RM plc Annual Report 2020

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FY2020 Annual Report · RM plc

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Annual report and
financial statements

Year ended 30 November 2020

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

2 0 2 0 P E R F O R M A N C E

Financial performance materially impacted by COVID-19

with school closures and exam cancellations globally

Trading improved progressively through H2

as education establishments reopened

Focus on cash and cost enabled a robust financial position

G O V E R N A N C E

with net debt reducing to £1m (2019: £15m)

Directors’ Biographies

Directors’ Report

Corporate Governance Report

Audit Committee Report

Remuneration Report

Nomination Committee Report

Independent Auditor’s Report

Shareholder Information

140

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

8 1

Consolidated Cash Flow Statement

Company Balance Sheet

Company Statement of Changes in Equity

Company Cash Flow Statement

Notes to the Financial Statements

2 0 2 1 O U T L O O K

Short term outlook remains uncertain

following further restrictions and exam cancellations

Confidence in medium-term supports final dividend proposal at 3.00 pps

Digital and automation investment programmes fully restarted

with longer-term operational and financial benefits

L O N G E R - T E R M O P P O R T U N I T Y

Well positioned to capitalise on structural trends in Education

C H A I R M A N ’ S S T A T E M E N T

Although not occurring during the year, and as previously
announced, David Brooks, our current CEO, will be leaving
the Company on 31st March 2021, shortly before the date
of the AGM. That would normally be the occasion on which
to thank him for his service and to wish him well. However,
in anticipation of his absence, I should like to take this
opportunity on behalf of the Board to do so in this report.
David has worked at RM for over 25 years. During the past
eight years, as CEO, the Company has undergone significant
restructuring and development. RM has benefited greatly
from his leadership and he leaves with the Board’s thanks
and best wishes for the future.

Dividend

The Board did not feel it prudent, in light of the prevailing
uncertainty, to pay a dividend in 2020 but, given the
Company’s performance and current situation, payment
of a final dividend of 3p a share is being recommended
to shareholders.

Outlook

Having regard to the outlook for the individual divisions,
the Board is confident that the continuing challenges will
be effectively addressed, as in 2020, and that RM’s future
is secure.

John Poulter
Chairman
11 February 2021

Performance

RM’s trading in 2020 was inevitably dominated by the
consequences of COVID-19 and the response to its effects.
These are covered in detail in the reports which follow and
demanded rapid adaptation by management and all the
employees, and thanks are due to all concerned. These
efforts were successful insofar as the Company delivered
a creditable, albeit reduced, level of profit and a strong
year-end balance sheet.

RM Resources, one of the largest UK suppliers of teaching
and learning products for schools and nurseries, experienced
a collapse in demand in March as schools adapted to
sudden closure. However, the market improved as the year
progressed such that, in the latter months, running revenues
were close to those enjoyed in 2019. Initial indications are
that business in the 2021 school shutdown has fallen less
precipitously, although the impact overall will depend on
duration and is necessarily uncertain.

Both RM Results and its’ examination awarding body
customers had to react to last minute cancellations of public
examinations. Planned provision was by then well-advanced
and both revenues and associated costs were largely
committed. As cancellations in 2021 have been announced
earlier, revenues are likely to be reduced as mitigating action
can be taken by all parties. New international contracts were
secured, but overseas travel is essential to frame details
around precise customer requirements, and this will remain
an impediment well into 2021.

RM Education, supplying services and software support
to schools, was less affected by closures as routine IT
infrastructure support was maintained as a necessity.

The Board

During the year, Deena Mattar and Andy Blundell retired from
the Board and I reiterate the Board’s thanks for their service
and valuable contribution.

Paul Dean was appointed as an NED and Chairman of the
Audit Committee on 4 February 2020 and Vicky Griffiths was
appointed as an NED on 1 July 2020. Their biographical
details showing the relevance of their qualifications and
experience to RM, follow later in this report.

STRATEGIC REPORTO 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 cycle

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

channels and opportunities

Increasing technology

adoption in global assessment

and lifelong learning

Software, services and

technology provider to UK

schools and colleges

Delivering cost effective,

reliable, secure technology for

local and remote learning

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

RM showed good resilience in 2020 despite

the business being significantly impacted by

O U R R E S P O N S E

T O C O V I D - 1 9

the closure of schools and nurseries and the

We responded to the pandemic in three phases:

cancellation of exams due to COVID-19.

1. Plan and Stabilise

Trading in the second and third quarters saw

the biggest downturn when compared with

2019. Revenue and profit were materially

down in RM Resources and RM Results while

RM Education was less impacted, reflecting the

nature of its work. Profit in RM Resources was

the most affected as revenue declined sharply

on the back of education establishment closures.

