RM plc Annual Report 2019

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FY2019 Annual Report · RM plc

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Annual report and
financial statements

Year ended 30 November 2019

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

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

128

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

O P E R A T I N G H I G H L I G H T S O F 2 0 1 9

SOLID
PERFORMANCE

Steady progress and continued
international momentum

Revenue up 1%

supported by growth in technology divisions offsetting decline

in resources and the adverse impact of IFRS 15 adoption

Adjusted operating profits increased 1%

driven by improvements in the two technology divisions

International revenue growth of 18%

driven by increased RM Results assessment software revenues

Acquistion of e-testing company

to augment RM Results software capability to enable

full end-to-end digital assessment to customers

Net debt of £15m (2018: £6m)

including the funding of the acquisition

New £70m credit facility signed

Paid and proposed dividend increased by 5% to 8.00p

C H A I R M A N ’ S S T A T E M E N T

Steady
progress

Performance

The Board

In 2019, there was marginal growth in each of revenue,
adjusted operating profit and adjusted earnings per share.
Net debt at year end was £15m after funding the acquisition
of the digital assessment software company, SoNET Systems.

Paul Dean has been appointed as of 4 February 2020 and
will assume the Chairmanship of the Audit Committee on his
appointment. Deena Mattar will retire as a Director later in
2020 having completed 9 years of service as a Director.

RM Resources experienced a challenging year with revenue
and profit down, primarily as a result of constrained trading
in the UK. Progress continues on the consolidation of five
distribution centres into a single automated facility which is
expected to be completed by the end of 2021. This project
will deliver meaningful operational and financial benefits.

RM Results delivered a strong performance. The revenue
and profit growth has been driven by new client wins and
enhanced business from existing customers. The acquisition
of SoNET during the year brings new technology to the
division, allowing it to offer end-to-end digital assessment
for the developing demand for online testing and marking
of exams.

RM Education revenue growth was driven by a good
performance in the Services business. Profit grew
strongly, benefiting from management focus on cost
efficiency alongside the increased revenue and some
one-time benefits.

Dividend

The Board is recommending a final dividend of 6.0 pence per
share which would constitute, at 8.0 pence per share in total,
an increase of 5% over the prior year.

Outlook

RM enters 2020 in a sound position and continues to have
good cash generative characteristics. The Group remains
committed to delivering long-term sustainable growth.

John Poulter
Chairman
3 February 2020

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

Helping teachers to teach and
learners to learn by developing
engaging and inspiring resources

RM Resources’ strategy is to grow its market share in the provision of resources to
schools, early years and special educational needs establishments through a range of
channels including catalogue, a direct sales force and online. Growth will continue to
be underpinned by differentiation through own-developed and own-brand products
and development of well-established international channels and markets.

RM RESULTS

Driving the global
modernisation of
assessment

RM Results’ strategy is to grow the digital assessment business through expanding
the scope of solutions to existing customers and to win new customers globally.
Software and services are provided through a growing portfolio of proprietary
software covering the end-to-end assessment lifecycle.

RM EDUCATION
Helping UK schools to improve
the impact of technology on
teaching and learning

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

Revenue
WHAT WE DO
£121.6m

HOW WE ADD
VALUE

THE
OPPORTUNITY

WHAT WE DO

HOW WE ADD
VALUE

THE
OPPORTUNITY

WHAT WE DO

HOW WE ADD
VALUE

THE
OPPORTUNITY

Provide education supplies and

curriculum products for schools and

nurseries in the UK and internationally

Unique own-designed

curriculum resources focused on

improving learning outcomes

Offering the whole

classroom proposition

Committed increases

in education funding

in the UK

Strong differentiation of

own-developed products and

brand pedigree in growing

international market

Investment in automated

warehouse program provides path

to significantly improved efficiency

A global leader in providing

digital assessment solutions

that support lifelong learning

Improve the quality, efficiency

and speed of our customer’s

assessment lifecycle

Secure, seamless and

hassle free e-assessment

and data analysis

Market with strong structural

growth opportunity in

global assessment

End-to-end digital

capability opens new

Increasing technology and

automation adoption in

channels and opportunities

global assessment

Software, services and

technology provider to UK

schools and colleges

Delivering cost effective,

reliable, secure technology

Helping schools to

make the most of

their IT investment

Growth in multi-academy

trusts provides aggregated

Committed increases

in education funding

buying in fragmented market

in the UK

Increasing technology

adoption in education

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

In 2019 we made strong progress in our

two technology divisions, RM Results and

RM Education, while our resources business,

RM Resources, continued to see challenging

trading. Overall revenue and adjusted operating

profit both increased modestly and statutory

profit after tax increased more strongly.

International revenue across the Group

grew well again.

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

RM Resources had a challenging year of trading, particularly
in the UK. This included declining legacy revenues from the
planned closure of indirect channels and the focus away from
non-education resources. Revenue in the UK was lower than
last year, but in-line with the wider UK competitive market
decline. International revenues, after a very strong 2018,
grew marginally year-on-year.

During 2019, we continued the programme to consolidate
the current estate of five distribution centres to a single,
automated centre. As well as consolidating the division’s
head office, planning permission has been granted for the
new distribution centre and the lease agreement with our
development partners has been signed. We are planning to
complete the transition to a single automated distribution
centre by the end of 2021.

The TTS brand grew in the UK and outperformed the wider
UK competitor market set benefitting from its differentiated
brand position and own-developed product portfolio. The
Consortium brand declined more than this benchmark with
trading impacted by some integration issues and the loss of
a key customer framework towards the end of the year. The
long term strategy for this division remains unchanged as we
continue to focus on improving operational efficiency and
investing in our differentiated products to drive growth in the
UK and international markets.

RM Results had a strong year of revenue growth. This included
good organic growth on the back of new client wins and
existing customer growth.

In June 2019, we acquired SoNET Systems Pty Ltd ('SoNET').
Headquartered in Melbourne, Australia, SoNET provides
Software as a Service platforms principally to the education
and government sectors. SoNET’s e-testing software
augments our existing e-marking capability. This acquisition
is enabling RM Results to offer full end-to-end digital
assessment services in the online testing and marking of
exams to both existing and new customers. The addition of
this technology is starting to open new market opportunities
and accelerate the growth of the RM Results division.

The pipeline of opportunities for RM Results continues to
be strong going into 2020.

Adjusted operating profit in RM Education grew strongly
in 2019. Revenue was also up, primarily driven by new
customer contracts and increased spend from existing
customers. In the year we signed a contract with the UK’s
largest multi-academy trust to deliver IT managed services
to all their schools and help them with their journey to
the cloud. Customer renewal rates remained high and in
the year we continued to look for opportunities to move
processes to our off-shored team in India. Moving forward we
see an opportunity to sharpen our approach to the market
by focusing on the software offerings separately from the
services and infrastructure propositions.

O U R S T R A T E G I C T H E M E S

At the beginning of 2019, on the back of a trend of improved
margins and good cash generation we mapped out a set of
four strategic themes. We believe these themes will enable
the Group to deliver long-term shareholder value.
The 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 these strategic
themes through acquisitions where appropriate.

Overleaf we define further what we mean by each of the four
strategic themes and map out where we see these themes
meeting growth opportunity.

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

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

I N N O V A 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

RM is focused exclusively on the education market and
therefore we have a depth of understanding and expertise.
Across all three divisions we have market leading IP. We
continue to increase our investment in developing our own IP
and our product development capability.

An example opportunity

There’s strong growth in technology being used in high stakes
assessment globally. Education policy makers in countries
around the world are looking to digitise their exams systems
and move away from relying on paper solutions, leading to
quality and reliability improvements.

Our approach

Provide customers with an end-to-end digital assessment
offering where the complete exam life-cycle can be delivered
without paper.

Evidence of progress

The acquisition of SoNET, in the second half of 2019, has
accelerated our ability to bring end-to-end digital assessment
to the market. On the back of this, we have been successful
in being awarded preferred bidder status with our first
new customer, delivering end-to-end digital assessments
seamlessly in an integrated platform.

RM’s international business grew by 18% in 2019 and has
doubled in the last 4 years. We are continuing to invest in our
international sales and marketing capability as well as taking
our best existing IP to overseas markets.

An example opportunity

The trend is growing in international education systems to
include coding and programming within their early years and
primary school curriculum.

Our approach

We have developed our own unique range of programmable
floor robots that are the perfect starting point for teaching
control, directional language and coding.

Evidence of progress

Sales of our robotics range drove an increase of sales of
Resources products through international distributors
by 17% in 2019.

Many of our customers across the Group are long-standing.
We will continue to look for ways to help them challenge
their business processes and learning environments and see
how we can use technology solutions to make it as easy as
possible to do business with us.

An example opportunity

In England, the government is urging schools to turn into
academies and move away from local authority control.
Groups of academies are forming into multi-academy trusts
(MATs). As these MATs grow, they are increasingly buying
products and services centrally for all of their schools.

Our approach

We can provide improved quality of service and savings to
MATs who are prepared to buy the ICT across all their schools
under a central contract. The largest benefits come when
we provide the MAT with a fully IT managed service. Our
national footprint means we can offer this to the smallest and
largest of MATs.

Our customers continue to need to save money and are
always looking for more cost effective ways of doing things;
therefore RM needs to continue to drive cost out and be as
efficient as possible. We will continue to look for ways of
successfully automating and offshoring processes across the
Group. We will also invest to simplify our business processes,
improve efficiencies, rationalise inventory and consolidate
our supply chain.

An example opportunity

Following the acquisition of Consortium, our Resources
division has five separate distribution centres that service our
customers in the UK and internationally. This footprint of
warehouses is costly and inefficient.

Our approach

We are running a programme to consolidate our
distribution centres from five to a single, automated facility
in the East Midlands. This will lead to significant cost savings
and an improved service to our customers.

Evidence of progress

In 2019, we signed a contract with the UK’s largest MAT
to provide a full IT managed service to all their schools.
This service includes moving much of the ICT delivery in
their schools to the cloud. It helps underpin their approach
to collaboration across academies and provides them with
significant savings that they can redistribute to teaching
and learning priorities.

In 2019, we committed the investment and initiated
the programme to consolidate our warehouse estate.
This included moving to four centres ahead of schedule,
gaining planning permission for the new site, signing the
lease with the developer and choosing the automation
partner for the new facility.

STRATEGIC REPORTW O R K F O R C E

R M I N D I A

As at 30 November 2019, RM’s operation in Trivandrum
accounted for 38% of Group headcount (2018: 38%).

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 2,011 (2018: 1,936),
which is comprised of 1,811 (2018: 1,750) permanent and
200 (2018: 186) temporary or contract staff, of which 1,239
(2018: 1,257) were located in the UK, 754 (2018: 679) in India
and 18 in Australia.

At 30 November 2019, headcount was 1,983 (2018: 1,952).
The following table sets out a more detailed summary of the
permanent staff employed as at 30 November 2019:

Male

Female

Executive Directors

2 (100%)

0 (0%)

Senior Managers
(excluding Executive Directors)

41 (75%)

14 (25%)

All employees

1,106 (61%)

711 (39%)

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, anti-harassment and bullying, equal opportunities,
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.

P R I N C I P A L A N D E M E R G I N G 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 and emerging 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 in the area in which RM specialise.

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.

STRATEGIC REPORTRisk and
categorisation

Operational
execution
(Operational 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’s increasing international business make it
subject to laws in other countries and higher
risk jurisdictions.

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 has internal policies and procedures across
a wide range of areas including bribery and corruption,
health and safety, privacy, employment and tax which are
regularly monitored and reviewed to ensure we assess
and take account of higher risk levels and comply with all
relevant laws and regulations.

Data and business
continuity
(Operational Risk)

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 Company has made a commitment to maintain
effective Information Security and Business Continuity
management systems and achieve ISO27001 and
ISO22301 certifications to demonstrate the robustness and
effectiveness of those systems.

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

The Company has a rolling investment programme
managed by a dedicated security and compliance
function and overseen by the Group Security and Business
Continuity Committee, which reports into the Group
Executive Committee. This programme covers data
integrity and protection, defence against external threats
(including cyber risks) and business continuity planning.

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.

People
(Operational Risk)

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.

Risk and
categorisation

Innovation
(Strategic Risk)

Dependence on
key contracts
(Strategic Risk)

Pensions
(Financial Risk)

Description and likely impact

Mitigation

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 IT market and elements of the education
resources market are subject to rapid, and
often unpredictable, change. As a result
of inappropriate technology, product and
marketing 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 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 is dependent on
the winning and extension of long-term
contracts with government, local authorities,
examination boards and commercial
customers.

The Company invests in maintaining a high level of
technical expertise and in 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 Group operates two defined benefit
pension schemes in the UK (the 'RM Education
Scheme' and the 'CARE Scheme' respectively)
both of which are closed to future accrual. It
also 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 RM Educational
Resources Ltd.

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.

Treasury
(Financial Risk)

The Group is exposed to treasury risks
including fluctuating exchange rates
and liquidity.

The Company regularly monitors treasury risks. It actively
looks to create natural currency hedges where possible
balancing foreign currency sales and purchase levels
and hedges net balances 9-12 months into the future for
material imbalances.

The Company remains cautious with liquidity risk and
carefully manages its debt leverage position.

Transformation
(Operational Risk)

Issues in implementing major programs
could lead to business disruption and loss of
intended benefits.

Steering committees are established for all major
programs which will include a member of the Executive
Committee. A number of mechanisms are in place to
monitor the ongoing impact of the various activities,
including where appropriate staff consultations and
satisfaction surveys, and ongoing customer feedback.

The Board is kept appraised of the current status of such
activities and projects on a regular and ongoing basis.

David Brooks
Chief Executive Officer
3 February 2020

STRATEGIC REPORT
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 delivered a solid financial performance in 2019 with progress across a number key financial measures. Revenues grew marginally
in the year, benefiting from good growth in the two technology divisions which more than offset a decline in RM Resources and a
£2.4m reduction in revenue associated with the adoption of the IFRS 15 accounting standard. Adjusted operating margins were flat
year-on-year which delivered a slight improvement in adjusted operating profit which flowed through to higher adjusted profit after tax
and an increased adjusted diluted earnings per share. These improvements in adjusted earnings also flowed through to increases in
statutory profit after tax as post-tax adjustments were £1.5m lower than the prior year. Net debt levels increased in the year to £15m
following the funding of an acquisition in the second half of 2019. The Group agreed a new three year £70m credit facility, with the
option to extend for a further two years.

Revenue

£223.8m

Adjusted*
Operating Profit

£27.6m

Net Debt

£15.0m

Adjusted*
Diluted EPS

26.4p

£221m

£223.8m

£27.5m £27.6m

£15.0m

25.8p

26.4p

£5.8m

Up 1%

Increased £9.2m

Up 2%

* Adjusted operating profit is before the amortisation of acquisition related intangible assets; acquisition related costs; one time property related

items, Pension GMP equalisation costs and restructuring costs. 2019 results reflect the adoption of IFRS 15. 2018 has not been restated to reflect

the new accounting standard.

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 increased by 1% to £223.8m (2018: £221.0m) however this includes the adoption of the new accounting standard,
IFRS 15, which reduced revenue by £2.4m versus the previous accounting standard. The 2018 numbers have not been adjusted
for IFRS 15 as the modified adoption approach was taken.

2019¹

2018¹

£m

Revenue

Operating profit

Profit before tax

Tax

Profit after tax

Adjusted

Adjustment²

Statutory

Adjusted

Adjustment²

Statutory

223.8

27.6

26.6

(4.7)

21.9

(3.5)

0.6

(2.8)

223.8

221.0

24.2

23.2

(4.1)

19.1

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

Adjusted operating profit margins remained flat at 12.4% (2018: 12.4%). Adjusted operating profit increased slightly to £27.6m
(2018: £27.5m). However, this was also impacted by the adoption of IFRS 15 which reduced operating profit by £1.5m.

