RM plc Annual Report 2018

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FY2018 Annual Report · RM plc

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Annual report and
financial statements

Year ended 30 November 2018

S T R A T E G I C

R E P O R T

Operating Highlights

Chairman’s Statement

Operating Divisions

CEO Statement

CFO Statement

1 3

G O V E R N A N C E

Directors’ Biographies

Directors’ Report

Corporate Governance Report

Audit Committee Report

Remuneration Report

Independent Auditor’s Report

Shareholder Information

124

F I N A N C I A L

S T A T E M E N T S

Consolidated Income Statement

Consolidated Statement of Comprehensive Income

Consolidated Balance Sheet

Consolidated Statement of Changes in Equity

7 1

Consolidated Cash Flow Statement

Company Balance Sheet

Company Statement of Changes in Equity

Company Cash Flow Statement

Notes to the Financial Statements

H I G H L I G H T S O F 2 0 1 8

Group revenue +19%; adjusted operating profits +29%

PLATFORM FOR
LONG-TERM
GROWTH

Revenue growth of 19% benefiting from full year revenues
from the acquisition of Consortium and 2% organic growth

International revenue growth of 30% driven by RM Results
and RM Resources

Good progress in all three divisions

• RM Resources increased revenues 45% including full year

benefit of the acquisition and strong international sales growth

• RM Results won 7 new contracts in target markets

• RM Education significantly improved operating margins to 11.6%

Adjusted operating profits increased 29% with growth across
all three divisions delivering operating margins up 1pp to 12.4%

Free cash flow of £13.8m reducing net debt to £5.8m

Full year proposed dividend increased by 15% to 7.60p

W H A T W E D O

We improve the life chances of people – worldwide – by delivering
great education products and services that help teachers to teach
and learners to learn

RM plc is a leading supplier of technology and resources to
the education sector. Our products and services are used in
most parts of UK education from early years settings, primary
and secondary schools and colleges to major exam boards
and central government. RM has increased its revenues and
adjusted operating margins and delivered a high return on
capital employed.

The Group has three Operating Divisions, each with its own
managing director and management team, with corporate
services functions provided centrally. Approximately 38% of
Group headcount is based in India, providing support services
and software development to the Operating Divisions.

Further information and investor updates
can be found at www.rmplc.com

C H A I R M A N ’ S S T A T E M E N T

A good
year for RM

Performance

Dividend

2018 was a good year for RM. Revenues increased by 19%
to £221m and adjusted operating profit was up by 29% to
£27.5m. Adjusted diluted earnings per share rose by 22%
to 25.8 pps and strong cash generation reduced net debt
to £5.8m.

Consortium, acquired in 2017, is now integrated into the
RM Resources Division and each of the two brands, TTS
and Consortium, delivered revenue growth in the year.
The international business in RM Resources was strong and
grew by 41%. Margins remain at double-digit levels and the
Board has approved an investment to consolidate the five
distribution centres into a single automated facility in 2021.

RM Results delivered modest revenue growth but improved
profitability. The Division was much strengthened with seven
new contract wins in the year, of which six are international,
and the renewal of several important long-term contracts.

RM Education revenues declined, as expected, but profit
grew strongly. Double-digit operating margins benefited from
cost efficiencies.

The Group’s defined benefit pension schemes’ IAS 19 net
deficit has reduced to £2.3m.

The Board is recommending a final dividend of 5.70 pence
per share which would constitute, at 7.60 pence per share
in total, an increase of 15% over the prior year.

Outlook

The RM Group has undergone substantial change in recent
years. The newly consolidated RM Resources stands to
benefit from distribution synergies to counteract anticipated
price pressure as customers move increasingly online,
RM Results is much invigorated both in UK and overseas,
and RM Education, having dealt with substantial legacy
issues, has developed its continuing businesses.

Notwithstanding macroeconomic uncertainties,
the Group enters 2019 in a good position.

John Poulter
Chairman
4 February 2019

S T R A T E G I C R E P O R T

O P E R A T I N G D I V I S I O N S

RM RESOURCES

Curriculum and
education resources for
schools and nurseries in
the UK and internationally

page 06

RM RESULTS

Technology experts
in end-to-end global
high stakes e-assessment

page 08

RM EDUCATION

Software, services
and technology to UK
schools and colleges

page 10

Revenue
£121.6m

Operating
profit
£16.6m

Operating
margin
13.7%

Revenue
£31.8m

Operating
profit
£8.2m

Operating
margin
25.6%

Revenue
£67.6m

Operating
profit
£7.8m

Operating
margin
11.6%

20% five-year CAGR
in international sales

50% of customers
international

National presence
and scale

S T R A T E G I C R E P O R T

c. 30,000
customers

National curriculum
resources specialist

50,000
products

c. 545
FTE staff

Full suite
provider

Regional education
supplies generalist

4,000
own-designed
products

8%
staff based in India

c. 20
customers

Using AI in
digital assessment

c. 400
FTE staff

c. 13m
exam scripts
processed per annum

High visibility
revenue

Global target markets
(Language testing, professional bodies,
general exams, higher education)

>50%
staff based in India

c. 8,000
customers

Safeguarding
pupils online

c. 800
FTE staff

c. 700
outsourced
IT customers

Cloud-based
digital platforms

>70%
annuity
revenue

>35%
staff based in India

R M R E S O U R C E S

Curriculum and
education resources for
schools and nurseries in
the UK and internationally

RM Resources’ strategy is to grow its market share in
the provision of resources to schools, early years and
special educational needs markets via online sales,
a direct sales force and direct catalogue, both in the
UK and internationally.

Underpinned by our own designed products,
growth in international sales to overseas resellers
and international schools is expected to continue.

Key attributes

• c. 30,000 customers

• 50,000 products

• 4,000 own designed products

• c. 545 FTE staff

• Growing international revenue

What we do

• Education supplies and curriculum resources

that enhance learning environments

• Supply UK and international schools with an

extensive range of education resources

• Market leader in early years and primary schools

How we add value

• Unique own designed curriculum resources

• Map our products closely to the curriculum

• Whole school proposition including commodities

and classroom and curriculum resources

Why customers choose us

• We pioneer a continual stream of new products

strongly linked to customer need

• Ability to meet whole spectrum of school

purchasing requirements

• Unique cross-curricular products

• We are 100% education focused

STRATEGIC REPORT07

R M R E S U L T S

Technology experts
in end-to-end global
high stakes e-assessment

RM Results’ strategy is to grow the e-assessment
business through expanding the scope of solutions to
existing customers and to win new customers in both
the UK and overseas markets. Software and services
are provided through a combination of proprietary and
third-party, in-house and outsourced arrangements.

Key attributes

• c. 20 customers

What we do

•

IT software and services to enable on-screen
exam marking (e-marking) and testing (e-testing)

• Management and analysis of high stakes and

high volume educational data

• c. 13m exam scripts processed per annum

• Work with the most respected education

assessment brands in the world

• UK’s largest provider of on-screen marking of

high stakes schools’ exams

• Systems to help create the English schools

performance tables

• c. 400 FTE staff, over 50% in India

How we add value

•

Improve quality and speed of each
customer’s exam lifecycle

• Provision of secure, seamless and hassle-free

e-marking, e-testing and data analysis

• Four target markets (language testing, professional

• High visibility of future revenues

bodies, general exams, higher education)

Why customers choose us

• Trusted supplier

• We manage the end-to-end e-marking and

e-testing lifecycle

• We innovate via proprietary and
best-in-class partner solutions

• We understand the relationship between
high stakes assessment and technology

STRATEGIC REPORT09

R M E D U C A T I O N

Software, services
and technology to UK
schools and colleges

RM Education’s strategy is to build on its strong
presence and brand pedigree in UK schools and
colleges, where it delivers ICT software and services to
a high standard, by investing in and growing annuity
based solutions that enable education leadership
teams to improve outcomes.

Recurring annuity revenues are in excess of 70%
reflecting the continued improvements over
recent years.

Key attributes

• c. 8,000 customers

• Full IT outsourcing to c. 700 customers

• Direct sales business model

• UK market leader

• c. 800 FTE staff, over 35% in India

• Annuity-based revenues over 70%

What we do

•

IT outsourcing, cloud and
support services to ensure reliable,
secure, consistent technology

• Fully managed connectivity services

to enhance digital learning

• Software that addresses some of

the most pressing issues of insight,
efficiency and safeguarding

How we add value

• Delivering cost effective, reliable,

secure technology

• Help schools to make the most of their

IT investment

• Protecting pupil safety and data

Why customers choose us

• Trusted and established brand

• Our depth and breadth of
technology understanding

• National footprint

STRATEGIC REPORT11

S T R A T E G I C R E P O R T

C H I E F E X E C U T I V E
O F F I C E R ' S S T A T E M E N T

2018 was a year of strong growth for RM.

Revenue increased by 19%, adjusted operating

profit by 29% and statutory profit after tax

by 32%. All three Divisions made excellent

progress and international business across

the Group increased by 30% on prior year.

O P E R A T I N G R E V I E W

F U T U R E S T R A T E G Y

We continue to expect that tight budgets and funding
uncertainty will keep the UK market subdued. However,
improved margins, good cash generation and a strong
balance sheet mean we are well placed to enable the Group
to deliver long-term shareholder value. Though structured
in three operating Divisions, with autonomous approaches
to their markets, going forward the Group will focus on four
strategic themes to deliver profitable growth.

These themes are:-

Intellectual property (“IP”) and technology development

International growth

Innovate with our customers

4. Efficiency and simplicity

We will consider the potential to accelerate this strategy
through acquisitions where appropriate.

In RM Resources, the integration of the Consortium
business, acquired in 2017, progressed as planned with
both Consortium and TTS brands growing organically in
2018. The business grew organically in a tough market and
strongly internationally. In the year, as part of Phase 2 of
the integration of the Consortium business, we announced
a programme to consolidate the current estate of five
distribution centres to a single, automated centre by the end
of 2021 which will deliver operational and financial benefits.

RM Results won seven new contracts in the year, six of them
with international customers. We also renewed several
contracts with long-term customers. During the year
the e-marking software, RM Assessor3, won in the digital
category at the London Design Awards and is being rolled
out successfully across our customer base. Overall revenues
improved slightly, driven by international sales which offset
legacy data contract exits.

Though revenue decreased in RM Education, we have won
over a hundred new managed services customers. We also
agreed a new five year contractual relationship with the
largest customer in the Connectivity business. Renewal rates
continue to be high, in addition to which, we are investing
more heavily in increased sales and marketing capability to
help drive improved new customer acquisition. In the year,
a restructuring removed significant run rate costs enabling
the Division to improve margins.

I P A N D T E C H N O L O G Y D E V E L O P M E N T

I N T E R N A T I O N A L G R O W T H

RM is focused on the Education market and therefore we
have a depth of understanding and expertise. Across all
three Divisions we have market leading IP. The intention is
to increase our investment in developing our own IP and
our software development capability. In addition, we will
further develop our technology depth and breadth including
Artificial Intelligence capability, e-assessment and data
analytics. Finally, we will look to exploit our current IP with
new customers.

Case studies

RM Results – Auto-marking exams

Background: one word hand-written answers on
exam papers are expensive and slow for our customers
to get marked.

Solution: multiple Artificial Intelligence solutions have been
brought together to read the words and mark reliably with
little or no human intervention.

Result: over 90% of questions can be marked via computer.

RM’s international business has doubled in the last four
years and sales to international markets are now almost
£30m. We had strong growth internationally in 2018 in
RM Resources (41%) and RM Results (28%). To maintain
our success internationally we are increasing investment in
our international sales and marketing capability as well as
continuing to take our best existing IP to overseas markets.

Case Studies

RM Resources – Robotics revolution in
European schools

Background: the trend in some European countries is
to include coding within their early years and primary
school curriculum.

Solution: the product proposition has been supplemented
by the creation of multi-lingual content, mapped to the
local curriculum.

Result: significant initial increases in penetration of our
coding products.

RM Resources – TTS own developed product

RM Results – E-marking to the world

Background: customers are looking for curriculum relevant
products to drive improved learning outcomes.

Solution: increased investment in own developed TTS
products across all subject areas and to be sold only
through our channels.

Result: own developed products represent over 40%
of TTS sales and the rate of new product releases has
increased significantly.

Background: examination bodies across the globe are
looking to digitise a largely paper-based system to improve
quality and efficiency.

Solution: RM has developed an award-winning e-marking
solution, RM Assessor3 that is proven to improve marking
quality for high-stakes exams.

Result: six new international contracts for RM Assessor3
across four continents have been awarded in 2018.

STRATEGIC REPORT

I N N O VA T E W I T H O U R C U S T O M E R S

E F F I C I E N C Y A N D S I M P L I C I T Y

A key theme of our strategy is working closely with our
customers, many of whom are long standing. Going forward,
we look to provide customers with further insight into their
business through the use of data analytics. The opportunity
for our customers is to improve the life chances for their
young people. As a trusted partner we expect to challenge
their business processes and learning environments and
see how we might help improve them over time. We will
also look for new technology solutions to make it as easy as
possible for our customers to do business with us.

Case studies

RM Results – Analysing the exam cycle

Background: exams in schools often happen in a summer
peak, with millions of papers to be marked in short timescales
and with increasing challenges to find enough markers.
Our customers are looking at ways of de-risking the process.

Solution: bringing together knowledge from years of
exam cycles, and the use of data analytics, we are helping
customers streamline the process and predict how to
improve and de-risk timescales.

Result: our customers have much better insight into the
exam cycle and are able to intervene to speed up marking
and remove unnecessary complexity.

RM Resources – Easy online buying

Background: our customers are increasingly looking to
place orders on their in-school financial management
systems, which can link into the e-procurement hubs of their
educational suppliers.

Solution: RM has integrated most of the common school
finance systems into our website, so that a school can simply
click a single button to order educational supplies once they
are listed on their financial management systems.

Result: this saves customers’ time and develops habitual
loyalty to RM.

Budgets remain tough across the whole Education market.
Customers need to save money and are always looking for
more cost effective ways of doing things. In addition, with the
transition to online marketing, it is clear RM needs to continue
to drive cost out and be efficient as possible. Over one third
of RM’s staff are based in our India office in Trivandrum.
We will continue to look for ways of successfully offshoring
processes across the Group. In addition, we will use the
application of automation where appropriate to ensure
that repeatable, rules-based processes need limited human
intervention. Finally, we will invest to simplify many of our
business processes, improve efficiencies and consolidate
our supply chain.

Case studies

RM Education – Remote network management

Background: many of our customers need cost savings in
order to consider moving from an in-house IT team to an
outsourced service. The reliance on a few on-site staff to
manage the ICT makes these savings difficult to realise.

Solution: provide a fully remote network manager service
that can manage the school network without needing to be
physically onsite.

Result: the customer receives a more cost-efficient service
that isn’t reliant on a few key individuals and draws from
expert knowledge across an array of IT specialisms.

RM Resources – Distribution centre consolidation

Background: following the acquisition of Consortium in
2017, we have five distribution centres across three locations.

Solution: to move to a single, automated distribution site as
part of Phase 2 of the integration.

Result: a single automated site will reduce operating costs
and significantly improve service levels in a market that is
price sensitive.

E M P L O Y E E S

R M I N D I A

As at 30 November 2018, RM’s operation in Trivandrum
accounted for 38% of Group headcount (2017: 32%).
Headcount increased through the year as the RM Resources
Division transitioned some of its support operation to India
and RM Results increased headcount to support new contract
wins and new software development.

The Indian operation provides services solely to RM Group
companies. Activities include software development,
customer and operational support, back office shared
service support (e.g. customer order entry, IT, finance and HR)
and administration.

E N V I R O N M E N T A L

M A T T E R S

The Group’s impact on the environment, and its policy in
relation to such matters, are noted in the Directors’ Report.

Average Group headcount for the year was 1,936 (2017: 1,787),
which is comprised of 1,750 (2017: 1,633) permanent and
186 (2017: 154) temporary or contract staff, of which 1,257
(2017: 1,172) were located in the UK and 679 (2017: 615)
in India. At 30 November 2018 headcount was 1,952
(2017: 1,907).

The following table sets out a more detailed summary of the
permanent staff employed as at 30 November 2018:

Male

Female

Executive Directors

2 (100%)

0 (0%)

Senior Managers
(excluding Executive Directors)

50 (81%)

12 (19%)

All employees

1,103 (62%)

657 (38%)

The Group is committed to offering equal employment
opportunities and its policies are designed to attract, retain
and motivate the best staff regardless of gender, sexual
orientation, race, religion, age, disability or educational
background. The Group gives proper consideration to
applications for employment when these are received from
disabled persons and will employ them in posts whenever
suitable vacancies arise. Employees who become disabled
are retained whenever possible through retraining, use
of appropriate technology and making available suitable
alternative employment.

The Group encourages the participation of all employees in
the operation and development of the business and has a
policy of regular communications. The Group incentivises
employees and senior management through the payment
of bonuses linked to performance objectives, together with
the other components of remuneration detailed in the
Remuneration Report.

The Group has a wide range of other written policies,
designed to ensure that it operates in a legal and ethical
manner. These include policies related to health and safety,
‘whistle blowing’, anti-bribery and corruption, business
gifts, grievance, career planning, parental leave and systems
and network security. All of RM’s employment policies are
published internally.

The Corporate Governance Report sets out the
Company’s Diversity Policy.

STRATEGIC REPORTP R I N C I P A L R I S K S A N D U N C E R T A I N T I E S

The management of the business and the execution of the Company’s strategy are subject to a number of risks. The Company has a
structured approach to the assessment and management of risks. A detailed risk register is maintained, in which risks are categorised
under the following categories: political, strategic, operational and financial. The full register is reviewed at least annually by each
Division to ensure that the risks that could potentially affect each Division are properly captured. The register also includes a summary
of the steps taken to manage or mitigate against those risks and the person or people responsible for the relevant actions. This
register is then consolidated and Group-wide risks added, to ensure that the register covers the entire Group’s operations. This is then
reviewed by the Executive Committee, the Audit Committee and the Board. As such, the Board confirms that it has carried out a robust
assessment of the principal risks facing the Group and appropriate processes have been put in place to monitor and mitigate them.
Further details are also set out in the Corporate Governance Report.

The key business risks for the Group are set out in the table below.

Risk and
categorisation

Public policy
(Political Risk)

Education practice
(Political Risk)

Impact of UK’s
exit from the
European Union
(Political Risk)

Description and likely impact

Mitigation

The majority of RM’s business is funded from
UK government sources. Changes in political
administration, or changes in policy priorities,
might result in a reduction in education
spending, leading to a decline in market size.

UK government funding in the education sector
is constrained by fiscal policy.

Global economic conditions might result
in a reduction in budgets available for
public spending generally and education
spending specifically.

Education practices and priorities may change
and, as a result, RM’s products and services
may no longer meet customer requirements,
leading to a risk of lower revenue.

If there is an adverse change in the economic
and/or fiscal environment as a result of the
UK’s exit from the EU without a suitable period
for planning and implementation, costs could
increase and/or revenues reduce as a result.
This could include cost increases as a result of
the devaluation of Sterling.

The Company reviews the education policy environment
by regular monitoring of policy positions and by building
relationships with education policy makers.

The Group’s three Divisions have diverse revenue streams
and product/service offerings.

The Company’s strategy is to focus on areas of education
spend which are important to meet customers’ objectives.
Where the revenue of an individual business is in decline,
management seeks to ensure that the cost base is
adjusted accordingly.

The Company maintains knowledge of current education
practice and priorities by maintaining close relationships
with customers.

The currency elements of this risk is managed through
currency hedging against exchange rate movements,
typically 9-12 months into the future. The Group is also
working to rebalance its exposure by growing its foreign
currency denominated sales ahead of its costs to reduce
the currency imbalance and more naturally hedge this risk.

The Group has also undertaken a review of the wider risks
associated with the UK’s exit from the EU, including in the
event of a ‘no deal’ scenario. The Group is managing the
principal risk areas identified and will continue to monitor
developments.

Risk and
categorisation

Operational
execution
(Operational Risk)

Data and business
continuity
(Operational Risk)

People
(Operational Risk)

Integration Risk

Description and likely impact

Mitigation

RM provides sophisticated products and
services, which require a high level of technical
expertise to develop and support, and on
which its customers place a high level of
reliance. Any significant operational/system
failure would result in reputational damage
and increased costs.

RM is engaged in the delivery of large,
multi-year projects, typically involving the
development and integration of complex IT
systems, and may have liability for failure to
deliver on time.

RM is engaged in storing and processing
personal data, where accuracy, privacy and
security are important. Any significant security
breach could damage reputation and impact
future profit streams.

The Group would be significantly impacted
if, as a result of a major incident, one of
its key buildings, systems or infrastructure
components could not function for a long
period of time.

The Company invests in maintaining a high level of
technical expertise.

Internal management control processes are in place to
govern the delivery of all projects (including internal
projects), including regular reviews by relevant
management. The operational and financial
performance of projects, including future obligations,
the expected costs of these and potential risks are
regularly monitored by management and, as appropriate,
the Board.

The Company’s IS function has invested in developing
its Data Centres, and has been successfully certified to
ISO/IEC 27001:2005 for the provision of systems,
information and hosting services.

The Company has established a Group Security and
Business Continuity Committee to oversee the security
aspects of the Group’s information systems. This covers
data integrity and protection, defence against external
threats (including cyber risks) and disaster recovery.

The Group seeks to protect itself against the consequences
of a major incident by implementing a series of back up
and safety measures.

The Group has property and business interruption
insurance cover.

RM’s business depends on highly skilled
employees. Failing to recruit and retain such
employees could impact operationally on RM’s
ability to deliver contractual commitments.

The Company seeks to be an attractive employer and
regularly monitors the engagement of its employees.
The Company has talent management and career
planning programmes.

An inability to deliver, or a significant delay
in implementation of, the second phase of
synergies planned in relation to the acquisition
of Consortium and/or the loss of customers
as a result of related disruption. That second
phase includes in particular the consolidation
of the RM Resources property estate.

The Company has established a formal internal steering
committee to oversee the ongoing integration of
Consortium and the consolidation of the RM Resources
property estate. In addition, the Company has retained
external advisors in relation to such matters.

Integration risks are proactively managed and a number of
mechanisms are in place to monitor the ongoing impact
of the various activities, including staff consultations and
satisfaction surveys and ongoing customer feedback.

Financial reports are generated each month to ensure
that spend on integration activities and resulting expected
benefits remain within budget.

The Board is kept appraised of the current status of the
integration work on a regular and ongoing basis.

STRATEGIC REPORTDescription and likely impact

Mitigation

Risk and
categorisation

Innovation
(Strategic Risk)

Dependence on
key contracts
(Strategic Risk)

Pensions
(Financial Risk)

The IT market and elements of the education
resources market are subject to rapid, and
often unpredictable, change. As a result
of inappropriate technology and product
choices or a failure to adopt and develop
new technologies quickly enough, the
Group’s products and services might become
unattractive to its customer base, or new
market opportunities be missed.

The Group’s continued success depends on
developing and/or sourcing a stream
of innovative and effective products for
the education market and marketing these
effectively to customers.

The performance of the RM Education and
RM Results Divisions are dependent on
the winning and extension of long-term
contracts with government, local
authorities, examination boards and
commercial customers.

The Group operates two defined benefit
pension schemes in the UK (the “RM Scheme”
and the “CARE Scheme” respectively) and
participates in a third defined benefit pension
scheme (the “Platinum Scheme”).

Scheme deficits can adversely impact the net
assets position of the trading subsidiaries
RM Education Ltd and The Consortium for
Purchasing and Distribution Ltd.

Dividends
(Financial Risk)

The Company’s ability to pay dividends to
shareholders depends on having sufficient
distributable reserves in the holding company,
RM plc. The Group is reliant on continued
dividend distribution from subsidiaries and
ensuring no significant impairment of RM plc’s
carrying assets.

David Brooks
Chief Executive Officer
4 February 2019

The Company actively monitors technology and market
developments and invests to keep its existing products,
services and sales methods up-to-date, as well as seeking
out new opportunities and initiatives.

The Group works with teachers and educators to
understand opportunities and requirements.

The Company invests in maintaining a high level of
technical expertise and on building effective working
relationships with its customers. The Company has in
place a range of customer satisfaction programmes, which
include management processes designed to address the
causes of customers’ dissatisfaction.

The RM Scheme was closed to new entrants in 2003 and
closed to future accrual of benefits in 2012.

The CARE Scheme was closed to new entrants in 2006 and
closed to future accrual of benefits in 2011.

The Company evaluates risk mitigation proposals with the
trustees of these respective Schemes.

The Platinum Scheme is a multi-employer scheme over
which the Company has no direct control. However, due
to the small number of the Company’s employees who are
in this Scheme, the risk to the Company from this Scheme
is limited.

The Company monitors the level of distributable reserves
in RM plc and subsidiary companies and considers
their ability to make dividend payments, via the holding
company, to the shareholders.

C H I E F F I N A N C I A L
O F F I C E R ' S S T A T E M E N T

RM has made good progress across our key financial measures in 2018. Revenues grew in the year both on an underlying basis and
through the full year benefits of the 2017 Consortium acquisition. Operating margins grew, enabling strong growth in our adjusted
operating profits and adjusted diluted earnings per share. Importantly the growth in operating profits was in all three Divisions. These
improvements in adjusted earnings also flowed through to increases in statutory profit before and after tax. Solid cash generation has
enabled us to reduce our net debt levels.

Revenue

£221.0m

Adjusted*
Operating Profit

£27.5m

Net Debt

£5.8m

Adjusted*
Diluted EPS

25.8p

£221m

£186m

£27.5m

£21.3m

£13.4m

£5.8m

25.8p

21.2p

Up 19%

Up 29%

Reduced £7.6m

Up 22%

* Adjusted operating profit is before the amortisation of acquisition related intangible assets; GMP pension equalisation costs;

acquisition related costs; net increase of provisions for onerous lease contracts and restructuring costs.

G R O U P F I N A N C I A L P E R F O R M A N C E

Group revenue grew by 19% to £221.0m (2017: £185.9m) supported by the full year benefit of the acquisition of Consortium
(2018: £59.7m vs 2017: £27.8) and 2% underlying growth when excluding Consortium revenues.

2018

2017*

£m

Revenue

Operating profit

Profit before tax

Tax

Profit after tax

Adjusted

Adjustment

Statutory

Adjusted

Adjustment

Statutory

221.0

27.5

26.0

(4.7)

21.2

(4.9)

(5.0)

0.6

(4.3)

221.0

22.6

21.0

(4.1)

16.9

185.9

21.3

19.7

(2.4)

17.3

(5.1)

0.7

(4.5)

185.9

16.2

14.6

(1.7)

12.9

* 2017 adjusted earnings have been re-presented to reflect the share-based payment charge in adjusted earnings.

These charges were previously reported as an adjustment.

Revenues increased notably in our international markets which grew 30% (+£6.1m) on the prior year driven by new customer wins in
RM Results and strong sales growth in RM Resources.

Adjusted operating profit margins increased this year from 11.4% in 2017 to 12.4%. Adjusted operating profit increased to £27.5m
(2017: £21.3m) and now includes the £1.0m costs (2017: £0.8m) of share-based payments which were treated as an exceptional item
in previous years.

STRATEGIC REPORT
To provide a better understanding of underlying business
performance, amortisation charges associated with the
acquisition, related intangible assets, restructuring provision
movements, acquisition costs, GMP pension equalisation
costs and other items of an exceptional nature have been
disclosed in an adjustments column in the income statement
to give ‘Adjusted’ results. Note 5 to the financial statements
identifies these adjustments highlighting recurring and
non-recurring items.

Statutory operating profit increased to £22.6m (2017: £16.2m),
with adjustments of £2.5m for a restructuring provision in
RM Resources associated with the decision to consolidate
the property estate and the resulting redundancy provision,
£1.2m of amortisation of acquisition related intangible assets
and a £1.2m charge for the costs associated with the High
Court decision in October 2018 to implement the alignment
of guaranteed minimum payments (GMP) between men and
women in defined benefit pension schemes.

The Group generated a statutory profit before tax of £21.0m
(2017: £14.6m) with a net interest charge of £1.5m which
includes £0.5m of non-cash charges associated with the
discounting of the defined benefit pension schemes.

The total tax charge within the income statement for the year
was £4.1m (2017: £1.7m). The Group’s tax charge for the year,
measured as a percentage of profit before tax, was 19.5%
(2017: 11.9 %). The increase is principally due to the absence
of a reduction of £1.2m in the transfer pricing provision in
2017 associated with cross border intra-group transactions
between the UK and India. Statutory profit after tax increased
to £16.9m (2017: £12.9m).

Adjusted diluted earnings per share were 25.8 pence (2017:
21.2 pence). Statutory basic earnings per share were 20.7
pence (2017: 15.8 pence) and statutory diluted earnings per
share were 20.6 pence (2017: 15.7 pence).

RM generated cash from operations for the year of £24.2m
(2017: £17.9m). Free cash flow in the year was £13.8m which
enabled net debt to be reduced at the end of the year to
£5.8m (2017: £13.4m).

Over the next two years RM expects discretionary capital
expenditure to rise to circa £10m per annum. This spend
in focused on key strategic areas including Phase 2 of the
Consortium integration which will consolidate the current
five distribution centres into a single automated facility, a
Group-wide IT system implementation and development
of e-assessment IP in RM Results. These projects are
scheduled to conclude in 2021 and deliver good financial
and operational benefits.

Dividends

The total dividend paid and proposed for the year has been
increased by 15% to 7.60 pence per share (2017: 6.60 pence).
This is comprised of the interim dividend of 1.90 pence per
share paid in September 2018 and, subject to shareholder
approval, a proposed final dividend of 5.70 pence per share.
The estimated total cost of ordinary dividends paid and
proposed for 2018 is £6.2m (2017: £5.4m).

The Board is committed to a long-term sustainable dividend
policy and the Company has £29.6m of distributable reserves as
at 30 November 2018 available to support the dividend policy.

RM plc is a non-trading investment holding company
and derives its profits from dividends paid by subsidiary
companies. The Directors consider the Group’s capital
structure and dividend policy at least twice a year, 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 Risks and
Uncertainties’ set out below which could have a negative
impact on the performance of the Group or its ability to
distribute profits.

Defined Benefit Pension Schemes (“Schemes”)

The Company operates two defined benefit pension schemes
(the "RM Scheme" and "CARE Scheme") and participates in
a third, multi-employer, defined benefit pension scheme
(the "Platinum Scheme"). Both of the RM Scheme and
the CARE Scheme are closed to future accrual of benefits.
While the Platinum Scheme remains open to future accrual
of benefits, the number of Group employees participating in
that Scheme is very small and so the impact of that Scheme
on the Group is limited.

The IAS 19 net deficit (pre-tax) across the Group decreased
by £17.9m to £2.3m (Nov 2017: £20.2m) with both the
RM Scheme and the Platinum Scheme being in surplus.
This reduction was driven a decrease in the liabilities of the
Schemes and the benefit of Company contributions.

The Group deficit recovery plan cash flow requirements across
all Schemes in 2018 was £4.6m pa. The Group is currently
in discussions with the Trustee of the RM Scheme regarding
the triennial review as at 31 May 2018 and expects to reach
agreement in the first half of 2019. The next review date for the
Platinum Scheme is in December 2018 and the next triennial
review for the CARE Scheme is due in December 2019.