Across the organisation we implemented a range

of cost saving initiatives which enabled all three

divisions to remain profitable.

• Business continuity planning supported all office staff

working from home immediately on lockdown.

•

Initial focus on safeguarding our people and
supporting customers and suppliers.

• COVID-19 stress test scenarios established, and

activities initiated to manage funding and cost base.

• Dividend cancelled and capital programmes deferred

to conserve cash.

2. Run Lean

• Permanent staff recruitment stopped, temporary

staffing levels and discretionary spend
materially reduce.

• Board, Executive team and wider senior leaders
temporarily reduced salaries by up to 25%.

For the year, Group revenue was down 16%

• Banks relaxed covenants and wider cash conservation

and adjusted operating profit declined by 48%

compared with 2019. Statutory profit after tax

decreased by 56%, however despite the change

in profit, careful financial management meant

that RM finished the year with an improved net

debt position of £1.3m (2019 - £15m).

activities put in place. Additional funding was
not required.

• Government job retention scheme used cautiously in
the first half of the year with focus on RM Resources.
Company maintained 100% employee pay. We
stopped use of the scheme at the end of May ahead
of schools reopening in June and paid back these
receipts to the government by the end of September.

3. Recovery

•

Innovation teams established to assess COVID-19
impact on market and customers.

• Customers engaged to assess short and

longer term needs.

• Capital programmes restarted alongside review of
Target Operating Model and working practices.

• Trading returned to more normal levels during Q4.

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

RM Resources had a challenging year of trading as schools
and nurseries both in the UK and internationally closed for
extended periods of time. Revenue in the UK was impacted
significantly in Q2 but recovered to more normal levels by
the end of Q4. Following a strong Q1, international revenues
were materially down on the prior year.

During 2020, we continued the programme to consolidate the
current estate of distribution centres to a single, automated
centre. The building construction was completed and
formally handed over, with our 15 year lease starting in
November 2020. 2021 will be spent equipping the centre
with automation equipment, followed by transitioning stock
from the current warehouses. Our current plan is to have the
distribution centre fully operational in the first half of 2022.
During the year we sold one of our freehold properties and
have agreed heads of terms for the sale of the remaining two
freehold properties.

In RM Results trading was impacted by the cancellation
of exams and assessments around the world. The division
has a mixture of recurring revenues and volume related fees
associated with the volume of exams taken which, despite
some contractual protection, clearly experienced a decline as
many exams were cancelled or deferred around the world.

Whilst the development of the sales pipeline during the year
has been significantly restricted by COVID-19 disruption and
travel restrictions, we were pleased to win two contracts to
provide full end-to-end digital assessment including, for the
first time, remote invigilation and also a global research test
which will be delivered across circa 70 countries.

The acquisition of SoNET Systems Pty Ltd ('SoNET') in
2019 has enabled RM Results to offer full end-to-end digital
assessment services in the online testing and marking of
exams to customers. During 2020 we have also started
to partner with 3rd parties to provide remote invigilation
(proctoring) of exams to both new and existing customers to
facilitate the remote taking of high-stakes assessments safely
and securely.

Trading in RM Education was less impacted by COVID-19 in
2020 than the other two divisions. The provision and support
of technology was still needed in schools as they moved
between in-class and remote learning models. There was
a strong focus in schools to plan the move of their learning
materials to the cloud and we see this as a continued
opportunity for this division going forward. The sales pipeline
has been impacted by COVID-19 as schools made operating
safely their key priority.

C U R R E N T C O V I D

S I T U A T I O N

In January UK governments announced a new set of school
closures with immediate effect. In addition, England and
Northern Ireland confirmed GCSEs and A levels in 2021 would
not go ahead as planned. Scotland had already announced
the cancellation of school 2021 exams late last year. It is too
early to judge what the precise impact on trading in 2021 will
be as the length of school closures, the contract covers for
exam cancellations and the effect on international business
remain uncertain. We intend to continue the investment
in our digital and automation programmes to upgrade our
IT systems and consolidate our distribution centres.

F U T U R E M A R K E T T R E N D S

The education marketplace is changing. Some of these
trends are in response to COVID-19 while others have been in
the pipeline for some time. If we look beyond the disruption
of the current pandemic, there are longer-term market
trends that should be positive for RM. To help understand
this change and RM’s response to it, this section maps
out four key market trends and gives specific examples of
opportunities for the business to deliver shareholder return.