In order to provide a better understanding of underlying business performance, some costs are identified as ‘adjustments'² to
underlying business performance. In 2019 these are broken down as follows:

Amortisation charges associated with acquisition related intangible assets

Acquisition related costs

Restructuring costs

One time property related items

Total adjustments²

£1.6m

£0.7m

£0.8m

£0.3m

£3.5m

Taking into consideration the adjustments of £3.5m (2018: £4.9m), statutory operating profit increased to £24.2m (2018: £22.6m).

The Group generated a statutory profit before tax of £23.2m (2018: £21.0m) with a net interest charge of £1.0m which primarily relates
to the Group credit facility.

The total tax charge within the Income Statement for the year was £4.1m (2018: £4.1m). The Group’s tax charge for the year, measured
as a percentage of profit before tax, was 17.7% (2018: 19.5%). Statutory profit after tax increased 13% to £19.1m (2018: £16.9m).

Adjusted diluted earnings per share increased to 26.4 pence (2018: 25.8 pence). Statutory basic earnings per share were 23.2 pence
(2018: 20.7 pence) and statutory diluted earnings per share were 23.0 pence (2018: 20.6 pence).

RM generated cash from operations for the year of £19.9m (2018: £24.2m) which is down on the prior year primarily due to higher
inventory levels in RM Resources and utilisation of property and restructuring provisions. This cash generated was utilised to fund
the acquisition of SoNET (£7.8m) including purchase cost and acquisition-related fees, capital expenditure of £6.0m (2018: £1.1m),
contributions to the defined benefit pension scheme of £4.6m in line with the prior year, tax payments of £3.6m and dividend cash
costs of £6.3m which were up 13% on the prior year. As a result, net debt increased to £15.0m at the end of the year (2018: £5.8m).

RM is currently progressing two large capital projects; consolidation of the existing five distribution centres into a single automated
facility and a Group-wide IT system implementation. These projects will drive elevated capital expenditure over the next two years,
likely to be in excess of £20m. A proportion of this spend will be recovered by the subsequent sale of three freehold properties.
Both projects are scheduled to conclude by the end of 2021 and deliver good financial and operational benefits.

Dividend

The total dividend paid and proposed for the year has been increased by 5% to 8.00 pence per share (2018: 7.60 pence). This is comprised
of the interim dividend of 2.00 pence per share paid in September 2019 and, subject to shareholder approval, a proposed final dividend of
6.00 pence per share. The estimated total cost of ordinary dividends paid and proposed for 2019 is £6.6m (2018: £6.2m).

The Board is committed to a long-term sustainable dividend policy and the Company has £31.9m of distributable reserves,
as at 30 November 2019, 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.

1. 2019 results reflect the adoption of the new accounting standard IFRS 15. Results in the table for 2018 are presented as reported at the time and

not restated as RM took the modified approach to adoption. This approach has been taken throughout the narrative below and explanations are

The dividend policy is influenced by a number of the principal risks identified in the table of ‘Principal and Emerging Risks and
Uncertainties’ set out above which could have a negative impact on the performance of the Group or its ability to distribute profits.

provided in the notes to the accounts to highlight the impacts.

2. Adjustments reflect the amortisation of acquisition related intangible assets; acquisition related costs; one time property related items and restructuring

costs and costs associated with GMP equalisation. Further details are defined and reconciled in Note 5 of the notes to the financial statements.

Revenues increased notably in our international markets, up 18% (+£4.9m) on the prior year driven by customer development across
new and existing customers in RM Results. This international performance was also supported by 5 months of revenue (£1.7m)
following the acquisition of SoNET, an Australian assessment software company acquired in June 2019.

Defined Benefit Pension Schemes ('Schemes')

The Company operates two defined benefit pension schemes ('RM Education Scheme' and 'Care Scheme') and participates in a third,
multi-employer, defined benefit pension scheme (the 'Platinum Scheme'). Both of the RM Education Scheme and the CARE Scheme
are closed to future accrual of benefits. As a result of the intended closure of existing warehouses, the Platinum Scheme will become
closed 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. A provision has been made this year to reflect additional pension contributions which may be
required to close the scheme.

STRATEGIC REPORT

The IAS 19 net deficit (pre-tax) across the Group increased
by £3.7m to £6.0m (2018: £2.3m) with the Platinum Scheme
being in surplus. This increase was caused by an increase
in the liabilities of the Schemes driven by lower discount
rates albeit the extent was mitigated by a change in mortality
and inflation assumptions and the continuing Group deficit
recovery plan payments.

The Group deficit recovery plan payments across all schemes
in 2019 were £4.6m which is in line with the prior year.
Following the triennial review at 31 May 2018, the Group
agreed with the Trustee of the RM Education Scheme to
contribute £3.7m per annum until 31 May 2026 and to transfer
the remaining £7m, held in escrow, into the scheme which
was completed in 2019. The triennial valuation date for the
Care Scheme was 31 December 2019.

R M R E S O U R C E S

RM Resources revenues decreased by 6% to £114.5m
(2018: £121.6m), in part, driven by a £3.5m planned reduction
in legacy revenue streams. UK education revenue reduced
by 4% and was partially offset by a 2% increase in
international revenues.

Divisional adjusted operating profit reduced to £13.7m
(2018: £16.6m) and operating margins decreased to 12.0%
(2018: 13.7%). The reduction was driven by lower revenues
with operating costs broadly stable. Cost savings and synergy
benefits were offset by higher warehouse and distribution
costs as a percentage of revenue associated with required
changes to staff contract arrangements, and additional spend
in ongoing integration activities.

UK education revenues decreased by 4% to £90.1m
(2018: £93.7m). This decline was in line with UK competitive
market data representing a difficult economic backdrop
driven by continued uncertainty for schools including the
announcement of a required increase in teachers’ pension
funding from 16.5% to 23.6% in 2019. Commitment to fund
this pension increase has subsequently been announced by
the new government alongside additional school funding of
£14bn over the next 3 years.

Revenues arising from the TTS brand grew 4% in the
UK benefiting from its clearly differentiated position
and innovative, own-developed product portfolio. The
Consortium brand saw its revenues decline more than
the comparative market set as trading was impacted by
some integration related issues and the loss of a customer
framework at the end of the year. Delivering an improved
performance in this division remains a key focus moving
forward and a number of actions were taken towards the
end of the 2019.

As outlined in 2018, there are a number of legacy revenue
streams in which we have either stopped investment or
taken the strategic decision to close immediately to improve
the longer term position of our core brands. These revenue
streams reduced by £3.5m in 2019 to £2.8m. This included
the closure of our UK trade channel, where we sold TTS
own-developed products through UK competitors.
This should strengthen our RM Resources brand
proposition in the longer term. In addition, there were other
non-education legacy revenue streams in the Consortium
brand which declined by £1.2m to £2.6m.

The division continues to invest in its online presence and the
online channel continues to deliver proportional growth and
now makes up over half of UK direct education sales.

International

The international business is made up of two key channels,
international distributors, through which we sell own-
developed products to over 80 countries, and international
English curriculum schools to whom we sell a wider portfolio
of education supplies. International revenues increased by
2% to £19.5m (2018: £19.1m). This was driven by continued
growth of our own-developed products through distributor
channels, more than offsetting a reduction in international
schools revenues, primarily impacted by lower new school
build projects in Europe and the Middle East.

R M R E S U LT S

Revenue increased by 19% on the prior year to £37.7m
(2018: £31.8m), with 59% of the increase from new and
existing International customers (including those acquired as
part of the acquisition) and 41% from existing UK customers.

Adjusted operating profit increased by 7% on the prior year
to £8.7m (2018: £8.2m), with adjusted operating margins
decreasing to 23.2% (2018: 25.6%). The dilution of adjusted
operating margin was expected with the adoption of IFRS 15
alongside the impact of the SoNET acquisition which
delivered £1.7m of revenues with lower operating margins.

RM Results signed a number of new international contracts
in the year and is running pilots with several prospective
clients, providing a strong pipeline of opportunities for further
international growth. The division has also successfully
secured several important contract renewals providing a
strong platform for future activity and further investment in
new product IP. One client has confirmed their intention
to insource and formally notified us that they intend to do
this at the end of 2020, this has been taken into account in
our outlook.

In June 2019, RM acquired SoNET for a consideration of
£7.3m. SoNET’s e-testing software augments RM’s existing
e-marking capability enabling RM Results to offer full end-
to-end digital assessment services in the online testing and
marking of exams to both existing and new customers.

The outlook remains positive in the division with the contract
performance in 2019, strong pipeline and product investment
creating a sound platform on which to deliver long term
growth. Progress continues to be made in developing a
wider intellectual property portfolio and M&A opportunities
will continue to be assessed to look to accelerate
strategic progress.

R M E D U C A T I O N

Revenues in the division increased by 6% to £71.6m
(2018: £67.6m) driven primarily by the performance of
Services including higher hardware sales and related
installation services. Adjusted operating margins improved to
14.5% (2018: 11.6%) delivering increased adjusted operating
profit of £10.4m (2018: £7.8m) benefitting from the higher
revenues and good operating leverage from lower costs and
some one-time benefits.

The division is made up of Services (85% of revenue) and
Digital Platforms (15%) and includes a number of legacy
services and contracts that are either in contractual run-off,
or in which we have stopped continued investment. In 2019,
they constituted 4% of revenues (2018: 5%) and are expected
to have materially concluded by 2020.

A key focus of the division is to build its annuity revenue
offerings which now account for over 65% of the revenue
(2018: 70%). This proportion is down slightly on the previous
year due to the strong performance in hardware in 2019 and a
high level of some legacy contract spend in its final year.

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 and associated technology services
(managed services) and managed broadband connectivity to
UK schools and colleges. Total Services revenues increased
by 6% to £57.6m (2018: £54.3m) with managed services
revenues growing 4% to £44.7m and connectivity revenues
growing 13% to £12.9m supported, in part, by higher sales of
unbundled IP addresses.

Retention rates in the year for managed outsourced services
contracts with schools were circa 90% and in addition,
72 new schools signed managed services contracts in the
year (2018: 99 schools) resulting in a 5% growth in outsourced
school customer numbers across the year.

Digital Software Platforms

The Digital Software Platform offering covers a number
of key cloud-based products such as RM Integris (school
management system), RM Unify (authentication and portal
system) and RM SafetyNet (internet filtering and safeguarding
system) as well as other content, finance and network
software offerings. Digital Platforms revenues increased by
4% to £10.1m (2018: £9.7m) driven by growth in RM Integris
and network software. Customer retention rates of core
Digital Platform products remain consistent and in excess of
90% in the year.

I M P A C T O F U K W I T H D R AW A L F R O M
T H E E U R O P E A N U N I O N

The Company will continue to monitor the evolving situation
regarding the UK withdrawal from the EU on 31 January 2019
given the ongoing risk of a no-deal exit at the end of the
transition period if no trade deal is agreed.

The Group has European sales of £14.3m, of which £8.4m
relate to physical product sales in RM Resources and
£5.9m 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 focussed 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 and recent commitments for increased
school 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 over time.

STRATEGIC REPORTThe 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
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
3 February 2020

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

The financial position, cashflows 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, financial risk management objectives, and
exposure to credit and liquidity risk. During the year, the
Group renegotiated and extended its revolving credit facility.
The current facility is for £70m with a £30m accordion
clause, enabling the Group to extend the facility to £100m.
The facility is committed to June 2022 but has the option
of a further two year extension. The associated financial
covenants are based on the definition of finance leases prior
to the implementation of the new accounting standard,
IFRS 16 which RM will adopt in financial year 2020. The
Group ended the year with a net debt of £15.0m which is an
increase of £9.2m on the prior year end position of £5.8m
after costs of acquisition and strategic increases in capital
expenditure during the year. The average net debt position
during the year was £24.1m with the highest borrowing
point being £38.7m.

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 and Emerging
Risks and Uncertainties section above, along with their
mitigating actions.

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

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 (r) (n)

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 U L D E A N
Non-Executive Director

Paul Dean joins the Board on 4 February 2020 as a Non-
Executive Director and Chairman of the Audit Committee.
He is currently Non-Executive Director and Chair of the
Audit Committee for Wincanton plc and Focusrite plc, and
the Senior Independent Director and Chair of the Audit
Committee of Polypipe plc. He was previously the Senior
Independent Director and Chair of the Audit Committee at
Porvair for 7 years, Group Finance Director of Ultra-Electronics
plc from 2008 to 2013 and Group Finance Director of Foseco
plc from 2005 to 2008. Paul will be a member of the Audit,
Remuneration and Nomination Committees.

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 Group Chief Operating Officer and Chief Executive of
the Informa Intelligence Division of Informa plc.

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

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 an Independent Non-Executive on the Partnership
Oversight Board of Grant Thornton UK LLP. She is also a
former Non-Executive Director of Lamprell plc, Wates Group
Limited and Invensys plc. Deena will retire as a Director later
in the year.

Committee membership as at the date of this report:

(a)

(r)

(n)

Audit Committee Member

Remuneration Committee Member

Nomination Committee Member

G O V E R N A N C E

D I R E C T O R S ’ R E P O R T

Emissions by scope

The Directors submit their report together with the audited
consolidated and Company financial statements for the year
ended 30 November 2019.

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

D I V I D E N D S

The total dividend paid and proposed for the year
has been increased by 5.26% to 8.00 pence per share
(2018: 7.60 pence). This is comprised of the interim
dividend of 2.00 pence per share paid in September 2019
and, subject to shareholder approval, a final dividend of
6.00 pence per share.

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
as we deem it important to promote sustainability and also
to minimise the potential negative environmental impact
of products and processes. These actions include efficient
utility usage, waste reduction/recycling and use of energy
saving features in products. The Directors are currently
reviewing the Group’s overall sustainability strategy with
the intention of putting in place more ambitious goals and
projects that enhance our sustainable business practices.

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 2019.

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.

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-2019).

Scope

Source

Country

Tonnes CO2℮

Absolute totals
Tonnes CO2℮

Tonnes CO2℮

Absolute totals
Tonnes CO2℮

Year ended 30 September 2019

Year ended 30 September 2018

Scope 1

Van/car travel

Gas

Electricity

Scope 2
(location
based)

Total

Note: CO2℮ means CO2 equivalent

India

Australia

409

676

719

595

1,091

1,331

2,422

481

789

805

634

1,276

1,439

2,715

The Group has reduced its emissions in 2019 compared to 2018 by 293 tonnes, a reduction of 11%. This is largely related to changes
we have made, such as the adoption of agile working, that has led to a reduction in our requirements for building space across
the Group.

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

With enhanced data accuracy, 2018 emissions have been restated.

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

Year ended
30 September 2019

Year ended
30 September 2018

0.54

0.67

1.21

0.66

0.74

1.40

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. In those updates, reports are provided on all relevant data
protection matters, including those relating to security and any legal and regulatory developments.

GOVERNANCEH 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 ISO 45001. 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 £6.6m of research and development in the year, which was expensed in
the Income Statement (2018: £6.7m). This primarily relates to product research, maintenance and related expenditure which does not
meet capitalisation criteria.

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 31 January 2020 the Company had received notifications that the following parties were interested in accordance with DTR 5:

Shareholder

No. of shares

Percentage of
Issued Share Capital
as at 31 January 2020

No. of shares
Direct

No. of shares
Indirect

Schroders Investment Management Ltd

Aberforth Partners LLP

Castlefield Fund Partners Ltd

Canacord Genuity Group Inc

BlackRock Inc

Artemis Fund Managers Ltd

Majedie Asset Management Ltd

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

14,389,444

12,570,713

10,240,000

4,725,312

4,523,809

4,090,645

3,930,360

17.16%

14.99%

12.21%

5.63%

5.39%

4.88%

4.69%

14,389,444

12,570,713

10,240,000

4,725,312

4,523,809

4,090,645

3,930,360

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 2019, the RM plc Employee Share Trust owned 1,398,921 ordinary shares in
the Company (1.67% 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 July 2019, the Company entered into a revised agreement extending the term of the revolving credit facility, with Barclays Bank plc
and HSBC Bank plc, to June 2022. The principal facility has been increased to £70m. In addition, the Company has a £30m accordion
facility, enabling the Company to extend the total facility up to £100m. 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.