R M R E S O U R C E S

International

RM Resources revenues increased by 45% to £121.6m. This
includes the full year benefit of the acquisition of Consortium
that was concluded in July 2017. TTS revenues grew 11% to
£61.9m (2016: £55.9m) whilst Consortium added £59.7m in its
first full year post acquisition (2017: £27.8m for five months).

Divisional adjusted operating profit increased to £16.6m
(2017: £11.6m) as the Division’s profitability benefited from
the increase in revenues outlined above. Operating margins
decreased slightly to 13.7% (2017: 13.9%) as £3m of synergy
benefits delivered were offset by the full year impact of the
lower operating margins in Consortium and an increased
proportion of revenues delivered through frameworks or
exclusive contracts at lower gross margins.

UK direct education revenues increased by 47% to £95.8m
(2017: £65.2m) driven by the acquisition of Consortium
and 3% growth in TTS UK education direct marketing
revenues. The underlying UK growth across the brands is
encouraging in a market that we believe declined slightly
and that was delivered against a backdrop of significant
integration activity.

In the UK business, there are a number of legacy revenue
streams that amounted to £6.7m related to activities in which
we have stopped continued investment. This includes closure
of the UK trade channel where we sold own developed
products through other UK distributors with revenues of
£2.9m. It was announced in the year that we would close this
channel (with the exception of Northern Ireland) at the end
of 2018 which would mean that in 2019 our own developed
products can only be purchased in the UK through our own
brand channels. It is expected that this will strengthen the
UK proposition as the market leading full suite provider of
curriculum and commodity products.

There is a further £3.8m of UK legacy revenues that were
acquired as part of the Consortium acquisition which are
outside education in areas such as Care, Procurement
frameworks and Office equipment leasing. These revenues
declined 17% on a 12 month pro-forma basis and we expect
the decline to continue going forward.

The Division continues to invest in its online channels. Online
orders make up approximately half of UK direct education
sales. We expect the proportional growth in online sales to
continue in future years, as more customers use it as their
preferred method of ordering. This trend will continue to
put pressure on pricing and it is key to the strategy of the
Division that it is run efficiently and investment continues to,
in part, focus on delivering a low cost operation with excellent
customer service levels.

The international business is made up of two key channels,
international distributors, through which we sell own
designed products to over 80 countries, and international
English curriculum schools to whom we sell a wider portfolio
of education supplies. Revenues from international
distributors and international schools increased by 41% to
£19.1m (2017: £13.5m). This was driven by strong growth of
our own designed products through distributor channels
(+61%) including part delivery of a large one-time order in
South America (£1.4m) and increased sales to international
schools (+15%).

R M R E S U LT S

Revenue grew slightly to £31.8m (2017: £31.6m) with revenue
from e-assessment growing by 4%, which offset the planned
exit of a number of legacy contracts in Data (-14%). Adjusted
operating profit increased by 5% on the prior year to £8.2m
(2017: £7.8m).

Adjusted operating margins increased to 25.6% (2017: 24.5%)
benefitting primarily from one time benefits of improvements
in the long-term contract margins delivered as a result of
operational improvements across the contract portfolio and
allocation of software development into new product IP. This
was further supported by the successful roll-out of the latest
release of e-marking software, Asessor3.

RM Results signed seven new contracts in 2018, six of which
were with international customers. The order book value of
these contracts is above £4m with the potential to materially
increase that value through increased volumes and broader
phases of implementation and delivery still to be contracted.

The Division also successfully secured several important
contract renewals and extensions with existing customers
in the year.

The outlook remains positive in this Division with the contract
performance in 2018 and strong pipeline creating a robust
platform for long-term growth. Progress continues to be
made in developing further intellectual property in the
e-assessment portfolio and M&A opportunities will continue
to be assessed to look to accelerate strategic development.

R M E D U C A T I O N

Revenues in the Division declined by 4% to £67.6m
(2017: £70.6m) driven primarily by the planned contract
completion of several long-term contracts. Adjusted
operating profit margins improved, increasing to 11.6%
(2017: 9.3%), benefitting from a reduction in the cost base
and a resulting one-time benefit in the long-term contract

STRATEGIC REPORTlifetime margins which more than offset restructuring costs
in the year. Adjusted operating profit increased to £7.8m
(2017: £6.6m).

The Division is made up of Services (63% of revenue) –
which includes IT outsourcing, support contracts and 3rd
party technology management, Digital Platforms (14%) –
software offerings which are predominantly cloud-based and
Connectivity (18%) – fully managed broadband services for
Schools and Colleges. The Division has a number of legacy
services and contracts that are either in contractual run-off,
or we have stopped continued investment in them. In 2018
they constituted 5% of revenues and are expected to have
materially concluded by 2020.

Connectivity

The Connectivity offering provides managed broadband
connections to schools and colleges. Revenues decreased by
3% to £11.8m (2017: £12.3m) resulting from a £0.8m reduction
of unbundled sales of IP addresses. Underlying managed
connectivity services revenues increased by 3% in the year to
£11.5m benefiting from an increase in school contracts year
on year.

During the year we signed a new five year agreement with
the Division’s largest aggregated customer which provides
continuity of our revenue stream whilst also enabling direct
contractual relationship with the schools.

A key focus of the Division is to build its annuity revenue offerings
which now account for over 70% of the revenue portfolio.

I M P A C T O F T H E
E U R E F E R E N D U M V O T E

The Company continues to monitor the evolving impacts of
the referendum decision on UK’s membership of the EU. The
Group has European sales of £12.4m, of which £8.5m relate to
physical product sales in RM Resources and £3.9m relate to
software and services sales in RM Results and RM Education.
The Group has undertaken a review of the potential changes
resulting from the UK’s exit from the EU, including in the event
of a ‘no deal’ scenario. This review focused on the principal
risk areas of customers and markets, supply chain, people,
treasury, legal, data and regulation and customs and tax.
Following this review, although we believe the likely impact to
be unfavourable, we continue to believe that it will not have
a materially adverse effect on the Group as a whole, whilst
assuming that the UK government does not fundamentally
change its approach to education funding. We continue to
monitor the evolving nature of the negotiations.

The Group has foreign currency denominated costs that
outweigh foreign currency denominated revenues and
therefore increased currency volatility creates an exposure.
This is primarily attributed to US Dollar and Indian rupee
exposure. This risk is managed through currency hedging
against exchange rate movements, typically 9-12 months
into the future. The Group is also working to rebalance its
exposure by growing its foreign currency denominated sales
ahead of its costs to reduce the currency imbalance and more
naturally hedge this risk.

The following divisional metrics exclude the impact of the
legacy revenues to show the underlying trends.

Services

The Services offering is primarily the provision of IT
outsourcing services to UK schools and colleges but also
includes support contracts to school IT teams and the
provision, implementation and management of 3rd party
technology. Services revenues decreased by 3% to £42.6m
(2017: £43.9m) resulting from a 12% reduction in the
proportion of spend under aggregated long-term contracts
which traditionally had higher service provision requirements
and resulting average spend. Retention rates in the year
were 96% and in addition, 99 new schools signed managed
services contracts in the year (2017: 46) resulting in 10%
growth in schools outsourced. Furthermore a consolidated
school group signed a 3 year managed services contract just
after the year end adding a further 38 schools.

A proportion of RM Education’s managed service contracts
are subject to long-term project accounting policies.
Consequently, as these contracts complete in the year
or progress towards completion, profits benefit from the
effects of good operational performance, risk mitigation at
completion and wider reductions in the Division’s cost base.

Digital Platforms

The Digital Platform offering covers a number of key cloud-
based products such as RM Integris (RM’s school management
system), RM Unify, our authentication and portal system and
RM SafetyNet, our internet filtering and safeguarding system as
well as other content, finance and network software offerings.
Digital Platforms revenues increased by 7% to £9.6m (2017:
£8.9m) driven by growth in RM Integris and network software.
Customer retention rates of core Digital Platform products
were in excess of 90% in the year.

S T R A T E G I C R E P O R T

G O I N G C O N C E R N

The financial position, cash flows and liquidity position are
described in the financial statements and the associated
notes. In addition, the notes to the financial statements
include RM's objectives, policies and processes for managing
its capital, its financial risk management objectives, and
its exposure to credit and liquidity risk. During the year, the
Group’s revolving credit facility reduced from £75m, at the
beginning of the year, to £65m on 31 December 2018 and
will reduce again to £60m on 30 June 2019. The current bank
credit facility ends on 30 June 2020 but has an option to
extend for a further two years with lender consent and the
Board has no reason to believe that the facility would not be
extended. The Group ended the year with a net debt of £5.8m
which is a reduction of £7.6m on the prior year end position
of £13.4m. The average net debt position during the year was
£24.1m with the highest borrowing point being £32.8m.

Having reviewed the future budgets and projections for
the business, the principal risks that could impact on the
Group’s liquidity and solvency over the next 12 months
and its current financial position, the Board believes that
RM is well placed to manage its business risks successfully
and remain in compliance with the financial covenants
associated with its borrowings. Therefore, the Board has a
reasonable expectation that the Group and Company have
adequate resources to continue in operational existence for
the foreseeable future, a period of not less than 12 months
from the date of this report. For this reason, the Company
continues to adopt the going concern basis of accounting
in preparing the annual financial statements.

F I N A N C I A L V I A B I L I T Y S T A T E M E N T

In accordance with the UK Corporate Governance Code,
in addition to an assessment of going concern, the
Directors have also considered the prospects of the Group
and Company over a longer time period. The period of
assessment chosen is three years, which is consistent with
the time period over which the Group’s medium-term
financial budgets are prepared. These financial budgets
include income statements, balance sheets and cash flow
statements. They have been assessed by the Board in
conjunction with the principal risks of the Group, which are
documented within the Principal Risks and Uncertainties
section above, along with their mitigating actions.

The Board considers that the principal risks which have
the potential to threaten the Group’s business models,
future performance, solvency or liquidity over the three year
period are:

1. Public policy risk – UK education policy priority changes
or restrictions in government funding due to fiscal policy.

2. Operational execution – including:

• Major adverse performance in a key contract or

product which results in negative publicity and which
damages the Group’s brand.

• Delays to key projects where we are investing more

significant levels of discretionary capital expenditure.

3. Business continuity – an event impacting the Group’s

major buildings, systems or infrastructure components.
This would include a major incident at one of the
RM Resources main warehouses.

4. Strategic risks

• Loss of a significant contract which underpins an

element of a Division’s activity.

• Significant reduction in gross margins.

•

Impact of a ‘no-deal’ Brexit and resulting possible
changes in the fiscal and economic environment

Having assessed the above risks, singularly and in
combination, and via sensitivity analysis, the Directors have
a reasonable expectation that the Company will be able to
continue in operation and meet its liabilities as they fall due
over the three year period of assessment and are not aware
of any reason that viability would be an issue.

Neil Martin
Chief Financial Officer
4 February 2019

D I R E C T O R S ’ B I O G R A P H I E S

J O H N P O U LT E R
Chairman (a) (r) (n)

N E I L M A R T I N
Chief Financial Officer

John Poulter was appointed as Non-Executive Chairman of
RM plc on 1 May 2013. He is also Chairman of the Nomination
Committee of the Board. Mr Poulter is a former Chairman of
4imprint Group plc and a former Chairman and former Chief
Executive of Spectris plc. He has also been a Non-Executive
Director of a number of public and private companies
including FTSE 250 constituents BTP plc, RAC plc and
Kidde plc.

A N D Y B L U N D E L L
Independent Non-Executive Director (a) (r) (n)

Andy Blundell joined the Board as a Non-Executive Director
on 25 May 2017. He is also Chief Executive Officer of
Communisis who he joined in January 2008, where he held
earlier roles as Managing Director of Print Sourcing and Group
Sales Director. Formerly, he was a Managing Director at
Bemrose Booth Ltd and a Managing Director at De La Rue plc.

D AV I D B R O O K S
Chief Executive Officer

David Brooks was appointed Chief Executive Officer of RM plc
on 1 March 2013, having been appointed to the Board as
Chief Operating Officer on 1 July 2012. He originally joined
RM, with a degree in computing, on the Group’s graduate
scheme. He has gained extensive experience in several senior
roles across the RM Group.

P A T R I C K M A R T E L L
Independent Non-Executive Director (a) (r) (n)

Patrick Martell joined the Board on 1 January 2014 as a
Non-Executive Director and was appointed Chairman of the
Remuneration Committee on 19 March 2014. Mr Martell is a
former Group CEO of St Ives plc, having joined in 1980. He
was appointed to the Board of St Ives plc on 1 August 2003
and held the position of Managing Director, Media Products
and Managing Director, UK Operations from 2006 to 2009,
at which point he was appointed Group CEO. Mr Martell is
currently Chief Executive of the Business Intelligence Division
of Informa plc.

G O V E R N A N C E

Neil Martin joined the Company and the Board on
28 September 2015. Prior to joining RM, he was CFO for UK
and Ireland for the Adecco Group, the leading provider of HR
solutions listed on the Swiss Stock Exchange. He was CFO
at the UK listed, IT staffing company, Spring plc until it was
acquired by Adecco in 2009. Mr Martin started his career by
spending seven years at Exxon Mobil.

D E E N A M A T T A R
Senior Independent Non-Executive Director (a) (r) (n)

Deena Mattar FCA joined the Board on 1 June 2011 as a
Non-Executive Director and was appointed Chairman of the
Audit Committee on 26 March 2012. She served as Group
Finance Director of Kier Group plc from 2001 to 2010, having
joined the Group in 1998 as Finance Director of Kier National.
Prior to this she held senior positions at KPMG. Ms Mattar is
also a Non-Executive Director and Chairman of the
Audit Committee of Wates Group Ltd, an Independent
Non-Executive on the Partnership Oversight Board of
Grant Thornton UK LLP and, until its sale to Schneider
Electric, she was a Non-Executive Director and Chairman of
the Audit Committee for Invensys plc. She is also a former
Non-Executive Director of Lamprell plc.

Committee membership as at the date of this report:

(a)

(r)

(n)

Audit Committee Member

Remuneration Committee Member

Nomination Committee Member

D I R E C T O R S ’ R E P O R T

The Directors submit their report together with the audited
consolidated and Company financial statements for the year
ended 30 November 2018.

The Corporate Governance Report is incorporated into this
report by reference.

D I V I D E N D S

T R E A S U R Y A N D F O R E I G N E X C H A N G E

The Group has in place appropriate treasury policies and
procedures, which are approved by the Board. The treasury
function manages interest rates for both borrowings and
cash deposits for the Group and is also responsible for
ensuring there is sufficient headroom against any banking
covenants contained within its credit facilities, and for
ensuring there are appropriate facilities available to meet
the Group’s strategic plans.

In order to mitigate and manage exchange rate risk,
the Group routinely enters into forward contracts and
continues to monitor exchange rate risk in respect of
foreign currency exposures.

All these treasury policies and procedures are regularly
monitored and reviewed. It is the Group’s policy not
to undertake speculative transactions which create
additional exposures over and above those arising from
normal trading activity.

E N V I R O N M E N T A L P O L I C Y
A N D R E P O R T I N G

The Group recognises that its activities must be carried out
in an environmentally friendly and compliant manner. Good
standards of environmental performance are adopted to
minimise the potential negative environmental impact of
products and processes and also to promote sustainability.
These actions include efficient utility usage, waste reduction/
recycling and use of energy saving features in products.

The Group is required to report Scope 1 and 2 emissions for all
Group companies within the Annual Report and has elected to
report emissions for the year to 30 September 2018.

Set out below are all of the emission sources required to be
reported under the Companies Act 2006 (Strategic Report
and Directors’ Reports) Regulations 2013.

The GHG Protocol Corporate Accounting and Reporting
Standard (revised edition) has been applied. The figures
include emissions arising from all financially controlled
assets, as well as business travel arising from air and
other vehicle use.

All emissions factors have been selected from the emissions
conversion factors published annually by the Department for
Business, Energy & Industrial Strategy (which can be found at
https://www.gov.uk/government/publications/
greenhouse-gas-reporting-conversion-factors-2018).

GOVERNANCEEmissions by scope

Scope

Source

Scope 1

Air travel

Van/car travel

Gas

Scope 2

Electricity and gas

India

Electricity and gas

India

Total

Year ended 30 September 2018

Year ended 30 September 2017

Country

Tonnes CO2℮

Absolute totals
Tonnes CO2℮

Tonnes CO2℮

Absolute totals
Tonnes CO2℮

735

396

481

120

789

804

2,522

826

3,348

624

296

515

124

420

857

186

1,979

1,044

3,023

Emissions have also been analysed using an intensity metric, which will enable the Company to monitor how well emissions
are controlled on an annual basis, independent of fluctuations in the levels of activity. The metric used is ‘emissions per
full-time equivalent (FTE) employee’. The Group’s emissions per employee are shown in the table below.

Tonnes CO2℮/employee

Scope 1

Scope 2

Total

D A T A P R O T E C T I O N

Year ended
30 September 2018

Year ended
30 September 2017

1.33

0.43

1.76

1.15

0.60

1.75

Given the nature of its operations, the Company has always taken data protection matters very seriously. The security and
integrity of customer data is critical and its importance to the Group is noted in the table of “Principal Risks and Uncertainties”
in the Strategic Report.

The Company has a formal Group Security and Business Continuity Committee (GSBCC), which oversees data protection matters.
That Committee is chaired by the Chief Financial Officer and attendees include the Group’s Data Protection Officer (DPO),
Chief Information Officer, Group HR Director and representatives from each of the Divisions.

As part of its ongoing programme of GDPR-compliance, the Group has formal data protection policies which all staff are required
to adhere to, ongoing training is provided to all staff, security vetting of relevant suppliers and other third parties is conducted and
contracts are governed to ensure that all relevant legal requirements are addressed.

The DPO works independently of management in fulfilment of the statutory duties required of that role and, should any issues arise,
he can escalate these directly to the Board via the Company Secretary. As well as attending the GSBCC, the DPO provides regular
(at least quarterly) updates to the Executive Committee on data protection matters. At those updates, reports are provided of all
relevant data protection matters, including those relating to security and any legal and regulatory developments.

H E A LT H A N D S A F E T Y

The Group has implemented a health and safety management system which aims to continually improve health and safety
implementation and is designed to meet the requirements of OHSAS 18001. The following objectives are incorporated into the health
and safety management system:

• Accident reduction

• Raising health and safety awareness

• Effective training

• Risk reduction and management

P O L I T I C A L D O N A T I O N S

Neither the Company nor any of its subsidiaries made any political donations or incurred any political expenditure during the year.

R E S E A R C H A N D D E V E L O P M E N T

The Company continues to develop and maintain its existing software development products whilst staff work to develop new and
more effective systems and products. The Company incurred £6.7m of research and development in the year, which was expensed in
the income statement (2017: £6.8m). This relates to product enhancement and research.

S U B S T A N T I A L S H A R E H O L D I N G S

On 4 February 2019 the Company had received notifications that the following parties were interested in accordance with DTR 5:

Shareholder

Aberforth Partners

Schroders Investment Management Ltd

Artemis Investment Management LLP

Majedie Asset Management Ltd

The Wellcome Trust Ltd

Ennismore Fund Management Limited

Fidelity International

No. of shares

14,669,375

13,194,974

12,620,997

5,280,817

4,798,752

3,315,000

3,109,433

Percentage of
Issued Share Capital
as at 4 February 2019

No. of shares
Direct

No. of shares
Indirect

17.49%

15.73%

15.05%

6.30%

5.72%

3.95%

3.71%

14,669,375

13,194,974

12,620,997

5,280,817

4,798,752

3,315,000

3,109,433

T H E T A K E O V E R S D I R E C T I V E

The Company has one class of share capital, ordinary shares. All the shares rank pari passu. There are no special control rights in
relation to the Company’s shares. As at 30 November 2018, the RM plc Employee Share Trust owned 2,013,176 ordinary shares in the
Company (2.40% of the issued share capital); any voting or other similar decisions relating to those shares would be taken by the
Trustees, who may take account of any recommendation of the Board of the Company.

The Group enters into long-term contracts to supply IT products and services to its customers. Wherever possible, these contracts do
not have change of control provisions, but some significant contracts do include such provisions.

In February 2017, the Company entered into a revolving credit facility with Barclays Bank plc and HSBC Bank plc, which expires in
June 2020. The initial facility was for £75m, with the amount of funds available reducing to £70m from 30 June 2018, £65m from
30 December 2018 and £60m from 30 June 2019. That facility is subject to termination in the event of a change of control of the
Company or the de-listing of any part of the share capital of the Company from the Official List.

GOVERNANCER E P U R C H A S E O F O W N S H A R E S

At the Annual General Meeting held on 21 March 2018,
members renewed the authority under section 701 of the
Companies Act 2006 to make market purchases on the
London Stock Exchange of up to 8,265,001 ordinary shares,
being 10% of the issued share capital of the Company.
The minimum price which may be paid for each share is the
nominal value. The maximum price which may be paid for a
share is an amount equal to the higher of (1) 5% above the
average of the middle market quotations of the Company’s
ordinary shares as derived from the London Stock Exchange
Daily Official List for the five business days immediately
preceding the day on which such share is contracted to be
purchased and (2) the amount stipulated by Article 5(1) of the
Buy-back and Stabilisation Regulation 2003. This authority
has not been used since the Annual General Meeting.

The Directors will seek to renew this authority at the next
Annual General Meeting scheduled for 27 March 2019.

O V E R S E A S B R A N C H E S

The Group has an overseas branch in Singapore.

D I R E C T O R S

Details of those Directors who have held office during the
financial year and up to the date of signing this report and any
changes since the start of the financial year are given below:

John Poulter

Andy Blundell

David Brooks

Patrick Martell

Neil Martin

Deena Mattar

Biographical details of the current Directors are given in the
Directors’ Biographies section of the Annual Report. At the
forthcoming Annual General Meeting all Directors will stand for
re-election in accordance with best practice and guidance set
out in the UK Corporate Governance Code. All Directors have
either a letter of appointment or a service contract, details of
which can be found in the Remuneration Report.

The Group has provided indemnity insurance for one or more
of the Directors during the financial year and at the date of
signing this Report. The Directors also have the benefit of a
Deed of Indemnity in respect of liabilities which may attach
to them in their capacity as Directors of the Company. These
provisions are qualifying third-party indemnity provisions as
defined by section 234 of the Companies Act 2006.

I N D E P E N D E N T A U D I T O R A N D
D I S C L O S U R E O F I N F O R M A T I O N
T O A U D I T O R

As far as the Directors are aware, there is no relevant audit
information (as defined by section 418(3) of the Companies
Act 2006) of which the Company’s auditor is unaware and
each of the Directors have taken reasonable steps in order
to make themselves aware of relevant audit information
and to establish that the Company’s auditor is aware of
that information.

A resolution to reappoint KPMG LLP as auditor of the Company
will be proposed at the next Annual General Meeting.

S T A T E M E N T O F D I R E C T O R S ’
R E S P O N S I B I L I T I E S I N R E S P E C T O F
T H E A N N U A L R E P O R T A N D T H E
F I N A N C I A L S T A T E M E N T S

The Directors are responsible for preparing the Annual
Report and the Group and Company financial statements in
accordance with applicable law and regulations.

Company law requires the Directors to prepare Group and
Company financial statements for each financial year.
Under that law the Directors are required to prepare the
Group financial statements in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the
European Union and applicable law and have elected to
prepare the Company financial statements on the same
basis. Under company law the Directors must not approve
the financial statements unless they are satisfied that they
give a true and fair view of the state of affairs of the Company
and the Group and of their profit or loss for that year.

In preparing those financial statements, the Directors are
required to:

• select suitable accounting policies and then apply

them consistently;

• make judgments and estimates that are reasonable,

relevant and reliable;

• state whether applicable IFRSs as adopted by the

European Union have been followed, subject to any
material departures disclosed and explained in the
financial statements;

• assess the Group and Company’s ability to continue as a
going concern, disclosing, as applicable, matters related
to going concern; and

• use the going concern basis of accounting unless they either
intend to liquidate the Group or the Company or to cease
operations, or have no realistic alternative but to do so.

A N N U A L G E N E R A L M E E T I N G

The forthcoming Annual General Meeting will be held on
27 March 2019 at 140 Eastern Avenue, Abingdon, Oxfordshire
OX14 4SB, at the time set out in the Annual General Meeting
notice. The notice of the Annual General Meeting contains
the full text of resolutions to be proposed.

By Order of the Board

Greg Davidson
Company Secretary
4 February 2019

The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Company’s transactions and disclose with reasonable
accuracy at any time the financial position of the Company
and to enable them to ensure that the financial statements
comply with the Companies Act 2006. They are responsible
for such internal control as they determine is necessary to
enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error,
and have general responsibility for taking such steps as are
reasonably open to them to safeguard the assets of the Group
and to prevent and detect fraud and other irregularities.

Under applicable law and regulations, the Directors are
also responsible for preparing a Strategic Report, Directors’
Report, Remuneration Report, Corporate Governance Report
and Audit Committee Report that complies with that law
and those regulations.

The Directors are responsible for the maintenance and
integrity of the corporate and financial information included
on the Company’s website. Legislation in the UK governing
the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.

Each of the Directors, whose names and functions are listed
at the front of the Annual Report, confirm that, to the best of
their knowledge:

•

the 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 Company and the Group taken as a whole;
and

the Strategic Report includes a fair review of the
development and performance of the business and the
position of the Company and the Group taken as a whole,
together with a description of the principal risks and
uncertainties that they face.

The Directors consider the annual report and accounts,
taken as a whole, is fair, balanced and understandable and
provides the information necessary for shareholders to assess
the Group’s position and performance, business model
and strategy.

A copy of the Group financial statements is posted on the
Group’s website www.rmplc.com.

GOVERNANCE33

C O R P O R A T E G O V E R N A N C E R E P O R T

I N T R O D U C T I O N F R O M T H E C H A I R M A N

As Chairman, I am responsible for ensuring that the Company
has high standards of corporate governance. On behalf
of the Board, I confirm that the Company has complied
with the provisions of the UK Corporate Governance Code
2016 (the “Code”) throughout the 12 month period ended
30 November 2018. How we have applied the principles of
the Code is set out in the table below.

The Code itself provides a framework for corporate
governance and, irrespective of the Code, the Board tries
to foster throughout the organisation a culture of open
and honest communication, constructive challenge and
proper division of responsibilities, all set within a structure
containing appropriate checks and balances. The Board sees
this as a positive contributor to effective business operations.

This Corporate Governance Report provides a summary of
the arrangements that are in place and the above is intended
to set the context within which those arrangements operate
and the importance placed on them by the Board.

John Poulter
Chairman

GOVERNANCEC O M P L I A N C E W I T H T H E U K C O R P O R A T E G O V E R N A N C E C O D E 2 0 1 6

Code of Best Practice – Principles

RM Statement of compliance

DIRECTORS

The Role of the Board

Every company should be headed by an effective board
which is collectively responsible for the long-term success
of the company.

The Directors’ responsibilities are outlined in the Directors’ Report. The
Board meets regularly on a formal basis plus additional ad hoc meetings as
necessary. Further details of the operation of the Board and the structure of
internal governance arrangements are referred to below.

Division of Responsibilities

There should be a clear division of responsibilities at the
head of the company between the running of the board
and the executive responsibility for the running of the
company’s business. No one individual should have
unfettered powers of decision.

The Chairman

The Chairman is responsible for leadership of the board
and ensuring its effectiveness on all aspects of its role.

Non-Executive Directors

As part of their role as members of a unitary board,
non-executive directors should constructively
challenge and help develop proposals on strategy.

EFFECTIVENESS

The Composition of the Board

The board and its committees should have
the appropriate balance of skills, experience,
independence and knowledge of the company
to enable them to discharge their respective
duties and responsibilities effectively.

There is a clear distinction between the role of the Non-Executive Directors
on the Board, which is chaired by the Chairman, and the Chief Executive
Officer and Chief Financial Officer, who have executive responsibility for the
running of the Company’s business.

The Chairman sets the Board’s agenda and ensures that adequate time is
available for the discussion of all agenda items. The Chairman promotes
a culture of openness and debate. He also ensures constructive relations
between the Executive Directors and the Non-Executive Directors.
The Chairman ensures effective communication with shareholders.

The Chairman meets the independence criteria.

The Non-Executive Directors scrutinise strategic proposals for the Group and
monitor performance on an ongoing basis. The controls in place to ensure
the integrity of financial information and systems of risk management are
described elsewhere in the Annual Report.

Deena Mattar is Senior Independent Director and is available to shareholders if
they have concerns which contact through the normal channels has failed
to resolve.

The Chairman holds meetings with the Non-Executive Directors without the
Executive Directors present when considered appropriate and the performance
of Non-Executive Directors, including the Chairman, is assessed as noted in
paragraph B6 below.

The Board consists of the Chief Executive Officer and Chief Financial Officer
plus, currently, four Non-Executive Directors including the Chairman. All of
the Non-Executive Directors are considered by the Board to be independent
of the management of the Company and free from any business or other
relationship which could materially interfere with the exercise of their
independent judgment. The Directors have a combination of financial and
business expertise which is suited to the nature of the Company.

Code of Best Practice – Principles

RM Statement of compliance

Appointments to the Board

There should be a formal, rigorous and transparent
procedure for the appointment of new directors to
the board.

Commitment

All directors should be able to allocate sufficient
time to the company to discharge their
responsibilities effectively.

Development

A separate Nomination Committee, comprised of all Non-Executive Directors,
including the Chairman, is responsible for identifying and nominating
candidates to fill Board vacancies. While the Chairman chairs the
Nomination Committee, the Senior Independent Director would do so if the
Committee was dealing with the appointment of a new Chairman.

An external search consultancy, which had no other connection to the
Company (other than in relation to similar previous appointments),
was appointed during the year to assist with the appointment of a new
Non-Executive Director. That appointment has not yet been made.

The Board ensures that on appointment and thereafter all Directors have
sufficient time to carry out their duties.

All directors should receive induction on joining the
board and should regularly update and refresh their skills
and knowledge.

All Directors receive an induction on joining the Board. All Directors
have extensive experience and possess relevant skills and knowledge
to perform their duties.

Information and Support

The board should be supplied in a timely manner with
information in a form and of a quality appropriate to
enable it to discharge its duties.

The Board is supplied with monthly management accounts and detailed
operational reviews. The Board is also informed of any key developments
or issues that require their consideration as and when they arise and
management ensures that further information and/or clarification is
provided to the Board as required from time to time.

All Directors have access to the advice and services of the Company Secretary
or suitably qualified alternative, and all the Directors are able to take
independent professional advice, if necessary, at the Company’s expense.
All Directors are also invited to attend meetings of the Executive Committee
and have access to managers within the Group.

Evaluation

The board should undertake a formal and rigorous
annual evaluation of its own performance and that of its
committees and individual directors.

The performance of the Board and each Board Committee is reviewed
on an annual basis and a review was conducted during the year ended
30 November 2018.

The performance of the Chairman is assessed by the Non-Executive Directors
led by the Senior Independent Director. The Senior Independent Director
also meets with the Non-Executive Directors without the Chairman being
present on such other occasions as considered appropriate.