The education market trends we are seeing are:

1. Becoming more digital

2. Modernisation of assessment

3. Flexible learning

4. Buyer aggregation

Provided overleaf are further details on these trends, together
with examples of emerging customer requirements as well as
RM’s response.

STRATEGIC REPORTM A R K E T T R E N D S I N A C T I O N

1. Becoming more digital

2. Modernisation of assessment

3. Flexible learning

4. Buyer aggregation

Education has traditionally lagged behind many sectors
when it comes to digitisation. Whether it is the delivery of
teaching and learning or the buying of products and services
online, digital adoption has been slow. However, we are
starting to see a change in the marketplace which has been
accelerated by COVID-19 in 2020. There have been associated
developments in curriculum as education systems around the
world are starting to include the development of sequencing
and coding skills into the curriculum. This is reflected by the
growth for robotics within the education environment which
is expected to more than double between 2019 and 2027.
Schools and nurseries are increasingly ordering online and
utilising more digitised materials in conjunction with physical
resources to deliver a blended teaching solution. In parallel,
schools and nurseries are increasingly using digital tools and
channels to search and select learning resources.

Market trend

Many qualifications are still completed using paper-based
exams. In the last five years we have seen these exams
converted into a digitised form and marked on-screen.
The digitisation of high-stakes assessments is complex
and a niche area of expertise but we have seen COVID-19
start to accelerate the adoption of technologies that are
modernising assessments. More exam awarding bodies in
the UK and internationally are now moving towards a model
of computer-based paperless assessments and utilising
broader technology enablement around the end-to-end
assessment process.

COVID-19 has forced many learners to remotely engage
with their education, and technology underpins this shift.
This is accelerating understanding in the market of the role
technology can play in improving the flexibility of learning
models, reducing the workload for teachers and driving
value from ongoing digital assessment as part of the learning
journey. We expect this increase in awareness to continue
beyond the short term ‘remote’ learning demands of
COVID-19 as focus shifts to the ongoing value technology can
add to the delivery of educational outcomes.

Market trend

England has seen Multi Academy Trusts (MAT) continue to
grow. Over the next three years, the number of schools in
MAT groupings of all sizes is set to continue to expand with
the biggest continuous growth in this area predicted to come
from MATs with between 6 and 11 schools. Correspondingly,
spend through the MAT sector is predicted to grow in the
same time frame. In addition, the provision of nursery
education in the UK is consolidating with the larger chains
acquiring and growing. Across the nursery sector, the
market value of spend through nursery chains is predicted
to increase each year over the next three years through the
acquisition of single site nurseries. These changes are leading
to a growing trend for central bodies to oversee, and step-in
to, the purchasing for educational establishments.

Move to computer-based high-stakes testing in
flexible locations to suit test takers (including home).

Our response

Providing end-to-end secure assessments onscreen.

Customers are seeking digital resources for their children
to engage with which are different to laptops or tablet.

Example of progress

Our response

Technology solutions which create immersive environments.

Robotics designed for Early Years enhancing cause and
effect through ICT.

Won two contracts in 2020 with Accountancy Awarding
bodies to provide on screen testing, remote invigilation
and on screen marking.

Example of progress

Market trend

Launching two new robots in 2021 which promote
independent thinking and computational skills for
young learners in the classroom and beyond.

Market trend

Online purchasing of education supplies.

Our response

Investing in our e-commerce functionality.

Expanding marketing activities across a broader portfolio
of digital marketing channels.

Example of progress

On our journey to 100% of orders being online,
this figure increased to over 60% in 2020 (up 10%).

Increasing use of digital technology for baseline assessments in
international research studies – that inform education policy.

Our response

Providing digital assessment platforms designed to support
standardised assessments in multiple countries, languages
and with both online and offline delivery capabilities to deal
with variations in infrastructure in different geographies.

Example of progress

Won contracts to provide digital assessment for international
research studies, for example winning the Global Trends in
International Mathematics and Science Study which will be
delivered in c.70 countries in 2023.

Schools needing to provide remote learning.

Our response

Market trend

Helping schools move learning materials to the cloud.

Example of progress

Launching new managed services proposition –
RM’s unique cloud proposition for schools.

Market trend

Education bodies wanting to bring digital assessment into the
curriculum as a learning tool, and as a precursor to enabling
digital exams.

Our response

Helping curriculum authorities bring curriculum content
and digital assessment into the schools setting to aid
with learning.

Example of progress

Providing formative assessment solution to customers
in Australia.

MAT and nursery chains buying products on behalf of
their establishments.