R 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 27 March 2019,
members renewed the authority under section 701 of the
Companies Act 2006 to make market purchases on the
London Stock Exchange of up to 8,387,501 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 last independent trade and the highest
current independent bid on the London Stock Exchange at
the time the purchase is carried out. 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 26 March 2020.

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 parent Company financial statements in
accordance with applicable law and regulations.

Company law requires the Directors to prepare Group and
parent Company financial statements for each financial
year. Under that law they are required to prepare the Group
financial statements in accordance with International
Financial Reporting Standards as adopted by the European
Union (IFRSs as adopted by the EU) and applicable law
and have elected to prepare the parent 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 Group and
parent Company and of their profit or loss for that period. In
preparing each of the Group and parent Company financial
statements, the Directors are required to:

• select suitable accounting policies and then apply

them consistently;

• make judgements and estimates that are reasonable,

relevant and reliable;

• state whether they have been prepared in accordance with

IFRSs as adopted by the EU;

• assess the Group and parent 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 parent
Company or to cease operations, or have no realistic
alternative but to do so.

GOVERNANCEA 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
26 March 2020 at 142B Park Drive, Abingdon, Oxfordshire,
OX14 4SE, 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

Mark Lágler
Company Secretary
3 February 2020

The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the parent Company’s transactions and disclose with
reasonable accuracy at any time the financial position of the
parent Company and enable them to ensure that its 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, Directors’ Remuneration Report and Corporate
Governance Statement 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.

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

Each of the Directors, whose names and functions are listed
at the front of the Annual Report, confirm that to the best
of our 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 undertakings included in
the consolidation 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 issuer and the undertakings included
in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that
they face.

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

GOVERNANCEC 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

UK Corporate Governance Code 2018

As Chairman, I am responsible for ensuring that the Company
has high standards of corporate governance. While the UK
Corporate Governance Code, as published and updated
from time to time, sets out a framework for corporate
governance, irrespective of that Code, the Board tries to foster
throughout the organisation a culture of open and honest
communication, constructive challenge, proper division of
responsibilities and consideration of all relevant stakeholders,
all set within a structure containing appropriate checks and
balances. The Board sees this as a positive contributor to
effective business operations.

Nonetheless, corporate governance has been an area
of considerable focus in recent years, with the Financial
Reporting Council issuing a revised Code in 2018 (‘2018
Code’) following extensive consultation. While we have
reported against the 2016 Code (see further below), the Board
has used the introduction of the 2018 Code as an opportunity
to review the Company’s governance framework and any
changes that may be necessary or desirable.

The 2018 Code will apply to RM from the start of the financial
year commencing 1 December 2019 and so the Company will
report in full on its application in the Annual Report for the
year ending 30 November 2020. However, we have set out
below a few of the key points arising specifically in relation
to the 2018 Code that have been considered by the Board
already, in order to give investors and other stakeholders the
confidence that such matters have been, and will continue to
be, properly addressed.

Although the 2018 Code was at first sight a significant
departure from previous Codes, a lot of its content was
already being covered or reviewed in some way by the Board
or within the business. For example:

•

In terms of culture and purpose, the Company has a clear
and stated vision (as already available at www.rmplc.com):

“We grow through improving life chances of people -
worldwide - by delivering great education products and
services that help teachers to teach and learners to learn.”

In terms of values, the above vision is supported internally
by a recently launched set of values and behaviours
(known as '5 To Drive'). The ‘5 To Drive’ initiative is a
comprehensive internal programme that is intended
to drive positive and aligned behaviours throughout
the organisation. These behaviours are intended to
benefit not just the Company itself and its staff but also
all stakeholders with whom we do business. In next
year’s Annual Report we will provide more detail on
the '5 To Drive' programme and alignment within the
Company with this.

• The Board has always considered the treatment and
engagement of the entire workforce as an issue of
importance. A number of processes have been in
place in order to assist the Board in monitoring such
matters, ranging from Company-wide employee surveys,
consideration of key policies and tracking of attrition and
labour turnover rates across each part of the business.

UK Corporate Governance Code 2016

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 2019. How we have applied the
principles of the Code is set out in the table below.

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

Workforce engagement is a key focus area in the
2018 Code and, while the revised Code sets out certain
prescribed mechanisms for improving workforce
engagement, the Board considers that, notwithstanding
those mechanisms, the Board has a collective
responsibility in this area. Additionally, being mindful of
best practice and the provisions of the new Code,
the Board has appointed Patrick Martell as a
‘Designated Non-Executive Director’ to enhance that
engagement, with various initiatives under consideration
to achieve that engagement.

•

In determining remuneration for the Executive Directors,
the Remuneration Committee has always considered
the remuneration arrangements for the wider workforce.
Pension arrangements have been aligned (with the
Executive Directors having identical arrangements to the
rest of the workforce). The Remuneration Committee
has also been involved in reviewing the remuneration for
senior management, an area which is formalised by the
2018 Code. Similarly, the Company’s Remuneration Policy
was revised and put to shareholders in March 2018, with
a number of the recommendations from the 2018 Code
having already been incorporated (e.g. post-vesting
holding periods).

•

In addition, the majority of the Board is independent,
there is an annual re-election of all Directors, the Audit,
Nomination and Remuneration Committees have at least
three members, and there is annual evaluation of the
Board, the Chairman and the Committees.

Despite the reviews and steps already taken, the Board is
cognisant of the fact that best practice continues to evolve.
As such, the Board will continue to monitor and review its
governance arrangements under the 2018 Code against best
practice being adopted by others and will report more fully in
next year’s Annual Report.

GOVERNANCE

C 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

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 (including the Non-Executive Director starting
on 4 February 2020) 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 judgement. The Directors have a combination of financial and
business expertise which is suited to the nature of the Company.

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.

External search consultancies, which have no other connection to the
Company (other than in relation to similar previous appointments),
were appointed during the year to assist with new Non-Executive Director
appointments. Paul Dean has been appointed as a Non-Executive with effect
from 4 February 2020. No other appointment has 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.

Evaluation

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

Re-election

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

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.

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 2019. Certain administrative improvements were identified
as a result of this year’s review and will be implemented during the year
ending 30 November 2020.

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.

GOVERNANCE
Code of Best Practice – Principles

RM Statement of Compliance

Code 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 and Accounts, 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 Annual 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 Chairman, 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.

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, Chairman, 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 judgements 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.

GOVERNANCEThe 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. Further
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

2¹

¹ John Poulter resigned from the Audit Committee on 25 September 2019.

Where a Director is unable to attend a meeting, the papers are sent in advance and the Director has the opportunity to
provide comments.

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 and Emerging 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 2019 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 establishment of appropriate operating and

financial policies.

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 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 the technology solutions it offers
create opportunities for its customers to reduce their
environmental impact. It also 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.

GOVERNANCEThe 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.

The Directors have overall responsibility for establishing
financial and other reporting procedures to provide them
with a reasonable basis on which to make proper judgements
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.

• Existence of an internal audit function led by Group

Financial Controller.

• 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.

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

The Audit Committee considers that the significant
accounting judgements upon which the accounts are
based relate primarily to revenue recognition for long-term
contracts under IFRS 15. In these contracts the arrangements
may be complex, particularly with respect to variable
consideration and service performance measures.

These contracts can involve significant judgements that may
impact the recognition of revenue including:

The Audit Committee reviewed and considered the
following areas:

• The identification of performance obligations included

within the contract.

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

• The allocation of revenue to performance obligations

including the impact of variable consideration.

• Whether the Group has followed appropriate accounting

• The combination of goods and services into a single

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.

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 introduction of IFRS 15 on the accounts of

the Group and the key judgements involved.

• Monitoring and reviewing the effectiveness of the

• The effect of the proposed introduction of IFRS 16 on 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.

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.

In relation to the acquisition of SoNET Systems Pty
Ltd, certain valuation risks stems from the acquisition,
including in relation to the purchase price allocation and
the acquisition balance sheet. The Company is required
to make a number of judgements which focus on (but are
not limited to) the identification of the intangible assets
acquired and an assessment of the fair value of the acquired
assets and liabilities. The Company engaged a number
of advisors (financial and accounting and legal) to assist
with the acquisition and to support the valuation of the
intangible assets acquired. Given the size, materiality and
structure of the acquisition, these are not considered by
the Audit Committee to be critical judgements within the
Annual Report.

performance obligation.

• The measurement of progress for performance obligations

satisfied over time.

• The consideration of onerous contract conditions and

associated loss provisions.

As part of the adoption of IFRS 15, the Audit Committee
received papers and presentations on the key judgements
and impact on IFRS 15 on current contracts. The Audit
Committee also agreed that regular summaries are presented
for their consideration and review for significant complex
contracts which highlight the key judgements and estimates
made to determine revenue recognition.

Management reported to the Committee that they were
not aware of any material misstatements. The auditor
reported to the 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 2019 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 2019, the Audit
Committee comprised Deena Mattar BSc (Econ), FCA
(Chairman), Andy Blundell and Patrick Martell, all of whom
are independent Non-Executive Directors. In addition John
Poulter (Group Chairman) was a member until 25 September
2019, when he stepped down from the Audit Committee after
consideration of the 2018 UK Corporate Governance Code
that recommends the Committee should only comprise
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), John Poulter (Chairman),
David Brooks (Chief Executive Officer), Neil Martin ACMA
(Chief Financial Officer), Jo Bridgman ACA (Group Financial
Controller) 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
27 March 2019, 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.

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

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

Main 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
3 February 2020

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 16).

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
(Jo Bridgman, Group Financial Controller). 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, focussed 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.

Fees for non-audit work in the period were 6.7% 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.

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 The Consortium in June 2017, those reviews involved
aligning the governance framework in that business with
the governance framework in operation elsewhere in the
Group. Following the acquisition of SoNET Systems in
2019 the Group governance framework has been materially
implemented in this new subsidiary with UK experienced
management present in the acquired company for the first
six months of acquisition. 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.

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.

GOVERNANCEThe 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.

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 2019.

This Report is divided into the following three sections:

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

The introduction in 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 2019.

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 2019 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 2018.

• Approval of the Remuneration Report for the year ended

30 November 2018.

• The grant of LTIP awards to senior executives in March 2019.

• The proposal to put a new Performance Share Plan

to shareholders at the AGM in March 2019 (to replace
the previous Plan which will shortly be coming to
its conclusion).

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 2019 were as follows:

• During the year, none of the Group’s LTIPs were due to vest.

•

In relation to annual bonuses for the year ended
30 November 2019, the Committee considered the
Company’s performance relative to the targets set at the
start of the year. Group adjusted profit before tax was
£26.6m, as compared to a target of £26.0m. In light of that
performance, the Committee considered it appropriate to
set the bonus payable for each of the Executive Directors
at 45% of base salary.

The Committee considers that the overall pay outcome for
the year ended 30 November 2019 is justified given the overall
performance of the business, taking into account its future
prospects and position.

Patrick Martell
Chairman, Remuneration Committee
3 February 2020

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.

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.

GOVERNANCE

Element

Fixed Pay

Base Salary
(see also
note 1 below)

Pension
(see also
note 2 below)

Benefits

Purpose and link to strategy

Operation

Maximum Opportunity

Performance Metrics

Changes for 2019/20

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

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

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

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

None.

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.

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

GOVERNANCEPurpose and link to strategy

Operation

Maximum Opportunity

Performance Metrics

Changes for 2019/20

Element

Variable Pay

Annual Bonus

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.

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:

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.

Notes:

1. Since the end of the financial year, having applied the principles set out in the table above, the Committee has not increased the

base salary of David Brooks and Neil Martin.

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.

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).

150% of base salary.

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.

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.

It is anticipated that, during the year ending 30 November 2020, awards will be made to David Brooks and Neil Martin,
respectively, under the RM plc Performance Share Plan 2019. 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 2019 and the year ended 30 November 2022. Vesting will occur on a sliding scale between a compound
annual growth rate (CAGR) in EPS of 5% pa (25%) and a CAGR in EPS of 15% pa (100%) namely 30.8 pence and 40.5 pence.

50% shall be based on the Company’s relative TSR performance for the period from January/February 2020 to
January/February 2023. The Company’s TSR performance shall be measured against the TSR performance of the
companies within the FTSE Small Cap (ex. Investment Trusts) Index ('Comparator Group') 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%).

GOVERNANCE3 . 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 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).

• 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. Fees were last 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 2020. 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 101% of base salary for David Brooks and 99% 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

1,400

1,200

1,000

800

600

400

200

David Brooks – Chief Executive Officer

LTIPs

Variable Pay

Fixed

Minimum

On-target

Maximum

£000

1,400

1,200

1,000

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.

GOVERNANCE

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

1 2 . P O L I C Y O N T E R M I N A T I O N

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.

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.

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.

Circumstances
of departure

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:

Salary and benefits
for notice period

John Poulter

Andy Blundell

David Brooks

Neil Martin

Deena Mattar

Patrick Martell

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 2022

6 months

3 months

12 months

3 months

‘Good Leaver’

Voluntary Resignation

‘Bad Leaver’

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.

GOVERNANCE‘Good Leaver’

Voluntary Resignation

‘Bad Leaver’

Unvested LTIP awards

Normal circumstances

Forfeited.

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

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

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 2019 and,
in respect of those Directors, the equivalent figures for the year ended 30 November 2018:

Name

Executive

David Brooks

Neil Martin

Non-Executive

John Poulter

135

131

Salary/fees
£000

Taxable
benefits
£000

Annual
bonus
£000

Retirement
benefits
£000

Termination
payments
£000

LTIPs
£000

Total
£000

2019

2018

2019

2018

2019

2018

2019

2018

2019

2018

2019

2018

2019

2018

3581

3231

2971

2911

161

134

226

204

923

875

295

430

401

310

231

211

201

711

553

467

982

840

135

131

1,288

2,083

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

Forfeited.

Andy Blundell

Patrick Martell

Deena Mattar

Total

Notes:

The table has been audited.

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.

None.

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 profit before tax in the year of £26.0m, 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 2019, the Committee considered the Company’s performance relative to
that target. Group operating profit before tax was £26.6m. In light of that performance, the Committee considered it appropriate to set
the bonuses payable at 45% 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

During the year none of the Group’s LTIPs were due to vest.

Past Directors

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

GOVERNANCE3 . P E R F O R M A N C E G R A P H

The following graph shows the value, by 29 November 2019, of £100 invested in RM plc on 30 November 2009 compared with the value
of £100 invested in the FTSE Small Cap (ex. Investment Trusts) 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

£300

£250

£200

£150

£100

£50

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

RM plc

FTSE Small Cap Index (ex. Investment Trusts)

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 2019 was £1,010,010 (2018: £791,676). 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 2019, 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

David Brooks PSP1

14 March 2019

3632

12.5% for EPS element

n/a

February 2022

12.5% for TSR element

Neil Martin

PSP1

14 March 2019

2952

12.5% for EPS element

n/a

February 2022

12.5% for TSR element

A summary of
performance targets
and measures

50% on EPS
performance3

50% on relative TSR
performance4

50% on EPS
performance3

50% on relative TSR
performance4

Notes:

The table has been audited.

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 122,000 shares for Neil Martin) by the share price on the date of grant of the award (242.00 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 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% pa (25%) and a CAGR in EPS of 15% pa (100%), namely 30.1 pence and 39.5 pence respectively.

4. 50% of the award is 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 within
the FTSE Small Cap (ex. Investment Trusts) Index ('Comparator Group') 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%).

GOVERNANCE4 . 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:

6 . 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

• 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.