The performance of the Chief Executive Officer is assessed by the Chairman,
in consultation with the other Non-Executive Directors. The performance
of the Chief Financial Officer is assessed by the Chief Executive Officer, in
consultation with the Chairman and other Non-Executive Directors.

The Chairman also holds meetings with the Non-Executive Directors without
the Executive Directors present when considered appropriate.

All Directors are appointed for specific terms subject to annual re-election by
shareholders at each Annual General Meeting.

Re-election

All directors should be submitted for re-election
at regular intervals, subject to continued
satisfactory performance.

GOVERNANCECode of Best Practice – Principles

RM Statement of compliance

ACCOUNTABILITY

Financial and Business Reporting

The board should present a fair, balanced and
understandable assessment of the company’s position
and prospects.

In preparing the Annual Report, the Directors consider that they present a
fair, balanced and understandable assessment of the Group’s performance
and position and provide appropriate guidance on its future prospects.
The Company’s strategy is summarised in the Strategic Report.

Risk Management and Internal Control

The board is responsible for determining the nature
and extent of the principal risks it is willing to take in
achieving its strategic objectives. The board should
maintain sound risk management and internal
control systems.

The Company operates a risk management and internal control process,
further details of which are given elsewhere in this Report. The control
environment addresses, inter alia, financial, operational and compliance
matters. These processes are reviewed at least on an annual basis.
Further details are provided in the Audit Committee Report.

The Directors confirm that they have carried out a robust assessment of the
principal risks facing the Company.

The Strategic Report sets out further details of those risks and provides a
summary as to how they are managed or mitigated. Having carried out that
assessment, the Directors have a reasonable expectation that the Company
will be able to continue in operation and meet its liabilities as they fall due.
Further details of that assessment are provided in the Strategic Report.

Audit Committee and Auditors

The board should establish formal and transparent
arrangements for considering how they should apply
the corporate reporting, risk management and internal
control principles and for maintaining an appropriate
relationship with the company’s auditors.

The Audit Committee is comprised of Non-Executive Directors and meets at
least three times a year. The Chief Executive Officer, Chief Financial Officer
and other members of the internal finance team and internal audit are
invited to attend. The Audit Committee meets separately with the Company’s
auditor without the Executive Directors present. Further details are set out
below and in the Audit Committee Report.

REMUNERATION

The Level and Components of Remuneration

Executive directors’ remuneration should be designed
to promote the long-term success of the company.
Performance-related elements should be transparent,
stretching and rigorously applied.

The Remuneration Committee carefully considers the elements of
remuneration paid to the Executive Directors and the basis on which they
are paid. In all cases, remuneration is designed to promote the long-term
success of the Company. The Remuneration Report sets out further details.

Procedure

There should be a formal and transparent procedure for
developing policy on executive remuneration and for
fixing the remuneration packages of individual directors.
No director should be involved in deciding his or her
own remuneration.

During the period, neither the Chief Executive Officer nor the Chief Financial
Officer held any Non-Executive positions with other companies.

Remuneration packages for individual Directors are set by the Remuneration
Committee after, if required, receiving information from independent sources
and the Company’s Human Resources function. Further details are provided
in the Remuneration Report.

The Chief Executive Officer and Chief Financial Officer may be invited to
attend the Committee’s meetings but are not involved in deciding their own
remuneration. The Chairman of the Remuneration Committee is available to
discuss remuneration with shareholders as required.

Code of Best Practice – Principles

RM Statement of compliance

RELATIONS WITH SHAREHOLDERS

Dialogue with Shareholders

There should be a dialogue with shareholders based on
the mutual understanding of objectives. The board as a
whole has responsibility for ensuring that a satisfactory
dialogue with shareholders takes place.

The Chief Executive Officer and Chief Financial Officer offer meetings
with major shareholders at least twice a year after the announcement of
preliminary full year and interim results. The Chairman also meets with
shareholders, as appropriate.

Deena Mattar, Senior Independent Director, is available to shareholders
if they have concerns which contact through the normal channels has
failed to resolve.

All Non-Executive Directors are available to meet institutional shareholders
on an ad hoc basis.

The Board is kept appraised of the views of major shareholders through
regular dialogue with its brokers and other advisors and from feedback
provided by the Executive Directors and Chairman respectively, following
meetings held with shareholders.

Constructive Use of General Meetings

The board should use general meetings to communicate
with investors and to encourage their participation.

All Directors make themselves available at the Annual General Meeting to
respond to any questions raised by the investors in attendance.

The Company complies with all of the requirements of the Code in relation to
the timing and operation of all Annual General Meetings.

B O A R D O F D I R E C T O R S

The Board of Directors meets regularly to review strategic, operational and financial matters, including proposed acquisitions and
divestments, and has a formal schedule of matters reserved to it for decision. Those matters include the approval of interim and
annual financial statements, the annual budget, significant Stock Exchange announcements, significant contracts and capital
investment, in addition to reviewing the effectiveness of the internal control systems and business risks faced by the Group.
Where appropriate, it has delegated authority to committees of Directors.

B O A R D C O M M I T T E E S

There are three Board committees: Audit, Remuneration and Nomination, each of which comprises only independent
Non-Executive Directors.

The Audit Committee is chaired by Deena Mattar. Ms Mattar has considerable financial experience and expertise as further
outlined in the Directors’ Biographies section of this Annual Report. The Audit Committee is comprised solely of independent
Non-Executive Directors. The Audit Committee meets at least three times a year. The Company’s external auditor,
Chief Executive Officer, Chief Financial Officer, Company Secretary and Group Financial Controller, who is Head of Internal Audit,
normally attend these meetings. The Audit Committee is responsible for reviewing the accounting policies, internal control
environment and the financial information contained in the annual and interim reports. The Audit Committee also reviews
the arrangements by which staff may, in confidence, raise concerns about possible improprieties, whether of a financial nature
or otherwise. The Committee provides an opportunity for the Non-Executive Directors to make independent judgments and
contributions, thus furthering the effectiveness of RM’s internal controls. Further details of the Audit Committee’s activities are given
in the Audit Committee Report. The terms of reference for the Audit Committee are published on www.rmplc.com.

The Remuneration Committee is chaired by Patrick Martell. The Remuneration Committee is comprised solely of independent
Non-Executive Directors. Executive Directors and senior managers may be invited to attend Committee meetings but will not be
present during any discussion of their own pay arrangements. The Remuneration Committee sets the remuneration of the Executive
Directors and recommends and monitors the level and structure of remuneration for senior management. It also considers grants and
performance conditions under RM’s share-based payment schemes and reviews RM’s employment strategy generally.

GOVERNANCEFurther details of the Remuneration Committee’s activities are given in the Remuneration Report. The terms of reference for the
Remuneration Committee are published on www.rmplc.com.

The Nomination Committee is chaired by the Chairman and includes all of the independent Non-Executive Directors. The Nomination
Committee recommends to the Board candidates for appointment as Directors. It meets as required, when the Group is considering
the appointment of Directors. The terms of reference for the Nomination Committee are published on www.rmplc.com.

D I V E R S I T Y P O L I C Y

The Company recognises that talented people are core to the success of the business, whatever their age, race, gender, religious or
philosophical belief, sexual orientation, physical ability or educational background. The Company is committed to promoting a culture
of equal opportunity and diversity through a range of policies, procedures and working practices. The Company wants to ensure that
all employees receive fair and equal treatment, and this applies to recruitment and selection, terms and conditions of employment,
promotion, training, development opportunities and employment benefits.

The Board has chosen not to set specific representation targets (whether for gender, race or otherwise) at Board level, although it does
have due regard to the benefits of diversity within the overriding objective of ensuring that its membership has the appropriate balance
of skills, experience and independence.

B O A R D A T T E N D A N C E

Details of the number of meetings of the Board and each Committee and individual attendances by Directors are set out in the
table below.

Number of meetings held in the period

John Poulter

Andy Blundell

David Brooks

Patrick Martell

Neil Martin

Deena Mattar

Board
Meetings

Audit
Committee

Remuneration
Committee

Nomination
Committee

E X E C U T I V E C O M M I T T E E

The Executive Committee is chaired by the Chief Executive Officer. The Executive Committee comprises the Chief Executive Officer,
Chief Financial Officer and other senior managers within the Group. The Executive Committee normally meets on a monthly basis to
discuss policy and operational issues. Those issues outside the delegated authority levels set by the Board are referred to the Board for
its decision. All Non-Executive Directors are invited to attend the Executive Committee.

R E L A T I O N S W I T H S H A R E H O L D E R S

In order to maintain dialogue with institutional shareholders, the Executive Directors offer to meet with them following interim and
final results announcements, or otherwise, as appropriate. Other Directors are available to meet institutional shareholders on request.
The Annual Report is made available on the Company’s website (www.rmplc.com), and sent to shareholders, as appropriate, at least
21 days before the Annual General Meeting. Each issue for consideration at the Annual General Meeting is proposed as a separate
resolution. All Directors generally attend the Annual General Meeting.

S O C I A L , E T H I C A L A N D
E N V I R O N M E N T A L I S S U E S

• The establishment of appropriate operating and

financial policies.

The Board takes regular account of the significance of
social, ethical and environmental (‘SEE’) matters related to
the Group’s business of providing IT services and solutions
(including software, managed services and consultancy) to
educational institutions.

The Board considers that it has received adequate
information to enable it to assess significant risks to the
Company’s short and long-term value arising from SEE
matters and has concluded that the risks associated
with SEE matters are minimal. The Board will continue
to monitor those risks on an ongoing basis and will
implement appropriate policies and procedures if those
risks become significant.

I N T E R N A L C O N T R O L

The Group maintains an ongoing process in respect of
internal control to safeguard shareholders’ investments and
the Group’s assets and to facilitate the effective and efficient
operation of the Group.

These processes enable the Group to respond appropriately,
and in a timely fashion, to significant business, operational,
financial, compliance and other risks, in line with the Code,
which may otherwise prevent the achievement of the
Group’s objectives.

The Group recognises that it operates in a highly competitive
market that can be affected by factors and events outside
its control. Details of the main risks faced by the Group are
set out in the “Principal Risks and Uncertainties” table in the
Strategic Report. It is committed to mitigating risks arising
wherever possible. Internal controls that are considered,
applied and monitored appropriately, are an essential tool in
achieving this objective.

The key elements of Group internal control, which have been
effective during 2018 and up to the date of approval of the
financial statements are set out below:

• The existence of a clear organisational structure

with defined lines of responsibility and delegation of
authority from the Board to its Executive Directors and
operating divisions.

• A procedure for the regular review of reporting business

issues and risks by operating divisions.

• Regular review meetings with the operating management.

• A planning and management reporting system operated

by each division and the Executive Directors.

The Directors have overall responsibility for establishing
financial and other reporting procedures to provide them
with a reasonable basis on which to make proper judgments
as to the financial position and prospects of the Group, and
have responsibility for establishing the Group’s system of
internal control and for monitoring its effectiveness. The
Group’s systems are designed to provide Directors with
reasonable assurance that physical and financial assets
are safeguarded, transactions are authorised and properly
recorded and material errors and irregularities are either
prevented or detected with the minimum of delay. However,
systems of internal financial control can provide only
reasonable and not absolute assurance against material
misstatement or loss.

The key features of the systems of internal financial control
include:

• A financial planning process with an annual budget

approved by the Board, which budget is regularly updated
providing an updated forecast for the year.

• Monthly comparison of actual results against budget.

• Written procedures detailing operational and financial

internal control policies which are reviewed on a
regular basis.

• Regular reporting to the Board on treasury and

legal matters.

• Defined investment control guidelines and procedures.

• Regular reviews by the Executive Committee of the Group’s
systems and procedures, the principal risks facing the
Company and the steps taken to mitigate and address
those risks.

• Periodic reviews by the Audit Committee of the principal
risks facing the Company and mitigating actions as noted
above, as well as of the Group’s systems and procedures to
identify and address those risks.

The majority of the Group’s financial and management
information is processed and stored on computer
systems. The Group is dependent on systems that require
sophisticated computer networks. The Group has established
controls and procedures over the security of data held on
such systems, including business continuity arrangements.

Both the Board and Audit Committee have reviewed the
operation and effectiveness of this framework of internal
control for the period and up to the date of approval of the
Annual Report.

GOVERNANCE41

A U D I T C O M M I T T E E R E P O R T

The Audit Committee operates under terms of reference
approved by the Board, with the purposes of:

• Monitoring the integrity of the financial statements of the

Company and the Group.

• Reviewing the adequacy and effectiveness of the Group’s
internal financial controls and risk management systems.

• Reviewing and agreeing the Group’s adoption of
going concern, and the adequacy of the financial
viability statement.

• Reviewing the adequacy and security of the Group’s
arrangements for whistleblowing, the procedures for
detecting fraud and the systems and controls for the
prevention of bribery and the reporting of non-compliance.

• Monitoring and reviewing the effectiveness of the Group’s
internal audit processes, the remit of internal audit and
its operations.

• Considering and making recommendations on matters
relating to the appointment of the Company’s external
auditor, overseeing the relationship with the Company’s
external auditor (including recommending remuneration
levels and considering non-audit services), assessing the
auditor’s independence and objectivity, monitoring the
quality and effectiveness of the external audit process,
reviewing the audit plan and reviewing the findings of the
audit with the Company’s auditor.

F I N A N C I A L S T A T E M E N T S

The Audit Committee reviewed the form and content of
the Annual Report and the interim results prior to their
publication to provide assurance that the disclosure made in
the financial statements was properly set in context.

The Audit Committee reviewed and considered the
following areas:

• The methods used to account for significant or unusual
transactions where different approaches are possible.

• Whether the Group has followed appropriate accounting

standards and made appropriate estimates and judgements,
taking into account the views of the Company’s auditor.

• The consistency of, and any changes to, accounting

policies both on a year-on-year basis and across the Group.

• The clarity of disclosure in the Company’s financial reports.

• The effect of the proposed introduction of IFRS 15 on the

future accounts of the Group.

As part of this process the Audit Committee received reports
from the Company’s management and the external auditor.
The external auditor provided its audit opinion along with its
audit findings that were of significance in relation to the audit
of the annual financial statements and a high-level review
of the interim financial statements. The Audit Committee
reviewed these reports with the external auditor.

The Audit Committee considers that the significant
accounting judgements upon which the accounts are based
relate primarily to long-term contract accounting and the
related margin recognition.

GOVERNANCELong-term contracts represent a significant part of
the Group’s business and the accounting is inherently
judgemental. To determine the margin to be recognised
or loss to be provided, it is necessary to estimate future
costs and revenues. Also, the Group may sign variations,
extensions and/or new contracts with an existing customer
and it is necessary to assess whether or not, for accounting
purposes, these should be combined with an existing
contract, or treated as a separate contract.

Monthly management accounts and reports are provided
to the Board. These management accounts are based on
detailed information obtained by management which take
into account the following:

• The forecast costs and revenues to complete on contracts

and the margin to recognise or loss to be provided.

• Contract variations and extensions and whether

they should be combined with existing contractual
arrangements and their impact on recognised revenue
and margin.

Where a contract has a significant impact on revenue
and profit or where there is a significant variation to
the contract outturn or a significant judgement is
required, this information is typically included in the
management accounts and discussed by the Board and
the Audit Committee. On a quarterly basis the results to date
and forecast of each significant contract is included in the
Board papers.

Management reported to the Audit Committee that they
were not aware of any material misstatements. The auditor
reported to the Audit Committee that they had not found
any material misstatements in the course of their work.
The Audit Committee was also satisfied that the significant
assumptions used for determining the value of assets and
liabilities had been appropriately scrutinised, challenged and
were sufficiently robust.

The Audit Committee considered and is satisfied that, taken
as a whole, the Annual Report 2018 is fair, balanced and
understandable and provides the information necessary for
shareholders to assess the Group’s performance, business
model and strategy.

C O M P O S I T I O N A N D Q U A L I F I C A T I O N S
O F T H E A U D I T C O M M I T T E E

During the year ended 30 November 2018, the Audit
Committee comprised Deena Mattar BSc (Econ), FCA
(Chairman), John Poulter, Andy Blundell and Patrick Martell,
all of whom are independent Non-Executive Directors.
The Group considers that Deena Mattar as a Fellow of the
Institute of Chartered Accountants in England and Wales
and former FTSE250 Finance Director has significant recent
and relevant financial experience, as further described in the
Directors’ Biographies section of this Annual Report.

The External Auditor (KPMG), David Brooks (Chief Executive
Officer), Neil Martin, ACMA (Chief Financial Officer),
Tim Caufield, ACA (Interim Group Financial Controller
to 10 January 2018), Jo Bridgman ACA (Group Financial
Controller from 23 February 2018) and other management are
invited to attend Audit Committee meetings as appropriate.

S C H E D U L E O F M E E T I N G S

The Audit Committee met three times during the period. All of
these meetings were part of the regular schedule of meetings
set out in the Committee’s terms of reference.

Audit Committee meetings have formal agendas, which cover
all of the areas of responsibility set out in the Committee’s
terms of reference. These agendas include meetings with the
external auditor without Executive Directors or managers of
the Company present.

A P P O I N T M E N T O F
E X T E R N A L A U D I T O R

The Audit Committee recommended, and shareholders
approved at the Company’s Annual General Meeting on
21 March 2018, the re-appointment of KPMG LLP as Group
external auditor.

KPMG has been the Group’s auditor since 2011 which was
when the last audit tender was conducted. The external
auditor is required to rotate the audit partner responsible
for the Group audit every five years and, as such, a new lead
audit partner (John Bennett) was appointed in 2016.

There are no contractual obligations restricting the Group’s
choice of external auditor.

Fees for non-audit work in the period were 6.2% of the annual
audit fee, which relates to the Banking facility Covenant
Compliance review and the interim review. These activities
are required to be performed by the Auditor.

I N T E R N A L C O N T R O L

Control environment

The Board has put in place an organisational structure with
clearly defined lines of responsibility and delegation of
authority to Executive management. A Group-wide approval
matrix is in place. Individuals are made aware of their level of
authority and their budgetary responsibility which enables
them to identify and monitor financial performance. There
are established policies and procedures, which are subject to
regular review and, following the acquisition of Consortium
in June 2017, those reviews involved aligning the governance
framework in that business with the governance framework
in operation elsewhere in the Group. The Boards of the
operating companies work within terms of reference and any
matters outside those terms or the agreed business plan are
referred to the Group Board for approval.

Identification and evaluation of
business risks and control objectives

The Board has the primary responsibility for identifying the
principal business risks facing the Group and developing
appropriate policies to manage those risks. It delegates
responsibility for operational risks to the Executive Committee
which meets monthly. Further details in relation to the
processes for identifying and managing Group risks are set out
in the Strategic Report and Corporate Governance Report.

Public reporting

The Audit Committee reviews and comments upon both the
Group’s annual and interim results prepared by management,
together with any other trading statements that are made.

Management information

Executive managers are required to produce a budget for
approval at the beginning of each financial year and detailed
financial reporting is formally compiled monthly and
reviewed by the Board. Consolidated management accounts
are produced each month and results measured against
budget and the previous year to identify significant variances.
Forecasts are produced each month during the year, with
variances to budget being measured.

O V E R S I G H T O F E X T E R N A L A U D I T

The Audit Committee has reviewed the scope and results
of the audit services, and the cost effectiveness and
independence and objectivity of the external auditor.
This includes discussions with the external auditor in relation
to areas of key focus and ensuring that the external auditor
challenges management appropriately, in particular in
relation to matters that require judgement to be exercised.
Separately, the external auditor briefs the Committee on new
developments that may affect the Company to help ensure
that the Company is suitably prepared and up-to-date with
all new and forthcoming accounting developments and
disclosures (e.g. IFRS 15).

I N T E R N A L A U D I T

The Audit Committee approved the appointment of
RM’s Group Financial Controller as Head of Internal Audit
(Tim Caufield ACA, Interim Group Financial Controller
(to 10 January 2018) and Jo Bridgman, Group Financial
Controller (from 23 February 2018)). For the purposes of this
role, the Group Financial Controller reported directly to the
Chairman of the Audit Committee. The Audit Committee,
with the advice and support of the Head of Internal Audit,
sets an internal audit plan, focused on financial controls
and risk areas. The Head of Internal Audit reports on
progress against this plan at Audit Committee meetings.
Internal audit activities are undertaken on a peer-to-peer
basis, or by contracting a suitably qualified third-party firm
of accountants.

P O L I C Y O N N O N - A U D I T W O R K

The Audit Committee has considered the issue of the
provision of non-audit work by the external auditor and has
agreed a policy intended to ensure that the objectivity of the
external auditor is not compromised. The policy sets a limit
for fees for non-audit work and states that non-audit work
should only be undertaken by the external auditor where
there is a clear commercial benefit in doing so. Any significant
activity must be approved, in advance, by at least two Audit
Committee members.

The Audit Committee’s policy is to include a cap on fees
for non-audit work of 25% of the annual audit fee. This
fee incorporates a review of the Group’s interim results. In
exceptional circumstances it may be appropriate for the
auditor to carry out non-audit work in excess of this cap. If
this is the case the type of work and the fee is considered very
carefully by the Audit Committee in advance of appointing
the auditor to the work.

GOVERNANCEMain control procedures

S T A T E M E N T O F R I S K S

As with any business, RM is exposed to risks as an inherent
part of creating value for shareholders. As described above,
the Group has put in place processes designed to identify
these principal risks and to manage and mitigate the effect of
them. The Audit Committee is responsible for ensuring that
risks are properly considered and the Board is responsible for
deciding what risks should be taken and how best to manage
and mitigate the risks.

The Audit Committee is satisfied that the Group’s risk
management and internal control processes are appropriate
to the business and Executive management has identified
and addressed the principal risks affecting RM.

The most significant risks the Group is exposed to are set out
in the Strategic Report.

Deena Mattar
Chairman, Audit Committee
4 February 2019

The existing finance systems and procedures allow the Board
to derive confidence in the completeness and accuracy
of the recording of financial transactions. The processes
in place and the level of analytical detail given within
the management accounts facilitate the identification of
unreliable data. The Group’s treasury activities are operated
within a defined policy designed to control the Group’s
cash and to minimise its exposure to foreign exchange
and liquidity risk.

Monitoring

The Audit Committee meets periodically to review reports
from management and the external auditor so as to derive
reasonable assurance on behalf of the Board that financial
control procedures are in place and operate effectively.
An internal audit plan is set with the Audit Committee and
updates on progress are provided periodically. The internal
audit work is performed on a peer-to-peer review basis
or by engaging a third-party firm of accountants and is
directed by a qualified accountant who is independent of
the business divisions.

‘ W H I S T L E B L O W I N G ’ P O L I C Y

The Group has adopted a formal ‘whistleblowing’ policy,
which allows staff to raise concerns about possible
improprieties. No concerns were raised during the year.

A N T I - B R I B E R Y

RM conducts all its business in an honest and ethical manner
and seeks to ensure that all associates and business partners
do the same.

The Bribery Act 2010 sets clear standards of behaviour, which
govern the Group’s operations. The Group has implemented
policies and procedures to ensure that it is transparent
and ethical in all business dealings. The Group has an
anti-corruption and anti-bribery policy which sets out the
legal standards the Group enforces as part of its ongoing
commitment to implement adequate procedures to guard
against illegal practices. Staff certification of compliance with
the policy is regularly reported to the Committee.

R E M U N E R A T I O N R E P O R T

P A R T A - I N T R O D U C T I O N

On behalf of the Board, I am pleased to present the
Remuneration Report for the year ended 30 November 2018.

This Report is divided into the following three sections:

Part A – Introduction
Part B – Remuneration Policy
Part C – Implementation Report

The introduction in this Part A provides an overview
of the Report, the functioning and membership of the
Remuneration Committee, key decisions taken during the
year and the remuneration outcomes for the year ended
30 November 2018.

1 . T H E R E M U N E R A T I O N C O M M I T T E E

The Committee operates under terms of reference
approved by the Board with the purposes of determining,
on behalf of the Board and shareholders, the remuneration
of the Executive Directors and senior employees across the
Group. The Committee also oversees major policy changes
(if any) to the overall reward structure of employees
throughout the Group. In particular, the Committee
keeps under review incentive plans so as to ensure these
plans are structured appropriately and are consistent.
The Committee’s terms of reference can be found on the
Group’s website at www.rmplc.com.

2 . M E M B E R S H I P O F T H E C O M M I T T E E

The membership of the Remuneration Committee during
the year ended 30 November 2018 comprised Patrick Martell
(Chairman), Andy Blundell, Deena Mattar and John Poulter,
all of whom are independent Non-Executive Directors.
The other Directors attend meetings as and when required
and by invitation.

None of the members of the Remuneration Committee
has any personal financial interest in the Company other
than through fees received or as a shareholder. They are
not involved in the day-to-day running of the business and
have no personal conflicts of interest which could materially
interfere with the exercise of their independent judgement.

3 . M A J O R D E C I S I O N S O N
D I R E C T O R S ’ R E M U N E R A T I O N

During the year, the following key decisions were considered
by the Committee:

• Agreement of the bonuses payable in respect of the

financial year ended 30 November 2017.

• Approval of the Remuneration Report for the year ended 30

November 2017.

• The grant of LTIP awards to senior executives in March 2018.

4 . R E M U N E R A T I O N O U T C O M E S F O R
T H E Y E A R

The key remuneration outcomes during or in relation to the
year ended 30 November 2018 were as follows:

•

In August 2018, the LTIP award granted in August 2015
vested in full. The vesting of that award was subject to the
Company’s relative TSR performance as compared to the
FTSE SmallCap (ex IT) index (the “Comparator Group”) over
the 3-year period from May/June 2015 to May/June 2018.
The Company’s relative TSR performance placed it in the
81st percentile as compared to the Comparator Group.
Vesting was based on a straight line scale between 25%
vesting at the 50th percentile and 100% vesting at the 75th
percentile (or above). Based on the Company’s relative
performance, all of the award vested. The Committee
applied no discretion.

In October 2018, the LTIP award granted in October 2015
vested in part. The vesting of that award was subject to
the Company’s relative TSR performance as compared to
the FTSE SmallCap (ex IT) index (the “Comparator Group”)
over the 3-year period from July/August 2015 to July/
August 2018. The Company’s relative TSR performance
placed it in the 73rd percentile as compared to the
Comparator Group. Vesting was based on a straight line
scale between 25% vesting at the 50th percentile and
100% vesting at the 75th percentile (or above). Based on
the Company’s relative performance, 95% of the award
vested. The Committee applied no discretion.

GOVERNANCE

Under these arrangements, the variable component of
the remuneration package is designed to be focused on
performance. These incentive arrangements enable Executive
Directors and senior employees to have the opportunity to
earn higher levels of reward if they enhance shareholder
returns by meeting the Group’s short-term and long-term
targets. The Remuneration Policy therefore seeks to ensure
that Executive Directors and senior employees are focused
on the achievement of key Company objectives. The
Committee is satisfied that this model provides appropriate
alignment with shareholder interests and therefore acts as an
appropriate motivator.

The Committee, together with the entire Board, recognises the
need for investment in the long-term future of the Company,
not just performance in any single year. Since such measures
are difficult to quantify, the Committee retains the discretion
to adjust annual bonus payments and/or LTIPs to ensure that
the balance of incentives is maintained between short-term
performance and longer-term investment, provided that if
any discretion is exercised all payments remain subject to the
limits and other constraints set out in this Policy.

The Committee has reviewed the level of risk inherent in
the Remuneration Policy and is satisfied that there is an
appropriate balance between encouraging entrepreneurial
behaviour from Executive Directors and senior employees,
and ensuring that there are no areas of the Policy which
encourage undue risk taking. In relation to the target setting
process and other matters arising in relation to the operation
of the annual bonus and long-term incentive plans, the
Committee considers that the structure does not encourage
excessive risk-taking.

2 . C O M P O N E N T S O F R E M U N E R A T I O N
F O R E X E C U T I V E D I R E C T O R S

The following table sets out a summary of the various
components of remuneration for Executive Directors,
their purpose and link to strategy, how it operates, the
maximum opportunity available, the nature of any
applicable performance metrics and changes (if any)
made during the year.

•

In relation to annual bonuses for the year ended
30 November 2018, the Committee considered the
Company’s performance relative to the targets set at the
start of the year. Group adjusted operating profit before
tax was £26.0m, as compared to a target of £24.4m. In
light of that performance, the Committee considered
it appropriate to set the bonus payable for each of the
Executive Directors at 70% of base salary.

5 . N E W P E R F O R M A N C E S H A R E P L A N

The Company's existing RM plc Performance Share Plan 2010
(“PSP Scheme”) will shortly be coming up to its ten year
anniversary and, accordingly, shareholders' approval will
be sought at the Annual General Meeting on 27 March 2019
to a new LTIP, the RM plc Performance Share Plan 2019
("New PSP"). The New PSP is materially the same as the PSP
Scheme and, in particular, has the same malus and clawback
conditions and post-vesting holding periods for Directors as
referred to in the Remuneration Report.

The Committee considers that the overall pay outcome for
the year ended 30 November 2018 is justified given the overall
performance of the business, taking into account its future
prospects and position.

Patrick Martell
Chairman, Remuneration Committee
4 February 2019

P A R T B – R E M U N E R A T I O N

P O L I C Y

1 . G E N E R A L O B J E C T I V E S

The Remuneration Committee is responsible for the
remuneration of the Directors and oversight of the
remuneration arrangements for senior employees across
the Group.

RM’s Remuneration Policy is designed to promote the
long-term success of the Company. The Policy is designed to
attract, retain and motivate Directors and senior employees,
both to achieve the Group’s business objectives and to deliver
sustained shareholder returns, while also being conscious of
the wider climate in relation to executive pay. This includes
the perceptions of a range of stakeholders, such as the wider
workforce, customers and external commentators. The Policy
should ensure that the payments made to Executives reflect
their performance and, in particular, are not excessive.

Purpose and link to strategy

Operation

Maximum Opportunity

Performance Metrics

Changes for 2018/19

To attract and retain
talent by ensuring that
salaries are competitive
in the market.

Base salaries will be set on appointment at the appropriate level required to
fill the role.

If there is a probationary period following appointment, the base salary
may increase as appropriate following successful completion of that
probationary period.

Thereafter, base salaries will generally only be increased in line with the
increases in pay for the wider workforce (either across single or multiple years),
except as justified by other circumstances.

Entitlement is the same as for other employees within the Group.
Cash allowance alternative where individuals are subject to HMRC
pension limits (subject to there being the same overall cost to the Group).

Pension benefits will not be augmented on exit.

The range of benefits is the same as for other employees within the Group.
The range of benefits offered to employees is reviewed periodically to ensure
that offerings are in line with market practice.

To attract and retain
talent by ensuring
that remuneration is
competitive in the market.

Base salaries will be determined as outlined in the

None.

“Operation” column opposite.

Up to 7% of base salary depending upon level of

None.

employee contribution.

None.

Private healthcare.

Group income protection.

Life assurance.

Car allowance.

Mobile phone allowance.

Other benefits may be added if also

available to any other employees.

None.

Element

Fixed Pay

Base Salary
(see also
note 1 below)

Pension
(see also
note 2 below)

Benefits

GOVERNANCEElement

Fixed Pay

Base Salary

(see also

note 1 below)

Purpose and link to strategy

Operation

Maximum Opportunity

Performance Metrics

Changes for 2018/19

To attract and retain

Base salaries will be set on appointment at the appropriate level required to

Base salaries will be determined as outlined in the
“Operation” column opposite.