Our response

Dedicated sales team engaging with MAT and nursery chains.

Customised product collections and bespoke marketing for
consolidated groups.

Single dedicated ecommerce site across RM Resources
entire portfolio.

Example of progress

Over 30 commercial agreements across MATs and nursery
chains in 2020.

Targeting a material increase of new agreements in 2021.

Market trend

MATs looking for visibility of the purchasing habits of
their schools.

Our response

Investing in increased self-service/data capability.

Example of progress

Our major IT programme delivering in stages through
2021 and 2022.

STRATEGIC REPORTW O R K F O R C E

Average Group headcount for the year was 1,837 (2019: 2,011),
which is comprised of 1,716 (2019: 1,811) permanent and
121 (2019: 200) temporary or contract staff, of which 1,072
(2019: 1,239) were located in the UK, 729 (2019: 754) in India
and 36 in Australia (2019: 18).

As at 30 November 2020, headcount was 1,853 (2019: 1,983).
The following table sets out a more detailed summary of the
permanent staff employed as at 30 November 2020:

Male

Female

Executive Directors

2 (100%)

0 (0%)

Executive Committee
and direct reports
(excluding EAs and PAs)

23 (53.5%)

20 (46.5%)

Senior Managers
(excluding Executive Directors)

33 (63.5%)

19 (36.5%)

All employees

1,055 (62%)

650 (38%)

The Company recognises that talented people are core to
the success of the business. The Company is committed
to promoting a culture of equal opportunity, diversity and
inclusion and its policies, procedures and working practices
are designed to attract, retain and motivate the best staff
regardless of their age, race, gender, religious or philosophical
belief, sexual orientation, disability or educational
background. There is a flexible work policy and practices
to encourage gender diversity.

The Company does not operate an employees’ share scheme
due to the size and geography of the Group’s workforce. The
Company’s emphasis is on fair pay structures across the
Group and bonus schemes that support and encourage a
high-performance culture.

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. HR policies and procedures, including pay and
bonus processes, are reviewed to ensure there is no gender
bias and last year we rolled out unconscious bias training
to all recruiting managers. Our internal communications
strategy ensures that diversity and inclusion is talked about
on a frequent basis.

Last year we set ourselves the target of having at least 30% of
senior positions held by females and we have met this target.
There is now an increasingly balanced gender split across our
Executive and their direct reports. We support employees
with high potential through leadership development
programmes.

The Group gives equal consideration to applications for
employment received from candidates with disabilities.
Employees who become disabled are retained whenever
possible through retraining, use of appropriate technology
and making available suitable alternative employment within
the Group.

Regular assessments of the developmental needs of
employees are carried out across the organisation and
feedback on this is given and where appropriate training
provided. 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,
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 Board Diversity Policy.

RM India

P U R P O S E , VA L U E S ,

S T R A T E G Y A N D C U LT U R E

The Company has a clear and stated purpose of
“Enriching the lives of learners worldwide.”

Our vision is “Enabling the improvement of
educational outcomes around the world.”

Our strategic goals are:

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In the RM Results and RM Education divisions we do this
“through the innovative use of existing and emerging
technologies” and in the RM Resources division we do this
“with our innovative products and outstanding services”

As at 30 November 2020, RM’s operation in Trivandrum
accounted for 41% of Group headcount (2019: 38%).

Underpinning our culture are our set of ‘5 To Drive’
behaviours:

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.

Consider it Done: We hold ourselves accountable, as
individuals and as a company, for delivering on our
promises. We can be relied upon to get the job done
for our customers and ourselves. We are tenacious in
delivering positive results and respond energetically when
faced with new challenges.

Make it Simple: We make complex issues easy to
understand and we strive for the simplest solutions that
deliver the most significant results for our customers and
ourselves. We say it as it is and don’t assume that how we
have done it in the past will necessarily be how we do it in
the future.

Win Together: We are at our best when working with our
customers and with our colleagues - motivated by the
belief that diverse teams are much more successful than
the sum of their parts. We strive to see things from the
point of view of others, building trust, showing humility
and working collaboratively to get great results.

Be Brave: We are ambitious, and we push the boundaries
to deliver great results for our customers and for our
business. We do not settle for less than great, or shy
away from the difficult, and we don’t let fear stifle our
true potential.

Be Curious: We have an intense desire to understand
our customers and to imagine new possibilities for our
business and theirs. We are hungry to learn, seek out new
ideas and best practice, to expand our networks and to
develop our understanding. We are inquisitive, creative
and we question how things are and can be done.