Comparing 2018 to 2019

% change in CEO remuneration

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

% change in comparator group remuneration

Salary

10.8

3.12

Benefits

0.0

8.8

Bonus1

-11.0

12.1

2010

20111

20122

20133

2014

2015

2016

2017

2018

2019

Notes:

517

56%

426

286

379

58%⁴

576

75%

1,246

50%

655

45%

713

73%

982

64%

553

41%

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 2018 and 2019. The bonuses referred to in
the ‘Single Figure’ table at paragraph 1 relate to the years ended 30 November 2018 (paid in February 2019) and 30 November 2019
(to be paid in February 2020).

40%

91%

100%

36%

100%

N/A⁵

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

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. During the year none of the Group’s LTIPs were due to vest.

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 2019 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

2019
£m

67.2

1.3

6.3

3.6

4.6

2018
£m

64.8

2.1

5.6

3.1

4.6

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 27 March 2019 in respect of the remuneration report for the year ended
30 November 2018, and at the Annual General Meeting held on 21 March 2018 in respect of the remuneration policy 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

97.55

% of votes
against

Number of votes
withheld

0.01

2.39

506,109

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 2019 were:

Holding as at
30 November 2019

Current holding
as % of base salary1

Shareholding
policy met2

Holding as at
30 November 2018

87,500

6,312

440,878

5,000

115,416

17,933

302%

95%

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 2018 to 30 November 2019 (£2.4583)

and base salaries as at 1 January 2020.

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 2019 and the date of this Report.

GOVERNANCE9 . 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

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

As at 30 November 2019, the Executive Directors had the following interests in the Company’s share plans1:

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

PSP Awards2

Date of Grant

9 March 2017

13 March 2018

14 March 2019

Date of Grant

9 March 2017

13 March 2018

14 March 2019

David Brooks

Neil Martin

Notes:

No. of Shares/Options

Performance Conditions

175,000

150,000

See notes 3, 4 and 5

See notes 5, 6 and 7

See notes 5 and 8

No. of Shares/Options

Performance Conditions

160,000

135,000

122,000

See notes 3, 4 and 5

See notes 5, 6 and 7

See notes 5 and 8

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.

1 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.

1. The table has been audited. To avoid duplication, and in accordance with Section 17(b)(iii) of The Large and Medium-sized

• Total pension entitlements, as described in the notes to paragraph 1.

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.

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

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

2. Granted under 'The RM plc Performance Share Plan 2010'. All PSP awards are subject to a minimum vesting period of 3 years.

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

By Order of the Board

Patrick Martell
Chairman, Remuneration Committee
3 February 2020

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% pa (25%) and a CAGR in EPS of 17.5% pa (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
within the FTSE Small Cap (ex. Investment Trusts) Index ('Comparator Group') 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, 2018 and 2019 were 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. If the options granted in March 2019
vest, they would be exercisable in the period 15 March 2022 to 26 October 2027.

6. 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% pa (25%) and a CAGR in EPS of 17.5% pa (100%), namely 26.1 pence and 34.1 pence respectively.

7. 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
within the FTSE Small Cap (ex. Investment Trusts) Index ('Comparator Group') 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%).

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

(Directors’ long-term incentive plans) above.

GOVERNANCE 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

We have audited the financial statements of RM plc
('the Company') for the year ended 30 November 2019
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 2019 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 first appointed as auditor by the Directors
on 24 March 2011. The period of total uninterrupted
engagement is for the nine financial years ended
30 November 2019. 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.

Materiality:
Group financial
statements as
a whole

Coverage

Key audit matters

Recurring risks

£1.15m (2018: £1.12m)

4.7% (2018: 4.6%) of
normalised profit before tax

97% (2018: 97%) of
total profits and losses that
made up Group profit before tax

vs 2018

◀▶

RM Results
long-term contracts

Recoverability of parent
company’s investment
in subsidiaries

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
judgement, 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.

RM Results
long-term contracts

Revenue £37.7m
(2018: £31.8m);

Refer to page 38
(Audit Committee
Report), page 77
(accounting policy)
and page 86
(financial disclosures).

T H E R I S K

O U R R E S P O N S E

Accounting judgement:

Our procedures included:

For long-term contracts within the
RM Results division, the contractual
arrangements can be complex. This can
involve significant judgements that may
impact the recognition of revenue and
contract profits including:

• The identification of the

performance obligations included
within the contract;

• The combining of goods and services
into a single performance obligation;

• The allocation of revenue to
performance obligations;

• The consideration of onerous

contract conditions and associated
loss provisions.

The effect of these matters is that, as part
of our risk assessment, we determined
that revenue recognised from the
long-term contracts within the RM Results
division has a high degree of judgement,
with a potential range of reasonable
outcomes greater than our materiality for
the financial statements as a whole.

In respect of onerous contract conditions,
in conducting our final audit work,
we reassessed the potential range of
reasonably possible outcomes to be less
than that materiality.

Control operation:

We tested controls over the allocation of costs to project
codes and the approval of those costs which is used in the
determination of stand-alone selling price;

Test of details:

We inspected a sample of the long-term contracts based
on the magnitude of revenue recognised in the year and
risk indicators (such as contracts with material lifetime
revenues, loss making contracts, and contracts with
material contract fulfilment asset balances).

For the contracts selected:

• We critically assessed the judgements used in the

identification of performance obligations by inspecting
the contract to understand the promised goods and
services and terms and conditions that underpin the
revenue and profit recognition assumptions.

• We critically assessed the judgements used in the
allocation of revenue to performance obligations,
including assessing the stand-alone selling price
identified for each performance obligation by agreeing
to supporting information including third-party
cost invoices.

• We inspected material contract variations and assessed

whether the variation was a new contract or an
extension to the existing contract and assessed how
revenue had been recognised for each.

Assessing transparency:

We considered the adequacy of the Group’s disclosures
about the revenue recognition policies and the
key judgements applied.

Our results

The results of our testing were satisfactory and we found
the identification of performance obligations and the
allocation of revenue to the performance obligations to
be acceptable (result on 2018 KAM: acceptable).

We continue to perform procedures over the revenue from long-term contracts in the RM Education division. However, as these
contracts are completing there is lower estimation uncertainty and we have not assessed this as one of the most significant risks in our
current year audit and, therefore, it is not separately identified in our report this year. The key audit matter in relation to revenue for
RM Results has changed in the year due to the identification of separate performance obligations in long-term contracts under IFRS 15
that were previously bundled under IAS 11/18.

GOVERNANCERecoverability of
parent company’s
investment in
subsidiaries

Investments £125.8m
(2018: £125.1m)

Refer to page 38
(Audit Committee
Report), page 76
(accounting policy)
and page 99
(financial disclosures).

T H E R I S K

O U R R E S P O N S E

Low risk, high value

Our procedures included:

The carrying amount of the parent
Company’s investments in subsidiaries
represents 84% (2018: 92%) of the
Company’s total assets.

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

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 statement,
this is considered to be the area that had
the greatest effect on our overall parent
Company audit.

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 sensitivity
of the investment in subsidiaries to impairment.

Our results

We found the Group’s assessment of the recoverability of
the parent Company’s investment in subsidiaries to be
acceptable (2018 result: 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 £1.15m (2018: £1.12m) determined
with reference to a benchmark of Group profit before tax,
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 (2018: £0.75m), determined with
reference to a benchmark of Company total assets, of which
it represents 0.5% (2018: 0.6%).

We agreed to report to the Audit Committee any
corrected or uncorrected identified misstatements
exceeding £57,500 (2018: £56,000), in addition to other
identified misstatements that warranted reporting on
qualitative grounds.

Normalised proﬁt before tax
£24.7m (2018: £24.7m)

Group materiality
£1.15m (2018: £1.12m)

£1.15m
Whole financial
statements materiality
(2018: £1.12m)

£0.75m
Range of materiality at
four components –
£0.55m to £0.75m
(2018: £0.55m to £0.75m)

£0.058m
Misstatements reported
to the audit committee
(2018: £0.056m)

Profit before tax
Group materiality

Of the Group’s ten (2018: twelve) reporting components, we subjected four (2018: four) to full scope audits for Group reporting.

The components within the scope of our work accounted for the percentages illustrated below.

The remaining 1% (2018: 0%) total Group revenue, 3% (2018: 3%) of the total profits and losses that made up Group profit before
tax and 6% (2018:12%) of total Group assets is represented by six (2018: eight) reporting components, none of which individually
represented more than 2% (2018: 4%) of any total Group revenue, total profit and losses that made up Group profit before tax or total
Group assets. For these 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 team performed the work on all components, including the audit of the parent Company. The Group team determined
the component materialities, which ranged from £0.55m to £0.75m (2018: £0.55m to £0.75m), having regard to the mix of size and risk
profile of the Group across the components. The Group team 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

99%

(2018: 100%)

100

97%

(2018: 97%)

97%

(2018: 88%)

Full scope for Group audit purposes 2019

Full scope for Group audit purposes 2018

Residual components

GOVERNANCE4 . 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 to cease its operations, and as they have
concluded that the Company’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 Company will continue in operation.

In our evaluation of the Directors’ conclusions, we considered
the inherent risks to the Company’s business model,
including the impact of Brexit, and analysed how those risks
might affect the 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 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 19 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 19 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 and Emerging Risks and Uncertainties
disclosures describing these risks and explaining how they
are being managed and mitigated; and

•

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 judgements 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
Report 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 25, 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.

GOVERNANCE8 . 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
15 Canada Square, Canary Wharf
London, E14 5GL

3 February 2020

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
pension 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

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

Revenue

Cost of sales

Gross profit

Operating expenses

Profit from operations

Other 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 2019

Year ended 30 November 2018

Adjusted

Adjustments

Note

£000

Total

£000

Adjusted

Adjustments

£000

223,765

(132,140)

91,625

223,765

220,977

(132,140)

(129,664)

91,625

91,313

Total

£000

220,977

(129,664)

91,313

(63,985)

(3,462)

(67,447)

(63,819)

(4,927)

(68,746)

27,640

(3,462)

24,178

27,494

(4,927)

22,567

153

(1,155)

(8)

153

164

(1,163)

(1,679)

(25)

164

(1,704)

26,638

(3,470)

23,168

25,979

(4,952)

21,027

(4,746)

640

(4,106)

(4,734)

634

(4,100)

21,892

(2,830)

19,062

21,245

(4,318)

16,927

26.6p

26.4p

26.0p

25.8p

23.2p

23.0p

2.00p

6.00p

20.7p

20.6p

1.90p

5.70p

The results for the year ended 30 November 2019 have been presented under IFRS 15.
The previous year’s results have not been restated (see Note 32).

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 76 to 126 form an integral part of these financial statements.

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 (loss)/gain on hedged instruments

Exchange loss on translation of overseas operations

Other comprehensive (expense)/income

Total comprehensive income

Note

Year ended
30 November 2019

Year ended
30 November 2018

£000

19,062

(8,033)

1,418

(806)

(211)

(7,632)

11,430

£000

16,927

15,693

(2,716)

822

(127)

13,672

30,599

The notes on pages 76 to 126 form an integral part of these financial statements.

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 2019

At 30 November 2018

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

Non-current assets

Goodwill
Intangible assets
Property, plant and equipment
Defined benefit pension scheme surplus
Other receivables
Contract fulfilment assets
Deferred tax assets

Current assets
Inventories
Trade and other receivables
Contract fulfilment assets
Held for sale asset
Tax assets
Cash at bank

Total assets
Current liabilities

Trade and other payables
Tax liabilities
Provisions
Overdraft

Net current assets/(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
25
18
17
9

16
18
17
19

21
23
9
25
22

£000

49,107
23,274
9,183
976
939
2,193
3,457
89,129

22,151
31,238
844
1,428
382
5,534
61,577
150,706

(51,231)
(117)
(1,585)
(4,006)
(56,939)
4,638

(3,483)
(3,868)
(3,356)
(6,951)
(16,534)
(34,192)
(91,131)
59,575

1,917
27,080
(1,007)
94
(411)
(497)
32,399
59,575

£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 results for the year ended 30 November 2019 have been presented under IFRS 15. The previous year’s results have not been
restated (see Note 32). The notes on pages 76 to 126 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 3 February 2020.

On behalf of the Board of Directors

David Brooks
Director

Neil Martin
Director

redemption

Hedging

Translation

Retained

Share capital

premium

Own shares

reserve

earnings

Capital

Note

£000

At 1 December 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)

At 1 December 2018 as reported

1,917

27,080

(1,423)

IFRS 15 restatement

At 1 December 2018 as restated

1,917

27,080

(1,423)

Profit for the year

Other comprehensive expense

Total comprehensive
(expense)/income

Transactions with owners of the Company:

Share-based payment
awards exercised

Share-based payment fair
value charges

Ordinary
dividends paid

416

£000

(427)

£000

(159)

£000

Total
£000

2,848

29,875

16,927

822

(127)

12,977

13,672

822

(127)

29,904

30,599

395

(931)

(921)

993

(5,601)

(286)

27,215

54,992

(1,185)

(286)

26,030

53,807

19,062

(806)

(211)

(6,615)

(7,632)

(806)

(211)

12,447

11,430

(416)

686

(6,348)

At 30 November 2019

1,917

27,080

(1,007)

(411)

(497)

32,399

59,575

The notes on pages 76 to 126 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

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

Year ended
30 November 2019

Year ended
30 November 2018

Note

7
8

5
13
14

20
5

14
13

11
22

Profit before tax
Investment income
Finance costs
Profit from operations
Adjustments for:
Pension GMP
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
(Gain)/loss on foreign exchange derivatives
Share-based payment charge
(Decrease)/increase in provisions
Defined benefit pension scheme administration cost

Operating cash flows before movements in working capital
(Increase)/decrease in inventories
Decrease/(increase) in receivables
(Increase) in contract fulfilment assets
Movement in payables:

Decrease in trade and other payables
Utilisation of provisions

Cash generated from operations
Defined benefit pension scheme cash contributions
Tax paid
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
Net cash used in investing activities
Financing activities

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

Net cash generated by/(used in) financing activities
Net increase 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

23,168
(153)
1,163
24,178

-
2,690
1,584
10
26
(29)
686
(758)
262
28,649
(4,115)
7,638
(1,602)

(7,483)
(3,161)
19,926
(4,618)
(3,639)
11,669

153
-
(7,109)
(728)
8
(2,876)
(3,159)
(13,711)

(6,348)
10,000
(529)
(513)
-
-
2,610
568
712
248
1,528

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

The notes on pages 76 to 126 form an integral part of these financial statements.

£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)
(2,263)
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

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

Total liabilities

Net assets

Equity attributable to equity holders

Share capital

Share premium account

Own shares

Capital redemption reserve

Retained earnings

Total equity

At 30 November 2019

At 30 November 2018

Note

£000

125,825

847

126,672

22,984

785

23,769

150,441

(138)

(72,789)

(72,927)

(49,158)

(16,534)

(89,461)

60,980

1,917

27,080

(1,007)

32,896

60,980

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

The notes on pages 76 to 126 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 3 February 2020.

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

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

redemption

Retained

Capital

Share capital

premium

Own shares

reserve

earnings

Note

£000

Total
£000

1,890

27,035

(1,406)

29,981

57,594

(27)

6,567

(931)

993

6,567

(921)

993

(5,601)

1,917

27,080

(1,423)

31,009

58,677

416

7,965

(416)

686

7,965

686

At 1 December 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

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 2019

Profit before tax

Investment income

Finance costs

Loss from operations

Adjustments for:

Increase in provisions

Operating cash flows before movements in working capital

(Decrease)/increase in receivables

Increase in payables

Utilisation of provision

Cash (used in)/generated from operations

Dividends received

Net cash (used in)/generated from operating activities

Investing activities

Interest received

Net cash generated from investing activities

Financing activities

Dividends paid

Share options exercised

Interest paid

1,917

27,080

(1,007)

32,896

60,980

Borrowing facilities arrangement and commitment fees

(6,348)

Drawdown/(repayment) of borrowings

The notes on pages 76 to 126 form an integral part of these financial statements.