None.

talent by ensuring that

fill the role.

salaries are competitive

in the market.

If there is a probationary period following appointment, the base salary

may increase as appropriate following successful completion of that

probationary period.

Thereafter, base salaries will generally only be increased in line with the

increases in pay for the wider workforce (either across single or multiple years),

except as justified by other circumstances.

Pension

(see also

To attract and retain

Entitlement is the same as for other employees within the Group.

talent by ensuring

Cash allowance alternative where individuals are subject to HMRC

note 2 below)

that remuneration is

pension limits (subject to there being the same overall cost to the Group).

competitive in the market.

Pension benefits will not be augmented on exit.

Up to 7% of base salary depending upon level of
employee contribution.

None.

Benefits

To attract and retain

The range of benefits is the same as for other employees within the Group.

Private healthcare.

None.

talent by ensuring

The range of benefits offered to employees is reviewed periodically to ensure

that remuneration is

that offerings are in line with market practice.

competitive in the market.

Group income protection.

Life assurance.

Car allowance.

Mobile phone allowance.

Other benefits may be added if also
available to any other employees.

Element

Variable Pay

Annual Bonus

Purpose and link to strategy

Operation

Maximum Opportunity

Performance Metrics

Changes for 2018/19

Provides an element
of at risk pay, which
incentivises good annual
financial results.

Members of the Committee keep the performance of the business under
continuous review, through regular financial and business reporting and these
reviews feed directly into annual and 3-yearly financial and strategic planning.

55% of base salary for on-target performance, with

Set by the Committee at the beginning of each year as

None.

a maximum figure for over-performance of 110% of

outlined in the “Operation” column opposite.

base salary.

Details of performance targets will be

Formal reviews are then conducted to ensure that targets are set that support
short-term and long-term business strategy with such targets being intended to:

At threshold performance, bonuses will be paid at

disclosed retrospectively in the following year’s

no more than 20% of the maximum opportunity.

Remuneration Report.

LTIPs

Incentivises Directors
to achieve returns for
shareholders over a
longer time frame.

• be stretching but realistic;

•

reflect expectations of the investor community;

• avoid unnecessary risk-taking; and

• encourage long-term planning and decision-making.

Awards are granted to Executives and senior management typically no more
than once per year, with the vesting of awards being based on criteria designed
to align with shareholder interests and encourage long-term performance.

Where LTIP awards vest, a post-vesting holding period of 2 years will apply
(save that Directors may sell sufficient shares on vesting/exercise to satisfy
the income tax/National Insurance liability that arises). Once LTIPs have
vested/been exercised, dividends or dividend equivalents can be paid on the
relevant shares.

LTIP awards are not pensionable.

LTIP awards are subject to malus and clawback provisions (see further below).

LTIP awards will not automatically vest on a change in control of the Company.
In relation to any such change in control, an assessment will be made as to the
level of vesting (if any) that is appropriate, taking into account (among other
things) the extent to which the relevant performance targets have been met, as
well as how much of the relevant performance period(s) has passed.

Any bonuses in excess of 100% of base salary will

If personal targets are set, those targets will be subject

be paid in the form of shares that must be held for

to an underpin based on Company performance.

a minimum of 2 years.

Annual bonuses are not pensionable.

Annual bonuses are subject to malus and

clawback provisions (see further below).

150% of base salary.

Set by the Committee at the date of grant to align with

None.

shareholders’ interests.

The vesting period for LTIPs will be a minimum of

3 years.

Details of performance targets will be disclosed

retrospectively in the Remuneration Report following

the year in which LTIPs are granted. (See note 3 below)

At threshold performance, no more than 25% of the

award will vest.

All targets will be subject to an underpin based on the

underlying performance of the Company.

Notes:

1. Since the end of the financial year, having applied the principles set out in the table above, the Committee has increased the

base salary of David Brooks to £365,000 and Neil Martin to £297,762, with effect from 1 February 2019.

2. Group company RM Education Ltd operates a defined benefit pension scheme. This closed to new members in 2003 and,

in respect of current members, closed to future accrual of benefits on 31 October 2012. David Brooks, CEO, has past benefits
accrued as at 31 October 2012. His entitlements under that scheme are calculated on the same basis as those of other members.
Since 1 November 2012, Mr Brooks has been a member of a defined contribution pension scheme.

GOVERNANCEPurpose and link to strategy

Operation

Maximum Opportunity

Performance Metrics

Changes for 2018/19

55% of base salary for on-target performance, with
a maximum figure for over-performance of 110% of
base salary.

At threshold performance, bonuses will be paid at
no more than 20% of the maximum opportunity.

Any bonuses in excess of 100% of base salary will
be paid in the form of shares that must be held for
a minimum of 2 years.

Annual bonuses are not pensionable.

Annual bonuses are subject to malus and
clawback provisions (see further below).

Set by the Committee at the beginning of each year as
outlined in the “Operation” column opposite.

None.

Details of performance targets will be
disclosed retrospectively in the following year’s
Remuneration Report.

If personal targets are set, those targets will be subject
to an underpin based on Company performance.

LTIPs

Awards are granted to Executives and senior management typically no more

150% of base salary.

Incentivises Directors

to achieve returns for

shareholders over a

longer time frame.

Set by the Committee at the date of grant to align with
shareholders’ interests.

None.

The vesting period for LTIPs will be a minimum of
3 years.

Details of performance targets will be disclosed
retrospectively in the Remuneration Report following
the year in which LTIPs are granted. (See note 3 below)

At threshold performance, no more than 25% of the
award will vest.

All targets will be subject to an underpin based on the
underlying performance of the Company.

Element

Variable Pay

Annual Bonus

Provides an element

of at risk pay, which

Members of the Committee keep the performance of the business under

continuous review, through regular financial and business reporting and these

incentivises good annual

reviews feed directly into annual and 3-yearly financial and strategic planning.

financial results.

Formal reviews are then conducted to ensure that targets are set that support

short-term and long-term business strategy with such targets being intended to:

• be stretching but realistic;

•

reflect expectations of the investor community;

• avoid unnecessary risk-taking; and

• encourage long-term planning and decision-making.

than once per year, with the vesting of awards being based on criteria designed

to align with shareholder interests and encourage long-term performance.

Where LTIP awards vest, a post-vesting holding period of 2 years will apply

(save that Directors may sell sufficient shares on vesting/exercise to satisfy

the income tax/National Insurance liability that arises). Once LTIPs have

vested/been exercised, dividends or dividend equivalents can be paid on the

relevant shares.

LTIP awards are not pensionable.

LTIP awards are subject to malus and clawback provisions (see further below).

LTIP awards will not automatically vest on a change in control of the Company.

In relation to any such change in control, an assessment will be made as to the

level of vesting (if any) that is appropriate, taking into account (among other

things) the extent to which the relevant performance targets have been met, as

well as how much of the relevant performance period(s) has passed.

Notes:

It is anticipated that, during the year ending 30 November 2019, awards will be made to David Brooks and Neil Martin,
respectively, under the RM plc Performance Share Plan 2010. Those awards will be awards of options with an exercise price
of £0.00 and the face value of the awards will be c. 100% of base salary. In terms of the targets for those awards:

•

50% shall be based on the Company’s growth in adjusted earnings per share (EPS) between the year ended
30 November 2018 and the year ended 30 November 2021. Vesting will occur on a sliding scale between a
compound annual growth rate (CAGR) in EPS of 5% per annum (25%) and a CAGR in EPS of 15% per annum (100%),
namely 30.1 pence and 39.5 pence respectively.

50% shall be based on the Company’s relative TSR performance for the period from January/February 2019
to January/February 2022. The Company’s TSR performance shall be measured against the TSR performance
of the companies (Comparator Group) within the FTSE Small Cap (ex IT) Index over the above period and must
be at least at the median of a ranking of the TSR of each of the members of the Comparator Group. Vesting will
occur on a sliding scale between median (25%) and upper quartile (100%).

3 . S H A R E H O L D I N G P O L I C Y

The Committee has implemented the following shareholding
policy for all Executive Directors in order to further align their
interests with those of the Company’s shareholders:

1. Within five years of the first opportunity for an LTIP
to vest following being appointed to the Board,
Executive Directors are required to build up, and retain,
ordinary shares in the Company equivalent in value to
at least 200% of their base annual salary.

If Executive Directors do not hold the appropriate level
of shares, they may not sell shares other than to satisfy
income tax/national insurance liabilities that arise in
relation to the vesting/exercise of LTIP awards. In all
cases, any such sale will be subject to the normal
Listing Rules and Disclosure and Transparency Rules’
requirements for directors’ dealings.

4 . P O L I C Y O N R E C R U I T M E N T

The ongoing remuneration arrangements for a newly
recruited or promoted Executive Director will reflect the
Remuneration Policy in place at the time of the appointment.

The initial base salary will be set to reflect the individual’s
experience, salary levels within the Company and market
levels. There may be a probationary period, following which
salary levels may be increased. For external appointments,
the Committee may also offer additional cash and/or share-
based elements to replace any remuneration forfeited,
when it considers this to be in the best interests of the
Company and its shareholders. The terms of any such
payments offered will reflect the nature, time horizons and
performance requirements of remuneration forfeited. For
internal appointments, any commitments made before
appointment and not relating to appointment will be
allowed to pay out according to their terms. For external and
internal appointments, the Committee may agree that the
Company will meet certain reasonable relocation expenses
as appropriate, provided that these are incurred and claimed
within 12 months of appointment.

5 . M A L U S A N D C L AW B A C K

Malus and clawback provisions are in place, and will
continue to be maintained, in relation to the variable,
performance related remuneration of the Executive Directors
(annual bonus and LTIPs).

As the payment of annual bonuses are at the discretion of the
Committee, the malus provisions in force are such that the
payment of those bonuses are such that the Committee can
reduce the payment if they consider that there is any reason
that makes it appropriate to do so.

This includes (without limitation) in the circumstances
applicable to clawback as outlined below but could
also include any other matters that the Committee
considers appropriate.

In respect of each award under the PSP Scheme and the New
PSP, if approved by shareholders, the clawback applies where
there is a deliberate act of fraud (whether by the Executive
Directors or anybody else) that results in the misstatement
of the Company’s results. The clawback operates to the later
of (a) one year from the relevant PSP award vesting and (b)
the completion of the next audit of the Group’s accounts after
the award vests.

In respect of annual bonuses, the payment of all bonuses is
at the discretion of the Remuneration Committee and the
clawback applies where the Company suffers significant
financial or reputational damage as a result of gross or
serious misconduct, fraudulent misrepresentation or the
Executive being convicted of a criminal offence. The clawback
operates for a period of up to 18 months after the end of the
relevant financial year to which the bonus relates.

6 . P AY M E N T U N D E R P R E V I O U S
P O L I C I E S

The Committee reserves the right to make any remuneration
payments and payments for loss of office, notwithstanding
that they are not in line with the Policy set out above, where
the terms of the payment were agreed (i) under a previous
Policy, in which case the provisions of that Policy shall
continue to apply until such payments have been made (ii)
before the Policy or the relevant legislation came into effect or
(iii) at a time when the relevant individual was not a Director
of the Company and, in the opinion of the Committee, the
payment was not in consideration for the individual becoming
a Director of the Company. For these purposes, ‘payments’
includes the satisfaction of awards of variable remuneration
and, in relation to share-based awards, the terms of the
payment which are agreed at the time the award is granted.

7. D I S C R E T I O N S

The Remuneration Committee retains discretion with regards
to the variable elements of pay (annual bonuses and LTIP
awards), in relation to:

• The timing, size and type of awards and holding periods
(subject always to the limits set out in the applicable
Remuneration Policy).

• Adjustments required in certain circumstances

(e.g. rights issues, corporate restructuring events and
special dividends).

GOVERNANCE• Adjustment of targets and measures if events occur which cause it to determine that the conditions are no longer appropriate.

• Amending plan rules in accordance with their terms or as required by law or regulation.

However, the Committee acknowledges the concerns of interested stakeholders that the discretion afforded to remuneration
committees in quoted companies should not be too broad or enable the payment of inappropriate or excessive amounts, especially
where payments to Executive Directors are not aligned with the experience of shareholders. As such, any exercise of discretion by the
Committee will be kept to a minimum, other than in exceptional circumstances and, further, any exercise of discretion that results in
an increase in payment will be explained to shareholders in the following Remuneration Report.

8 . N O N - E X E C U T I V E D I R E C T O R F E E S

The fees payable to Non-Executive Directors are considered periodically by reference to comparable roles in companies of a similar
size and complexity as the Company. Prior to 2018, the last such review was conducted in 2011. Fees were reviewed during the year
ended 30 November 2018 and increased to be more in line with current market rates. Fees are not performance-related. Out-of-pocket
expenses (such as travel costs) incurred in performing those duties are reimbursed by the Company. Any review of the fees paid to
Non-Executive Directors will take into account the changes in pay arrangements for the wider workforce (over the intervening period
since the last review of such fees), as well as the market for Non-Executive Directors, to ensure that the right balance is struck between
attracting good candidates and paying fees that are appropriate.

9 . I L L U S T R A T I O N O F R E M U N E R A T I O N P O L I C Y

The graphs below provide estimates of the potential future reward for each of the Executive Directors based on their current roles, the
Remuneration Policy outlined above and base salaries as at 1 February 2019. However, it is noted that the illustrations show maximum
LTIP awards at 150% of base salary, whereas the typical value of LTIP awards is lower (e.g. as is shown in Part C of this Remuneration
Report, the value of the last LTIP awards made were 98% of base salary for David Brooks and 98% of base salary for Neil Martin).
The illustrations for LTIP awards assume no change in share price between the date of grant of an award and the date of vesting.

£000

1400

1200

1000

800

600

400

200

David Brooks – Chief Executive Officer

LTIPs

Variable Pay

Fixed

Minimum

On-target

Maximum

£000

1400

1200

1000

800

600

400

200

Neil Martin – Chief Financial Officer

LTIPs

Variable Pay

Fixed

Minimum

On-target

Maximum

Explanations:

Base

Benefits

Pension

Total

Base

Benefits

Pension

Total

Fixed (£000)

365

406

Fixed (£000)

297

333

On-target

On-target is assumed to be an annual bonus
equal to 55% of base salary and an LTIP award
of 25% of maximum

On-target

On-target is assumed to be an annual bonus
equal to 55% of base salary and an LTIP award
of 25% of maximum

Maximum

• Full pay-out of annual variable pay

Maximum

• Full pay-out of annual variable pay

i.e., 110% of base salary

• Maximum vesting of LTIP awards

Of the overall remuneration package possible for each of the “Minimum”, “On-target” and “Maximum” payouts described,

the following sets out the respective proportions for the fixed, variable and LTIP components:

Minimum: 100% fixed pay. On-target: 55% fixed pay, 27% variable pay & 18% LTIPs. Maximum: 30% fixed pay, 30%, variable pay & 40% LTIPs.

1 0 . C O M P A R I S O N O F R E M U N E R A T I O N P O L I C Y

This Policy sets out the remuneration structure applicable to Directors of the Company. Salary levels and incentive arrangements
applicable to other Group employees are determined by reference to local employment conditions for comparative roles.

Budgeted salary increases for Group employees are taken into consideration when determining increases for the Executive Directors
and base salaries for Executive Directors will generally only be increased in line with the increases in pay for the wider workforce
(either across single or multiple years), except as justified by other circumstances.

Employees are provided with a competitive benefits package including (as appropriate) private healthcare, Group income
protection, life assurance, car allowance, mobile phone allowance and pension. These are the same benefits as those provided to
Executive Directors.

The closure to future accrual of benefits of RM Education Ltd’s defined benefit pension scheme in October 2012 applied equally to
all employees, including Directors.

Consistent with Directors, the majority of employees are eligible to participate in an annual bonus scheme with conditions linked to
their personal performance, the performance of their operating subsidiary and the Group overall.

The Group does not consult with employees in respect of the Remuneration Policy. However, the Committee receives regular updates
on salary and bonus levels across the Group and is aware of how the remuneration of Directors compares to other employees.

Remuneration consultants have not been engaged during the period. However, the Committee does use market data produced by
leading remuneration consultants to compare pay arrangements.

1 1 . D I R E C T O R S ’ S E R V I C E C O N T R A C T S A N D L E T T E R S O F A P P O I N T M E N T

The Policy in relation to Executive Directors’ service contracts is for them to contain a maximum notice period of 12 months.
Each service contract is subject to earlier termination for cause.

Details of the Directors’ service contracts and/or letters of appointment who served for all or part of the year ended 30 November 2018
are shown in the table below:

Initial agreement date

Expiry date of
current agreement

Notice to be given by employer
and individual

1 May 2013

25 May 2017

1 July 2012

28 September 2015

1 June 2011

30 April 2022

24 May 2020

Indefinite

31 May 2020

1 January 2014

31 December 2019

6 months

3 months

12 months

3 months

John Poulter

Andy Blundell

David Brooks

Neil Martin

Deena Mattar

Patrick Martell

GOVERNANCE1 2 . P O L I C Y O N T E R M I N A T I O N

All Non-Executive Directors have letters of appointment with the Company for an initial period of three years, subject to annual
re-appointment at each Annual General Meeting. Notice periods are as set out in paragraph 11 above. No compensation is payable
on termination, other than any accrued fees and expenses.

The table below sets out the Company’s policy on termination for Executive Directors. This policy is consistent with provisions relating
to termination of employment in the Executive Directors’ service agreements and with provisions in the incentive plan rules.

‘Good Leaver’

Voluntary Resignation

‘Bad Leaver’

Circumstances
of departure

Salary and benefits
for notice period

Typically termination for cause.

Typical reasons include
retirement, redundancy, death,
ill health, injury, disability or as
defined by the Committee.

Where departure is on mutually
agreed terms, the Committee
may treat the departing
executive as a ‘Good Leaver’ in
terms of one or more elements
of remuneration.

The Committee will use this
discretion judiciously and,
if exercised, details will be
disclosed in the following year’s
Remuneration Report.

Immediate termination with no
notice period.

Salary and benefits continue
to be paid to the date of
termination of employment,
including any notice period
and/or garden leave period.

The Company may terminate
employment with immediate
effect and, in lieu of the
unexpired portion of any notice
period, make a series of monthly
payments based on salary and
benefits (or make a lump sum
payment based on salary only).

Bonus accrued prior
to termination

A time pro-rated bonus award
may be made by the Company,
with the Committee’s approval.

No accrued bonus is payable.

‘Good Leaver’

Voluntary Resignation

‘Bad Leaver’

Unvested LTIP awards

Normal circumstances

Forfeited.

LTIP awards may vest subject to
the performance condition at the
end of the normal performance
period and, if applicable,
released at the end of the
holding period.

All awards will be time pro-rated.

Exceptional circumstances
(e.g. death or other
compassionate grounds).

LTIP awards may be released on
departure, subject to assessment
of the performance conditions
at that time.

All awards will be time pro-rated.

Normal circumstances

Vested LTIP awards that are
subject only to a holding period
will be released in full to the
executive at the end of the
holding period.

Exceptional circumstances
(e.g. death or other
compassionate grounds).

Vested LTIP awards subject to a
holding period may be released
on departure.

Limited disbursements
(e.g. legal costs, relocation costs,
untaken holiday, expenses,
outplacement support).

Vested LTIP awards
subject to a
holding period

Other

Awards will be released to the
executive at the end of the
holding period.

Forfeited.

None.

GOVERNANCEP A R T C – I M P L E M E N T A T I O N R E P O R T

1 . D I R E C T O R S ’ R E M U N E R A T I O N – S I N G L E F I G U R E O F R E M U N E R A T I O N

The tables below set out a single figure of remuneration for each of the Directors in respect of the year ended 30 November 2018 and,
in respect of those Directors, the equivalent figures for the year ended 30 November 2017:

Salary/fees
£000

Taxable
benefits
£000

Annual
bonus
£000

Retirement
benefits
£000

Termination
payments
£000

LTIPs
£000

Total
£000

2018

2017

2018

2017

2018

2017

2018

2017

2018

2017

2018

2017

2018

2017

3231

2911

3181

2861

226

204

254

229

401

310

John Poulter

131

120

875

855

430

483

711

109

211

201

211

201

982

840

713

550

131

120

2,083

1,514

Name

Executive

David Brooks

Neil Martin

Non-Executive

Andy Blundell

Patrick Martell

Deena Mattar

Total

Notes:

1. The section below headed “Retirement Benefits” explains how those benefits have been calculated and presented in the above tables.

The following provides details of how the ‘Single Figure’ has been calculated:

Taxable benefits

These comprise the benefits noted in Part B above other than retirement related benefits. The figure included in the above table in
respect of such benefits is calculated based on the taxable value of such benefits.

Annual bonus

At the start of the year, the Committee decided that on-target bonuses for the Executive Directors would be based upon the Company
achieving an adjusted operating profit before tax in the year of £24.4m, subject to the Committee being satisfied as to the long-term
underlying performance of the business. In particular, the Committee would not reward achievement against target if that achievement
was as a result of an abnormal or unplanned level of movement in work-in-progress or as a result of exceptional items.

In relation to annual bonuses for the year ended 30 November 2018, the Committee considered the Company’s performance relative
to that target. Group adjusted operating profit before tax was £26.0m. In light of that performance, the Committee considered it
appropriate to set the bonuses payable at 70% of base salary.

As noted above, any annual bonuses are subject to the Committee being satisfied that the achievement of annual targets is not at the
expense of the underlying long-term performance or position of the Company. The Committee was satisfied that this was the case.

LTIPs

On 6 August 2018, the award granted to David Brooks under the PSP Scheme in August 2015 vested in full, reflecting the extent
to which the performance criteria were met. The performance criteria was based on the Company’s relative TSR performance as
compared to the FTSE SmallCap (ex IT) index for the period from May/June 2015 to May/June 2018. The Company’s performance
placed it at the 81st percentile. Vesting was based on a straight line scale between 25% vesting at the 50th percentile and 100% vesting
at the 75th percentile (or above). Based on the Company’s relative performance, all of the award vested. The Committee applied no
discretion (up or down).

As such, 180,000 Options vested. Based on the share price as at the date of vesting, the value of the award at that date was £401,400.
While that figure is shown in the table above, Mr Brooks has not exercised those Options and so not actually realised that value.
The actual value he will receive will depend upon the value of those Options as at the date he exercises them. Those Options are
exerciseable until 1 August 2025.

On 4 October 2018, the LTIP award granted in October 2015 vested in part. The vesting of that award was subject to the Company’s
relative TSR performance as compared to the FTSE SmallCap (ex IT) index (the “Comparator Group”) over the 3-year period from
July/August 2015 to July/August 2018. The Company’s relative TSR performance placed it in the 73rd percentile as compared to the
Comparator Group. Vesting was based on a straight line scale between 25% vesting at the 50th percentile and 100% vesting at the 75th
percentile (or above). Based on the Company’s relative performance, 95% of the award vested. The Committee applied no discretion.

As such, 152,000 Options vested. Based on the share price as at the date of vesting, the value of the award at that date was £310,080.
While that figure is shown in the table above, Mr Martin has not exercised those Options and so not actually realised that value.
The actual value he will receive will depend upon the value of those Options as at the date he exercises them. Those Options are
exerciseable until 30 September 2025.

Past Directors

There were no payments made to past Directors in the year.

Retirement benefits

David Brooks and Neil Martin are both members of a defined contribution pension scheme operated by RM Education Ltd.
The Group would ordinarily make a contribution to that scheme of 7% of base salary (the same as for other employees). However,
due to HMRC limits, the amount paid into the scheme for David Brooks and Neil Martin is lower, with the balance paid instead as a non-
pensionable cash allowance. To make the figures in the above tables more meaningful, the ‘Retirement Benefits’ are stated prior to
those adjustments.

David Brooks is also a member of RM Education Ltd’s defined benefit pension scheme which closed to future accrual with effect from
31 October 2012. During the year, the increase in Mr Brooks’ accrued pension under that scheme was nil. The transfer value of accrued
benefits under that scheme as at 30 November 2018 was £791,676 (2017: £759,646). Mr Brooks’ normal retirement age is 60.

Termination payments

There were no termination payments in the year.

2 . D I R E C T O R S ’ L O N G - T E R M I N C E N T I V E P L A N S

During the year ended 30 November 2018, the following long-term incentive awards were made.

Type of
share
award

Grant date

Face value
of award
£000

Name

Percentage
that would vest
at threshold
performance

Maximum
percentage of the
face value where
this is more than
the face value

The end of the
period over which
the performance
conditions have to
be fulfilled

A summary of
performance targets
and measures

David Brooks PSP1

13 March 2018

3182

25% for EPS element

n/a

February 2020 50% on EPS performance3

Neil Martin

PSP1

13 March 2018

2862

25% for EPS element

n/a

February 2020 50% on EPS performance3

25% for TSR element

50% on relative TSR
performance4

25% for TSR element

50% on relative TSR
performance4

GOVERNANCENotes:

1. Awards granted under the PSP Scheme.

2. The face value of the award has been calculated by multiplying the maximum number of shares in the award (150,000 shares for

David Brooks and 135,000 shares for Neil Martin) by the share price on the date of grant of the award (212.00 pence).

3. 50% of the award is based on the Company’s growth in adjusted earnings per share (EPS) between the year ended 30 November

2017 and the year ended 30 November 2020. Vesting will occur on a sliding scale between a compound annual growth rate (CAGR)
in EPS of 7.5% per annum (25%) and a CAGR in EPS of 17.5% per annum (100%), namely 26.1 pence and 34.1 pence respectively.

4. 50% of the award is based on the Company’s relative TSR performance for the period from January/February 2018 to

January/February 2021. The Company’s TSR performance shall be measured against the TSR performance of the companies
(Comparator Group) within the FTSE SmallCap (ex. IT) Index over the above period and must be at least at the median of a
ranking of the TSR of each of the members of the Comparator Group. Vesting will occur on a sliding scale between median (25%)
and upper quartile (100%).

3 . P E R F O R M A N C E G R A P H

The following graph shows the value, by 30 November 2018, of £100 invested in RM plc on 30 November 2008 compared with the value
of £100 invested in the FTSE Small Cap (ex. IT) Index on the same date. The reason for selecting that index is that this is the one that
is most closely aligned to the market capitalisation and relative position of the Company. The other points plotted are the values at
intervening financial year ends.

Total Shareholder Return

£400

£350

£300

£250

£200

£150

£100

£50

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

RM plc

FTSE Small Cap Index
(ex. IT)

4 . H I S T O R I C A L C H I E F E X E C U T I V E O F F I C E R P AY

The table below sets out details of:

• The total pay for each of the persons who have performed the role of Chief Executive for the current year and the preceding nine
financial years. The Single Figure is calculated using the same methodology as that used for the “Single Figure of Remuneration”
table in paragraph 1 above.

• The pay-out of incentive awards as a proportion of the maximum opportunity for the period.

2009

2010

20111

20122

20133

2014

2015

2016

2017

548

48%

517

56%

426

286

379

58%4

576

75%

1,246

50%

655

45%

713

73%

2018

983

64%

40%

91%

100%

36%

100%

Single Figure (£000)

Annual variable element
award rates against maximum
opportunity

Long-term incentive vesting rates
against maximum opportunity

Notes:

1. Terry Sweeney to 24 October 2011 (single figure: £369,000). Rob Sirs from 25 October 2011 to 30 November 2011

(single figure: £57,000).

2. Rob Sirs from 1 December 2011 to 31 January 2012 (single figure: £49,000). Martyn Ratcliffe from 1 February 2012 to

30 November 2012 (single figure: £237,000).

3. Martyn Ratcliffe from 1 December 2012 to 28 February 2013 (single figure: £52,000). David Brooks from 1 March 2013
(single figure: £327,000). Figures pro-rated to reflect the period during which Mr Ratcliffe and Mr Brooks respectively
fulfilled the role of Chief Executive Officer.

4. Relates to David Brooks only. Martyn Ratcliffe had no annual variable remuneration.

5 . R E L A T I V E I M P O R T A N C E O F S P E N D O N P AY

The following table sets out, in respect of the year ended 30 November 2018 and the immediately preceding financial year,
the total remuneration paid to all employees as compared to other significant distributions and payments.

Total remuneration to employees

Total remuneration to Directors

Dividends paid

Corporation tax paid

Defined benefit pension cash contribution

2018
£m

65.5

2.1

5.6

3.1

4.6

2017
£m

61.1

1.5

5.0

2.0

4.2

GOVERNANCE6 . P E R C E N T A G E C H A N G E I N R E M U N E R A T I O N O F D I R E C T O R
U N D E R T A K I N G T H E R O L E O F C H I E F E X E C U T I V E O F F I C E R

Comparing 2017 to 2018

% change in CEO remuneration

% change in comparator group remuneration

Notes:

Salary

Benefits

2.0

2.82

-0.9

7.23

Bonus1

64.7

71.23

1. Bonus includes annual bonus only and not any other payments made to employees described as a ‘bonus’ (e.g. Christmas

bonuses or commission). Bonuses in this paragraph 6 relate to those actually paid in 2017 & 2018. The bonuses referred to in the
‘Single Figure’ table at paragraph 1 relate to the years ended 30 November 2017 (paid in February 2018) and 30 November 2018
(to be paid in February 2019).

2. The comparator group for changes in base salary comprises all of the Company’s employees (both UK and India).

3. The comparator group comprises all of the Company’s UK-based employees but excludes those employed by Consortium,

as it was acquired on 30 June 2017 and so not within the Group for a full year in 2017.

7 . S T A T E M E N T O F S H A R E H O L D E R V O T I N G

Voting at the Annual General Meeting held on 21 March 2018 in respect of the remuneration report for the year ended
30 November 2017, and for the remuneration policy, respectively, was as follows:

Resolution to approve the remuneration policy

Resolution to approve the remuneration report

8 . D I R E C T O R S ’ S H A R E H O L D I N G S

% of votes
in favour

99.98

% of votes
against

Number of votes
withheld

0.01

506,109

505,970

The beneficial interests of the Directors (including connected persons as defined for the purposes of section 96B(2) of the
Financial Services and Markets Act 2000) in the ordinary shares of RM plc as at 30 November 2017 were:

Holding as at
30 November 2018

Current holding
as % of base salary1

Shareholding
policy met2

Holding as at
30 November 2017

87,500

6,312

345,648

5,000

35,000

17,933

220%

25%

Yes

87,500

6,312

345,648

5,000

35,000

17,933

John Poulter

Andy Blundell

David Brooks

Patrick Martell

Neil Martin

Deena Mattar

Notes:

1. Calculated based on the average share price for the period 1 December 2017 to 30 November 2018 (£2.06)

and base salaries as at 1 January 2019.