These are intended to drive positive and aligned behaviours
throughout the organisation. They are intended to
benefit not just the Company itself and its staff but also all
stakeholders with whom we do business.

Each month, employees that demonstrate these behaviours
are given awards recognising this.

The Board receives regular reports and updates from the
CEO, CFO and General Counsel as well as other members
of the Executive and the Group. These reports and updates
cover a wide range of matters in order to ensure that policy,
practices and behaviour in the Group are aligned with the
Company’s purpose, values and strategy and that any issues
that may give rise to concerns are brought to the attention
of the Board. This has included reviews on particular parts
of the business, any significant customer issues, compliance
updates, disputes and whistle-blower concerns. The Board
requests further information on any matters that they
consider relevant. The Board requires ongoing updates, seeks
assurance as to the proposed actions to resolve such matters
and receives information on the corrective actions taken.

STRATEGIC REPORT

Section 172 (1) Statement

The Company’s Directors, individually and collectively, have acted in a way that they consider, in good faith, is most likely to promote
the success of the Company for the benefit of its members as a whole.

Examples of how the Board has had regard, in its principal decisions made during the year, to the various factors set out in Section
172(1), and the impact that regard has had, are set out below. Additionally, examples appear throughout this Annual Report and these
are incorporated into this Section 172(1) Statement.

Board Decision

Factors

Factors considered in accordance with s.172(1) and effect

LT, £, R, BR

This would maintain our relationship and reputation with schools as
a trusted partner

Continue to keep distribution centres
open to supply schools with resources
and maintain the IT systems of schools
during the COVID-19 lockdown

Investments in a new IT system and
a new fully automated national
distribution centre

Extension of Board’s
workforce engagement

£, LT, W

BR, R

Maintaining the Company’s financial
position during the COVID-19 crisis

£, Sh, LT

BR, R, C

This would enable schools to stay open for the benefit of the wider
community

The need to ensure employees are able to continue to work safely

This is an important investment for the long-term future of the
business

This would enable RM Resources to provide a market leading fully
digital service to customers with enhanced user experience

This would enable the Board to hear the views of the workforce
more clearly, helping the Board to have regard to these issues when
making decisions

This would enhance the Company’s reputation as a good employer

This would help maintain the liquidity of the Group in the face of the
uncertainty caused by the COVID-19 crisis and prevent it impacting
long-term plans

Senior management should demonstrate personal commitment to
the future of the business by a salary sacrifice

That the Group should only take government support
when necessary

Key of factors considered:

£ Financial impact

Sh Acting fairly between members

R Reputation

W Employees

LT Long-term impact

C Community & environment

BR Fostering business relationships

N O N - F I N A N C I A L I N F O R M A T I O N S T A T E M E N T

This Strategic Report together with the Directors’ Report, Corporate Governance Report and Audit Committee Report provide details of
the non-financial matters required by sections 414CA and 414CB of the Companies Act 2006.

Environmental Policy and Reporting

The Environmental Policy and Reporting section in the Directors’ Report is incorporated into this report.

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, financial and emerging. 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.

Description and likely impact

Mitigation

Risk and
categorisation

Public policy
(Political Risk)

Education practice
(Political Risk)

The majority of RM’s business is funded from
UK government sources. Changes in political
administration, or changes in policy priorities,
might result in major changes to the exam
system or 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 and assessment 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.

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

There may be an adverse change in the
economic and/or fiscal environment as a result
of the UK’s exit from the EU and costs could
increase and/or revenues reduce as a result.

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 Company is evolving its product and service offering to
helps its customers with their developing requirements.

The Group has adapted its processes to support the Brexit
deal, is managing the principal risk areas identified and
will continue to monitor developments.

STRATEGIC REPORT

Risk 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, competition law
and tax which are regularly monitored and reviewed to
ensure we assess and take account of higher risks levels
and comply with all relevant laws and regulations.

Data and business
continuity
(Operational and
Emerging Risk)

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

The Company has made a commitment to maintain
effective Information Security and Business Continuity
management systems and achieve ISO27001 and
ISO22301 certifications for all business areas 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 Company analyses all information security and data
protection incidents (including their root cause), changes
in the regulatory framework, and breaches that have
occurred in other companies to identify opportunities for
improvement.

The Group seeks to protect itself against the consequences
of a major incident by implementing a series of back-
up and safety measures. It also manages risks with key
suppliers by regularly reviewing their security and business
continuity systems, conducting assessments and running
joint tests.

The Group has cyber insurance and property and business
interruption insurance cover.

Risk and
categorisation

People
(Operational Risk)

Description and likely impact

Mitigation

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.