Net cash generated from/(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 2019

£000

7,187

(11,387)

2,763

(1,437)

(13,223)

940

(13,720)

11,000

(2,720)

110

(6,348)

(513)

10,000

(529)

2,610

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)

The notes on pages 76 to 126 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

Consolidation

Revenue

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

Basis of preparation

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.

The Company has taken the exemption under s408 of the
Companies Act 2006, not to produce an Income Statement.
During the year the profit for the year was £7,965,000
(2018: £6,567,000).

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, except in relation to IFRS 15 Contracts
with Customers that has been applied from 1 December 2018.

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.

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. In addition, assets held for
sale are stated at the lower of previous carrying amount and
the fair value less costs to sell. The preparation of financial
statements, in conformity with generally accepted accounting
principles, requires the use of estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Although
these estimates are based on the Directors’ best knowledge
of current events and actions, actual results ultimately may
differ from those estimates.

The 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.

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.

Alternative Performance Measures (APMs)

Investment in subsidiaries

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.

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; less

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.

The Group operates a number of diverse businesses and
accordingly applies a variety of methods for revenue
recognition, based on the principles set out in IFRS 15 for the
year ended 30 November 2019. Many of the contracts entered
into, in the RM Results division, are long-term and complex
in nature.

The revenue and profits recognised in any period are
based on the delivery of performance obligations and an
assessment of when control is transferred to the customer.

In determining the amount of revenue and profits to record,
and related balance sheet items (such as contract fulfilment
assets, trade receivables, accrued income and deferred
income) to recognise in the period, management is required
to form a number of significant judgements and assumptions.
This includes:

• The identification of performance obligations included

within the contract.

• The allocation of revenue to performance obligations

including the impact of variable consideration.

• The combination of goods and services into a single

performance obligation.

• The measurement of progress for performance obligations

satisfied over time.

• The consideration of onerous contract conditions and

associated loss provisions.

Revenue is recognised either when the performance
obligation in the contract has been performed
(so 'point in time' recognition) or 'over time' as control
of the performance obligation is transferred to the customer.
For all contracts, the Group determines if the arrangement
with a customer creates enforceable rights and obligations.

For contracts with multiple components to be delivered,
management applies judgement to consider whether these
promised goods or services are; (i) distinct – to be accounted
for as separate performance obligations; (ii) not distinct – to
be combined with other promised goods or services until a
bundle is identified that is distinct; or (iii) part of a series of
goods and services that are substantially the same and have
the same pattern of transfer to the customer.

At contract inception the total transaction price is estimated,
being the amount to which the Group expects to be entitled
and has rights to under the present contract. This includes
an assessment of any variable consideration where the
performance obligation is satisfied over time. Such amounts
are only included based on the expected value or the most
likely outcome method, and only to the extent it is highly
probable that no revenue reversal will occur.

FINANCIAL STATEMENTSThe transaction price does not include estimates of
consideration resulting from change orders for additional
goods and services until these are agreed.

Once the total transaction price is determined, the Group
allocates this to the identified performance obligations in
proportion to their relative stand-alone selling prices and
recognises revenue when those performance obligations
are satisfied. In our RM Results division the Group may
sell customer bespoke solutions, and in these cases the
Group typically uses the expected cost plus margin or a
contractually stated price approach (if set out by performance
obligation in the contract) to estimate the stand-alone
selling price of each performance obligation. Any remaining
performance obligations for which the stand-alone selling
price is highly variable or uncertain, due to not having
previously been sold on a stand-alone basis, is allocated
applying the residual approach.

For each performance obligation, the Group determines if
revenue will be recognised over time or at a point in time.
Where the Group recognises revenue over time for long-term
contracts, this is generally due to the Group performing and
the customer simultaneously receiving and consuming the
benefits provided over the life of the contract.

For each performance obligation to be recognised over
time, the Group applies a revenue recognition method that
faithfully depicts the Group’s performance in transferring
control of the good or services to the customer. This
decision requires assessment of the real nature of the goods
or services that the Group has promised to transfer to the
customer. The Group applies the relevant input or output
method consistently to similar performance obligations in
other contracts.

When using the output method the Group recognises
revenue on the basis of direct measurements of the value
to the customer of the goods and services transferred to
the date relative to the remaining goods and services under
the contract. Where the output method is used, where the
series guidance is applied (see below for further details), the
Group often uses a method of time elapsed which requires
minimal estimation. Certain long-term contracts use output
method based on estimation of number of scripts, or level
of service activity. The number of scripts is considered to be
variable consideration.

There is judgement in determining whether a contract has
onerous conditions. When identified the expected loss is
provided for at the time identified.

Transactional (point-in-time) contracts

Contract modifications

The Group delivers goods and services in RM Education
and RM Resources that are transactional services for which
revenue is recognised at the point in time when the control
of the goods or services has transferred to the customer.
This may be at the point of physical delivery of goods and
acceptance by a customer or when the customer obtains
control of an asset or service in a contract with customer-
specified acceptance criteria.

The nature of contracts or performance obligations
categorised within this revenue type includes: (i) provision
of curriculum and educational resources for schools and
nurseries; (ii) provision of IT hardware goods and (iii)
installation of IT hardware goods.

Over time contracts

The Group delivers services in RM Education and RM Results
divisions under customer contracts with variable duration.
The nature of contracts and performance obligations
categorised within this revenue type is diverse and includes:
(i) outsourced service arrangements in the public and private
sectors; and (ii) Right to Access licenses (see below).

The Group considers that the services provided meet the
definition of a series of distinct goods and services as they
are: (i) substantially the same; (ii) have the same pattern of
transfer (as the series constitutes services provided in distinct
time increments (e.g. daily, monthly, quarterly, exam session,
or annual service)) and therefore treats the series as one
performance obligation. Even if the underlying activities
performed by the Group to satisfy a promise vary significantly
throughout the day and on a day by day basis, that fact, by
itself, does not mean the distinct goods or services are not
substantially the same. For the majority of the over time
contracts with customers are in this category, the Group
recognises revenues using the output method as it best
reflects the nature in which the Group is transferring control
of the goods or services to the customer.

Right to Access licenses are those where the Group has a
continuing involvement after the sale or transfer of control
to the customer, which significantly affects the intellectual
property to which the customer has rights. The Group is in
a majority of cases responsible for maintenance, continuing
support, updates and upgrades and accordingly the sale of
the initial software is not distinct. The Group’s accounting
policy for licenses is discussed in more detail below.

The Group’s over time contracts are often amended for
changes in contract specifications and requirements.
Contract modifications exist when the amendment either
creates new or changes the existing enforceable rights and
obligations. Material modifications are predominantly
extension to contract. The Group considers whether
each contract modification is part of the original contract
or is a separate contract and allocates the transaction
price accordingly.

Licences

Software licenses delivered by the Group can be either 'Right
to Access' or 'Right to Use' licenses. Right to Access licenses
require continuous upgrade and updates for the software to
remain useful, all other licenses are treated as Right to Use
licenses. The assessment of whether a license is a Right to
Access license or a Right to Use license involves judgement.
The key determinant of whether a license is a Right to
Access license is whether the Group is required to undertake
activities that significantly affect the license intellectual
property (or the customer has a reasonable expectation
that it will do so) and the customer is, therefore exposed to
positive or negative impacts resulting from those changes.

The Group considers for each contract that includes a
separate license performance obligation all the facts and
circumstances in determining whether the license revenue
is recognised over time or at a point in time from the go live
date of the license.

Contract fulfilment costs

Contract fulfilment costs are divided into: (i) costs that give
rise to an asset; and (ii) costs that are expensed as incurred.

When determining the appropriate accounting treatment for
such costs, the Group firstly considers any other applicable
standards. If those other standards preclude capitalisation
of a particular cost, then the asset is not recognised
under IFRS 15.

If other standards are not applicable to contract fulfilment
costs, the Group applies the following criteria which, if
met, result in capitalisation: (i) the costs directly relate
to a contract or to a specifically identifiable anticipated
contract; (ii) the costs generate or enhance resources of
the entity that will be used in satisfying (or continuing to
satisfy) performance obligations in the future; and (iii) the
costs are expected to be recovered. The assessment of this
criteria requires the application of judgement, in particular at
which point the capitalisation ceases and the performance
obligation begins.

Amortisation, derecognition and impairment of contract
fulfilment assets and capitalised costs to date

The Group amortises contract fulfilment assets to cost of
sales over the expected contract period using a systematic
basis that mirrors the pattern in which the Group transfers
control of the service to the customer. The amortisation
charge is included within cost of sales.

A contract fulfilment asset is derecognised either when it
is disposed of or when no further economic benefit are
expected to flow from its use or disposal.

Management is required to determine the recoverability of
contract related assets within property, plant and equipment,
intangible assets as well as contract fulfilment assets, accrued
income and trade receivables. At each reporting date, the
Group determines whether or not the contract fulfilment
assets are impaired by comparing the carrying amount of
the asset to the remaining amount of consideration that the
Group expects to receive less costs that relate to providing
services under the relevant contract. In determining the
estimated amount of consideration, the Group uses the same
principles as it does to determine the contract transaction
price, except that any constraints used to reduce the
transaction price will be removed for the impairment test.

Deferred and accrued income

The Group’s customer contracts include a diverse range of
payment schedules dependent upon the nature and type
of goods and services being provided. The Group often
agrees payment schedules at the inception of long-term
contracts under which it receives payments throughout
the term of the contracts. These payment schedules may
include progress payments as well as regular monthly or
quarterly payments for ongoing service delivery. Payments
for transactional goods or services may be at delivery date,
in arrears or part payment in advance. There are no material
financing arrangements.

Where payments made are greater than the revenue
recognised at the period end date, the Group recognises a
deferred income contract liability for this difference. Where
payments made are less than the revenue recognised at the
period end date, the Group recognises an accrued income
contract asset for this difference. Where accrued income and
deferred income exist on the same contract these balances
are shown net.

FINANCIAL STATEMENTSRevenue accounting policy under IAS 18 applicable for the
year ended 30 November 2018

Revenue

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

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 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.

If 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.

Long-term contracts

Intangible assets

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

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.

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

Customer relationships

15 years

5 years

2 – 8 years

3 – 5 years

so that it will be available for use or sale; and

Intellectual property and database assets

3 – 10 years

b. an intention to complete the intangible asset and use or

Property, plant and equipment

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

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

3 - 10 years

2 - 5 years

2 - 4 years

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.

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.

f. an ability to measure reliably the expenditure attributable

Computer equipment

to the intangible asset during its development.

Vehicles

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.

FINANCIAL STATEMENTS

Impairment of tangible and intangible assets
excluding goodwill

Accrued income is recognised when services are performed
and revenue recognised in advance of an invoice being raised.

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.

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.

The Group assesses on a forward-looking basis the expected
credit losses associated with its receivables carried at
amortised cost. The impairment methodology applied
depends on whether there has been a significant increase
in credit risk and this is assessed between government and
commercial organisations. For trade receivables, the Group
applies the simplified approach permitted by IFRS 9, resulting
in trade receivables recognised and carried at original invoice
amount less an allowance for any uncollectible amounts
based on expected credit losses.

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.

Held for sale asset

Held for sale assets are stated at the lower of cost less
accumulated depreciation and any impairment losses where
appropriate or fair value less costs to sell.

Borrowings

Borrowings relate to an unsecured revolving cash facility,
detailed in Note 30. All loans and borrowings are initially
recognised at their fair value less any directly attributable
transaction costs. After initial recognition, loans and
borrowings are subsequently measured at amortised cost
using the effective interest method.

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.

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

Restructuring

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.

For all hedging of forecast financial transactions, the
associated cumulative gain or loss is removed from equity
and recognised in the Income Statement in the same period
or periods during which the hedged expected future cash
flows affect profit or loss. When the hedging instrument is
sold, expires, is terminated or exercised, or the entity revokes
designation of the hedge relationship but the hedged
forecast transaction is still expected to occur, the cumulative
gain or loss at that point remains in equity and is recognised
in accordance with the above policy when the transaction
occurs. If the hedged transaction is no longer expected to
take place, the cumulative unrealised gain or loss recognised
in equity is recognised in the Income Statement immediately.

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.

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.

FINANCIAL STATEMENTSShare-based payments

Employee Share Trust

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 The 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
The 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.

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.
The Employee Share Trust is treated as a branch in the
consolidated financial statements.

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 2019 (being 1,398,921 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.

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
the 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

Dividends are recognised as a liability in the period in which the
shareholders’ right to receive payment has been established.

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:

• Retirement benefit scheme valuation – see Note 25

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:

• Revenue from contracts over time – see Note 3

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 2018 have been adopted. The following new
standards and interpretations have been adopted in the
current period and have impacted the reported results or the
financial position as disclosed in Note 32:

•

IFRS 15 – Contracts with Customers

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):

• Amendments to IFRS 2 - Classification and Measurement

of Share-based Payment Transactions

•

IFRS 16 Leases

IFRS 16 Leases (IFRS 16) was issued in January 2016, replacing
IAS 17 Leases (IAS 17) and other relevant guidance. IFRS 16
sets out the principles for the recognition, measurement,
presentation and disclosure of leases. IFRS 16 will be effective
for annual periods beginning on or after 1 January 2019.

Under the transition rules, the Group will apply IFRS 16 using
the modified retrospective approach, with the cumulative
effect of applying the standard recognised in retained
earnings on 1 December 2019. Contracts that have not
been identified as leases under IAS 17 and IFRS 4 were not
reassessed for whether there is a lease.

As at 30 November 2019, the Group held a significant number
of operating leases for which the future minimum lease
payments amount to £6,896,000 as disclosed in Note 29.
Adoption of the standard will not have a material impact
on the Group’s opening retained earnings and future profit
before tax, but will have a material impact on the balance
sheet (grossing up lease liability recognised and Right of Use
asset recognised).

FINANCIAL STATEMENTS3 . R E V E N U E

4 . O P E R A T I N G S E G M E N T S

RM Resources

RM Education

Transactional

Over time

RM Results

Over time

£000

114,184

342

114,526

£000

17,512

1,598

19,110

£000

38,275

14,180

52,455

£000

36,860

814

37,674

Year ended 30 November 2019

Supply of products

Rendering services

Licences

Year ended 30 November 2018

Supply of products

Rendering services

Licences

Total

£000

131,696

75,477

16,592

223,765

Total

£000

135,291

64,080

21,606

220,977

Each contract is analysed separately to identify the performance obligations and judgements made as to whether, for example, goods
and services should be combined. Judgement is also required to allocate the transaction price to each performance obligation based
on the standalone selling price or, for licences, the residual amount. Judgements include determination of performance obligations
and allocation of revenue to performance obligations. Scanning revenues of £6,841,000 are judged to be delivered over time as the
associated transaction price will be dependent on over time variables (such as volumes). Revenue is then recognised based on these
judgements which are set out in more detail in Note 2.

The table below shows the time bands of the expected timing of revenue to be recognised on over time contracts at 30 November 2019.

Time bands of over time contracts order book

At 30 November 2019

< 1 year

1-2 years

2-5 years

Total

RM Education

Over time

RM Results

Over time

£000

8,101

4,659

1,499

14,259

£000

18,511

23,610

18,412

60,533

Total

£000

26,612

28,269

19,911

74,792

Adjusted profit/(loss) from operations

Investment income

Adjusted finance costs

Adjusted profit before tax

Adjustments (see Note 5)

Profit before tax

The order book represents the consideration the Group will be entitled to receive from customers when the Group satisfies the
remaining performance obligations in the contracts. However the total revenue that will be earned from the order book in future may
change through non-contracted volumetric revenue, scope changes and contract extensions. These elements have been excluded
from the figures in the table above as they are not contracted.

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.

This segmental analysis shows the result and assets of these divisions. Revenue is that earned by the Group from third parties. Net
financing costs and tax are not allocated to segments as the funding, cash and tax management of the Group are activities carried out
by the central treasury and tax functions.