2. The ‘Shareholding policy’ is set out in paragraph 3 of Part B of this Report.

3. There have been no changes in any of the above shareholdings between 30 November 2018 and the date of this Report.

9 . D I R E C T O R S ’ I N T E R E S T S I N S H A R E P L A N S

As at 30 November 2018, the Executive Directors had the following interests in the Company’s share plans1:

PSP Awards2

Date of Grant

9 March 2017

13 March 2018

Date of Grant

9 March 2017

13 March 2018

David Brooks

Neil Martin

Notes:

No. of Shares/Options

Performance Conditions

175,000

150,000

See notes 3, 4 & 5

See note 6

No. of Shares/Options

Performance Conditions

160,000

135,000

See notes 3, 4 & 5

See note 6

1. To avoid duplication, and in accordance with Section 17(b)(iii) of The Large and Medium-sized Companies and Groups

(Accounts and Reports) (Amendment) Regulations 2013, the figures in the above table do not include the shares or share-based
awards referred to in paragraph 1 (Directors’ Remuneration – Single Figure of Remuneration) or in the table in paragraph 8 (Directors’
Shareholdings) above.

2. Granted under the PSP Scheme. All PSP awards are subject to a minimum vesting period of 3 years.

50% of this award is based on the Company’s growth in adjusted earnings per share (EPS) between the year ended 30 November
2016 and the year ended 30 November 2019. Vesting will occur on a sliding scale between a compound annual growth rate (CAGR)
in EPS of 7.5% per annum (25%) and a CAGR in EPS of 17.5% per annum (100%), namely 21.7 pence and 28.2 pence respectively.

4. 50% of the award is based on the Company’s relative TSR performance for the period from January/February 2017 to

January/February 2020. The Company’s TSR performance shall be measured against the TSR performance of the companies
(Comparator Group) within the FTSE Small Cap (ex IT) Index over the above period and must be at least at the median of a ranking
of the TSR of each of the members of the Comparator Group. Vesting will occur on a sliding scale between median (50%) and
upper quartile (100%).

5. The PSP awards granted in 2017 and 2018 were both awards of options, with an exercise price of £0.00 per option. If the options
granted in March 2017 vest, they would be exercisable in the period 11 March 2020 to 29 October 2027. If the options granted in
March 2018 vest, they would be exercisable in the period 16 March 2021 to 26 October 2027.

6. The performance conditions and other information relevant to these awards are set out in paragraph 2

(Directors’ long-term incentive plans) above.

1 0 . D E T A I L S O F D I R E C T O R S ’ S E R V I C E C O N T R A C T S

Relevant information relating to the Service Contracts of the Directors is set out in Part B of this Report (Remuneration Policy).

1 1 . R E M U N E R A T I O N C O M M I T T E E D E T A I L S

Details of the Remuneration Committee and its membership are contained in Part A of this Report (Introduction).
No remuneration consultants were used during the year.

GOVERNANCE1 2 . C O M P L I A N C E W I T H
R E G U L A T I O N S

This Report has been prepared in accordance with
Schedule 8 of the Large and Medium-Sized Companies and
Group (Accounts and Reports) Regulations 2008, as amended
by the Large and Medium-Sized Companies and Groups
(Accounts and Reports) (Amendment) Regulations 2013.
The Report also meets the relevant requirements of the
Listing Rules of the UK Listing Authority and illustrates how
the principles of the UK Corporate Governance Code relating
to Directors’ remuneration are applied by the Company.

The Group’s auditors are required to comment on whether
certain parts of the Group’s Remuneration Report have been
prepared in accordance with Schedule 8 of the Large and
Medium-Sized Companies and Group (Accounts and Reports)
Regulations 2008. Accordingly, the following sections of this
Part C of this Report have been audited by KPMG LLP:

• The “Single Figure of Remuneration” table in paragraph 1.

• Total pension entitlements, as described in the notes to

paragraph 1.

• Directors’ shareholdings, as set out in paragraph 8.

• Directors’ interests in share plans, as set out in paragraph 9.

By Order of the Board

Patrick Martell
Chairman, Remuneration Committee
4 February 2019

I N D E P E N D E N T A U D I T O R ’ S R E P O R T

to the members of RM plc

1 . O U R O P I N I O N I S U N M O D I F I E D

O V E R V I E W

Materiality:
Group financial
statements as
a whole

£1.12m (2017: £0.95m)

4.5% (2017: 4.9%) of
normalised profit before tax

Coverage

97% (2017: 99%) of
Group profit before tax

Key audit matters

Recurring risks

Long-term contracts

Recoverability of parent
company’s investment
in subsidiaries

vs 2017

◀▶

2 . K E Y A U D I T M A T T E R S :
O U R A S S E S S M E N T O F R I S K S O F
M A T E R I A L M I S S T A T E M E N T

Key audit matters are those matters that, in our professional
judgment, were of most significance in the audit of the
financial statements and include the most significant
assessed risks of material misstatement (whether or not
due to fraud) identified by us, including those which had the
greatest effect on: the overall audit strategy; the allocation
of resources in the audit; and directing the efforts of the
engagement team. We summarise below the key audit
matters, in decreasing order of audit significance, in arriving
at our audit opinion above, together with our key audit
procedures to address those matters and, as required for
public interest entities, our results from those procedures.
These matters were addressed, and our results are based on
procedures undertaken, in the context of, and solely for the
purpose of, our audit of the financial statements as a whole,
and in forming our opinion thereon, and consequently are
incidental to that opinion, and we do not provide a separate
opinion on these matters.

We have audited the financial statements of RM plc
(“the Company”) for the year ended 30 November 2018
which comprise the Consolidated Income Statement,
Consolidated Statement of Comprehensive Income,
Consolidated and Company Statements of Changes in Equity,
Consolidated and Company Balance sheets, Consolidated
and Company Cash Flow Statements and the related Notes,
including the accounting policies in Note 2.

In our opinion:

•

the financial statements give a true and fair view of the
state of the Group’s and of the parent Company’s affairs as
at 30 November 2018 and of the Group’s profit for the year
then ended;

the Group financial statements have been properly
prepared in accordance with International Financial
Reporting Standards as adopted by the European Union
(IFRSs as adopted by the EU);

the parent Company financial statements have been
properly prepared in accordance with IFRSs as adopted by
the EU and as applied in accordance with the provisions of
the Companies Act 2006; and

the financial statements have been prepared in
accordance with the requirements of the Companies
Act 2006 and, as regards the Group financial statements,
Article 4 of the IAS Regulation.

Basis for opinion

We conducted our audit in accordance with International
Standards on Auditing (UK) (“ISAs (UK)”) and applicable
law. Our responsibilities are described below. We believe
that the audit evidence we have obtained is a sufficient
and appropriate basis for our opinion. Our audit opinion
is consistent with our report to the audit committee.

We were appointed as auditor by the directors on
24 March 2011. The period of total uninterrupted
engagement is for the 8 financial years ended
30 November 2018. We have fulfilled our ethical
responsibilities under, and we remain independent of the
Group in accordance with, UK ethical requirements including
the FRC Ethical Standard as applied to listed public interest
entities. No non-audit services prohibited by that standard
were provided.

GOVERNANCET H E R I S K

Long-term contracts

Forecast-based valuation:

O U R R E S P O N S E

Our procedures included:

Revenue £40.7m
(2017: £46m);

Receivables £0.1m
(2017: £0.0m);

Payables £4.6m
(2017: £10.2m)

Refer to page 42
(Audit Committee
Report), page 80
(accounting policy)
and page 101
(financial disclosures).

Long-term contracts including
Building Schools for the Future
implementation and managed service
contracts and e-marking software and
services contracts, represent a significant
part of the Group’s business and the
accounting is inherently judgemental.

To determine the margin to be recognised
or loss to be provided, it is necessary to
estimate future costs, including contingent
and uncertain future expenses.

The effect of these matters is that,
as part of our risk assessment, we
determined that the margin to be
recognised or loss to be provided has a
high degree of estimation uncertainty,
with a potential range of reasonable
outcomes greater than our materiality
for the financial statements as a whole.

The Group may also sign variations,
extensions and/or new contracts with
an existing customer and it is necessary
to assess whether or not, for accounting
purposes, these should be combined
with an existing contract.

Control design: evaluating controls over the
allocation of costs to a specific contract, including
their operating effectiveness;

Test of details: a number of long-term contracts based on
the magnitude of revenue recognised in the year and risk
indicators (such as contracts with a significant change in
the estimate of lifetime revenue, margin or risk provision,
loss making contracts and contracts with a large work in
progress balance).

For the contracts selected:

• Reading any variations, extensions and new contracts
and consider, amongst other matters, whether the
new agreement provides value to the customer on a
stand-alone basis (and therefore should be treated as a
separate contract) or whether, together with an existing
contract, it is effectively a single project with an overall
profit margin (and therefore should be accounted for as
a revision to the existing contract);

• Assessing the completeness and accuracy of costs to
complete, including those for specified contract risks,
by reading the contract and, if available, customer
correspondence and obtaining evidence to support
selected inputs.

Historical accuracy: comparing actual outturn to
previous forecast for a number of contracts to support
the accuracy of Directors’ estimation; and

Assessing transparency: assessing the adequacy of the
Group’s disclosure about estimation uncertainty regarding
long-term contract outcome.

Our results

The results of our testing were satisfactory and we
considered the amount of revenue, receivables and
payables recognised in respect of long-term contracts
balances to be acceptable.

Recoverability of
parent company’s
investment in
subsidiaries

Investments £125.1m
(2017: £125.0m)

Refer to page 42
(Audit Committee
Report), page 79
(accounting policy)
and page 99
(financial disclosures).

T H E R I S K

Low risk, high value

O U R R E S P O N S E

Our procedures included:

The carrying amount of the parent
company’s investments in subsidiaries
represents 92% (2017: 89%) of
the company’s total assets. Their
recoverability is not at a high risk of
significant misstatement or subject to
significant judgement. However, due
to their materiality in the context of the
parent company financial statements,
this is considered to be the area that
had the greatest effect on our overall
parent company audit.

Benchmarking assumptions: Challenging the
assumptions used in the cash flows included in the
budgets based on our knowledge of the Group and the
markets in which the subsidiaries operate;

Historical comparisons: Assessing the reasonableness of
the budgets by considering the historical accuracy of the
previous forecasts;

Comparing valuations: Comparing the sum of the
discounted cash flows to the Group’s market capitalisation
to assess the reasonableness of those cash flows; and

Assessing transparency: assessing the adequacy of the
parent company’s disclosures in respect of the investment
in subsidiaries.

Our results

We found the resulting estimate of the recoverable
amount of the parent company’s investment in
subsidiaries to be acceptable.

3 . O U R A P P L I C A T I O N O F
M A T E R I A L I T Y A N D A N O V E R V I E W
O F T H E S C O P E O F O U R A U D I T

The materiality for the Group financial statements as a
whole was set at £1.12m (2017: £0.95m) determined with
reference to a benchmark of Group profit before taxation,
normalised to exclude highlighted items as disclosed in
Note 5 of the financial statements with the exception of
amortisation of acquisition related intangible assets.

Materiality for the parent company financial statements as
a whole was set at £0.75m (2017: £0.7m), determined with
reference to a benchmark of company total assets, of which
it represents 0.6% (2017: 0.5%).

We agreed to report to the Audit Committee any corrected
or uncorrected identified misstatements exceeding £56,000
(2017: £48,000), in addition to other identified misstatements
that warranted reporting on qualitative grounds.

Normalised proﬁt before tax
£24.7m (2017: £19.2m)

Group materiality
£1.12m (2017: £0.95m)

£1.12m
Whole financial
statements materiality
(2017: £0.95m)

£0.75m
Range of materiality at
four components –
£0.55m to £0.75m
(2017: £0.25m to £0.7m)

£0.056m
Misstatements reported
to the audit committee
(2017: £0.048m)

Profit before tax
Group materiality

GOVERNANCEOf the Group’s twelve (2017: twelve) reporting components, we subjected four (2017: four) to full scope audits for Group reporting
purposes and zero (2017: one) to specified risk-focused audit procedures. The components for which we performed specified
risk-focused procedures were not individually financially significant enough to require an audit for Group reporting purposes, but
did present specific individual risks that needed to be addressed. The components within the scope of our work accounted for the
percentages illustrated opposite

The remaining 0% (2017: 0%) total Group revenue, 3% (2017: 1%) of the total profits and losses that made up Group profit before tax
and 12% (2017: 9%) of total Group assets is represented by eight (2017: seven) reporting components, none of which individually
represented more than 4% (2017: 5%) of any total Group revenue, Group profit before tax or total Group assets. For the remaining
components, we performed analysis at an aggregated Group level to re-examine our assessment that there were no significant risks of
material misstatement within these.

The Group audit engagement team performed the work on all components, including the parent company. The Group audit team
determined the component materialities, which ranged from £0.55m to £0.75m (2017: £0.25m to £0.7m), having regard to the mix of
size and risk profile of the Group across the components, and performed procedures on the items excluded from normalised Group
profit before tax.

Group revenue

Total proﬁt and losses
that make up
Group proﬁt before tax

Group total assets

100%

(2017: 100%)

100

97%

(2017: 99%)

88%

(2017: 91%)

Full scope for group audit purposes 2018

Specified risk - focused audit procedures 2018

Full scope for group audit purposes 2017

Specified risk - focused audit procedures 2017

Residual components

4 . W E H AV E N O T H I N G T O R E P O R T
O N G O I N G C O N C E R N

The Directors have prepared the financial statements on the
going concern basis as they do not intend to liquidate the
Company or the Group or to cease their operations, and as
they have concluded that the Company’s and the Group’s
financial position means that this is realistic. They have also
concluded that there are no material uncertainties that could
have cast significant doubt over their ability to continue as a
going concern for at least a year from the date of approval of
the financial statements (“the going concern period”).

Our responsibility is to conclude on the appropriateness of
the Directors’ conclusions and, had there been a material
uncertainty related to going concern, to make reference to
that in this audit report. However, as we cannot predict all
future events or conditions and as subsequent events may
result in outcomes that are inconsistent with judgements that
were reasonable at the time they were made, the absence
of reference to a material uncertainty in this auditor's report
is not a guarantee that the Group and the Company will
continue in operation.

In our evaluation of the Directors’ conclusions, we considered
the inherent risks to the Group’s and Company’s business
model, including the impact of Brexit, and analysed how
those risks might affect the Group’s and Company’s financial
resources or ability to continue operations over the going
concern period. We evaluated those risks and concluded that
they were not significant enough to require us to perform
additional audit procedures.

Based on this work, we are required to report to you if:

• we have anything material to add or draw attention to
in relation to the Directors’ statement in Note 2 to the
financial statements on the use of the going concern basis
of accounting with no material uncertainties that may cast
significant doubt over the Group and Company’s use of
that basis for a period of at least twelve months from the
date of approval of the financial statements; or

•

the related statement under the Listing Rules set
out on page 25 is materially inconsistent with our
audit knowledge.

We have nothing to report in these respects, and we did not
identify going concern as a key audit matter.

5 . W E H AV E N O T H I N G T O R E P O R T
O N T H E O T H E R I N F O R M A T I O N I N
T H E A N N U A L R E P O R T

The directors are responsible for the other information
presented in the Annual Report together with the financial
statements. Our opinion on the financial statements does
not cover the other information and, accordingly, we do not
express an audit opinion or, except as explicitly stated below,
any form of assurance conclusion thereon.

Our responsibility is to read the other information and,
in doing so, consider whether, based on our financial
statements audit work, the information therein is materially
misstated or inconsistent with the financial statements or
our audit knowledge. Based solely on that work we have not
identified material misstatements in the other information.

Strategic report and directors’ report

Based solely on our work on the other information:

• we have not identified material misstatements in the

strategic report and the directors’ report;

•

in our opinion the information given in those
reports for the financial year is consistent with the
financial statements; and

in our opinion those reports have been prepared in
accordance with the Companies Act 2006.

Directors’ remuneration report

In our opinion the part of the Directors’ Remuneration Report
to be audited has been properly prepared in accordance with
the Companies Act 2006.

Disclosures of principal risks and longer-term viability

Based on the knowledge we acquired during our financial
statements audit, we have nothing material to add or draw
attention to in relation to:

•

the directors’ confirmation within the Financial Viability
Statement on page 25 that they have carried out a
robust assessment of the principal risks facing the Group,
including those that would threaten its business model,
future performance, solvency and liquidity;

the Principal Risks disclosures describing these risks and
explaining how they are being managed and mitigated;
and

GOVERNANCE•

the directors’ explanation in the Financial Viability
Statement of how they have assessed the prospects
of the Group, over what period they have done so and
why they considered that period to be appropriate, and
their statement as to whether they have a reasonable
expectation that the Group will be able to continue
in operation and meet its liabilities as they fall due
over the period of their assessment, including any
related disclosures drawing attention to any necessary
qualifications or assumptions.

6 . W E H AV E N O T H I N G T O R E P O R T
O N T H E O T H E R M A T T E R S O N W H I C H
W E A R E R E Q U I R E D T O R E P O R T B Y
E X C E P T I O N

Under the Companies Act 2006, we are required to report
to you if, in our opinion:

• adequate accounting records have not been kept by the
parent Company, or returns adequate for our audit have
not been received from branches not visited by us; or

Under the Listing Rules we are required to review the
Financial Viability Statement. We have nothing to report in
this respect.

•

the parent Company financial statements and the part of
the Directors’ Remuneration Report to be audited are not
in agreement with the accounting records and returns; or

Our work is limited to assessing these matters in the
context of only the knowledge acquired during our financial
statements audit. As we cannot predict all future events or
conditions and as subsequent events may result in outcomes
that are inconsistent with judgments that were reasonable at
the time they were made, the absence of anything to report
on these statements is not a guarantee as to the Group’s and
Company’s longer-term viability.

• certain disclosures of directors’ remuneration specified by

law are not made; or

• we have not received all the information and explanations

we require for our audit.

We have nothing to report in these respects.

7. R E S P E C T I V E R E S P O N S I B I L I T I E S

Corporate governance disclosures

Directors’ responsibilities

We are required to report to you if:

• we have identified material inconsistencies between the
knowledge we acquired during our financial statements
audit and the directors’ statement that they consider that
the annual report and financial statements taken as a
whole is fair, balanced and understandable and provides
the information necessary for shareholders to assess the
Group’s position and performance, business model and
strategy; or

•

the section of the annual report describing the work of the
Audit Committee does not appropriately address matters
communicated by us to the Audit Committee.

We are required to report to you if the Corporate Governance
Statement does not properly disclose a departure from the
eleven provisions of the UK Corporate Governance Code
specified by the Listing Rules for our review.

We have nothing to report in these respects.

As explained more fully in their statement set out on
page 31, the directors are responsible for: the preparation
of the financial statements including being satisfied that
they give a true and fair view; such internal control as they
determine is necessary to enable the preparation of financial
statements that are free from material misstatement,whether
due to fraud or error; assessing the Group and parent
Company’s ability to continue as a going concern, disclosing,
as applicable, matters related to going concern; and using the
going concern basis of accounting unless they either intend
to liquidate the Group or the parent Company or to cease
operations, or have no realistic alternative but to do so.

Auditor’s responsibilities

Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or other
irregularities (see below), or error, and to issue our opinion in
an auditor’s report. Reasonable assurance is a high level of
assurance, but does not guarantee that an audit conducted
in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from
fraud, other irregularities or error and are considered material
if, individually or in aggregate, they could reasonably be
expected to influence the economic decisions of users taken
on the basis of the financial statements.

A fuller description of our responsibilities is provided on the
FRC’s website at www.frc.org.uk/auditorsresponsibilities.

8 . T H E P U R P O S E O F O U R A U D I T
W O R K A N D T O W H O M W E O W E
O U R R E S P O N S I B I L I T I E S

This report is made solely to the Company’s members,
as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so
that we might state to the Company’s members those matters
we are required to state to them in an auditor’s report and for
no other purpose. To the fullest extent permitted by law, we
do not accept or assume responsibility to anyone other than
the Company and the Company’s members, as a body, for our
audit work, for this report, or for the opinions we have formed.

John Bennett (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor

Chartered Accountants
Arlington Business Park, Theale,
Reading, RG7 4SD

4 February 2019

Irregularities – ability to detect

We identified areas of laws and regulations that could
reasonably be expected to have a material effect on the
financial statements from our general commercial and
sector experience, through discussion with the directors
and other management (as required by auditing standards),
and from inspection of the Group’s regulatory and legal
correspondence and discussed with the directors and
other management the policies and procedures regarding
compliance with laws and regulations. We communicated
identified laws and regulations throughout our team and
remained alert to any indications of non-compliance
throughout the audit.

The potential effect of these laws and regulations on the
financial statements varies considerably.

The Group is subject to laws and regulations that directly
affect the financial statements including financial reporting
legislation (including related companies legislation),
distributable profits legislation, taxation legislation, and
we assessed the extent of compliance with these laws
and regulations as part of our procedures on the related
financial statement items.

Whilst the Group is subject to many other laws and
regulations, we did not identify any others where the
consequences of non-compliance alone could have
a material effect on amounts or disclosures in the
financial statements.

Owing to the inherent limitations of an audit, there is an
unavoidable risk that we may not have detected some
material misstatements in the financial statements, even
though we have properly planned and performed our audit
in accordance with auditing standards. For example, the
further removed non-compliance with laws and regulations
(irregularities) is from the events and transactions reflected in
the financial statements, the less likely the inherently limited
procedures required by auditing standards would identify
it. In addition, as with any audit, there remained a higher
risk of non-detection of irregularities, as these may involve
collusion, forgery, intentional omissions, misrepresentations,
or the override of internal controls. We are not responsible
for preventing non-compliance and cannot be expected to
detect non-compliance with all laws and regulations

GOVERNANCE

C O N S O L I D A T E D I N C O M E S T A T E M E N T

Revenue

Cost of sales

Gross profit

Operating expenses

Profit from operations

Investment income

Finance costs

Profit before tax

Tax

Profit for the year

Earnings per ordinary share

- basic

- diluted

Paid and proposed dividends per share

- interim

- final

Year ended 30 November 2018

Year ended 30 November 2017

Adjusted

Adjustments

Note

£000

Total

£000

Adjusted*

Adjustments*

£000

220,977

(129,664)

91,313

220,977

185,863

(129,664)

(112,857)

91,313

73,006

Total

£000

185,863

(112,857)

73,006

(63,819)

(4,927)

(68,746)

(51,729)

(5,083)

(56,812)

27,494

(4,927)

22,567

21,277

(5,083)

16,194

164

(1,679)

(25)

(1,704)

365

(1,920)

(45)

365

(1,965)

25,979

(4,952)

21,027

19,722

(5,128)

14,594

(4,734)

634

(4,100)

(2,401)

658

(1,743)

21,245

(4,318)

16,927

17,321

(4,470)

12,851

26.0p

25.8p

21.3p

21.2p

20.7p

20.6p

1.90p

5.70p

15.8p

15.7p

1.65p

4.95p

* Re-presented for share-based payment reclassification (see Note 2)

Adjustments to results have been presented to give a better guide to business performance (see Note 5).

All amounts were derived from continuing operations.

The Notes on pages 79 to 122 form an integral part of these financial statements.

C O N S O L I D A T E D S T A T E M E N T O F
C O M P R E H E N S I V E I N C O M E

Profit for the year

Items that will not be reclassified
subsequently to profit or loss

Defined Benefit Pension Scheme remeasurements

Tax on items that will not be reclassified subsequently to profit or loss

Items that are or may be reclassified
subsequently to profit or loss

Fair value gain/(loss) on hedged instruments

Exchange loss on translation of overseas operations

Note

Tax on items that are or may be reclassified subsequently to profit or loss

Other comprehensive income

Total comprehensive income
for the year attributable to equity holders

The notes on pages 79 to 122 form an integral part of these financial statements.

Year ended
30 November 2018

Year ended
30 November 2017

£000

16,927

15,693

(2,716)

822

(127)

13,672

30,599

£000

12,851

17,960

(3,123)

(1,306)

(36)

(80)

13,415

26,266

FINANCIAL STATEMENTS
C O N S O L I D A T E D B A L A N C E S H E E T

At 30 November 2018

At 30 November 2017

Non-current assets

Goodwill
Intangible assets
Property, plant and equipment
Defined Benefit Pension Scheme surplus
Other receivables
Deferred tax assets

Current assets
Inventories
Trade and other receivables
Tax assets
Cash and short-term deposits

Total assets
Current liabilities

Trade and other payables
Tax liabilities
Provisions
Overdraft

Net current liabilities
Non-current liabilities

Other payables
Provisions
Deferred tax liability
Defined Benefit Pension Scheme obligation
Borrowings

Total liabilities
Net assets
Equity attributable to shareholders

Share capital
Share premium account
Own shares
Capital redemption reserve
Hedging reserve
Translation reserve
Retained earnings

Total equity

Note

12
13
14
24
18
9

16
18

21
22
9
24
20

£000

45,164
18,465
9,184
1,253
930
3,385
78,381

17,787
34,878
424
2,634
55,723
134,104

(54,637)
(1,600)
(5,082)
(1,922)
(63,241)
(7,518)

(283)
(2,708)
(2,817)
(3,557)
(6,506)
(15,871)
(79,112)
54,992

1,917
27,080
(1,423)
94
395
(286)
27,215
54,992

The notes on pages 79 to 122 form an integral part of these financial statements.

These Financial Statements of RM plc, registered number 01749877, were approved and authorised for issue
by the Board of Directors on 4 February 2019.

On behalf of the Board of Directors,

David Brooks
Director

Neil Martin
Director

£000

45,164
20,377
10,369
495
1,144
6,484
84,033

19,413
29,147
-
1,797
50,357
134,390

(57,636)
(632)
(3,436)
(2,028)
(63,732)
(13,375)

(852)
(3,019)
(2,993)
(20,731)
(13,188)
(40,783)
(104,515)
29,875

1,890
27,035
(1,406)
94
(427)
(159)
2,848
29,875

C O N S O L I D A T E D S T A T E M E N T O F
C H A N G E S I N E Q U I T Y

redemption

Hedging

Translation

Retained

Share capital

premium

Own shares

reserve

earnings

Capital

Note

£000

At 1 December 2016

1,890

27,035

(1,987)

Profit for the year

Other comprehensive
(expense)/income

Total comprehensive
(expense)/income

Transactions with owners of the Company

Share-based payment
awards exercised

Share-based payment fair
value charges

Ordinary
dividends paid

581

£000

At 30 November 2017

1,890

27,035

(1,406)

Profit for the year

Other comprehensive
income/(expense)

Total comprehensive
income/(expense)

Transactions with owners of the Company

Shares issued

Share options exercised

Share-based payment
awards exercised

Share-based payment fair
value charges

Deferred Tax on
Share-based payments

Ordinary
dividends paid

(27)

£000

879

£000

(123)

£000

Total
£000

(19,992)

7,796

12,851

(1,306)

(36)

14,757

13,415

(1,306)

(36)

27,608

26,266

(427)

(581)

821

(5,008)

(159)

2,848

29,875

16,927

822

(127)

12,977

13,672

822

(127)

29,904

30,599

(931)

(921)

993

(5,601)

At 30 November 2018

1,917

27,080

(1,423)

395

(286)

27,215

54,992

The notes on pages 79 to 122 form an integral part of these financial statements.

FINANCIAL STATEMENTS

C O N S O L I D A T E D C A S H F L O W S T A T E M E N T

Year ended
30 November 2018

Year ended
30 November 2017
Restated**

Note

7
8

13
13
14

22
22
22

14
13

11
20

Profit before tax
Investment income
Finance costs
Profit from operations
Adjustments for:
Pension GMP
Impairment of non-acquisition related intangible assets
Amortisation of intangible assets
Depreciation and impairment of property, plant and equipment
Loss on disposal of other intangible assets
Loss on disposal of property, plant and equipment
Loss/(gain) on foreign exchange derivatives
Share-based payment charge
Increase in provisions
Defined Benefit Pension Scheme administration cost

Operating cash flows before movements in working capital
Decrease/(increase) in inventories
(Increase)/decrease in receivables
Decrease in trade and other payables
Utilisation of onerous lease and dilapidations provisions
Utilisation of employee-related restructuring provisions
Utilisation of other provisions
Cash generated from operations
Defined Benefit Pension Scheme cash contributions
Tax paid
Income on sale of finance lease debt
Net cash inflow from operating activities
Investing activities
Interest received
Repayment of loans by third parties
Acquisition net of cash acquired
Acquisition related costs
Proceeds on disposal of property, plant and equipment
Purchases of property, plant and equipment
Purchases of other intangible assets
Amounts transferred from short-term deposits

Net cash used in investing activities
Financing activities

Dividends paid
(Repayment)/drawdown of borrowings
Borrowing facilities arrangement and commitment fees
Interest paid
Share options exercised
Share-based payment awards exercised

Net cash (used in)/generated by financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effect of foreign exchange rate changes
Cash and cash equivalents at the end of the year*

£000

21,027
(164)
1,704
22,567

1,200
-
2,165
1,920
-
95
79
993
3,598
645
33,262
1,626
(5,668)
(2,805)
(694)
(1,569)
-
24,152
(4,591)
(3,134)
-
16,427

109
12
-
(335)
-
(1,049)
(69)
-
(1,332)

(5,601)
(7,000)
(303)
(439)
45
(921)
(14,219)
876
(231)
67
712

£000

14,594
(365)
1,965
16,194

-
33
1,107
2,289
21
135
(1,306)
821
1,997
552
21,843
(27)
5,443
(7,129)
(308)
(1,697)
(236)
17,889
(4,187)
(2,019)
9
11,692

307
16
(58,407)
(191)
12
(1,150)
(176)
3,014
(56,575)

(5,008)
14,000
(1,098)
(224)
-
-
7,670
(37,213)
36,973
9
(231)

* Cash and cash equivalents include bank overdrafts as these form an integral part of the Group's cash management.

**The cash flow for the year ended 30 November 2017 has been re-presented to correctly classify acquisition related costs as a

component of cash generated from operations. This has reduced operating cash flows and cash used in investing activities by £2.8m.

The notes on pages 79 to 122 form an integral part of these financial statements.

C O M P A N Y B A L A N C E S H E E T

Non-current assets

Investments

Other receivables

Current assets

Trade and other receivables

Tax assets

Total assets

Current liabilities

Accruals

Trade and other payables

Net current liabilities

Non-current liabilities

Borrowings

Provisions

Total liabilities

Net assets

Equity attributable to equity holders

Share capital

Share premium account

Own shares

Capital redemption reserve

Retained earnings

Total equity

Note

At 30 November 2018

At 30 November 2017

£000

125,112

867

125,979

9,745

539

10,284

136,263

(73)

(71,007)

(71,080)

(60,796)

(6,506)

(77,586)

58,677

1,917

27,080

(1,423)

31,009

58,677

£000

125,040

894

125,934

14,620

320

14,940

140,874

(258)

(64,533)

(64,791)

(49,851)

(13,188)

(5,301)

(18,489)

(83,280)

57,594

1,890

27,035

(1,406)

29,981

57,594

The notes on pages 79 to 122 form an integral part of these financial statements.

These Financial Statements of RM plc, registered number 01749877, were approved and authorised for issue by the Board of Directors
on 4 February 2019.