Steering committees are established for all major
programs which will include a member of the Executive
Committee. Currently there are 2 major programmes to
develop a new automated warehouse and migrate to
new CRM and ERP systems. 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.

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.

Transformation
(Operational Risk)

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

Innovation
(Strategic Risk)

The IT market and elements of the education
resources market are subject to rapid, and
often unpredictable, change. As a result
of inappropriate technology, 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.

Dependence on
key contracts
(Strategic Risk)

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.

Impact of
the COVID-19
pandemic
(Operational Risk)

The impact of the COVID-19 pandemic has put
pressure on those with whom we trade and
there are risks from customer closures, pricing
pressures and service delivery pressures from
delays to exams.

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 Company manages its relationship with its customers,
supplier and other stakeholders. It works closely with
customers to avoid potential bad debts and to manage
the impact of costs increases from key suppliers.

The Company worked closely with customers after the
exam cancellations in 2020 and is doing so again with the
cancellation of summer 2021 exams.

STRATEGIC REPORTRisk and
categorisation

Pensions
(Financial Risk)

Description and likely impact

Mitigation

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.

Pension costs can be significant in respect of
staff that transfer across to us, where they are
members of Local Authority pension schemes.

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

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

The Company assesses potential pension costs of staff
from other employers that would transfer across to
the Company and take this into account in its bids for
new contracts.

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.

David Brooks
Chief Executive Officer
11 February 2021

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’s financial performance was materially impacted by COVID-19 in 2020. Following a positive start to the year with revenue growth
in the first quarter, the closure of schools at the end of March and subsequent cancellation of exams around the world had a
significant impact on the Group through the remainder of the year and resulted in full year revenue decline of 16%. The organisation
implemented a range of cost savings initiatives which enabled all three divisions to remain profitable but the impact of the pandemic
broadly halved profit levels and adjusted diluted earnings per share. Net debt levels reduced by £14m, benefiting from a number of
activities that were initiated to conserve cash, ending the year at £1.3m.

Revenue

£189.0m

Adjusted*
Operating Profit

£14.4m

Net Debt

£1.3m

Adjusted*
Diluted EPS

13.0p

£224m

£189m

£27.6m

£15.0m

26.4p

£14.4m

£1.3m

13.0p

Down 16%

Down 48%

Improved £14m

Down 51%

* 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.

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 decreased by 16% to £189.0m (2019: £223.8m).

£m
Unaudited

Revenue

Operating profit

Profit before tax

Tax

Profit after tax

2020¹

2019¹

Adjusted

Adjustment²

Statutory

Adjusted

Adjustment²

Statutory

189.0

14.4

13.4

(2.6)

10.8

(2.9)

0.5

(2.4)

189.0

223.8

11.5

10.5

(2.1)

8.4

27.6

26.6

(4.7)

21.9

(3.5)

0.6

(2.8)

223.8

24.2

23.2

(4.1)

19.1

1. 2020 results reflect the adoption of the new accounting standard IFRS 16. Results in the table for 2019 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

provided in the notes to the accounts to highlight the impacts. IFRS 16 has impacted the profit before tax by less than £0.1m in 2020.

2. Adjustments reflect the amortisation of acquisition related intangible assets; one time property related items, including a stock write down,

restructuring costs, costs associated with GMP equalisation and profits on the sale of non-core assets. Further details are defined and reconciled

in Note 5 of the notes to the financial statements.

The pandemic impacted revenues in the UK and internationally. UK revenues fell by 14% with international revenues down 25%
reflecting a 41% reduction in RM Resources international revenues.

Adjusted operating profit margins reduced to 7.6% (2019: 12.4%). Adjusted operating profit reduced by 48% to £14.4m (2019: £27.6m).

In order to provide a better understanding of underlying business performance, some costs are identified as ‘adjustments’ 2
to underlying business performance. In 2020 these are broken down as follows:

Amortisation charges associated with acquisition-related intangible assets

£2.0m

Impairment of intangible software

Restructuring costs

One time property-related items

One time sale of investment

Stock obsolescence associated with revised warehouse strategy

Pension GMP equalisation

Total adjustments²

£0.7m

£1.0m

£-0.6m

£-0.7m

£0.4m

£0.2m

£2.9m

Taking into consideration the adjustments of £2.9m (2019: £3.5m), statutory operating profit decreased to £11.5m (2019: £24.2m).

The Group generated a statutory profit before tax of £10.5m (2019: £23.2m) with a net interest charge of £1.0m which relates to the
Group credit facility and finance costs related to the defined benefit pension schemes.