Segmental results

Year ended 30 November 2019

£000

RM Resources*

RM Results

RM Education

Corporate Services

Revenue

Europe

North America

Asia

Middle East

Rest of the World

95,034

8,404

4,141

1,348

2,575

3,024

114,526

13,691

27,700

4,966

1,652

3,260

37,674

8,731

69,748

923

187

541

166

71,565

10,407

(5,189)

Total

£000

192,482

14,293

4,328

3,541

2,671

6,450

223,765

27,640

153

(1,155)

26,638

(3,470)

23,168

FINANCIAL STATEMENTS

Year ended 30 November 2018

RM Resources*

RM Results

RM Education

Corporate Services

£000

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/(loss) from operations

Investment income

Adjusted finance costs

Adjusted profit before tax

Adjustments (see Note 5)

Profit before tax

* Included in UK are International Sales via UK Distributors of £1,944,000 (2018: £2,479,000).

There are no customers that individually represent over 10% of the Group’s turnover.

Segmental assets

At 30 November 2019

Segmental

Other

Total assets

At 30 November 2018

Segmental

Other

Total assets

RM Resources

RM Results

RM Education

Corporate Services

£000

105,489

£000

20,072

£000

13,208

£000

1,562

RM Resources

RM Results

RM Education

Corporate Services

£000

105,170

£000

7,833

£000

13,197

£000

177

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

140,331

10,375

150,706

Total

£000

126,377

7,727

134,104

Included within the disclosed segmental assets are non-current assets (excluding deferred tax assets) of £76,559,000 (2018: £74,559,000)
located in the United Kingdom, £8,475,000 (2018: nil) located in Australia and £638,000 (2018: £438,000) located in India.
Other non-segmented assets includes other receivables, tax assets and cash and short-term deposits.

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

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 (gain)/loss

Inventory write-offs

Increase/(decrease) 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

Year ended
30 November 2019

Year ended
30 November 2018

£000

2,690

307

1,277

1,584

29,876

6,611

27,498

63,985

3,462

67,447

79,433

67,208

3,457

(135)

(39)

414

302

347

£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

FINANCIAL STATEMENTS

Adjustments to administrative expenses

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:

Amortisation of acquisition-related intangible assets

Acquisition related costs

Property related costs

Pension GMP

Restructuring costs

Recurring items:

Year ended
30 November 2019

Year ended
30 November 2018

£000

1,577

728

335

822

3,462

£000

1,207

1,200

2,520

4,927

Research and development, products and services

Marketing and sales

Corporate services

Year ended
30 November 2019

Year ended
30 November 2018

Number

1,415

321

237

1,973

Number

1,344

309

229

1,882

The above figures have been calculated on a Full Time Equivalent basis. The actual average number for the year is 2,011.

Aggregate emoluments of persons employed by the Group comprised:

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. 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 exceptional property
costs; the gain/loss on sale of operations and restructuring and acquisition costs. As these items are one-off or non-operational in
nature, management considers that they would distort the Group’s underlying business performance.

During the year the Group acquired SoNET Systems Pty Limited (Note 20) and incurred £728,000 of associated acquisition costs
comprising advisor fees, related intangible impairment and integration costs.

Wages and salaries

Termination costs

Social security costs

Other pension costs

Share-based payments (Note 27)

Year ended
30 November 2019

Year ended
30 November 2018

£000

56,106

929

4,828

4,632

713

67,208

£000

53,833

978

4,499

4,483

993

64,786

Information regarding the remuneration of the Directors is shown in the Remuneration Report.

During the year the Group exited a number of key properties and entered into new properties resulting in non-recurring exceptional
costs of £335,000.

7. I N V E S T M E N T I N C O M E

During the prior year, the Group announced an estates strategy review that will mean relocating a number of activities in the
RM Resources division to one location. During the year the timing and impact of this has been reviewed and includes a provision for
improved contributions to the impacted defined benefit scheme.

In 2018 the Group provided for the estimated liability of equalising GMPs in our defined benefit pension schemes of £1.2m (see Note 25).

The adjustments have the following impact on key metrics:

2019

2018

Measure

Adjustment

Adjusted measure

Measure

Adjustment

Adjusted measure

£000

24,178

23,168

£000

3,462

3,470

£000

27,640

26,638

£000

22,567

21,027

£000

4,927

4,952

£000

27,494

25,979

Profit from operations

Profit before tax

Earnings per share (see Note 10)

2019

2018

Measure

Adjustment

Adjusted measure

Measure

Adjustment

Adjusted measure

Basic

Diluted

23.2p

23.0p

3.4p

26.6p

26.4p

20.7p

20.6p

5.3p

5.2p

26.0p

25.8p

Bank interest

Other finance income

8 . F I N A N C E C O S T S

Year ended
30 November 2019

Year ended
30 November 2018

£000

136

153

£000

144

164

Year ended
30 November 2019

Year ended
30 November 2018

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

Note

£000

592

(6)

555

1,163

£000

583

507

481

1,704

FINANCIAL STATEMENTS

9 . T A X

c) Reconciliation of Consolidated Income Statement tax charge

a) Analysis of tax charge in the Consolidated Income Statement

The tax charge in the Consolidated Income Statement reconciles to the effective rate applied by the Group as follows:

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 charge/(credit)

Total Consolidated Income Statement tax charge

Year ended
30 November 2019

Year ended
30 November 2018

£000

4,179

(479)

385

4,085

247

(288)

4,106

£000

4,289

(313)

395

4,371

(273)

(271)

4,100

The adjustment in respect of prior years reflects the tax impact of the movement in share price on share based payment on exercise.

Year ended 30 November 2019

Year ended 30 November 2018

Adjusted

Adjustments

£000

Total

£000

Adjusted*

Adjustments*

£000

Total

£000

Profit on ordinary activities before tax

26,638

(3,470)

23,168

25,979

(4,952)

21,027

Tax at 19% (2018: 19%) thereon:

5,061

(659)

4,402

4,936

(941)

3,995

Effects of:

- other expenses not deductible for tax purposes

- other temporary timing differences

- impairments

- effect of profits/(losses) in various

overseas tax jurisdictions

- Prior period adjustments - UK

133

(4)

(511)

(28)

133

(32)

(511)

106

(193)

192

(307)

284

390

(170)

192

(307)

b) Analysis of tax (credit)/charge in the Consolidated Statement of Comprehensive Income

Tax charge/(credit) in the Consolidated Income Statement

4,746

(640)

4,106

4,734

(634)

4,100

UK corporation tax

Defined benefit pension scheme

Shared based payments

Pension escrow account

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 (credit)/charge

Year ended
30 November 2019

Year ended
30 November 2018

£000

(735)

(38)

(353)

(624)

437

(105)

(1,418)

£000

(380)

3,048

(6)

2,716

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% was
substantively enacted on 6 September 2016 and is effective from April 2020.

This will reduce the Company’s future tax charge accordingly. The deferred tax asset at 30 November 2019 has been calculated based
on these rates.

FINANCIAL STATEMENTSd) Deferred tax

1 0 . E A R N I N G S P E R S H A R E

The Group has recognised deferred tax assets as these are anticipated to be recognised 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 2017

(Credit)/charge to income

(Charge)/credit to equity

Acquired deferred tax liabilities

At 30 November 2018

Acquired through subsidiary

(Credit)/charge to income

Credit/(charge) to equity

At 30 November 2019

£000

1,154

(133)

1,021

(305)

716

£000

3,440

(3,048)

392

624

1,016

£000

233

161

396

(78)

105

423

£000

1,657

(48)

(97)

1,548

(437)

1,274

£000

(2,993)

204

(2,789)

(807)

268

(3,328)

Total

£000

3,491

268

(3,094)

(97)

568

(738)

(21)

292

101

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 £nil
(2018: £2,383,000) which was previously available for offset against future profits within the United States of America.
Movement from the prior period reflects the liquidation of the two US subsidiaries.

No deferred tax liability is recognised on temporary differences of £581,000 (2018: £449,000) 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.

Year ended 30 November 2019

Year ended 30 November 2018

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

19,062

2,830

21,892

82,341

23.2

3.4

26.6

16,927

4,318

21,245

81,779

Basic earnings

19,062

82,341

23.2

16,927

81,779

Effect of dilutive potential ordinary shares:
share-based payment awards

Diluted earnings

Adjustments (see Note 5)

Adjusted diluted earnings

19,062

2,830

21,892

577

82,918

(0.2)

23.0

3.4

26.4

16,927

4,318

21,245

460

82,239

20.7

5.3

26.0

20.7

(0.1)

20.6

5.2

25.8

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 2018 –
5.70p per share (2017: 4.95p)

Interim dividend for the year ended 30 November 2019 –
2.00p per share (2018: 1.90p)

Year ended
30 November 2019

Year ended
30 November 2018

£000

4,698

1,650

6,348

£000

4,047

1,554

5,601

The proposed final dividend of 6.00p per share for the year ended 30 November 2019 was approved by the board on 3 February 2020.
The dividend is subject to approval by Shareholders at the annual general meeting. The anticipated cost of this dividend is £4,948,566.

FINANCIAL STATEMENTS

1 2 . G O O D W I L L

Group

Cost

At 30 November 2017 and 2018

Acquired during the year (Note 20)

Exchange differences

At 30 November 2019

Accumulated impairment losses

At 1 December 2017, 30 November 2018 and 30 November 2019

Carrying amount

At 30 November 2019

At 30 November 2018

The carrying amount of goodwill is allocated as follows:

Group

RM Resources

RM Results

£000

54,858

4,153

(210)

58,801

(9,694)

49,107

45,164

Year ended
30 November 2019
£000

Year ended
30 November 2018
£000

42,208

6,899

49,107

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 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%
(2018: 2.0%) which aligns to market growth and inflation expectations. Pre-tax discount rates used are 12.3% (2018: 13.6%).

Sensitivity analysis

The sensitivity of goodwill carrying values to reasonably possible changes in key assumptions has been performed. A 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.

1 3 . O T H E R I N T A N G I B L E A S S E T S

Group

Cost

Customer

Intellectual

property &

Website

Other

relationships

Brands

database assets

platform

software assets

£000

Total

£000

At 1 December 2017

644

18,210

325

2,520

3,292

24,991

Additions

Transfers between categories

Disposals

At 30 November 2018

Acquired through acquisition

Additions

Transfers between categories

Exchange differences

Disposals

644

1,871

(94)

(234)

18,210

(144)

At 30 November 2019

2,187

18,066

Accumulated amortisation
and impairment losses

At 1 December 2017

Charge for the year

Exchange differences

At 30 November 2018

Charge for the year

Transfers between categories

Exchange differences

Disposals

At 30 November 2019

Carrying amount

At 30 November 2019

At 30 November 2018

644

216

(234)

626

613

1,206

1,819

1,207

3,026

1,561

15,040

16,391

2,722

325

2,876

(325)

2,876

325

154

(325)

154

2,520

154

(726)

1,958

211

504

715

867

402

(716)

1,268

690

1,805

188

(13)

3,536

3,005

(169)

(5)

(266)

6,101

2,821

455

(9)

3,267

246

(402)

(5)

(266)

2,840

3,261

269

188

(13)

25,235

4,747

3,159

(159)

(243)

(1,551)

31,188

4,614

2,165

(9)

6,770

2,690

(5)

(1,541)

7,914

23,274

18,465

FINANCIAL STATEMENTS

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

1 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 2019 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 Pension Scheme Trustee Limited

Hedgelane Limited

Hammond Bridge Limited *

RM Schools Limited *

SoNET Systems Pty Ltd *

RM PLC Australia Pty Ltd

RM Educational Resources Limited *

* Held through subsidiary undertaking.

Corporate Trustee

Holding company

Dormant

Software

Holding company

Resource supply

England

Ordinary

100%

England

Ordinary

100%

England

Ordinary

100%

England

Ordinary

100%

Australia

Ordinary

100%

Australia

Ordinary

100%

England

Ordinary

100%

All UK subsidiary companies are registered at 142B Park Drive, Milton Park, Abingdon, Oxfordshire OX14 4SE.

RM Education Solutions India Pvt Limited is registered at Unit No.8A, Carnival Techno Park Technopark, Kariyavattom, PO Trivandrum,
Thiruvananthapuram, Kerala 695581, India.

SoNET Systems Pty Ltd is registered at 15 Gordon Street, Richmond, Victoria, VIC 3121, Australia.

RM PLC Australia Pty Ltd is registered at Level 17, 181 William Street, Melbourne, Victoria, VIC 3000, Australia.

During the year RM Books Limited, RM Group US LLC and RM Education Inc were liquidated.

Group

Cost

Freehold land

Short leasehold

Computer

& buildings

improvements

Plant & equipment

equipment

£000

Vehicles

£000

Total

£000

At 1 December 2017

8,004

6,245

4,149

8,262

Additions

Transfers between categories

Exchange differences

Disposals

At 30 November 2018

8,004

Acquired

Additions

Transfers between categories

Exchange differences

Reclass to assets held for sale (Note 19)

(1,771)

Disposals

At 30 November 2019

Accumulated depreciation and impairment

At 1 December 2017

Charge for the year

Exchange differences

Disposals

At 30 November 2018

Charge for the year

6,233

1,057

206

1,263

175

Reclass to assets held for sale (Note 19)

(373)

Exchange differences

Disposals

At 30 November 2019

Carrying value

At 30 November 2019

At 30 November 2018

1,065

5,168

6,741

112

(24)

(260)

6,073

299

(14)

(1,774)

4,584

5,350

506

(15)

(304)

5,537

262

(13)

(1,772)

4,014

570

536

343

(24)

(37)

(309)

4,122

2,102

(16)

(284)

(694)

5,230

3,731

346

(28)

(210)

3,839

441

(254)

(16)

(671)

3,339

1,891

283

565

(164)

(44)

(128)

8,491

422

159

(28)

(641)

8,403

6,475

824

(36)

(304)

6,959

660

(22)

(637)

6,960

1,443

1,532

600

(8)

(373)

248

(7)

(64)

248

278

(3)

(157)

156

(6)

(59)

137

111

27,260

1,049

(188)

(113)

(1,070)

26,938

2,876

159

(65)

(2,055)

(3,173)

24,698

16,891

1,920

(82)

(975)

17,754

1,584

(627)

(57)

(3,139)

15,515

9,183

9,184

FINANCIAL STATEMENTS

The investment in subsidiary undertakings comprises:

1 6 . I N V E N T O R I E S

Company

Cost

At 1 December 2017

Share-based payments

At 30 November 2018

Acquisition

Disposal

Share-based payments

At 30 November 2019

Impairment

At 1 December 2017

At 30 November 2018

Disposal

At 30 November 2019

Carrying value

At 30 November 2019

At 30 November 2018

Investment in

Capital contribution

share capital

share-based payments

£000

112,461

12,667

12,739

(70)

686

Total

£000

125,128

125,200

(62)

686

112,470

13,355

125,825

(88)

112,470

112,373

13,355

12,739

125,825

125,112

At 30 November 2019 an impairment review was undertaken which indicated that no impairment in the investments held by the
Company was required (2018: 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 change of 1% in the discount rate or a 1% reduction in the growth rate in the future would not change the conclusion of the
impairment review.

Group

Components

Finished goods

Any inventory that is not expected to be turned over within 24 months has been provided for.

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

Group

At 1 December 2018 as reported

IFRS 15 restatement

At 1 December 2018 as restated

Additions

Amortised in the period

At 30 November 2019

Analysed by:

Current

Non-current

At 30 November 2019

2019

£000

22,120

22,151

2018

£000

17,747

17,787

2019

£000

1,435

2,879

(1,277)

3,037

2019

£000

844

2,193

3,037

Contract fulfilment assets represent investment in contracts which are recoverable and are expected to provide benefits over the life of
the contract. These costs are capitalised only when they relate directly to a contract and are incremental to securing the contract.