On behalf of the Board of Directors,

David Brooks
Director

Neil Martin
Director

FINANCIAL STATEMENTS

C O M P A N Y S T A T E M E N T O F
C H A N G E S I N E Q U I T Y

redemption

Retained

Share capital

premium

Own shares

reserve

earnings

Capital

At 1 December 2016

Profit for the year

Total comprehensive income

Transactions with owners of the Company

Share-based payment awards exercised

Share-based payment fair value charges

Ordinary dividends paid

At 30 November 2017

Profit for the year

Total comprehensive income

Transactions with owners of the Company

Shares issued

Share options exercised

Share-based payment awards exercised

Share-based payment fair value charges

Ordinary dividends paid

At 30 November 2018

Note

£000

1,890

£000

27,035

(1,987)

£000

581

£000

24,042

10,707

(581)

821

Total
£000

51,074

10,707

821

(5,008)

1,890

27,035

(1,406)

29,981

57,594

(27)

6,567

(931)

993

(921)

993

(5,601)

1,917

27,080

(1,423)

31,009

58,677

The notes on pages 79 to 122 form an integral part of these financial statements.

As permitted by section 408 of the Companies Act 2006, no separate income statement is presented for the parent company, RM plc.

C O M P A N Y C A S H F L O W S T A T E M E N T

Profit before tax

Investment income

Finance costs

Loss from operations

Adjustments for:

Increase in provisions

Operating cash flows before movements in working capital

Increase/(decrease) in receivables

Increase in payables

Utilisation of provision

Cash generated from operations

Dividends received

Net cash generated from operating activities

Investing activities

Increase in investments

Acquisition related costs

Interest received

Net cash generated from/(used in) investing activities

Financing activities

Dividends paid

Share options exercised

(Repayment)/drawdown of borrowings

Borrowing facilities arrangement and commitment fees

Net cash generated used in financing activities

Net increase in cash and cash equivalents

Cash and cash equivalents at the beginning of the year

Cash and cash equivalents at the end of the year

Note

Year ended
30 November 2018

£000

6,106

(9,125)

2,228

(791)

154

(637)

4,902

6,849

(5,455)

5,659

9,000

14,659

125

(5,601)

(7,000)

(2,228)

(14,784)

Year ended
30 November 2017
£000

10,528

(14,108)

871

(2,709)

273

(2,436)

(1,672)

43,526

39,418

13,800

53,218

(58,956)

(2,278)

(61,227)

(5,008)

14,000

(983)

8,009

The notes on pages 79 to 122 form an integral part of these financial statements.

FINANCIAL STATEMENTS

N O T E S T O T H E F I N A N C I A L S T A T E M E N T S

1 . G E N E R A L I N F O R M A T I O N

RM plc (‘Company’) is incorporated in England and Wales
and listed on the London Stock Exchange. It is the parent
company of a group of companies (‘Group’) whose business
activities and financial position, together with the factors
likely to affect its future development, performance and
position, and risk management policies are presented in the
Strategic Report and the Directors’ Report.

Consolidated income statement presentation

The Directors assess the performance of the Group using
an adjusted operating profit and profit before tax. The
Directors use this measurement basis as it excludes the effect
of transactions that could distort the understanding of the
Group's performance for the year and comparability between
periods. This includes making certain adjustments for
income and expense which are one-off in nature, or non-cash
items and those with potential variability year on year which
might mask underlying performance. Further details are
provided in Note 5.

2 . S I G N I F I C A N T A C C O U N T I N G
P O L I C I E S

The accounting policies are drawn up in accordance
with those International Accounting Standards (IAS) and
International Financial Reporting Standards (IFRS) issued
by the International Accounting Standards Board (IASB) and
adopted for use in the EU and therefore comply with Article 4
of the EU IAS Regulation applied in accordance with the
provisions of the Companies Act 2006.

These accounting policies have been consistently applied to
the years presented.

The financial statements are prepared on a going concern
basis. The Directors’ reasons for continuing to adopt
this basis are set out in the Going Concern section of the
Strategic Report.

Basis of preparation

The financial statements have been prepared on the
historical cost basis except for certain financial instruments,
share-based payments and pension assets and liabilities
which are measured at fair value. The preparation of financial
statements, in conformity with generally accepted accounting
principles, requires the use of estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date

of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Although
these estimates are based on the Directors’ best knowledge
of current events and actions, actual results ultimately may
differ from those estimates.

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 operating profit

- Adjusted profit before tax;

Further explanation of what each APM comprises and
reconciliations between Statutory reported measures and
adjusted measures are shown in Note 5.

The Board believes that presentation of the Group
results in this way is relevant to an understanding of the
Group's financial performance, as adjustment items are
identified by virtue of their size, nature and/or incidence.
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 better the financial performance, position
and trends of the Group. In determining whether an event
or transaction is an adjustment, the Board considers both
quantitative and qualitative factors such as the frequency and
predictability of occurrence.

During the year, the Group has refined its policy in relation to
adjustment items so as to streamline its application, simplify
the Group’s reporting and ensure consistency between
Adjusted and Adjustment performance. In particular, the
Board considers the recognition of share-based payments
should be included in arriving at Adjusted profits. In prior
periods such payments have been excluded in arriving at
Adjusted profit. On this basis prior year results have been
re-presented for share-based payment reclassification, giving
rise to a decrease in the Group’s Adjusted Operating profit of
£0.8m, and a decrease in the Group’s Adjusted Profit before
tax of £0.8m. There is no impact on the Statutory performance
of the Group or the Group’s condensed consolidated balance
sheet, further detail is set out in Note 5.

Consolidation

Revenue

The Group financial statements incorporate the financial
statements of the Company and all its subsidiaries for the
periods during which they were members of the Group.

Revenue represents amounts receivable for goods supplied
and services provided to third parties net of VAT and other
sales-related taxes.

Inter-company balances and transactions between Group
companies are eliminated on consolidation. On acquisition,
assets and liabilities of subsidiaries are measured at their fair
values at the date of acquisition with any excess of the cost of
acquisition over this value being capitalised as goodwill.

Subsidiaries are entities controlled by the Group. The Group
controls an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and
has the ability to affect those returns through its power
over the entity. In assessing control, the Group takes into
consideration potential voting rights. The acquisition date
is the date on which control is transferred to the acquirer.
The financial statements of subsidiaries are included in the
consolidated financial statements from the date that control
commences until the date that control ceases.

Investment in subsidiaries

In the Company accounts, investments in subsidiaries
are stated at cost less any provision for impairment
where appropriate.

Business combinations

For acquisitions on or after 1 January 2010, the Group
measures goodwill at the acquisition date as:

•

the fair value of the consideration transferred; plus

the net recognised amount (generally fair value) of the
identifiable assets acquired and liabilities assumed.

When the excess is negative, a bargain purchase gain is
recognised immediately in profit or loss.

Costs related to the acquisition, other than those
associated with the issue of debt or equity securities,
are expensed as incurred.

Acquisitions before 1 January 2010

For acquisitions before 1 January 2010, goodwill represents
the excess of the cost of the acquisition over the Group’s
interest in the recognised amount (generally fair value) of the
identifiable assets, liabilities and contingent liabilities of the
acquiree. When the excess was negative, a bargain purchase
gain was recognised immediately in profit or loss.

Transaction costs, other than those associated with the
issue of debt or equity securities, that the Group incurred in
connection with business combinations were capitalised as
part of the cost of the acquisition.

Revenue from the sale of goods and services is recognised
upon transfer to the customer of the significant risks and
rewards of ownership. This is generally when goods are
despatched to, or services performed for, customers.
Revenue on hardware is recognised on shipment providing
there are no unfulfilled obligations that are essential to the
functionality of the delivered product and with consideration
of any significant credit risk uncertainty. If such obligations
exist, revenue is recognised as they are fulfilled. Revenue
from term licences is spread over the period of the licence,
reflecting the Group’s obligation to support the relevant
software products or update their content over the term of
the licence. Revenue from contracts for maintenance, support
and annually and other periodically contracted products
and services is recognised on a straight line basis over the
contract period. Revenue from installation, consultancy
and other services is recognised when the service has been
provided. For multiple element arrangements revenue is
allocated to each element on a fair value basis. In practise,
the majority of the multiple element arrangements are
long-term contracts (see below). The portion of the revenue
allocated to an element is recognised when the revenue
recognition criteria for that element have been met.
Appropriate provisions for returns, trade discounts and other
allowances are deducted from revenue. Where customer
payments are received in advance of the recognition of
revenue, the amount is included within deferred income and
is aged dependent upon the estimated recognition profile.

Long-term contracts

Revenue on long-term contracts is recognised while contracts
are in progress. Revenue is recognised proportionally to the
stage of completion of the contract, based on the fair value of
goods and services provided to date, taking into account the
sign-off of milestone delivery by customers.

Long-term contracts represent those accounted for in
accordance with the principles of IAS 18 Revenue and
related linkage with IAS 11 Construction Contracts.

Profit on long-term contracts is recognised when the
outcome of the contract can be assessed with reasonable
certainty, including assessment of contingent and uncertain
future expenses. Thereafter profit is recognised based upon
the expected outcome of the contract and the revenue
recognised at the balance sheet date as a proportion of
total contract revenue.

FINANCIAL STATEMENTSIf the outcome of a long-term contract cannot be assessed
with reasonable certainty, no profit is recognised. Any
expected loss on a contract as a whole, is recognised as soon
as it is foreseen. The loss is calculated using a discounted cash
flow model utilising a discount rate that reflects an estimate
of the market’s assessment of the time value of money and
the risks specific to the liability. Any unwinding of the discount
is included in the income statement in finance costs.

Where the cumulative fair value of goods and services provided
exceeds amounts invoiced the balance is included within trade
and other receivables as long-term contract balances. Where
amounts invoiced exceed the fair value of goods and services
provided the excess is first set off against long-term contract
balances and then included in amounts due to long-term
contract customers within trade and other payables.

Where an existing contract is extended, renewed or replaced,
an assessment is made to assess the similarity between the
original contract and the extension, renewal or replacement.
Where the terms are substantially the same or similar, the
Group treat the arrangement as an extension to the original
contract. Where there are material changes that arrangement
is treated, in effect, as a new and therefore separate contract.

Intangible assets

All intangible assets, except goodwill, are stated at cost
less accumulated amortisation and any accumulated
impairment losses.

Goodwill

Goodwill represents the amount by which the fair value of the
cost of a business combination exceeds the fair value of net
assets acquired. Goodwill is not amortised and is stated at
cost less any accumulated impairment losses.

The recoverable amount of goodwill is tested for impairment
annually or when events or changes in circumstance indicate
that it might be impaired. Impairment charges are deducted
from the carrying value and recognised immediately in profit
or loss. For the purpose of impairment testing, goodwill
is allocated to each of the Group’s cash generating units
expected to benefit from the synergies of the combination.
If the recoverable amount of the cash generating unit is less
than the carrying amount of the unit, the impairment loss is
allocated first to reduce the carrying amount of any goodwill
allocated to the unit and then to the other assets of the unit
pro-rata on the basis of the carrying amount of each asset in
the unit. An impairment loss recognised for goodwill is not
reversed in a subsequent period.

Research and development costs

Research and development costs associated with the
development of software products or enhancements and
their related intellectual property rights are expensed
as incurred until all of the following criteria can be
demonstrated, in which case they are capitalised as an
intangible asset:

a. the technical feasibility of completing the intangible asset

so that it will be available for use or sale; and

b. an intention to complete the intangible asset and use or

sell it; and

c. ability to use or sell the intangible asset; and

d. how the intangible asset will generate probable future

economic benefits. Among other things, the Group can
demonstrate the existence of a market for the output of
the intangible asset or the intangible asset itself or, if it
is to be used internally, the usefulness of the intangible
asset; and

the availability of adequate technical, financial and other
resources to complete the development and to use or sell
the intangible asset; and

f. an ability to measure reliably the expenditure attributable

to the intangible asset during its development.

The technological feasibility for the Group’s software products
is assessed on an individual basis and is generally reached
shortly before the products or services are released, and late
in the development cycle. Capitalised development costs are
amortised on a straight-line basis over their useful lives, once
the product is available for use. Useful lives are assessed on a
project-by-project basis.

Other intangible assets

Expenditure on internally generated goodwill and brands
is recognised in the income statement as an expense
as incurred.

Other intangible assets that are acquired by the Group
are stated at cost less accumulated amortisation and
accumulated impairment losses.

If the recoverable amount of an asset (or cash generating
unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (or cash generating unit) is
reduced to its recoverable amount. An impairment loss is
recognised as an expense immediately.

Where an impairment loss subsequently reverses, the
carrying amount of the asset (or cash generating unit) is
increased to the revised estimate of its recoverable amount,
but so that the increased carrying amount does not exceed
the carrying amount that would have been determined had
no impairment loss been recognised for the asset (or cash
generating unit) in prior periods. A reversal of an impairment
loss is recognised as income immediately.

Financial instruments

Trade and other receivables

Trade and other receivables are not interest bearing,
except those specifically detailed in Note 18. Trade and
other receivables are recognised initially at fair value and
subsequent to initial recognition they are measured at
amortised cost using the effective interest method, less any
impairment losses.

Accrued income is recognised when services are performed
and revenue recognised in advance of an invoice being
raised.

Cash and short-term deposits

Cash comprises cash at bank and in hand and deposits
with a maturity of three months or less. Bank overdrafts
are included in cash only to the extent that the Group has
the right of set-off.

Borrowings

Borrowings relate to an unsecured revolving cash facility,
detailed in Note 29.

Trade and other payables

Trade payables on normal terms are not interest bearing.
Trade and other payables are recognised initially at fair value
and subsequent to initial recognition they are measured at
amortised cost using the effective interest method.

Derivative financial instruments

The Group holds derivative financial instruments to hedge its
foreign currency exposure.

Amortisation

Amortisation is charged to the income statement on a
straight-line basis over the estimated useful lives of intangible
assets unless such lives are indefinite. Intangible assets with
an indefinite useful life and goodwill are systematically tested
for impairment at each balance sheet date. Other intangible
assets are amortised from the date they are available for use.
The estimated useful lives are as follows:

Brand

Website platform

Other software assets

15 years

5 years

2 – 8 years

Property, plant and equipment

Property, plant and equipment assets are stated at cost, less
accumulated depreciation and any accumulated impairment
losses where appropriate.

Property, plant and equipment are depreciated by
equal annual instalments to write down the assets to their
estimated disposal value at the end of their useful lives
as follows:

Freehold property

Up to 50 years

Leasehold building improvements

Up to 25 years

Plant and equipment

Computer equipment

Vehicles

3 - 10 years

2 - 5 years

2 - 4 years

Impairment of tangible and intangible assets
excluding goodwill

At each balance sheet date, the Group reviews the carrying
amounts of its tangible and intangible assets to determine
whether there is any indication that those assets have
suffered an impairment loss. If any such indication exists,
the recoverable amount of the asset is estimated in order to
determine the extent of any impairment loss. Where the asset
does not generate cash flows that are independent from
other assets, the Group estimates the recoverable amount of
the cash generating unit to which the asset belongs.

The recoverable amount is the higher of fair value less
costs to sell and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks
specific to the asset for which the estimates of future cash
flows have not been adjusted.

FINANCIAL STATEMENTS

On initial designation of the derivative as the hedging
instrument, the Group formally documents the relationship
between the hedging instrument and hedged item, including
the risk management objectives and strategy in undertaking
the hedge transaction and the hedged risk, together with
the methods that will be used to assess the effectiveness of
the hedging relationship. The Group makes an assessment,
both at the inception of the hedge relationship as well as on
an ongoing basis, as to whether the hedging instruments are
expected to be “highly effective” in offsetting the changes
in the fair value or cash flows of the respective hedged
items attributable to the hedged risk. For a cash flow
hedge of a forecast transaction, the transaction should be
highly probable to occur and should present an exposure
to variations in cash flows that could ultimately affect
reported profit or loss.

Derivatives are recognised initially at fair value and
attributable transaction costs are recognised in profit or loss
as incurred. Subsequent to initial recognition, derivatives are
measured at fair value, and changes therein are accounted for
as described below. Fair value measurements are classified
using a fair value hierarchy.

Cash flow hedges

When a derivative is designated as the hedging instrument
in a hedge of the variability in cash flows attributable to a
particular risk associated with a recognised asset or liability
or a highly probable forecast transaction that could affect
profit or loss, the effective portion of changes in the fair
value of the derivative is recognised in other comprehensive
income and presented in the hedging reserve in equity.
Any ineffective portion of changes in the fair value of the
derivative is recognised immediately in profit or loss.

When the hedged item is a non-financial asset, the amount
accumulated in equity is included in the carrying amount
of the asset when the asset is recognised. In other cases the
amount accumulated in equity is reclassified to profit or loss
in the same period that the hedged item affects profit or loss.
If the hedging instrument no longer meets the criteria for
hedge accounting, expires or is sold, terminated or exercised,
or the designation is revoked, then hedge accounting is
discontinued prospectively. If the forecast transaction is
no longer expected to occur, then the balance in equity is
reclassified in profit or loss.

Other non-trading derivatives

When a derivative financial instrument is not designated in
a hedge relationship that qualifies for hedge accounting,
all changes in its fair value are recognised immediately in
profit or loss.

Inventories

Finished goods and work-in-progress are valued at cost on
a first in first out basis, including appropriate labour costs
and other overheads. Raw materials and bought in finished
goods are valued at purchase price. Stocks are recognised
when the Group has the rights and obligations of ownership,
which in the case of supply from the Far East may be from the
point of production or the point of shipment. All inventories
are reduced to net realisable value where lower than cost.
Provision is made for obsolete, slow moving and defective
items where appropriate.

Provisions

A provision is recognised if, as a result of a past event, the
Group has a present legal or constructive obligation that can
be estimated reliably, and it is probable that an outflow of
economic benefits will be required to settle the obligation.

Provisions are determined by discounting the expected
future cash flows at a pre-tax rate that reflects current market
assessments of the time value of money and the risks specific
to the liability. The unwinding of the discount is recognised as
a finance cost.

Restructuring

A provision for restructuring is recognised when the Group has
approved a detailed and formal restructuring plan, and the
restructuring either has commenced or has been announced
publicly. Future operating losses are not provided for.

Onerous contracts

A provision for onerous contracts is recognised when
the expected benefits to be derived by the Group from a
contract are lower than the unavoidable cost of meeting its
obligations under the contract. The provision is measured
at the present value of the lower of the expected cost
of terminating the contract and the expected net cost
of continuing with the contract. Before a provision is
established, the Group recognises any impairment loss on the
assets associated with that contract.

Dilapidations provision

A dilapidations provision is recognised when the Group
has an obligation to rectify, repair or reinstate a leased
premises to a certain condition in accordance with the lease
agreement. The provision is measured at the present value
of the estimated cost of rectifying, repairing or reinstating
the leased premises at a specified future date. To the extent
that future economic benefits associated with leasehold
improvements are expected to flow to the Group, this cost
is capitalised within the leasehold improvement category of
property, plant and equipment and is depreciated over its
useful economic life.

Leases

Where assets are financed by leasing agreements which give
rights approximating to ownership, the assets are treated as
if they had been purchased outright. The amount capitalised
is the lower of the fair value or the present value of the
minimum lease payments during the lease term determined
at the inception of the lease. The assets are depreciated over
the shorter of the lease term or their useful life. Obligations
relating to finance leases, net of finance charges in respect
of future periods, are included, as appropriate, under
other payables due within or after one year. The finance
charge element of rentals is charged to finance costs in the
income statement over the lease term.

All other leases are classified as operating leases, the rentals
of which are charged to the income statement on a straight
line basis over the lease term.

Share-based payments

The Group operates a number of executive and employee
share schemes. For all grants of share-based payments, the
fair value as at the date of grant is calculated using a pricing
model and the corresponding expense is recognised over the
vesting period. Where the vesting period is shortened after
the date of grant, the remaining expense is recognised over
the shortened vesting period. Over the vesting period and
at vesting the cumulative expense is adjusted to take into
account the number of awards expected to or actually vesting
as a result of survivorship and where this reflects non-market-
based performance conditions. Share-based payment
charges which are incurred by a subsidiary undertaking
are included as an increase in Investments in subsidiary
undertakings within the parent company, and a capital
contribution in the subsidiary.

Employee benefits

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
(the “RM Scheme”) and, following the acquisition of
Consortium in June 2017, the Consortium CARE Scheme
(the “CARE Scheme”) and the Platinum Scheme. The
RM Scheme and the CARE Scheme are both operated
for employees and former employees of the Group only.
The Platinum Scheme is a multi-employer scheme, with
Consortium being just one of a number of employers.
The Group plays no active part in managing that Scheme,
although the number of the Group’s employees in that
Scheme is small and so the impact/risk to the Group from
that Scheme is limited.

For all defined benefit pension schemes, based on the advice
of a qualified independent actuary at each balance sheet
date and using the projected unit method, the administrative
expenses and current service costs are charged to operating
profit, with the interest cost, net of interest on scheme assets,
reported as a financing item.

Defined benefit pension scheme remeasurements are
recognised as a component of other comprehensive income
such that the balance sheet reflects the scheme’s surplus or
deficit as at the balance sheet date. Contributions to defined
contribution plans are charged to operating profit as they
become payable.

Employee Share Trust

The Employee Share Trust, which holds ordinary shares of
the Company in connection with certain share schemes, is
consolidated into the financial statements. Any consideration
paid to the Trust for the purchase of the Company’s own
shares is shown as a movement in shareholders’ equity.

Own Shares Held

The “Own Shares Reserve” figure is calculated based on the
number of shares held by the Employee Share Trust (“EST”) as
at 30 November 2018 (being 2,013,176 shares) multiplied by
the weighted average cost of those shares.

Translation reserve

The translation reserve comprises all foreign exchange
differences from the translation of the financial statements of
foreign operations, as well as from the translation of liabilities
that hedge the Company’s net investment in a foreign subsidiary.

Cash flow hedging reserve

The hedging reserve comprises the effective portion of the
cumulative net change in the fair value of cash flow hedging
instruments related to hedged transactions that have not
yet occurred.

Taxation

Current tax, including UK corporation tax and foreign tax,
is provided at amounts expected to be paid or recovered
using the tax rates and laws that have been enacted or
substantively enacted by the balance sheet date.

Deferred taxation is accounted for using the balance sheet
liability method in respect of temporary differences arising
from differences between the carrying amount of assets and
liabilities in the financial statements and the corresponding
tax bases used in computation of taxable profit. Deferred tax
liabilities are recognised for all taxable temporary differences
except in respect of investments in subsidiaries where

FINANCIAL STATEMENTSthe Group is able to control the reversal of the temporary
difference and it is probable that the temporary difference
will not reverse in the foreseeable future.

Current tax balances are offset when there is a legally
enforceable right to set off current tax assets against
current tax liabilities.

Deferred tax assets are recognised to the extent that it is
probable that future taxable profit will be available against
which the temporary difference can be utilised. Their carrying
amount is reviewed at each balance sheet date on the
same basis.

Deferred tax is measured on an undiscounted basis, and
at the tax rates that are expected to apply in the periods in
which the asset or liability is settled. It is recognised in the
income statement except when it relates to items credited or
charged directly to equity, in which case the deferred tax is
also dealt with in equity. Deferred tax assets and liabilities are
offset when they relate to income taxes levied by the same
taxation authority and when the Group intends to settle its
current tax assets and liabilities on a net basis.

Foreign currencies

The Group presents its financial statements in Sterling
because this is the currency in its primary operating
environment. Balance sheet items of subsidiary
undertakings whose functional currency is not Sterling
are translated into Sterling at the period-end rates of
exchange. Income statement items and the cash flows of
subsidiary undertakings are translated at the average rates
for the period. Exchange differences on the translation of
subsidiary opening net assets at closing rates of exchange
and the differences arising between the translation of profits
at average and closing exchange rates are recorded as
movements in the currency translation reserve.

Transactions denominated in foreign currencies are
translated into Sterling at rates prevailing at the dates of
the individual transactions. Foreign currency monetary
assets and liabilities are translated at the rates prevailing at
the balance sheet date. Exchange gains and losses arising
are charged or credited to the income statement within
operating costs. Foreign currency non-monetary amounts are
translated at rates prevailing at the time of establishing the
fair value of the asset or liability.

Dividends

Key sources of estimation uncertainty

In applying the Group’s accounting policies the Directors are
required to make estimates and assumptions. Actual results
may differ from these estimates. The Group’s key risks are
set out in the Strategic Report and give rise to the following
estimations which are disclosed within the relevant note to
the Report and Accounts:

• Long-term contract outcome – see Note 17

• Retirement benefit scheme valuation – see Note 24

Key sources of critical accounting judgements

In applying the Group’s accounting policies the Directors
are required to make judgements and assumptions, actual
results may differ from these. The Group’s key risks are set
out in the Strategic Report and give rise to the following
judgements which are disclosed within the relevant note to
the Report and Accounts:

• Long-term contract outcome – see Note 17

• Goodwill, intangible asset and investment valuation
and impairment. The judgemental area is on the
combination of Cash Generating Units (‘CGU’) into a
single CGU for RM Resources – Note 12 and Note 15.

Adoption of new and revised International Financial
Reporting Standards

The IFRIC interpretations, amendments to existing standards
and new standards that are mandatory and relevant for
the Company’s accounting periods beginning on or after
1 December 2017 have been adopted. The following new
standards and interpretations have been adopted in the
current period but have not impacted the reported results or
the financial position:

•

IFRS 9 Financial Instruments

New standards and interpretations not yet adopted

At the date of authorisation of these financial statements,
the following Standards and Interpretations which have not
been applied in these financial statements were in issue but
not yet effective/endorsed (and in some cases had not yet
been adopted by the EU):

•

IFRS 15 Revenue from Contracts with Customers

• Amendments to IFRS 2 - Classification and Measurement

of Share-based Payment Transactions

Dividends are recognised as a liability in the period in which the
shareholders’ right to receive payment has been established.

•

IFRS 16 Leases

The Directors are finalising their analysis and do not expect that the adoption of the standards listed above will have a material impact
on the financial statements of the Company and Group in future periods except potentially IFRS 15 (revenue and deferred income)
and IFRS 16 (leases). An exercise to determine the impact of IFRS 16 is planned during the coming financial year and the Company will
update the shareholders on the impact during 2019.

IFRS 15 is effective for accounting periods commencing on or after 1 January 2018, with the year ending 30 November 2019 being the
first year the standard will be effective for the Group. Our planned adoption method will be the modified retrospective method. In the
year the Group continued with a detailed assessment to determine the impact of adopting IFRS 15 which has included the engagement
of third-party advisors. We are currently finalising a detailed review of the Group's contract portfolio. The Directors anticipate the most
significant impact will be on long-term contracts within the RM Results and RM Education operating divisions, where there are multiple
components to be delivered over the course of the contract, under one agreement. IFRS 15 requires additional consideration to be
given to whether the components or promises within a contract are distinct and therefore separate from a revenue standpoint or
whether they should be bundled together to form one larger ‘performance obligation’.

Long-term contracts that include development activity were recognised in accordance with the principles of IAS 18 and IAS 11.
Development revenues are currently recognised over the development period based on a stage completion basis. Under IFRS 15,
the performance criteria distinguishes the contractual right of control over the development work. Where the customer retains the
development intellectual property rights (‘IPR’), the revenue will be recognised over the period of development activity as the control
of the IPR remains with the customer. This is not anticipated to have a financial impact on the period. Where RM Group retains the IPR
of the development work undertaken then the costs of the development will be capitalised and revenue and costs recognised over the
subsequent license period. This will have the impact of deferring revenue on these contracts.

For goods, RM Group currently recognises revenues on despatch. IFRS 15 requires revenue to be recognised when control has passed
to the customer and as such revenue will be recognised when received by the customer or their representative. This is not anticipated
to have a significant impact.

For services the Group currently recognises revenues upon the transfer of risks and rewards to the customer. For services that are
provided over a defined period, this is generally recognised over the life of the contract. This will include provision of software, services
support and maintenance activity. The revenue on these types of activity is expected to remain unchanged with the exception that
this will be recognised more evenly over the period of the contract as the control over the volume use of software is in the control of
the customer. Within a financial accounting year this is not anticipated to have a significant impact due the timeframe in which these
activities occur. However there will be an earlier recognition of revenue within each financial year. For contracts that are currently
recognised as long-term contracts but include the provision of goods or services revenue will be applied as control is passed to the
customer as described above.

3 . R E V E N U E

Revenue from supply of products

Revenue from rendering of services

Revenue from the sale of licences and receipt of royalties

Total revenue

4 . O P E R A T I N G S E G M E N T S

Year ended
30 November 2018

Year ended
30 November 2017

£000

135,291

64,080

21,606

220,977

£000

98,538

69,365

17,960

185,863

The Group's business is supplying products, services and solutions to the UK and international education markets. Information
reported to the Group's Chief Executive for the purposes of resource allocation and assessment of segmental performance is focused
on the nature of each type of activity.

The Group is structured into three operating divisions: RM Resources, RM Results and RM Education.

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.

FINANCIAL STATEMENTSThis 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 2018

£000

RM Resources

RM Results

RM Education

Corporate Services

**102,515

8,475

2,876

1,390

3,164

3,151

121,571

16,626

25,299

3,343

1,495

1,653

31,790

8,154

66,736

572

185

123

67,616

7,813

(5,099)

Revenue

Europe

North America

Asia

Middle East

Rest of the world

Adjusted profit from operations

Investment income

Adjusted finance costs

Adjusted profit before tax

Adjustments (see Note 5)

Profit before tax

Year ended 30 November 2017

£000

RM Resources

RM Results

RM Education

Corporate Services

**70,150

5,957

1,539

1,226

3,054

1,706

83,632

11,604

26,566

3,258

204

1,590

31,618

7,761

68,828

678

231

691

177

70,613

6,552

(4,640)

Revenue

Europe

North America

Asia

Middle East

Rest of the world

Adjusted* profit from operations

Investment income

Adjusted finance costs

Adjusted* profit before tax

Adjustments* (see Note 5)

Profit before tax

* Re-presented for share-based payment reclassification (see Note 2)

** Included in UK are international sales via UK distributors of £2,479,000 (2017: £2,354,000).

There are no customers that individually represent over 10% of the Group’s turnover.

Total

£000

194,550

12,390

3,061

2,885

3,287

4,804

220,977

27,494

164

(1,679)

25,979

(4,952)

21,027

Total

£000

165,544

9,893

1,770

2,121

3,062

3,473

185,863

21,277

365

(1,920)

19,722

(5,128)

14,594

Segmental assets

At 30 November 2018

Segmental

Other

Total assets

At 30 November 2017

Segmental

Other

Total assets

RM Resources

RM Results

RM Education

Corporate Services

£000

105,170

£000

7,833

£000

13,197

£000

177

RM Resources

RM Results

RM Education

Corporate Services

£000

103,935

£000

6,324

£000

15,627

£000

205

Total

£000

126,377

7,727

134,104

Total

£000

126,091

8,299

134,390

Included within the disclosed segmental assets are non-current assets (excluding deferred tax assets) of £74,559,000 (2017: £73,364,000)
located in the United Kingdom and £438,000 (2017: £692,000) located in India. Other non-segmented assets includes other receivables,
tax assets and cash and short-term deposits.