The total tax charge within the Income Statement was £2.1m (2019: £4.1m). The Group’s tax charge for the year, measured as a
percentage of profit before tax, was 19.8% (2019: 17.7%) and was impacted by the increase in the deferred tax rate which raised the
effective tax rate by 2.4% as a percentage of profit before tax. Statutory profit after tax decreased 56% to £8.4m (2019: £19.1m).

Adjusted diluted earnings per share decreased to 13.0 pence (2019: 26.4 pence). Statutory basic earnings per share were 10.2 pence
(2019: 23.2 pence) and statutory diluted earnings per share were 10.1 pence (2019: 23.0 pence).

RM generated cash from operations for the year of £27.8m (2019: £19.9m).

Cash generation benefited from reduced inventory levels, a favourable movement in trade and other payables, including positive
trading impacts of £8.1m and VAT deferral of £2.4m, and gains through the sale of non-core property and investments of £1.6m.
This cash generated was utilised through capital expenditure of £8.5m (2019: £6.0m), contributions to the defined benefit pension
scheme of £4.1m (2019: £4.6m) and tax payments of £2.6m (2019: £3.6m). Dividends were suspended in 2020 as part of the activities to
conserve cash. As a result, net debt was reduced to £1.3m at the end of the year (2019: £15.0m).

RM is currently progressing two large capital projects; consolidation of five distribution centres into a single automated facility and a
Group-wide IT system implementation. In March we paused the capital spend associated with the single automated facility and the
IT system implementation. The construction of the building continued under contract and was completed at the end of November
when RM commenced the lease of this facility. These projects, alongside wider capital investments, will drive further elevated
capital expenditure over the next two years, likely to be more than £20m in total. A proportion of this spend will be recovered by the
subsequent sale of a further two freehold properties following the completion of the sale of one freehold property in 2020 generating
£2.9m of cash and an exceptional profit on sale of £0.7m. Heads of terms are agreed for sales on the remaining two properties with
exchange expected in the first half of 2021. Both projects are scheduled to conclude by the end of 2022 and deliver good financial and
operational benefits.

STRATEGIC REPORT

Dividend

R M R E S O U R C E S

R M R E S U LT S

R M E D U C A T I O N

Following the impact of COVID-19 and subsequent lockdown,
RM took the decision to cancel the 2019 final dividend. No
interim dividend was paid in the year (2019: 2.0p). The Board
proposes a 2020 final dividend of 3.0 pence per share (2019: nil)
which is subject to shareholder approval. The estimated cost
of the ordinary dividend proposed is £2.5m (2019: £1.7m paid).

The Board is committed to a long-term sustainable dividend
policy and the Company has £36.2m of distributable
reserves, as at 30 November 2020, available to support the
dividend policy.

RM plc is a non-trading investment holding Company
and derives its profits from dividends paid by subsidiary
companies. The Directors consider the Group’s capital
structure and dividend policy at least twice a year, ahead of
announcing results and during the annual budgeting process,
looking at longer-term sustainability. The Directors do so in
the context of the Company’s ability to execute the strategy
and to invest in opportunities to grow the business and
enhance shareholder value.

The dividend policy is influenced by a number of the principal
risks identified in the table of ‘Principal 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.

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”). Following the closure of one
warehouse during the year (which impacted the Platinum
Scheme), all schemes are closed to future accrual of benefits.

The IAS 19 net deficit (pre-tax) across the Group increased
by £12.7m to £18.7m (2019: £6.0m) with the Platinum
Scheme being in surplus. This increase was caused by an
increase in the liabilities of the Schemes driven primarily by
lower discount rates.

The Group deficit recovery plan payments across all
schemes in 2020 were £4.1m which was down slightly on
the £4.6m in the prior year. Following the triennial review at
31 December 2019, the Group agreed with the Trustee of the
Consortium Care Scheme to contribute £0.7m per annum
until 31 December 2027.

RM Resources revenues decreased by 19% to £92.4m
(2019: £114.5) resulting from the widespread school closures
in the UK and internationally in response to the COVID-19
pandemic. UK education revenue reduced by 15% with
international revenues down 41% .

Divisional adjusted operating profit reduced to £3.1m
(2019: £13.7m) and operating margins decreased to 3.3%
(2019: 12.0%). The reduction was predominantly driven by
lower revenues. Underlying operating costs were reduced
by 13% but these were offset by a cost of £2.1m associated
with higher debtor and stock write down charges largely
associated with the impact of COVID-19.