100

101

FINANCIAL STATEMENTS

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

Analysis of trade receivables by type of customer

Group

Company

2019

£000

2018

£000

2019

£000

2018

£000

Group

Government

Commercial

2019

£000

2018

£000

9,250

11,585

12,093

9,654

21,343

21,239

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

Australian Dollar

Euro

Indian Rupee

21,343

21,239

1,897

2,384

893

353

2,013

25,624

24,564

5,614

31,238

10,314

34,878

22,957

22,984

9,722

9,745

939

930

847

867

32,177

35,808

23,831

10,612

26,149

3,869

1,475

640

31,892

3,145

771

16,882

10,612

6,949

32,177

35,808

23,831

10,612

Trade receivables included an allowance for estimated irrecoverable amounts at 30 November 2019 of £259,000 (2018: £377,000), 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 and considers lifetime expected credit
losses. 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.

No expected credit losses have been recognised on contract assets or intercompany receivables as these are not considered material.

Ageing of 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

2019

£000

2018

£000

15,734

16,492

4,314

619

676

2,188

906

1,653

21,343

21,239

1 9 . A S S E T S H E L D F O R S A L E

Following the acquisition of Consortium in 2017, the Group has five distribution centres across three locations. Therefore it has been
decided to move to a single, automated distribution site. As part of this process, the Group is selling its freehold property based in
Shrewsbury. The amortised cost of the property of £1,428,000 has been reclassified from property, plant and equipment to a current
asset held for sale because it is expected that the sale will be completed during 2020. The asset is included within the Resources division.

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.

The Group’s accrued income balances solely relate to revenue from contracts with customers. Movements in the accrued income
balances were driven by transactions entered into by the Group within the normal course of business in the year.

102

103

FINANCIAL STATEMENTS
In the period 14 June 2019 to 30 November 2019 SoNET contributed revenue of £1,700,000 and statutory profit after tax of £nil. If the
acquisition had occurred on 1 December 2018 SoNET would have contributed revenue of £3,341,000 and statutory profit after tax of
£28,000 in 2019. 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 2018.

Fair value adjustments

On the acquisition of SoNET 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
assets as the Intellectual Property of the Company’s software and customer contracts. These intangible assets were valued at £4.7m
using the Relief from Royalty method and are being amortised over 3-10 years which is in accordance with the estimated useful
economic life (UEL) and IAS 38.

Goodwill of £4.2m 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 Results proposition.

Deferred income has been recognised at fair value at the date of acquisition.

Acquisition related costs

The Group incurred acquisition related costs of £0.7m related to advisor fees, related intangible asset impairment and acquisition
transition costs. These costs have been included in the administrative expenses in the Group's Consolidated Statement of
Comprehensive Income in 2019.

2 0 . 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

Aquisitions

On 13 June 2019, the Group acquired all of the shares in SoNET Systems Pty Ltd.

SoNET is a software company which provides SaaS platforms, principally to the education and government sectors. SoNET’s
e-authoring and testing software augments RM Results’ existing e-marking capability, enabling RM Results to offer customers
full end-to-end digital assessment services in the online testing and marking of exams.

The role of technology in the assessment landscape is changing and we firmly believe that, in time, on-screen testing will
transform the way that assessments are designed and delivered. It has been a strategic priority for RM Results to enable end-to-end
digital assessment capability. SoNET’s e-testing product, Assessment Master, is a market leading assessment and testing platform
with functionality going beyond conventional online examination software (multiple choice etc.) to provide task-oriented and
task-simulated assessments of performance in any situation.

The fair value of the cash consideration for the acquisition was £7.3m. Transaction fees associated with the acquisition and expensed
to the Consolidated Statement of Comprehensive Income in 2019 were £0.3m.

Effect of acquisition

The acquisition had the following effect on the Group’s assets and liabilities:

Fair value on acquisition

Acquisition related intangible assets (Note 13)

Property, plant and equipment

Trade receivables

Other receivables

Cash and cash equivalents

Trade and other payables

Deferred income

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

The fair values on the acquisition above are provisional.

£000

4,747

307

208

(538)

(853)

(38)

(738)

(28)

3,164

4,153

7,317

(208)

7,109

104

105

FINANCIAL STATEMENTS

2 1 . T R A D E A N D O T H E R P AYA B L E S

2 2 . B O R R O W I N G S

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

- after five years

Group

Company

2019

£000

2018

£000

2019

£000

2018

£000

19,136

4,364

2,081

461

11,849

23,119

4,284

1,857

10,557

4,565

37,891

44,382

13,340

51,231

10,255

54,637

138

72,789

72,927

71,007

71,080

72,927

71,080

2 3 . P R O V I S I O N S

Onerous lease

Employee-related

and dilapidations

restructuring

Group

Note

Group and Company

Bank loan

Add capitalised fees

Borrowings

2019

£000

(17,000)

466

(16,534)

2018

£000

(7,000)

494

(6,506)

The borrowings in the year and details of the facility are detailed in Note 30. Bank and professional service fees relating to securing the
loan have been capitalised and are amortised over the length of the loan.

Net debt is the total of borrowings, cash at bank and overdraft which was £15.0m as at 30 November 2019 (2018:£5.8m).

At 1 December 2017

Utilisation of provisions

Release of provisions

Increase in provisions

Unwind of discount

At 30 November 2018 as reported

Arising on adoption of IFRS 15

Aquisition

Utilisation of provisions

Release of provisions

Increase in provisions

Unwind of discount

At 30 November 2019

£000

3,770

(694)

(43)

400

3,518

(1,940)

(802)

853

£000

978

(1,569)

(37)

3,201

2,573

2,617

(1,221)

(12)

836

Other

£000

1,707

(479)

471

1,699

1,538

3,237

(872)

Total

£000

6,455

(2,263)

(559)

4,072

7,790

1,582

9,372

(3,161)

(1,686)

878

5,453

2,220

2,380

Provisions for onerous leases and dilapidations have been recognised at the present value of the expected obligation at discount rates
of 2.6% (2018: 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 2019, £nil
(2018: £925,000) of the provision refers to onerous leases, and £852,000 (2018: £2,593,000) refers to dilapidations. During the year the
Group has exited 5 properties and entered into a number of new building leases. The releases of provisions associated with the above
property provisions relate to negotiated exit dates that did not fully align to original lease contract dates.

1,783

1,561

139

3,483

54,714

235

283

54,920

72,927

71,080

At 1 December 2018 restated

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

Australian Dollar

Indian Rupee

Other

Group

Company

2019

£000

2018

£000

2019

£000

2018

£000

50,141

52,817

72,927

71,080

1,005

1,535

868

1,165

54,714

350

1,353

400

54,920

72,927

71,080

The Group’s deferred revenue balances solely relate to revenue from contracts with customers. Movements in the deferred revenue
balances were driven by transactions entered into by the Group within the normal course of business in the year (see Note 32).

106

107

FINANCIAL STATEMENTS

The average remaining life of the onerous leases at 30 November 2019 is nil years (2018: 1.1 years).

2 5 . R E T I R E M E N T B E N E F I T S C H E M E S

In making their assessment of the required onerous lease provisions, the Group was required to estimate the likely sub-let income that
could be earned over the remaining life of the lease. This required 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. As described
in Note 5, the Group is undergoing an estates review and £0.6m of the increase relates to changes in the timing and composition of
employee costs associated with that review. Of the £2,220,000 provision, £1,393,000 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. The release of £872,000 primarily relates
to onerous contract risks that have either been re-negotiated or terminated during the year.

During the year the overall movement on long-term provisions was an increase of £1,160,000 (2018: decrease of £311,000).

Disclosure of provisions

Group

Current liabilities

Non-current liabilities

2 4 . S H A R E C A P I T A L

Company and Group

Allotted, called-up and fully paid

At 30 November 2017

Issued in 2018

Exercise of share options

As at 30 November 2018 and 2019

Ordinary shares issued carry no right to fixed income.

2019

£000

1,585

3,868

5,453

2018

£000

5,082

2,708

7,790

Ordinary shares of 22/7p

‘000

82,650

1,200

£000

1,890

83,875

1,917

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 £4,489,000
(2018: £3,997,000) represents contributions payable to these
schemes by the Group at rates specified in employment
contracts. At 30 November 2019 £308,300 (2018: £324,000)
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. The total
costs charged to income for these schemes was £143,000
(2018: £120,000). The amount due in respect of these
schemes at 30 November 2019 was £51,000 (2018: £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 The 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 The 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. Last year an estimate for Guaranteed
Minimum Pensions (‘GMPs’) was expensed (see below for
further explanation).

Scheme assets are measured at bid-price, where available, at
30 November 2019. The present value of the defined benefit
obligation was measured using the projected unit method.

Under the guidance of IFRIC 14, the Group are able to
recognise a pension surplus on the balance sheet for all three
schemes. In the year the Platinum scheme shows a surplus
and the RM and CARE schemes are in deficit.

The Research Machines plc 1988 Pension Scheme
(RM Scheme)

The Scheme provides benefits to qualifying employees and
former employees of RM Education Limited, but was closed to
new members with effect from 1 January 2003 and closed to
future accrual of benefits from 31 October 2012. The assets of
the Scheme are held separately from RM Education Limited's
assets in a trustee-administered fund. The Trustee is a limited
company. Directors of the Trustee company are appointed
by RM Education 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 2018 by a qualified
independent actuary. IAS 19 Employee Benefits (revised)
liabilities at 30 November 2019 have been rolled forward based
on this valuation’s base data.

As at 31 May 2018, the triennial valuation for statutory
funding purposes showed a deficit of £40,600,000
(31 May 2015: £41,800,000). The Group agreed with the
Scheme Trustees that it will repay this amount via deficit
catch-up payments of £3,700,000 per annum until 31 May 2026.

At 30 November 2019 there were amounts outstanding of
£308,300 (2018: £300,000) for one month's deficit payment
and £nil (2018: £32,000) for Scheme expenses. The escrow
bank account that was set up to manage the deficit risk in
2014 was closed during the year as the funds were paid over
to the RM Scheme.

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.

108

109

FINANCIAL STATEMENTSThe Consortium CARE Scheme (CARE Scheme)

Prudential Platinum Pension (Platinum Scheme)

Amounts recognised in the Income Statement and in the Statement of Comprehensive Income

The Consortium acquired West Mercia Supplies in April 2012
(prior to the Company acquiring The Consortium). Upon
acquisition by The Consortium of West Mercia Supplies, a
pension scheme (the Platinum scheme) was set up providing
benefits on both a defined benefit (final salary-linked) and a
defined contribution basis for West Mercia employees. The
most recent full actuarial valuation was carried out by the
independent actuaries XPS Pensions Group on 31 December
2018. 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 The Consortium and
the Trustees are responsible for ensuring that the correct
benefits are paid, that the scheme is appropriately funded
and that the scheme assets are appropriately invested. The
valuation of the scheme at 31 December 2018 was a surplus
of £213,000. (31 December 2015: deficit £70,000).

Until 31 December 2005, The Consortium for Purchasing
and Distribution Ltd ('The Consortium', acquired by the
Company on 30 June 2017) operated a pension scheme
(the 'Consortium CARE' scheme) providing benefits on
both a defined benefit (final salary-linked) and a defined
contribution basis. From 1 January 2006, the defined benefit
(final salary-linked) and defined contribution sections were
closed and all employees, subject to the eligibility conditions
set out in the Trust Deed and Rules, joined a new defined
benefit (Career Average Revalued Earnings) section. 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, The 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.

Administrative expenses and taxes

Current service costs

Operating expense

Interest cost

Interest on Scheme assets

Net interest gain/(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 (losses)/gains

Return on Scheme assets excluding interest on Scheme assets

(Expense)/income recognised in the Statement of Comprehensive Income

(Expense)/income recognised in total comprehensive income

Note

Year ended
30 November 2019

Year ended
30 November 2018

£000

(174)

(88)

(262)

(7,219)

7,225

(256)

1,586

(45,476)

2,150

(41,740)

33,707

(8,033)

(8,289)

£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

GMP equalisation

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 judgement. 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 judgement 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.

In 2018, this 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
was necessary.

In the Director’s view, the range of outcomes is not material even though this is an estimate.

110

111

FINANCIAL STATEMENTS

Reconciliation of the Scheme assets and obligations through the year

Obligation by participant status

Assets

At start of 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

Interest cost

Actuarial (losses)/gains

Benefits paid

Past service cost (GMP)

Current service costs

Contributions from employees

At end of year

Pension deficit

Pension surplus

Net pension deficit

RM Scheme

CARE Scheme

Platinum Scheme

Year ended
30 November 2019

Year ended
30 November 2018

£000

202,401

6,711

32,728

(147)

3,997

(5,994)

239,696

13,839

440

692

401

(557)

14,815

(201,848)

(17,396)

(6,622)

(39,066)

5,994

(241,542)

(1,846)

(548)

(2,533)

557

(19,920)

(5,105)

(1,846)

(5,105)

2,090

287

(27)

220

(10)

2,653

(1,390)

(49)

(141)

(88)

(19)

218,330

7,225

33,707

(174)

4,618

(6,561)

257,164

(220,634)

(7,219)

(41,740)

6,561

(88)

(19)

224,649

6,291

(7,087)

(537)

4,591

(9,596)

218,330

(244,885)

(6,798)

22,780

9,596

(1,200)

(108)

(19)

(1,677)

(263,139)

(220,634)

976

(6,951)

976

(5,975)

(3,557)

1,253

(2,304)

Included within the CARE Scheme obligations is an unfunded liability of £190,000 (2018: £203,000)
which is a liability of the Group and not the Scheme.

Reconciliation of net defined benefit obligation

Year ended
30 November 2019

Year ended
30 November 2018

Net obligation at the start of the year

Cost included in Income Statement

Scheme remeasurements included in the Statement of Comprehensive Income

Cash contribution

Net pension deficit

£000

(2,304)

(256)

(8,033)

4,618

(5,975)

£000

(20,236)

(2,352)

15,693

4,591

(2,304)

Year ended
30 November 2019

Year ended
30 November 2018

£000

976

216,540

45,623

263,139

£000

1,135

177,305

42,194

220,634

Active

Vested deferreds

Retirees

Under the current agreements, the Group expect to pay approximately £4,600,000 in contributions in the year ending 30 November 2020.

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 Scheme)

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 2019

Year ended
30 November 2018

£000

986

128,445

2,653

97,191

27,889

257,164

7,696

107,006

2,090

75,777

25,761

218,330

Year ended
30 November 2019

Year ended
30 November 2018

2.15%

2.10%

2.15%

2.95%

1.80%

1.85%

1.50%

2.85%

2.00%

3.30%

3.20%

3.40%

3.35%

2.25%

1.50%

3.20%

2.10%

S2PA CMI 2018 1.25%

S2PA CMI 2017 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)

22.3

23.6

22.7

24.1

112

113

FINANCIAL STATEMENTS

Expected cash flows

2 6 . O W N S H A R E S

Expected employer contributions for the year ended 30 November 2020

Expected total benefit payments

Year 1

Year 2

Year 3

Year 4

Year 5

Years 6 - 10

Year ended
30 November 2019

Year ended
30 November 2018

£000

4,325

3,540

3,850

4,285

4,633

4,947

£000

4,503

3,382

3,559

3,876

4,323

4,682

Company and Group

At 1 December 2017

Shares released to award holders

New shares issued

At 30 November 2018

32,025

30,267

Shares released to award holders

At 30 November 2019

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.

Ordinary shares of 22/7p

Number ‘000

913

(100)

1,200

2,013

(614)

1,399

£000

1,406

(10)

1,423

(416)

1,007

Sensitivities to assumptions - one item changed with all others held constant

The valuation of the shares is weighted average cost. The maximum number of own shares held in the year was 2,013,006.