FINANCIAL STATEMENTS

5 . P R O F I T F R O M O P E R A T I O N S

Profit from operations is stated after charging/(crediting):

Amortisation of intangible assets

Depreciation of property, plant and equipment:

- charged in cost of sales

- charged in operating expenses

Impairment of other intangible assets

Impairment of property, plant and equipment

Selling and distribution costs

Research and development costs

Administrative expenses - adjusted

Operating expenses - adjusted

Adjustments* to administrative expenses (see consolidated income statement)

Total operating expenses

Loss on disposal of property, plant and equipment

Loss on disposal of other intangible assets

Cost of inventories recognised as an expense

Staff costs

Operating lease expense

Operating lease income

Foreign exchange loss/(gain)

Inventory write-offs

(Decrease)/increase in inventory obsolescence provision

Note

Fees payable to the Company's auditor

Fees payable to the Company's auditor for the audit of these Financial Statements:

- the audit of the Company's Financial Statements

- the audit of the Company's subsidiaries pursuant to legislation

Other fees payable to the Company's auditor:

- other services pursuant to legislation

- corporate finance services

Year ended
30 November 2018

Year ended
30 November 2017

£000

2,165

492

1,428

1,920

28,889

6,748

28,182

63,819

4,927

68,746

98,848

64,786

3,892

(598)

226

288

(129)

233

267

£000

1,108

447

1,474

1,921

368

2,322

24,804

6,837

20,088

51,729

5,083

56,812

135

78,513

62,147

3,970

(569)

(1,205)

261

254

100

385

Adjustments to administrative expenses

Amortisation of acquisition-related intangible assets

Pension GMP

Net increase of provisions for onerous lease contracts

Acquisition related costs

Restructuring costs

Year ended
30 November 2018

Year ended
30 November 2017*

£000

1,207

1,200

2,520

4,927

£000

503

353

2,643

1,584

5,083

* Prior year re-presented for share-based payment reclassification (see Note 2)

Recurring items:

These are items which occur regularly but which management judge to have a distorting effect on the underlying results of the Group
or are not regularly monitored for the purpose of determining business performance. The recurring item relates to the amortisation of
acquisition related intangible assets. The prior year period has been re-presented to no longer show share-based payment charges as
an adjustment.

Recurring items are adjusted each year irrespective of materiality to ensure consistent treatment.

Highlighted items:

These are items which are non-recurring and are identified by virtue of either their size or their nature. These items can include, but are
not restricted to, impairment of held for sale assets and related transaction costs; changes in the provision for onerous lease contracts;
the gain/loss on sale of operations and restructuring and acquisition costs. As these items are one-off or non-operational in nature,
management considers that they would distort the Group’s underlying business performance.

During the year, the Group announced an estates strategy review that will mean relocating a number of activities in the RM Resources
division to one location resulting in a restructuring charge associated with the relocations of £2.5m.

During the year the Group provided for the estimated liability of equalising GMPs in our defined benefit pension schemes of £1.2m
(see Note 24).

In the prior year an onerous provision was created for the top floor of the head office property and an onerous provision release was
made for the continued sub-letting of one of the Group's properties.

In the prior year, the Group incurred professional advisor costs relating to the acquisition and integration of Consortium. Restructuring
costs were incurred during the prior year which also relate to the integration of Consortium

FINANCIAL STATEMENTS

6 . S T A F F N U M B E R S A N D C O S T S

The average number of persons (including directors) employed by the Group during the year was as follows:

Research and development, products and services

Marketing and sales

Corporate services

Year ended
30 November 2018

Year ended
30 November 2017

Number

1,344

309

229

1,882

Number

1,267

252

215

1,734

The above figures have been calculated on a Full Time Equivalent basis. The actual average number for the year is 1,936.
Aggregate emoluments of persons employed by the Group comprised:

Wages and salaries

Termination costs

Social security costs

Other pension costs

Share-based payments (Note 26)

7 . I N V E S T M E N T I N C O M E

Bank interest

Income on sale of finance lease debt

Other finance income

8 . F I N A N C E C O S T S

Year ended
30 November 2018

Year ended
30 November 2017

£000

53,833

978

4,499

4,483

993

64,786

£000

50,775

1,506

4,378

4,667

821

62,147

Year ended
30 November 2018

Year ended
30 November 2017

£000

144

164

£000

168

150

365

Year ended
30 November 2018

Year ended
30 November 2017

Borrowing facilities arrangement fees and commitment fees

Net finance costs on defined benefit pension scheme

Unwind of discount on long-term contract provisions

Unwind of discount on onerous lease and dilapidations provisions

Interest on bank loans and overdrafts

Other finance costs

Note

£000

583

507

481

1,704

£000

524

1,049

229

1,965

9 . T A X

a) Analysis of tax charge in the consolidated income statement

Current taxation

UK corporation tax

Adjustment in respect of prior years

Overseas tax

Total current tax charge

Deferred taxation

Temporary differences

Adjustment in respect of prior years

Overseas tax

Total deferred (credit)

Total consolidated income statement tax charge

Year ended
30 November 2018

Year ended
30 November 2017

£000

4,289

(313)

395

4,371

(273)

(271)

4,100

£000

2,976

(1,555)

387

1,808

(6)

104

(163)

(65)

1,743

b) Analysis of tax charge in the consolidated statement of comprehensive income

UK corporation tax

Defined Benefit Pension Scheme

Shared based payments

Deferred tax

Defined Benefit Pension Scheme movements

Defined Benefit Pension Scheme escrow

Share-based payments

Deferred tax relating to the change in rate

Total consolidated statement of
comprehensive income tax charge

Year ended
30 November 2018

Year ended
30 November 2017

£000

(380)

3,048

(6)

2,716

£000

(428)

3,481

3,203

FINANCIAL STATEMENTSc) 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 2018

Year ended 30 November 2017

Adjusted

Adjustments

£000

Total

£000

Adjusted*

Adjustments*

£000

Total

£000

Profit on ordinary activities before tax

25,979

(4,952)

21,027

19,722

(5,128)

14,594

Tax at 19% (2017: 19.33%) thereon:

4,936

(941)

3,995

3,812

(991)

2,821

Effects of:

- other expenses not deductible for tax purposes

- other temporary timing differences

- effect of profits/(losses) in various

overseas tax jurisdictions

- Prior period adjustments - UK

- Prior period adjustments - overseas

106

(193)

192

(307)

284

390

(170)

192

(307)

Tax charge in the consolidated income statement

4,734

(634)

4,100

* Re-presented for share-based payment reclassification (see Note 2)

211

(72)

(100)

(280)

(1,170)

2,401

321

(658)

532

(60)

(100)

(280)

(1,170)

1,743

The reduction in the prior year is principally due to a reduction of £1.2m in the transfer pricing provision associated with cross border
intra-group transactions between the UK and India which has been agreed with the relevant tax authorities and a reduction in the UK
corporate tax rate. There are no remaining material provisions in the Group.

Factors that may affect future tax charges

The standard rate of corporation tax in the UK for the period is 19%. A reduction in the UK corporation tax rate from 19% to 17%
(effective 1 April 2020) was substantively enacted on 6 September 2016.

This will reduce the company's future current tax charge accordingly. The deferred tax asset at 30 November 2018 has been calculated
based on these rates.

d) Deferred tax

The Group has recognised deferred tax assets as these are anticipated to be recoverable against profits in future periods.
The major deferred tax assets and liabilities recognised by the Group and movements thereon are as follows:

Defined

Accelerated tax

Benefit Pension

Share-based

Short-term timing

Acquisition related

depreciation

Scheme obligation

payments

differences

intangible assets

Group

At 1 December 2016

(Credit)/charge to income

Charge to equity

Acquired Deferred tax
assets/(liabilities)

At 30 November 2017

(Credit)/charge to income

(Charge)/credit to equity

Acquired Deferred tax liabilities

At 30 November 2018

£000

846

(13)

321

1,154

(133)

1,021

£000

5,912

(3,481)

1,009

3,440

(3,048)

392

£000

254

(80)

233

161

396

£000

1,781

(65)

(70)

1,657

(48)

(97)

£000

(3,077)

(2,993)

204

1,548

(2,789)

Total

£000

8,793

(3,631)

(1,736)

3,491

268

(3,094)

(97)

568

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. At the balance sheet date, the Group has an unrecognised gross deferred tax asset relating to tax losses of £2,383,000
(2017: £4,137,000) which is available for offset against future profits within the United States of America. Movement from the prior
period reflects the enactment of the Tax Cuts and Jobs Act in December 2017 which reduced the US Federal tax rate from 35% to 21%
from 1 January 2018. A deferred tax asset has not been recognised in respect of any of this amount due to uncertainty surrounding the
future use of these losses.

No deferred tax liability is recognised on temporary differences of £449,000 (2017: £506,000) 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.

FINANCIAL STATEMENTS1 0 . E A R N I N G S P E R O R D I N A R Y S H A R E

Year ended 30 November 2018

Year ended 30 November 2017

Profit for

Weighted average

Profit for

Weighted average

the year

number of shares

Pence per share

the year

number of shares

Pence per share

£000

‘000

£000

‘000

Basic earnings per ordinary share

Basic earnings

Adjustments* (see Note 5)

Adjusted basic earnings

Diluted earnings per ordinary share

16,927

4,318

21,245

81,779

20.7

5.3

26.0

12,851

4,470

17,321

81,455

Basic earnings

16,927

81,779

20.7

12,851

81,455

Effect of dilutive potential ordinary shares:
share-based payment awards

Diluted earnings

Adjustments* (see Note 5)

Adjusted diluted earnings

16,927

4,318

21,245

460

82,239

(0.1)

20.6

5.2

25.8

12,851

4,470

17,321

179

81,634

15.8

5.5

21.3

15.8

(0.1)

15.7

5.5

21.2

* Re-presented for share-based payment reclassification (see Note 2)

1 1 . D I V I D E N D S

Amounts recognised as distributions to equity holders were:

Final dividend for the year ended 30 November 2017 –
4.95p per share (2016: 4.50p)

Interim dividend for the year ended 30 November 2018 –
1.90p per share (2017: 1.65p)

Year ended
30 November 2018

Year ended
30 November 2017

£000

4,047

1,554

5,601

£000

3,660

1,348

5,008

The proposed final dividend of 5.70p per share for the year ended 30 November 2018 was approved by the Board on 4 February 2019.
The dividend is subject to approval by Shareholders at the annual general meeting. The anticipated cost of this dividend is £4,666,125
which is not included as a liability at 30 November 2018.

1 2 . G O O D W I L L

Group

Cost

At 1 December 2016

Acquired during the year

At 30 November 2017

At 1 December 2017

At 30 November 2018

Accumulated impairment losses

At 1 December 2016, 30 November 2017 and 30 November 2018

Carrying amount

At 30 November 2018

At 30 November 2017

The carrying amount of goodwill is allocated as follows:

Group

RM Resources

RM Results

£000

23,761

31,097

54,858

(9,694)

45,164

Year ended
30 November 2018

Year ended
30 November 2017

£000

42,208

2,956

45,164

£000

42,208

2,956

45,164

Further information pertaining to the performance and future strategy of the divisions can be found within the Strategic Report.

A review of the forecast future cash flows of RM Resources and of RM Results indicated no impairment was required.

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 discount rates and growth rates.

The Group consider RM Resources to be one CGU as operating profit is reported and budgeted in this way to the Board. During the
period, the assets and operations of the TTS CGU and the Consortium CGU in RM Resources have been integrated resulting in the 2 CGUs
now forming one single CGU. There is judgment involved in assessing the level the Group monitors results to determine the CGUs.

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, risks and the inter-dependencies 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. Analysis of the sensitivity of the resultant impairment reviews to changes in the discount rate is included below.

The Group prepares 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 internal forecasts with terminal rates of 2.0%
(2017: 2.5%). Pre-tax discount rates used are 13.6% (2017: 12.6%)

Sensitivity analysis

The sensitivity of goodwill carrying values to reasonably possible changes in key assumptions has been performed. A reasonably
possible change of 1% in the discount rate or a 1% reduction in the growth rate beyond 2021 would not change the conclusion of
the impairment review.

FINANCIAL STATEMENTS

1 3 . O T H E R I N T A N G I B L E A S S E T S

Customer

Intellectual

property &

Website

Other

relationships

Brands

database assets

platform

software assets

£000

644

110

18,100

325

2,520

3,418

176

(340)

3,292

188

(13)

644

18,210

325

2,520

3,536

25,235

Total

£000

4,497

20,620

176

(340)

24,991

188

(13)

At 30 November 2017

644

18,210

325

2,520

Group

Cost

At 1 December 2016

Acquired on 30 June 2017

Additions

Transfers between categories

Disposals

Additions

Transfers between categories

Exchange differences

At 30 November 2018

Accumulated amortisation
and impairment losses

At 1 December 2016

Charge for the year

Impairments

Exchange differences

Disposals

At 30 November 2017

Charge for the year

Exchange differences

644

110

503

613

1,206

At 30 November 2018

644

1,819

Carrying amount

At 30 November 2018

At 30 November 2017

16,391

17,597

325

211

504

715

2,714

394

(1)

(319)

2,821

455

(9)

3,267

3,793

1,108

(1)

(319)

4,614

2,165

(9)

6,770

1,805

2,309

269

471

18,465

20,377

1 4 . P R O P E R T Y, P L A N T A N D E Q U I P M E N T

Freehold land

Short leasehold

Computer

& buildings

improvements

Plant & equipment

equipment

£000

Vehicles

£000

Total

£000

4,438

344

(38)

(6)

(661)

4,149

343

(24)

(37)

(309)

4,122

3,916

369

(5)

(552)

3,731

346

(28)

(210)

3,839

283

418

8,934

126

660

(1,458)

8,262

565

(164)

(44)

(128)

8,491

7,082

837

(1)

(1,452)

6,475

824

(36)

(304)

6,959

1,532

1,787

915

23,385

(1)

(393)

600

(8)

(373)

248

618

(384)

278

(3)

(157)

156

322

5,473

1,150

(38)

(11)

(2,699)

27,260

1,049

(188)

(113)

(1,070)

26,938

17,166

1,921

368

(12)

(2,552)

16,891

1,920

(82)

(975)

17,754

9,184

10,369

Group

Cost

At 1 December 2016

Acquired on 30 June 2017

Additions

Transfers between categories

Exchange differences

Disposals

At 30 November 2017

Additions

Transfers between categories

Exchange differences

Disposals

3,017

5,000

(21)

8,004

6,081

275

(4)

(166)

6,245

112

(24)

(260)

At 30 November 2018

8,004

6,073

Accumulated depreciation and impairment

At 1 December 2016

Charge for the year

Impairment loss

Exchange differences

Disposals

At 30 November 2017

Charge for the year

Exchange differences

Disposals

At 30 November 2018

Carrying value

At 30 November 2018

At 30 November 2017

906

160

(9)

1,057

206

1,263

6,741

6,947

4,644

511

356

(6)

(155)

5,350

506

(15)

(304)

5,537

536

895

FINANCIAL STATEMENTS1 5 . I N V E S T M E N T S I N S U B S I D I A R Y U N D E R T A K I N G S

The subsidiary undertakings of the Company at 30 November 2018 were:

Name

RM Education Limited

TTS Group Limited

Principal activity

Country of

incorporation

Class of
share

Software, services & systems

England

Ordinary

Resource supply

England

Ordinary

% held

100%

RM Education Solutions India Pvt Limited *

Software and corporate services

India

Ordinary

100%

RM Books Limited

RM Group US LLC

RM Education Inc.*

Software services

England

Ordinary

100%

Non-trading

USA

Ordinary

100%

Ordinary

100%

RM Pension Scheme Trustee Limited

Corporate Trustee

England

Ordinary

100%

RM Schools Limited *

Hedgelane Limited

Hammond Bridge Limited *

Dormant

Property holding

Non-trading

England

Ordinary

100%

England

Ordinary

100%

England

Ordinary

100%

The Consortium for Purchasing and Distribution Limited *

Purchasing and distribution

England

Ordinary

* Held through subsidiary undertaking.

All UK subsidiary companies are registered at 140 Eastern Avenue, Milton Park, Abingdon, Oxon OX14 4SB.

RM Group US LLC is registered at 1431 Airport Drive, Suite 400 Ball Ground, Atlanta, GA 301074288 USA.

RM Education Inc. is registered at 129 Bridle Path, Marston Mills, MA 02648 USA .

RM Education Solutions India Pvt Limited is registered at Unit No.8A, Carnival Techno Park Technopark, Kariyavattom, PO Trivandrum,
Thiruvananthapuram, Kerala 695581, India.

During the year The Consortium Ltd*, Hammond Bridge Trustees Ltd*, Studentpacks Ltd* and Supply Zone Ltd* were liquidated.

The investment in subsidiary undertakings comprises:

Company

Cost

At 1 December 2016

Acquisition

Share-based payments

At 30 November 2017

Share-based payments

At 30 November 2018

Impairment

At 1 December 2016

At 30 November 2017

At 30 November 2018

Carrying value

At 30 November 2018

At 30 November 2017

Note

Capital contribution

Investment in

shared-based

share capital

£000

payments

£000

53,505

58,956

112,461

11,846

821

12,667

12,739

Total

£000

65,351

58,956

821

125,128

125,200

112,373

12,739

12,667

125,112

125,040

At 30 November 2018 an impairment review was undertaken which indicated that no impairment in the investments held by the
Company was required (2017: nil). The impairment review was performed using the same assumptions used in the impairment review
performed in relation to the Group’s assets which are disclosed in Note 12 of the consolidated financial statements. The impairment
review is sensitive to a change in key assumptions used in the value in use calculations relating to the discount rate and future
growth rates.

A reasonably possible change of 1% in the discount rate or a 1% reduction in the growth rate beyond would not change the
conclusion of the impairment review.

100

FINANCIAL STATEMENTS
1 6 . I N V E N T O R I E S

Group

Components

Finished goods

Any inventory that is not expected to be turned over within 24 months has been provided for.

1 7. L O N G - T E R M C O N T R A C T S

Group

Contract costs incurred plus recognised profits less recognised losses to date

Less: Progress billings

Amounts due from contract customers included in trade and other receivables

Amounts due to contract customers included in trade and other payables

2018

£000

17,747

17,787

2017

£000

19,357

19,413

Note

2018

£000

2017

£000

466,627

420,788

(471,126)

(430,968)

(4,499)

(10,180)

(4,565)

(4,499)

(10,183)

(10,180)

Total revenue from long-term contracts recognised in the year ended 30 November 2018 amounted to £40,713,000 (2017: £46,002,000).

Long-term contract outcome – estimation uncertainty

The Group’s long-term contracts represent a significant part of the Group’s business. As a result of the accounting for these contracts, as
outlined in Note 2, it is necessary for the Directors to assess the outcome of each contract and also estimate future costs and contracted
revenues to establish ultimate contract profitability.

Key judgements include performance indicator outcomes, future inflation rates, implementation/software development costs and
whether the contract variations and extensions should be combined with existing arrangements. Profit is then recognised based on
these judgements and, depending on the maturity of the contract portfolio, a greater or lesser proportion of Group profit will arise from
long-term contracts.

Sensitivity to assumptions has been considered but due to their nature it is not practicable to perform an analysis.

101

1 8 . T R A D E A N D O T H E R R E C E I VA B L E S

Note

Current

Financial assets

Trade receivables

Long-term contract balances

Other receivables

Derivative financial instruments

Accrued income

Amounts owed by Group undertakings

Non-financial assets

Prepayments

Non-current

Financial assets

Other receivables

Currency profile of receivables

Sterling

US Dollar

Indian Rupee

Group

Company

2018

£000

2017

£000

2018

£000

2017

£000

14,605

14,620

894

15,514

21,239

20,770

1,146

1,366

23,285

5,862

29,147

9,722

9,745

893

353

2,013

24,564

10,314

34,878

930

35,808

31,892

3,145

771

35,808

1,144

30,291

867

10,612

29,182

10,612

15,514

589

520

30,291

10,612

15,514

The amounts owed by Group undertakings to the Company are repayable on demand and bear interest at LIBOR plus 2%.

The Directors consider that the carrying amounts of trade and other receivables approximates their fair values.

The Company’s Non-current Other receivables are the gross amounts owed by the Company’s 9% equity investments in
Essex Schools (Holdings) Ltd. The balance is being repaid over a period of 25 years ending in 2036. The interest charged on
these receivables is 11.75% pa.

102

FINANCIAL STATEMENTSAnalysis of trade receivables by type of customer

Group

Government

Commercial

2018

£000

11,585

9,654

21,239

2017

£000

12,632

8,138

20,770

Trade receivables included an allowance for estimated irrecoverable amounts at 30 November 2018 of £377,000 (2017: £692,000), based
on management's knowledge of the customer, externally available information and expected payment likelihood. This allowance has
been determined by reference to specific receivable balances and past default experience. New customers are subject to credit checks
where available, using third-party databases prior to being accepted. The Group uses the practical expedient of measuring impairment
using a provision matrix which is consistent with applying a full credit loss model for the Group.

Ageing of unimpaired trade receivables

Group

Not past due

Overdue by less than 60 days

Overdue by between 60 and 90 days

Overdue by more than 90 days

2018

£000

16,492

2,188

906

1,653

2017

£000

15,674

3,866

650

580

21,239

20,770

103

1 9 . A C Q U I S I T I O N S O F S U B S I D I A R I E S

Acquisitions in the prior year

On 30 June 2017, the Group acquired all of the shares in Hedgelane Limited, including its principal trading subsidiary known as
Consortium. Consortium is a leading supplier of branded and own-branded products primarily to educational institutions.

The acquisition of Consortium represented a strategic opportunity for RM to enhance signiﬁcantly the scale and offering of its
education resources business. The Board believes that the combination of RM’s education resources business, TTS, and Consortium
would lead to an expanded, more diversiﬁed and better balanced product portfolio, comprising a wide spectrum of higher, value-
added, curriculum-focused resources and essential commodity and education resource products. The businesses also have
complementary geographic coverage and customer relationships, and combined would have an improved purchasing position and
beneﬁt from other signiﬁcant operational improvement opportunities.

The fair value of the cash consideration for the acquisition was £59.0m. Transaction fees associated with the acquisition and expensed
to the consolidated statement of comprehensive income in 2017 were £2.5m.

Effect of acquisition

The acquisition had the following effect on the Group’s assets and liabilities in 2017:

Fair value on acquisition
£000

Acquisition related intangible assets

Other intangible assets

Property, plant and equipment

Inventories

Trade and other receivables

Cash and cash equivalents

Defined benefit pension scheme surplus

Trade and other payables

Defined benefit pension scheme obligation

Current tax liabilities

Deferred tax

Provisions

Net assets acquired

Goodwill

Consideration paid

Satisfied by

Cash

Total purchase consideration

Net cash flow on acquisition

Cash and cash equivalents

Cash flow on acquisition

104

18,100

2,520

5,473

8,695

10,185

549

216

(9,720)

(6,153)

(4)

(1,837)

(165)

27,859

31,097

58,956

(549)

58,407

FINANCIAL STATEMENTS

In the period 1 July 2017 to 30 November 2017 Consortium contributed revenue of £27.8m and statutory profit after tax of £0.8m. If the
acquisition had occurred on 1 December 2016 Consortium would have contributed revenue of £58.8m and statutory profit after tax
of £1.2m in 2017. In determining these amounts, management has assumed that the fair value adjustments that arose on the date of
acquisition would have been the same if the acquisition occurred on 1 December 2016.

Fair value adjustments

On the acquisition of Consortium, all assets were fair valued and appropriate intangible assets recognised following the
principles of IFRS 3.

A deferred tax liability related to these intangible assets was also recognised. Management identified the main material intangible
asset as the Consortium own brand. These intangible assets were valued at £18.1m using the Relief from Royalty method and are
being amortised over 15 years which is in accordance with the estimated useful economic life (UEL) and IAS 38. The website platform
was valued at £2.5m over 5 years by considering the replacement cost.

Goodwill of £31.1m represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired.
The goodwill arising on the acquisition is largely attributable to the synergies and values associated with being part of the enlarged
RM Resources proposition.

Stock has been valued in line with Group policy taking into account the recoverability and obsolescence. The properties have been
restated to fair market value. Trade and other receivables and payables were all reviewed and are in line with Group policy.

Acquisition related costs

The Group incurred acquisition related costs of £3.2m related to advisor fees, banking arrangements and stamp duty. These costs have
been included in the administrative expenses in the Group's consolidation statement of comprehensive income in 2017. Costs relating
to debt raising were capitalised and amortised over the life of the loan, see Note 29.

2 0 . B O R R O W I N G S

Group and Company

Bank loan

Add capitalised fees

Borrowings

2018

£000

(7,000)

494

(6,506)

2017

£000

(14,000)

812

(13,188)

The borrowings in the year and details of the facility are detailed in Note 29. Bank and professional service fees relating to securing the
loan have been capitalised and are amortised over the length of the loan.

105

2 1 . T R A D E A N D O T H E R P AYA B L E S

Group

Company

Note

2018

£000

2017

£000

2018

£000

2017

£000

Current liabilities

Financial liabilities

Trade payables

Other taxation and social security

Other payables

Derivative financial instruments

Accruals

Long-term contract balances

Amounts owed to Group undertakings

Non-financial liabilities

Deferred income

Non-current liabilities

Non-financial liabilities

Deferred income

- due after one year but within two years

- due after two years but within five years

23,119

4,284

1,857

10,557

4,565

44,382

10,255

54,637

235

283

18,524

4,765

535

389

12,975

10,183

47,371

10,265

57,636

409

443

852

71,007

71,080

258

64,533

64,791

54,920

58,488

71,080

64,791

The amounts owed to Group undertakings by the Company are payable on demand and bear interest at LIBOR plus 2%.

Currency profile of trade and other payables

Sterling

US Dollar

Euro

Indian Rupee

Other

Group

Company

2018

£000

52,817

350

142

1,353

258

54,920

2017

£000

56,988

1,307

58,488

2018

£000

71,080

2017

£000

64,791

71,080

64,791

The Directors consider that the carrying amount of trade and other payables approximates their fair value.

106

FINANCIAL STATEMENTS

2 2 . P R O V I S I O N S

Group

At 1 December 2016

Acquired on 30 June

Utilisation of provisions

Release of provisions

Increase in provisions

Unwind of discount

At 30 November 2017

Utilisation of provisions

Release of provisions

Increase in provisions

Unwind of discount

At 30 November 2018

Note

Onerous lease

Employee-related

and dilapidations

restructuring

£000

3,157

165

(308)

(1,115)

1,780

3,770

(694)

(43)

400

3,518

£000

1,844

(1,697)

831

978

(1,569)

(37)

3,201

2,573

Other

£000

1,692

(236)

(568)

819

1,707

(479)

471

1,699

Total

£000

6,693

165

(2,241)

(1,683)

3,430

6,455

(2,263)

(559)

4,072

7,790

Provisions for onerous leases and dilapidations have been recognised at the present value of the expected obligation at discount
rates of 2.6% (2017: 2.6%) per annum reflecting a risk-free discount rate, applicable to the liabilities. These discounts will unwind to
their undiscounted value over the remaining lives of the leases via a finance cost within the income statement. At 30 November 2018,
£925,000 (2017: £1,525,000) of the provision refers to onerous leases, and £2,593,000 (2017: £2,245,000) refers to dilapidations. In the
prior year an onerous provision was created for the top floor of the head office property and an onerous provision release was made
for the successful sub-letting of one of the Group's properties. Following the acquisition in the prior year, the Group's dilapidation
provisions as a whole were reviewed and subsequently increased. During the year the Group has further updated provisions in line
with negotiations with landlords.

The average remaining life of the leases at 30 November 2018 is 1.1 years (2017: 2.1 years).

In making their assessment of the required provisions, the Group is required to estimate the likely sub-let income that could be
earned over the remaining life of the lease. This requires the Directors to make judgements relating to the likelihood that a property
will be sub-let and the income that will be earned.

Employee-related restructuring provisions refer to costs arising from restructuring to meet the future needs of the Group.
Of the £2,573,000 provision, £1,070,000 is expected to be utilised during the following financial year.

Other provisions includes one-off items not covered by any other category of which the most significant items are the risk
provisions from ended long-term contracts transferred from long-term contract creditors to provisions. During the year the
movement on long-term provisions was a net decrease of £257,000 (2017: net increase of £779,000).

107

Disclosure of provisions

Group

Current liabilities

Non-current liabilities

Company
Non-current liabilities

At 1 December 2016

Increase in provisions

At 30 November 2017

Increase in provisions

Utilisation of provisions

At 30 November 2018

2018

£000

5,082

2,708

7,790

2017

£000

3,436

3,019

6,455

£000

5,028

273

5,301

154

(5,455)

The above provision relates to the guarantee of an intergroup balance between subsidiary undertakings.

The Directors consider that the carrying amounts of provisions in the Group and the Company approximate their fair value.

2 3 . S H A R E C A P I T A L

Company and Group
Allotted, called-up and fully paid

At 30 November 2016 and 2017

Issued in the year

Exercise of share options

As at 30 November 2018

Ordinary shares issued carry no right to fixed income.

Ordinary shares of 22/7p

‘000

82,650

1,200

£000

1,890

83,875

1,917

108

FINANCIAL STATEMENTS2 4 . R E T I R E M E N T B E N E F I T S C H E M E S

a. Defined contribution scheme

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 £3,997,000
(2017: £4,150,000) represents contributions payable to these
schemes by the Group at rates specified in employment
contracts. At 30 November 2018 £324,000 (2017: £345,000)
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. The Group makes
payments to these schemes for current service costs
in accordance with its contractual obligations, most of
which are limited through reimbursement rights under
the contracts. The total costs charged to income for these
schemes was £120,000 (2017: £136,000). The amount due in
respect of these schemes at 30 November 2018 was £71,000
(2017: £71,000).

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
(the “RM Scheme”) and, following the acquisition of
Consortium in June 2017, the Consortium CARE Scheme (the
"CARE Scheme") and the Platinum Scheme (the "Platinum
Scheme"). The RM Scheme and the CARE Scheme are both
operated for employees and former employees of the Group
only. The Platinum Scheme is a multi-employer scheme,
with Consortium being just one of a number of employers.
The Group plays no active part in managing that Scheme,
although the number of the Group’s employees in that
Scheme is small and so the impact/risk to the Group from
that Scheme is limited.

For all three Schemes, based on the advice of a qualified
independent actuary at each balance sheet date and using
the projected unit method, the administrative expenses and
current service costs are charged to operating profit, with
the interest cost, net of interest on Scheme assets, reported
as a financing item. This year an estimate for Guaranteed
Minimum Pensions (‘GMPs’) has also been expensed (see
below for further explanation).

Scheme assets are measured at bid-price, where available, at
30 November 2018. The present value of the defined benefit
obligation was measured using the projected unit method.

Under the guidance of IFRIC 14, the Group is able to recognise
a pension surplus on the balance sheet for all three Schemes.
In the year the RM and Platinum Schemes show a surplus and
the CARE Scheme is in deficit.

The Research Machines plc 1988 Pension Scheme
(RM Scheme)

The Scheme provides benefits to qualifying employees and
former employees of RM Education Ltd, 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 Ltd's
assets in a trustee-administered fund. The Trustee is a limited
company. Directors of the Trustee company are appointed
by RM Education Ltd and by members. The 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 2015 by
a qualified independent actuary. IAS 19 Employee Benefits
(revised) liabilities at 30 November 2018 have been rolled
forward based on this valuation’s base data.