--------------------------------- 30 November 2019 ---------------------------------

30 November 2018

2 7. S H A R E - B A S E D P AY M E N T S

Base

£m

218.3

(220.6)

(2.3)

3.30%

3.20%

3.40%

3.35%

2.25%

-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

257.2

257.6

256.8

257.0

257.4

258.3

Present value of Scheme obligations

(263.2)

(269.1)

(257.3)

(258.7)

(267.7)

(271.1)

Net pension deficit

Actuarial assumptions

(6.0)

(11.5)

(0.5)

(1.7)

(10.3)

(12.8)

Discount rate (RM Scheme)

2.15%

2.05%

2.25%

2.15%

Discount rate (CARE Scheme)

2.10%

2.00%

2.20%

2.10%

Discount rate (Platinum Scheme)

2.15%

2.05%

2.25%

2.15%

Rate of RPI

Rate of CPI

Mortality table

Rating (years)

2.95%

2.85%

3.05%

2.85%

3.05%

2.95%

1.85%

1.75%

1.95%

1.75%

1.95%

1.85%

--------------------------- S2PA CMI 2018 1.25% ---------------------------

S2PA CMI 2017 1.25%

(1)

The key estimation sensitivity is the discount rate applied to pension liabilities.

Liability driven investments are expected to move broadly in line with the rise and fall in liability values, thus providing a degree of
protection to the Scheme’s funding position.

114

The Group operates the following executive and employee equity-settled share-based payment scheme known as the
RM plc Performance Share Plan 2010 (the 'PSP Scheme').

One award was made under the PSP Scheme during the year ended 30 November 2019. 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 the deferred bonus scheme is
partially matched by the release of own shares held.

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.

Details of performance share plan shares are as follows:

Group

At 1 December 2017

Granted during the year

Lapsed during the year

Exercised during the year

At 30 November 2018

Granted during the year

Lapsed during the year

Exercised during the year

At 30 November 2019

Maximum number of shares

Market price on grant

2,270,000

875,000

(228,000)

(542,745)

2,374,255

954,000

(623,000)

(614,255)

2,091,000

£2.12

£2.42

115

FINANCIAL STATEMENTS

The plans outstanding at 30 November 2019 had a weighted average contractual life of 1.3 years (2018: 1.3 years). The weighted average
exercise price was £nil (2018: £nil). The weighted average market share price at date of exercise was £2.44 (2018: £2.10).

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 26.

Performance conditions – estimation uncertainty

2 9 . 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

2019

£000

2,557

4,339

6,896

2018

£000

4,139

1,181

5,320

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.

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.

During the year the Group has exited 5 properties and entered into 4 new property leases.

2 8 . 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. 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.

The Company had no operating leases during the year.

Leases as a lessor

One of the above office properties was sublet under an operating lease that ended during the year.
The future minimum lease payments under this non-cancellable lease were:

Group

Within 1 year

In years 2 to 5 inclusive

b) Capital commitments

2019

£000

2018

£000

498

At 30 November 2019 amounts contracted but not provided for total £2,499,700 and relate primarily to other software assets.
In 2018 amounts contracted but not provided for totalled £527,645 and related mainly to tangible assets for premises in India.
The Company had no capital commitments during the year.

116

117

FINANCIAL STATEMENTS

3 0 . 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

2019

£000

2018

£000

2019

£000

2018

£000

25,624

24,564

22,957

9,722

939

5,534

930

2,634

847

867

32,097

28,128

23,804

10,589

(37,891)

(44,382)

(72,927)

(71,080)

(20,540)

(8,428)

(16,534)

(6,506)

(58,431)

(52,810)

(89,461)

(77,586)

All financial assets are classified as loans and receivables except for forward foreign exchange contracts of £nil (2018: £353,000) 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 £461,000
(2018: £nil) 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 financial 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 £nil (2018: £353,000) 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.

In 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 eleven to twelve months.

The total amount of outstanding forward foreign exchange contracts to which the Group was committed was:

2019

Forward contract

Forward contract value

Mark to market value

Fair value

Currency

US Dollar

Indian Rupee

Contract type

Currency ‘000

Buy

12,869

777,000

£000

(10,248)

(8,468)

(18,716)

2018

£000

(10,418)

(8,759)

(19,177)

£000

170

291

461

Forward contract

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)

£000

(2,765)

(5,005)

(7,770)

£000

(72)

(281)

(353)

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 £18,716,000 (2018: £8,123,000) and fair value liability
of £461,000 (2018: asset of £353,000) 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 debit of
£814,000 (2018: credit of £742,000) 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 2019 (2018: 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.

118

119

FINANCIAL STATEMENTSc) Foreign exchange rate sensitivity

The interest and currency profile of cash and cash equivalents is shown below:

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.

The total amount of outstanding forward foreign exchange contracts to which the Group was committed was:

Group

Forward foreign exchange contracts

Sensitivity

Group

10% increase in foreign exchange rates against Sterling:

US Dollar

Australian Dollar

Indian Rupee

2019

2018

Nominal value

Fair value

Nominal value

Fair value

£000

(18,716)

£000

461

£000

(8,123)

2019

2018

Income

£000

Equity

£000

Income

£000

(245)

(660)

(245)

(1,387)

332

(69)

£000

(353)

Equity

£000

591

(208)

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 £24,134,000 (2018: £24,135,000) and the maximum borrowings position was £38,682,000 (2018: £32,768,000).

The Group has a committed revolving credit facility with HSBC Bank plc and Barclays Bank plc, which was signed on 5 July 2019 which
expires on 4 July 2022. The initial facility is for £70,000,000 with the accordion option to increase the facility by a further £30,000,000.
The accordion extension does not need the permission of the existing lenders. The current bank credit facility ends on 4 July 2022
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 (which are included in other provisions). The £17.0m drawdown at the year end is not contractually due
for repayment until 2022. Interest is payable quarterly based on the drawdown at this date.

The interest payable on loans under the revolving credit facility is between 1.30% and 2.10% 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 2019. The fees are recognised in the
Consolidated Income Statement on an effective interest rate basis over the duration of the facility.

Group

Sterling cash and cash equivalents/(overdraft)

US Dollar

Euro

Indian Rupee

Singapore Dollar

Australian Dollar

New Zealand Dollar

Cash and cash equivalents

Borrowings – Sterling

2019

2018

Floating rate

Interest free

Total

£000

Floating rate

Interest free

£000

(4,006)

£000

105

1,758

1,641

681

760

364

225

(3,901)

(1,922)

1,758

1,641

681

760

364

225

£000

848

1,237

217

332

(4,006)

5,534

1,528

(1,922)

2,634

17,000

7,000

Total

£000

(1,074)

1,237

217

332

712

7,000

The weighted average effective interest rates at the balance sheet date on interest bearing financial assets and liabilities were as follows:

Group

Financial assets:

Cash and short-term deposits

Trade and other receivables (non-current)

Financial liabilities:

Overdrafts

Loans

2019

2018

Weighted average

Floating rate

interest rate

Floating rate

interest rate

£000

5,534

847

(4,006)

(17,000)

1.25

11.75

3.27

2.00

2,634

930

(1,922)

(7,000)

0.37

9.52

3.10

1.78

Interest rate risk sensitivity (assuming all other variables remain constant):

Group

1% increase in interest rates

1% decrease in interest rates

2019

2018

Income sensitivity

Equity sensitivity

Income sensitivity

Equity sensitivity

£000

(155)

155

£000

(155)

155

£000

208

(208)

£000

208

(208)

120

121

FINANCIAL STATEMENTS

Credit risk

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 expected credit losses. 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.

3 1 . 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:

b) Transactions between the Company and its subsidiary undertakings

During the year, the Company entered into the following transactions with its subsidiary undertakings:

Company

Receipts/(payments):

Management recharges

Net intercompany interest income

Dividends received

Year ended
30 November 2019

Year ended
30 November 2018

£000

(964)

(1,341)

11,000

(607)

(1,153)

9,000

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 £1,107 (2018: £10,550).
At the year end there is a balance of £nil (2018: £nil) 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.

Group

Short-term employee benefits

Post-employment benefits

Termination payments

Share-based payments

Year ended
30 November 2019

Year ended
30 November 2018

The following payments were made in the year: £98,901 for strategy work, £27,000 relating to advisory fees in connection with adoption
of IFRS 15 and 16, £22,172 relation to work on a new ERP system. There were no accruals at the year end.

£000

2,590

135

238

408

£000

2,561

178

588

In the prior year; £167,252 of integration costs, £40,945 work for IFRS 15, £11,870 relating to work on a new ERP system, and £245,606
relating to estate strategy. £42,000 was accrued at the year-end for further ERP work.

UBM plc

Patrick Neil Martell, non-executive director of RM plc, is Chief Executive Officer of Informa plc. In the year a payment of £9,136 was
made to UBM plc, a subsidiary of Informa plc, relating to an online subscription for legal guidance.

Share-based payments above include a fair value charge for executive Directors of £231,355 (2018: £170,836) in respect of awards to
David Brooks and £203,289 (2018: £159,000) in respect of Neil Martin.

Further information about the remuneration of individual Directors is provided in the audited section of the Remuneration Report.

122

123

FINANCIAL STATEMENTS

3 2 . I M P A C T O F A D O P T I O N O F I F R S 1 5

IFRS 15 Revenue from Contracts with Customers establishes a comprehensive framework for determining whether, how much and when
revenue is recognised. It has replaced existing revenue recognition guidance, including IAS 18 Revenue, IAS 11 Construction Contracts
and IFRIC 13 Customer Loyalty Programmes. IFRS 15 is effective for annual periods beginning on or after 1 January 2018.

An overview of the impact by division is set out below:

RM Resources

RM Resources provides goods to educational organisations and as such revenue is recognised at point of sale. UK schools tend to purchase
the majority of their consumables in preparation for new school years and hence the second half is seasonally stronger.

The Group has used the modified retrospective adoption approach under which the Group has applied all of the requirements of
IFRS 15 with effect from 1 December 2018.

RM Education

The Group has made opening balance sheet adjustments arising from changes to the revenue recognition treatment of goods and
services and the capitalisation of costs to obtain contracts. The impact of the new standard on its 2019 accounts is set out below:

Net current (liabilities)/assets relating
to goods and services

Capitalised contract costs

Deferred tax asset

Retained earnings (deficit)/surplus

Restated Balance Sheet
as at 1 December 2018

Income Statement for
year ended 30 November 2019

Balance Sheet as at
30 November 2019

IFRS 15 impact on

£000

(2,898)

1,435

278

(1,185)

£000

(2,416)

882

291

(1,243)

£000

(5,314)

2,317

569

(2,428)

RM Education provides ICT software, services and hardware to UK schools and colleges. Hardware is recognised at point of delivery
and the remaining services are recognised over time and include a number of different performance obligations. For some larger
long-term contracts the separation of the hardware performance obligation from the rest of the contract has driven a change in
revenue recognition profile leading to an opening reserves adjustment.

RM Results

RM Results provides IT software and end-to-end digital assessment services to enable online exam marking, online testing and the
management and analysis of educational data. Long term contracts have been split into separate performance obligations all of which
are recognised over time. Whilst this brings some of the revenue recognition forward, within the financial year, there is still a significant
seasonality towards exam marking periods.

As a result of long implementation periods associated with many of the bespoke contracts, contract fulfilment assets in relation to
development activity have been recognised in the balance sheet and has resulted in an opening reserves adjustment.

Detailed primary statement restatements

Detailed primary statement restatements arising from the adoption of IFRS 15 are set out below.

The adoption of IFRS 15 has had five principal impacts:

Impact on the Consolidated Income Statement

• The Group has separated performance obligations included in long-term contracts that were previously combined under IAS 11/18.
The provision of software, services support and maintenance are now recognised over time, typically the duration of the contract,
following completion of any development activities.

• Where the Group performs development activities, these are now treated as a separate performance obligation. If the customer
retains control of the developed Intellectual Property Rights ('IPR'), the revenue is recognised over the period of development
activity. If the developed IPR is retained by the Group, the costs of development are deferred as a contract fulfilment asset and are
amortised over the subsequent licence period.

• A number of separate performance obligations have been identified. Previously these would have all been recognised as part of the
long-term contract accounting. Under IFRS 15, certain performance obligations are recognised at a point-in-time, typically as the
goods are delivered to the customer.

• The Group needs to allocate the transaction price to each of the performance obligations. This requires estimation. Typically,

the Group uses observable market prices for certain elements such as scanning services provided by third parties. For elements,
such as software, that do not have an observable price, the Group applies the residual method to determine the fair value of these
performance obligations.

• Due to the change in revenue recognition, the Group has recognised a deferred tax adjustment at 1 December 2018.

Where the Group incurs identifiable costs that relate to a specific customer contract then these costs are capitalised as contract fulfilment
assets and amortised over the contract on a systematic basis consistent with the performance obligations included in the contract.

Revenue is recognised either when the performance obligation in the contract has been performed (so ‘point-in-time’ recognition) or
‘over time’ as control of the performance obligation is transferred to the customer.

During the year to 30 November 2019, revenue recognised 'point in time' and revenue recognised 'over time' is set out in Note 3.

Revenue

Cost of sales

Gross profit

Operating expenses

Profit from operations

Investment income

Finance costs

Profit before tax

Tax

Profit for the period

As reported

IFRS 15 impact

adoption of IFRS 15

Amounts before

£000

223,765

(132,140)

91,625

(67,447)

24,178

153

(1,163)

23,168

(4,106)

19,062

£000

2,416

(882)

1,534

(291)

1,243

£000

226,181

(133,022)

93,159

(67,447)

25,712

153

(1,163)

24,702

(4,397)

20,305

124

125

FINANCIAL STATEMENTS
Impact on the Consolidated Statement of Financial Position

Non-current assets

Goodwill
Intangible assets
Property, plant and equipment
Defined benefit pension scheme surplus
Other receivables
Contract fulfilment assets
Deferred tax assets

Current assets
Inventories
Trade and other receivables
Contract fulfilment assets
Held for sale asset
Tax assets
Cash and short-term deposits

Total assets
Current liabilities

Trade and other payables
Tax liabilities
Provisions
Overdraft

Net current assets
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

As reported

£000

49,107
23,274
9,183
976
939
2,193
3,457
89,129

22,151
31,238
844
1,428
382
5,534
61,577
150,706

(51,231)
(117)
(1,585)
(4,006)
(56,939)
4,638

(3,483)
(3,868)
(3,356)
(6,951)
(16,534)
(34,192)
(91,131)
59,575

1,917
27,080
(1,007)
94
(411)
(497)
32,399
59,575

IFRS 15 impact

adoption of IFRS 15

Amounts before

£000

128
-
-
-
-
2,193
-
2,321

249
3,057
844
-
217
-
4,367
6,688

(7,885)
352
(1,583)
-
(9,116)
(4,749)

-
-
-
-
-
-
(9,116)
(2,428)

-
-
-
-
-
-
(2,428)
(2,428)

£000

48,979
23,274
9,183
976
939
-
3,457
86,808

21,902
28,181
-
1,428
165
5,534
57,210
144,018

(43,346)
(469)
(2)
(4,006)
(47,823)
9,387

(3,483)
(3,868)
(3,356)
(6,951)
(16,534)
(34,192)
(82,015)
62,003

1,917
27,080
(1,007)
94
(411)
(497)
34,827
62,003

The opening balance at 1 December 2018 for IFRS 15 impacted balances were £1.4m contract fulfilment assets,
trade receivables £21.2m, accrued income £1.7m and deferred income £16.2m.

The Group has taken the practical expedient of applying the modified retrospective approach so have taken the aggregate of all
contract modifications that occurred before 1 December 2018 into the opening IFRS 15 position.

126

127

FINANCIAL STATEMENTSS 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 2019 final dividend

Record date for 2019 final dividend

Annual General Meeting

Payment of 2019 final dividend

Announcement of 2020 interim results

12 March 2020

13 March 2020

26 March 2020

24 April 2020

July 2020

Preliminary announcement of 2020 results

February 2021

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 Mark Lágler,
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.

M 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

Mark Lágler

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

142B Park Drive
Milton Park
Abingdon
Oxfordshire OX14 4SE
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
2 Forbury Place
33 Forbury Road
Reading
RG1 3AD

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

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

128

129

GOVERNANCE142B Park Drive

Milton Park

Milton

Abingdon

Oxfordshire

OX14 4SE

Telephone: +44 (0)8450 700 300

Stock code: RM.