As at 31 May 2015, the triennial valuation for statutory funding
purposes showed a deficit of £41,800,000 (31 May 2012:
£53,500,000). The Group agreed with the Scheme Trustee
that it will repay this amount via deficit catch-up payments
of £4,000,000 in December 2015 and £3,600,000 per annum
until 30 September 2024. At 30 November 2018 there were
amounts outstanding of £300,000 (2017: £300,000) for
one month's deficit payment and £32,000 (2017: £32,000)
for Scheme expenses. The next triennial valuation of the
Scheme is as at 31 May 2018 and we are currently undergoing
negotiations which may result in changes to the level of
deficit catch-up payments required.

109

Prudential Platinum Pension (Platinum Scheme)

Consortium acquired West Mercia Supplies in April 2012
(prior to the Company acquiring Consortium). Upon
acquisition by 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 Xafinity (now XPS Pensions Group) on
31 December 2015. Using the assumptions below the results
of the full valuation were adjusted and rolled forward to
form the basis for the current year valuation. The Scheme is
administered within a legally separate trust from 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 valuation of the scheme at 31 December 2015 was a
deficit of £70,000.

In addition to the £4,000,000 of catch-up payments in
December 2015, a further £4,000,000 contribution was paid
in December 2015 into an escrow account established in
March 2014, the use of which within the Scheme is required to
be agreed by RM Education Limited and the Scheme Trustee.

The parent company RM plc 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 Ltd (“Consortium”, acquired by the Company on
30 June 2017) operated the 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. As at 28
February 2011 the Scheme was closed to future accruals.
The disclosures in this report make allowance for this change.

The Scheme is subject to the Statutory Funding Objective
under the Pensions Act 2004. A valuation of the Scheme
is carried out at least once every three years to determine
whether the Statutory Funding Objective is met. As part
of the process, Consortium must agree with the trustees
of the Scheme the contributions to be paid to address
any shortfall against the Statutory Funding Objective.
The Statutory Funding Objective does not currently impact
on the recognition of the Scheme in these accounts. The
Scheme is managed by a Board of Trustees appointed
in part by the Company and in part from elections by
members of the Scheme. The Trustees have responsibility
for obtaining valuations of the fund, administering benefit
payments and investing Scheme assets. The Trustees
delegate some of these functions to their professional
advisors where appropriate. The valuation of the Scheme
at 31 December 2016 was a deficit of £4.2m.

110

FINANCIAL STATEMENTSAmounts recognised in the income statement and in the statement of comprehensive income

Year ended
30 November 2018

Year ended
30 November 2017

Administrative expenses and taxes

Current service costs

Operating expense

Interest cost

Interest on Scheme assets

Net interest expense

Past service costs (GMP)

Expense recognised in the income statement

Effect of changes in demographic assumptions

Effect of changes in financial assumptions

Effect of experience adjustments

Total actuarial gains

Return on Scheme assets excluding interest on Scheme assets

Income recognised in the statement of comprehensive income

Income recognised in total comprehensive income

GMP equalisation

Note

£000

(537)

(108)

(645)

(6,798)

6,291

(507)

(1,200)

(2,352)

(1,230)

19,884

4,126

22,780

(7,087)

15,693

13,341

£000

(552)

(69)

(621)

(6,946)

5,897

(1,049)

(1,670)

7,920

(4,608)

1,898

5,210

12,750

17,960

16,290

UK pension schemes are required to pay equal “Guaranteed Minimum Pensions” (“GMPs”) to men and women following the 1990
legal case which led to the Barber judgment. Pensions paid have historically been intrinsically different, for example due to different
GMP pension ages (60 for a woman and 65 for a man) and therefore difficult to calculate an estimate for pension equalisation.

The court judgment in October 2018 involving the Lloyds Banking Group’s pension schemes provided greater clarity, stating both that
adjustments to benefits would be required, and giving trustees some details of the methods that could be acceptable for doing so.

The data available on the proportion of the liabilities that relate to post 1988 GMPs is the best data currently available to estimate the
quantum of Scheme liabilities that need to be equalised. The Schemes will adopt an approach to GMP equalisation in a way that is
generally structured to minimise the costs of achieving this.

Our proposed approach can be broadly summarised as follows:

• Calculate proportion of Scheme’s obligations relating to Post 1988 GMP

• Estimate the proportion of GMPs relating to benefits that need to be equalised (post 1990 GMPs)

based on a break down of the Scheme rules and individual data for each Scheme

• Estimate of the cost of removing GMP inequalities in the Scheme

This has resulted in a one-off charge of £1m for the Research Machines plc 1988 Pension Scheme, and an exceptional charge of £0.2m
for the Consortium CARE Scheme (see Note 5). As the members of the Platinum Scheme joined during 2012 and didn’t transfer benefits
from previous schemes with them, there are no GMPs in the scheme and therefore no adjustment for equalisation is necessary.

In the Director’s view, the range of outcomes is not material even though this is an estimate at this stage.

111

Reconciliation of the Scheme assets and obligations through the year

RM Scheme

CARE Scheme

Platinum Scheme

Year ended
30 November 2018

Year ended
30 November 2017

£000

Assets

At start of year

Acquired during the year

Interest on Scheme assets

Return on Scheme assets
excluding interest on Scheme assets

Administrative expenses

Contributions from Group

Contributions from employees

Benefits paid

At end of year

Obligations

At start of year

Acquired during the year

Interest cost

Actuarial gains

Benefits paid

Past service cost (GMP)

Current service costs

Contributions from employees

At end of year

Pension deficit

Pension surplus

Net pension deficit

206,888

15,788

5,821

(6,274)

(511)

3,984

(7,507)

202,401

411

(681)

382

(2,061)

13,839

1,973

(132)

(26)

225

(28)

2,090

224,649

6,291

(7,087)

(537)

4,591

(9,596)

218,330

(223,392)

(20,015)

(1,478)

(244,885)

(6,233)

21,270

7,507

(1,000)

(201,848)

553

(522)

1,280

2,061

(200)

(17,396)

(3,557)

(43)

230

(108)

(19)

(1,390)

700

(6,798)

22,780

9,596

(1,200)

(108)

(19)

(220,634)

(3,557)

1,253

(2,304)

190,983

17,605

5,897

12,750

(552)

4,187

(6,230)

224,649

(225,758)

(23,542)

(6,946)

5,209

6,230

(69)

(9)

(244,885)

(20,731)

495

(20,236)

Reconciliation of net defined benefit obligation

Year ended
30 November 2018

Year ended
30 November 2017

Net obligation at the start of the year

Net obligation acquired during the year

Cost included in income statement

Scheme remeasurements included in the statement of comprehensive income

Cash contribution

Net pension deficit

£000

(20,236)

(2,352)

15,693

4,591

(2,304)

£000

(34,775)

(5,937)

(1,670)

17,959

4,187

(20,236)

112

FINANCIAL STATEMENTS

Obligation by participant status

Active

Vested deferreds

Retirees

Value of Scheme assets

Fair value of Scheme assets with a quoted market price

Cash and cash equivalents, including escrow

Equity instruments

Debt instruments

Liability driven investments

Value of unquoted Scheme assets

Insurance contract

Significant actuarial assumptions

Discount rate (RM Schemes)

Discount rate (CARE Scheme)

Discount rate (Platinum Scheme)

Rate of RPI price inflation

Rate of CPI price inflation

Rate of salary increases (Platinum Scheme)

Rate of pensions increases

pre 6 April 1997 service

pre 1 June 2005 service

post 31 May 2005 service

Post retirement mortality table

Year ended
30 November 2018

Year ended
30 November 2017

£000

1,135

177,305

42,194

220,634

£000

1,212

209,869

33,804

244,885

Year ended
30 November 2018

Year ended
30 November 2017

£000

7,696

107,006

2,090

75,777

25,761

218,330

10,535

107,814

1,973

77,939

26,388

224,649

Year ended
30 November 2018

Year ended
30 November 2017

3.30%

3.20%

3.40%

3.35%

2.25%

1.50%

3.20%

2.10%

2.85%

2.75%

2.85%

3.20%

2.10%

1.50%

3.10%

2.10%

S2PA CMI 2017 1.25%

S2PA CMI 2016 1.25%

Weighted average duration of defined benefit obligation

23 years

Assumed life expectancy on retirement at age 65:

Retiring at the accounting date (male member aged 65)

Retiring 20 years after the accounting date (male member aged 45)

22.7

24.1

22.1

23.5

In the prior year the methodology used in establishing discount rates was changed to better reflect management’s estimate
of the long-dated credit risk implied in bond yields appropriate for the cash flow liabilities in the Scheme.

113

Expected cash flows

Expected employer contributions for the year ended 30 November 2019

Expected total benefit payments

Year 1

Year 2

Year 3

Year 4

Year 5

Years 6 - 10

Year ended
30 November 2018

Year ended
30 November 2017

£000

4,503

3,382

3,559

3,876

4,323

4,682

30,267

£000

4,611

3,102

3,696

4,317

4,590

4,879

30,083

Sensitivities to assumptions - one item changed with all others held constant

--------------------------------- 30 November 2018 ---------------------------------

30 November 2017

-0.1%

+0.1%

discount

Base

£m

rate

£m

rate

-0.1% RPI

+0.1% RPI

Life +1 yr

£m

Analysis of net balance sheet position

Fair value of Scheme assets

Present value of Scheme obligations

218.3

(220.6)

218.6

218.0

218.1

218.5

219.1

(225.4)

(216.1)

(217.2)

(224.1)

(227.3)

Net pension deficit

Actuarial assumptions

Discount rate (RM Scheme)

Discount rate (CARE Scheme)

Discount rate (Platinum Scheme)

Rate of RPI

Rate of CPI

Mortality table

Rating (years)

(2.3)

(6.8)

1.9

0.9

(5.6)

(8.2)

3.30%

3.20%

3.40%

3.35%

2.25%

3.20%

3.40%

3.30%

3.10%

3.30%

3.20%

3.30%

3.50%

3.40%

3.35%

3.25%

3.45%

2.25%

2.15%

2.35%

--------------------------- S2PA CMI 2017 1.25% ---------------------------

S2PA CMI 2016 1.25%

(1)

Base

£m

224.7

(244.9)

(20.2)

2.85%

2.75%

2.85%

3.20%

2.10%

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.

114

FINANCIAL STATEMENTS2 5 . O W N S H A R E S

The RM plc Employee Share Trust (EST) was established in March 2003 to hedge the future obligations of the Group in respect of shares
awarded under the RM plc Co-Investment Plan, RM plc Performance Share Plan and Deferred Bonus Plan. The EST has waived any
entitlement to the receipt of normal dividends in respect of all of its holding of the Company’s ordinary shares. The EST’s waiver of
dividends may be revoked or varied at any time.

Company and Group

At 1 December 2016

Shares released to award holders

At 30 November 2017

New shares issued

Shares released to award holders

At 30 November 2018

Ordinary shares of 22/7p

Number ‘000

1,326

(413)

913

1,200

(100)

2,013

£000

1,987

(581)

1,406

(10)

1,423

The valuation of shares is weighted average cost. The maximum number of own shares held in the year was 2,113,055.

2 6 . S H A R E - B A S E D P AY M E N T S

The Group operates the following executive and employee equity-settled share-based payment schemes:

a) the RM plc 2004 Company Share Option Plan (the “2004 Scheme”)

b) the RM plc Performance Share Plan 2010 (the “PSP Scheme”)

No awards have been made under the 2004 Scheme since 2011 and the final Options outstanding were exercised during the year.

One award was made under the PSP Scheme during the year ended 30 November 2018. The fair values of awards made under this
Scheme have been assessed using Black-Scholes and Monte-Carlo models, as appropriate to the Scheme, at the date of grant. The fair
values of awards are expensed over the period between grant and vesting.

Share-based payment awards exercised in the period and disclosed in the statement of changes in equity represents the impact on
retained earnings of releasing the fair value charge accrued under IFRS 2 Share-based payment, which for deferred bonus scheme is
partially matched by the release of own shares held.

a) 2004 Company Share Option Plan (the “2004 Scheme”)

The Group has in place a share option scheme which issued options over shares in the Company. There have been various
performance conditions attached to share option grants including EPS, share price and share purchase conditions. Options are
usually forfeited if an employee leaves the Group before the options vest.

Group

At 1 December 2016

Lapsed during the year

At 30 November 2017

Exercised during the year

At 30 November 2018

Number of

Weighted average

share options

exercise price

Exercise price range

890,500

(865,500)

25,000

(25,000)

£1.90

£1.82

£1.74 - £2.05

£1.82

115

b) RM plc Performance Share Plan 2010 (“PSP Scheme”)

The Group uses the PSP Scheme for the remuneration of senior executives and senior management. Details of Directors’ awards
are contained within the Remuneration Report. Participation has been subject to various vesting conditions, including EPS, total
shareholder return (TSR) and share price conditions. If the participants leave the Group’s employment, in most circumstances the
award lapses.

Group

At 1 December 2016

Granted during the year

Lapsed during the year

Exercised during the year

At 30 November 2017

Granted during the year

Lapsed during the year

Exercised during the year

At 30 November 2018

Maximum number of shares

Market price on grant

2,720,000

1,215,000

(1,251,955)

(413,045)

2,270,000

875,000

(228,000)

(542,745)

2,374,255

£1.73 - £1.85

£2.12

The plans outstanding at 30 November 2018 had a weighted average contractual life of 1.3 years (2017: 1.5 years).

Where total shareholder return (TSR) is used as a performance condition, comparator company volatility is assessed using annualised,
daily historic TSR growth assessed over a period prior to the date of grant that corresponds to the performance period of three years.
The company correlation uses historic pairwise correlations of the companies over a three year period. The fair value of the TSR element
is based on a large number of stochastic projections of Company and comparator TSR.

Where earnings per share (EPS) is used as a performance condition, the EPS Performance Target is that EPS for the final Financial Year of
the measurement period.

In March 2003 the Company established the RM plc Employee Share Trust to hedge the future obligations of the Group in respect of share
scheme awards. These shares are used to hedge the estimated liability but until vesting represents own shares held – see Note 25.

Performance conditions – estimation uncertainty

Assigning a fair value charge to share-based payments requires estimation of: the projected share price; the number of instruments
which are likely to vest; other non-market based performance conditions.

2 7. G U A R A N T E E S A N D C O N T I N G E N T L I A B I L I T I E S

a) Guarantees

The Company has entered into guarantees relating to the performance and liabilities of certain major contracts of its subsidiaries.
Other than disclosed in Note 22 the Directors are not aware of any circumstances that have given rise to any liability under such
guarantees and consider the possibility of any arising to be remote.

b) Contingent liabilities

The Group has provided performance guarantees and indemnities relating to performance bonds and letters of credit issued by its
banks on its behalf, in the ordinary course of business. The Directors are not aware of any circumstances that have given rise to any
liability under such guarantees and indemnities and consider the possibility of any arising to be remote.

116

FINANCIAL STATEMENTS

2 8 . C O M M I T M E N T S

a) Operating leases

The Group had outstanding commitments for future minimum lease payments (to the next lease break or to the end of the lease,
whichever is sooner) under non-cancellable operating leases which fall due as follows:

Group

Within 1 year

In years 2 to 5 inclusive

2018

£000

4,139

1,181

5,320

2017

£000

3,827

5,167

8,994

Operating lease commitments represent rentals payable by the Group for certain of its office properties and include the period up to
the first break clause of the lease.

Post year end the Group have entered into a lease agreement for 7 years for a new head office premises in Abingdon.

The Company had no operating leases during the year.

Leases as a lessor

One of the above office properties is sublet under an operating lease. The future minimum lease payments under this non-cancellable
lease are:

Group

Within 1 year

In years 2 to 5 inclusive

b) Capital commitments

2018

£000

498

2017

£000

381

498

879

At 30 November 2018 amounts contracted but not provided for relate to tangible fixed assets for premises in India totalling £527,645.
(2017: nil) The Company had no capital commitments during the year.

117

2 9 . F I N A N C I A L R I S K M A N A G E M E N T

Carrying value of financial assets and financial liabilities

Financial assets

Trade and other receivables – current

Trade and other receivables – non-current

Cash and short-term deposits

Financial liabilities

Trade and other payables – current

Bank loans and overdrafts

Group

Company

Note

2018

£000

2017

£000

2018

£000

2017

£000

24,564

23,285

9,722

14,605

930

2,634

1,144

1,797

867

894

28,128

26,226

10,589

15,499

(44,382)

(47,371)

(71,080)

(8,428)

(15,216)

(6,506)

(52,810)

(62,587)

(77,586)

(64,791)

(13,188)

(77,979)

All financial assets are classified as loans and receivables except for forward foreign exchange contracts of £353,000 (2017: £nil)
which are classified as fair value through profit or loss.

All liabilities classified as financial liabilities are held at amortised cost except for forward foreign exchange contracts of £nil
(2017: £389,000) which are classified as fair value through profit or loss.

The Directors consider that the carrying amount of all financial assets and financial liabilities approximates their fair value,
therefore fair value information for financial assets and financial liabilities not shown at fair value is not disclosed.

It is, and has been throughout the period under review, the Group’s policy that no trading in financial instruments shall be undertaken
and the Group does not hold or issue derivative financial instruments for speculative purposes.

The main risks arising from the Company’s financial assets and liabilities are market risk (foreign currency risk and interest rate risk),
credit risk and liquidity risk. The Board reviews and agrees policies on a regular basis for managing the risks associated with these
assets and liabilities.

Foreign currency risk

a) Translation

All financial assets are classified as loans and receivables except for forward foreign exchange contracts of £353,000 (2017: £nil)
which are classified as fair value through profit or loss.

The Group also maintains foreign currency denominated cash accounts, but only holds balances required to settle its payables

b) Transaction

Operations are also subject to foreign exchange risk from transactions in currencies other than their functional currency and, once recognised,
the revaluation of foreign currency denominated assets and liabilities. Principally, this relates to transactions arising in US Dollars and
Indian Rupees. Specifically, the Group purchases a proportion of its inventory in US Dollars and operating costs in the Group’s subsidiary
RM Education Solutions India Pvt Ltd are in Indian Rupees.

118

FINANCIAL STATEMENTSIn order to manage these risks the Group enters into derivative transactions in the form of forward foreign currency contracts. To manage the
US Dollar to Sterling risk, the forward foreign currency contracts purchased are designed to cover 80-100% of forecast currency denominated
purchases and the contracts are set up to provide coverage over future fixed price periods, typically for the following 12 months. To manage
the Indian Rupee to Sterling risk, the contracts purchased are designed to cover 80-85% of forecast Rupee costs and are renewed on a
revolving basis of approximately 11 to 12 months.

The total amount of outstanding forward foreign exchange contracts to which the Group was committed was:

2018

Forward contract value

Mark to market value

Fair value

Currency

US Dollar

Indian Rupee

Contract type

Currency ‘000

Buy

3,725

507,305

£000

(2,837)

(5,286)

(8,123)

2017

£000

(2,765)

(5,005)

(7,770)

£000

(72)

(281)

(353)

Forward contract value

Mark to market value

Fair value

Currency

US Dollar

Indian Rupee

Contract type

Currency ‘000

Buy

9,353

625,974

£000

(6,957)

(7,185)

(14,142)

£000

(7,165)

(7,366)

(14,531)

£000

208

181

389

The fair value of the derivative financial instruments is estimated by discounting the future contracted cash flow, using readily available
market data and represents a level 2 measurement in the fair value hierarchy under IFRS 7. These fair value gains/(losses) are included
within trade and other receivables and trade and other payables respectively.

Of these, forward foreign currency exchange contracts with a contract value of £8,123,000 (2017: £14,143,000) and fair value gain
of £353,000 (2017: loss of £389,000) have been designated as effective hedges in accordance with IFRS 9 Financial Instruments:
Recognition and Measurement. The movement in fair value of hedged derivative financial instruments during the year was a credit of
£742,000 (2017: debit of £1,029,000) which has been recognised in Other comprehensive income and presented in the hedging reserve
in equity. In addition the Group retains the gain or loss on realised foreign currency contracts used to hedge non-financial assets which
are realised when the asset is recognised.

No forward foreign currency exchange contracts have been designated as ineffective hedges in accordance with
IFRS 9 Financial Instruments: Recognition and Measurement at 30 November 2018 (2017: nil).

Commercially effective hedges may lead to income statement volatility in the future, particularly if the hedges do not meet
the criteria of an effective hedge in accordance with IFRS 9 Financial Instruments: Recognition and Measurement.

c) Foreign exchange rate sensitivity

The following table details how the Group’s income and equity would increase/(decrease) if there were a 10% increase/(decrease)
in the amount of the respective currency which could be purchased with Sterling (assuming all other variables remain constant),
for example from $1.30:£1 to $1.43:£1 at the balance sheet date. The sensitivity analysis includes only outstanding foreign currency
denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency. A 10% weakening
of Sterling against the relevant currency would be estimated to have a comparable but opposite impact on income and equity.

119

The total amount of outstanding forward foreign exchange contracts to which the Group was committed was:

2018

2017

Nominal value

Fair value

Nominal value

Fair value

Group

Forward foreign exchange contracts

£000

(8,123)

£000

(353)

£000

(14,142)

Sensitivity

Group

10% increase in foreign exchange rates against Sterling:

US Dollar

Indian Rupee

2018

2017

Income

£000

(69)

Equity

£000

591

(208)

Income

£000

389

Equity

£000

725

(190)

In management’s opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk as the analysis does not
reflect management’s proactive monitoring methods and processes for exchange risk.

Interest rate risk

The only significant interest-bearing financial assets or liabilities relate to the Group’s borrowings referred to below. During the year,
average net debt was £24,135,000 (2017: £4,602,000) and the maximum borrowings position was £32,768,000 (2017: £37,712,000).

The Group has a committed revolving credit facility with HSBC Bank plc and Barclays Bank plc, which was signed on 7 February 2017
and which expires on 30 June 2020. The initial facility is for £75,000,000, with the amount of funds available reducing to £70,000,000
from 30 June 2018, £65,000,000 from 30 December 2018 and £60,000,000 from 30 June 2019. The current bank credit facility ends on
30 June 2020 but has an option to extend for a further 2 years. The extension remains subject to agreement with the lenders but the
Board has no reason to believe that the debt would not be renewed. Of the funds available, £5,000,000 is allocated to an on demand
working capital facility, leaving the remainder unallocated. Under the facility the Company is bound to covenants of 4 times interest
cover/EBITDA and 2.5 times Net Debt/EBITDA. Separate to this, the Group has a number of performance bonds relating to potential
liabilities arising in connection with any Local Government Pension Scheme that the Company participates in as a result of its
managed services contracts in the RM Education Division.

The interest payable on loans under the revolving credit facility is between 1.30% and 1.90% above LIBOR (the Margin), for the
remainder of the committed term subject to certain financial ratios. A commitment fee of 40% of the Margin is payable on the
unutilised balance and an arrangement fee of 0.5% of the initial total facility was paid in 2017. The fees are recognised in the
consolidated income statement on an effective interest rate basis over the duration of the facility.

The interest and currency profile of cash and short-term deposits is shown below:

2018

2017

Group

Sterling cash and cash equivalents/(overdraft)

Floating rate

Interest free

£000

(1,922)

£000

848

Total

£000

Floating rate

Interest free

£000

Total

£000

(1,074)

(2,631)

1,597

(1,034)

US Dollar

Euro

Indian Rupee

Singapore Dollar

Cash and cash equivalents

Borrowings – Sterling*

* Also in Company

120

1,237

217

332

217

332

712

(1,922)

2,634

678

125

678

125

(2,631)

2,400

(231)

7,000

14,000

FINANCIAL STATEMENTS
The weighted average effective interest rates at the balance sheet date were as follows:

2018

2017

Weighted average

Floating rate

interest rate

Floating rate

interest rate

Group

Financial assets:

£000

Cash and short-term deposits

Trade and other receivables (non-current)

2,634

930

0.37

9.52

1,797

1,144

Interest rate risk sensitivity (assuming all other variables remain constant):

0.16

9.52

Group

1% increase in interest rates

1% decrease in interest rates

Credit risk

2018

2017

Income sensitivity

Equity sensitivity

Income sensitivity

Equity sensitivity

£000

208

(208)

£000

208

(208)

£000

202

(202)

£000

202

(202)

The Group’s principal financial assets are bank balances and trade and other receivables. The Group’s credit risk is primarily
attributable to its trade receivables. Credit checks are performed on new customers and before credit limits are increased.
The amounts presented in the balance sheet are net of allowances for doubtful receivables. Note 18 includes an analysis of
trade receivables by type of customer and of the ageing of unimpaired trade receivables.

The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high
credit-ratings assigned by international credit-rating agencies. The Group has no significant concentration of credit risk, with exposure
spread over a large number of counterparties and customers and a large proportion are ultimately backed by the UK Government.

The carrying amount of financial assets represents the maximum credit exposure. The Group does not hold any collateral to
cover its risks associated with financial assets.

Liquidity risk

Cash is managed to ensure that sufficient liquid funds are available with a variety of counterparties, to meet short, medium
and long-term cash flow forecasting requirements.

Capital management

The Group’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence as to sustain future
development of the business. Management monitors the return on capital, as well as the level of dividends to ordinary shareholders
and contributions to the defined benefit pension schemes.

121

3 0 . R E L A T E D P A R T Y T R A N S A C T I O N S

a) Key management personnel

The remuneration of the Directors and other key management personnel of the Group during the year, in aggregate, was:

Group

Short-term employee benefits

Post-employment benefits

Termination payments

Share-based payment

Year ended
30 November 2018

Year ended
30 November 2017

£000

2,561

178

588

£000

2,510

178

218

554

Share-based payments above include a fair value charge for executive Directors of £170,836 in respect of awards to David Brooks
(2017: £170,000) and £159,000 in respect of Neil Martin (2017: £113,000).

Further information about the remuneration of individual Directors is provided in the audited part of the Remuneration Report.

b) Transactions between the Company and its subsidiary undertakings

Company

Receipts/(payments)

Management recharges

Net intercompany interest income

Dividends received

Year ended
30 November 2018

Year ended
30 November 2017

£000

(607)

(1,153)

9,000

(602)

(574)

13,800

Total amounts owed between the Company and its subsidiary undertakings are disclosed in Notes 18 and 21 respectively.

c) Other related party transactions

The Group encourages its Directors and employees to be Governors, Trustees or equivalent of educational establishments.
The Group trades with these establishments in the normal course of its business.

Spinfield School

Neil Martin, Executive Director, is a governor of Spinfield School. RM Resources made sales of £10,550 (2017: £1,126).
At the year end there is a balance of £nil (2017: £83) outstanding.

Grant Thornton LLP

Deena Mattar, Non-executive Director of RM plc, is a non-executive of the Partnership Oversight Board of Grant Thornton.
Grant Thornton were chosen from a competitive tender conducted by the Company and Deena Mattar was not involved in
that exercise.

The Company has engaged Grant Thornton to provide advice in connection with certain activities.

The following payments were made in the year; £167,252 of integration costs, £40,945 work for IFRS 15, £11,870 relating to work around
a new ERP system, and £245,606 relating to estate strategy. £42,000 was accrued at the year-end for further ERP work.

In the prior year the following payments were made; £650,000 of integration costs in TTS and Consortium, which was accrued in the
prior year, £48,000 stock work in Consortium and £25,000 accrual for IFRS 15 work.

122

FINANCIAL STATEMENTS

123

S H A R E H O L D E R I N F O R M A T I O N

F I N A N C I A L C A L E N D A R

Ex-dividend date for 2018 final dividend

Record date for 2018 final dividend

Annual General Meeting

Payment of 2018 final dividend

Announcement of 2019 interim results

14 March 2019

15 March 2019

27 March 2019

12 April 2019

July 2019

Preliminary announcement of 2019 results

February 2020

C O R P O R A T E W E B S I T E

E L E C T R O N I C C O M M U N I C A T I O N

Information about the Group’s activities is available
at www.rmplc.com.

I N V E S T O R I N F O R M A T I O N

Information for investors is available at www.rmplc.com.
Enquiries can be directed to Greg Davidson,
Company Secretary, at the Group head office address
or at companysecretary@rm.com.

R E G I S T R A R S A N D
S H A R E H O L D I N G I N F O R M A T I O N

Shareholders can access the details of their holdings in
RM plc via the Shareholder Services option within the
investor section of the corporate website at www.rmplc.com.
Shareholders can also make changes to their address
details and dividend mandates online. All enquiries about
individual shareholder matters should be made to the
Company’s registrar, Link Asset Services, either via email at
shareholderenquiries@linkgroup.co.uk or by telephone to
0371 664 0300. Calls are charged at the standard geographic
rate and will vary by provider. Calls outside the United
Kingdom will be charged at the applicable international
rate. Lines are open between 09:00 - 17:30, Monday to Friday
excluding public holidays in England and Wales.

To help shareholders, the Link Asset Services’ Share Portal at
www.signalshares.com contains a frequently asked questions
section for shareholders.

Shareholders are able to receive company communication
via email. By registering your email address, you will receive
emails with a web link to information posted on our website.
This can include our report and accounts, notice of meetings
and other information we communicate to our shareholders.

Electronic communication brings numerous benefits, which
include helping us reduce our impact on the environment,
increased security (your documents cannot be lost in the
post or read by others) and faster notification of information
and updates. To sign up to receive e-communications go to
Link Asset Services’ Share Portal at www.signalshares.com. All
you need to register is your investor code, which can be found
on your share certificate or your dividend tax voucher. The
Share Portal is a secure online site where you can manage
your shareholding quickly and easily. You can check your
shareholding and account transactions, change your name,
address or dividend mandate details online at any time and
vote online via the Share Portal.

B E N E F I C I A L S H A R E H O L D E R S W I T H
‘ I N F O R M A T I O N R I G H T S ’

Please note that beneficial owners of shares who have
been nominated by the registered holders of those
shares to receive information rights under section 146
of the Companies Act 2006 are required to direct all
communications to the registered holder of their shares
rather than to Link Asset Services, or to the Company directly.

124

GOVERNANCEM U LT I P L E A C C O U N T S O N
T H E S H A R E H O L D E R R E G I S T E R

If you have received two or more copies of this document,
it may be because there is more than one account in your
name on the shareholder register. This may be due to either
your name or address appearing on each account in a
slightly different way.

For security reasons, Link Asset Services will not amalgamate
the accounts without your written consent. If you would like
to amalgamate your multiple accounts into one account,
please write to Link Asset Services.

C O M P A N Y S E C R E T A R Y

Greg Davidson

G R O U P H E A D O F F I C E
A N D R E G I S T E R E D O F F I C E

140 Eastern Avenue
Milton Park
Abingdon
Oxfordshire OX14 4SB
United Kingdom

Telephone: +44 (0)8450 700 300

R E G I S T E R E D N U M B E R

RM plc’s registered number is 01749877

A U D I T O R

KPMG LLP
Arlington Business Park
Theale
Reading RG7 4SD

F I N A N C I A L A D V I S O R S
A N D S T O C K B R O K E R S

Numis Securities Ltd
10 Paternoster Square
London EC4M 7LT

Peel Hunt LLP
120 London Wall
London EC2Y 5ET

F I N A N C I A L P U B L I C R E L A T I O N S

Headland PR Consultancy LLP
1 Suffolk Lane
London EC4R 0AX

R E G I S T R A R

Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU

L E G A L A D V I S O R

Osborne Clarke
One London Wall
London EC2Y 5EB

125

140 Eastern Avenue

Milton Park

Milton

Abingdon

Oxfordshire

OX14 4SB

Telephone: +44 (0)8450 700 300

Stock code: RM.