UK education revenues decreased by 13% to £78.5m
(2019: £90.1m). This decline was broadly in line with the UK
key competitor market set representing the impact of the
pandemic and school closures. This performance reflects
an improvement in underlying performance in the schools’
market offset by two areas that disproportionally impacted
RM Resources. The most impacted market sector was the
Early Years sector which declined by more than double
that of the schools’ market. This is also the sector in which
RM Resources has the highest market share. Furthermore,
revenues were negatively impacted by the loss of the Wales
framework agreement at the end of 2019 and the break-up of
a nursery chain contract into small agreements in which the
business did not win all the sub-agreements.

Revenues arising from the TTS brand fell only 9% 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 disproportionately
impacted by the contract loss and Early Years market.

International

International sales are made through 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 declined by
41% to £12.8m (2019: £21.4m). This was again as a direct
result of school closures, which in some countries was for
a more extended period than that encountered in the UK.
There were fewer students in International schools which
also saw higher remote learning adoption. The region most
impacted was the US which saw sales down 81%.

Revenue decreased by 16% on the prior year to £31.6m (2019:
£37.7m) as growth in new contracts was materially reduced
as a result of the large number of exams cancelled globally
resulting from the COVID-19 pandemic which impacted the
variable element of many of our contracts.

Geography

RM Customer
Exam Bodies

Exam
Cancellations

UK General Exams

UK Other

EMEA

Australia / NZ

Asia

ROW

75%

35%

90%

35%

70%

Adjusted operating profit fell by 24% on the prior year to
£6.6m (2019: £8.7m), with adjusted operating margins
decreasing to 20.9% (2019: 23.2%).

RM Results signed two new end-to-end digital assessment
contracts in the year that include e-testing, e-marking and,
for the first-time, remote invigilation. The division has also
signed a global baseline test with International Association
for the Evaluation of Educational Achievement to deliver
the Trends in International Mathematics and Science study
across c.70 countries and also agreed several important
contract renewals. More widely the sales pipeline has been
restricted by COVID-19 disruption and will remain challenging
until travel restrictions are eased.

Revenues in the division reduced by 9% to £65.0m
(2019: £71.6m) driven primarily by the conclusion of the
Building Schools for the Future (BSF) programmes in 2019
which resulted in a £5m reduction in revenue in 2020. The
Division proved to be more resilient with regard to UK
school closures resulting from COVID-19 as most schools
remained operational and required technology support as
they continued to teach vulnerable children and those of
key workers and support remote learning throughout the
lockdown. The sales pipeline was impacted through most
of the year and remains challenging as school management
teams focus on managing the changing COVID-19 protocols
and policies. Adjusted operating margins were retained
at similar levels to the prior year at 14.3% (2019: 14.5%)
delivering adjusted operating profit of £9.3m (2019: £10.4m).
This reduction reflects the lower revenues partially offset
by benefits from a pre-COVID restructuring programme and
reduced discretionary spend through lockdown.

The division is made up of Services (83% of revenue) and
Digital Platforms (17%) with a key focus of the division to
build its annuity revenue offerings which accounted for 70%
of revenue in 2020.

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 declined
by 11% to £54.0m (2019: £60.8m) with managed services
revenues declining 12% to £42.0m. This was driven primarily
by the absence of BSF revenues and a slight reduction in site
numbers through the year as converting the sales pipeline
became challenged. Connectivity declined 7% to £12.0m
due entirely to lower sales of unbundled IP addresses with
underlying connectivity revenues up marginally.

Digital Software Platforms

The Digital Software Platform offering covers a number of
key cloud-based products and services such as RM Integris
(school management system), RM Unify (authentication and
identity management system) and RM SafetyNet (internet
filtering system) as well as other content, finance and network
software offerings. Digital Platforms revenues increased by 2%
to £10.9m (2019: £10.8m) driven by sales of RM Unify which is
used as part of enabling a cloud platform in schools.

STRATEGIC REPORTI 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
following the UK withdrawal from the EU given the recent
trade deal agreement and uncertainty regarding the flow of
products through key ports. The Group had European sales
of £11.9m in 2020, of which £6.4m relate to physical product
sales in RM Resources and £5.6m relate to software and
services sales in RM Results and RM Education.

T R E A S U R Y M A N A G E M E N T

The Company’s financial position is supported by a revolving
credit facility of £70million that is shared between two banks,
HSBC and Barclays. It also has an additional accordion
arrangement for a further £30million, enabling the Group to
extend the facility to £100million. The facility is committed
to June 2022 but has the option of a further 2-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.

Treasury activities are managed centrally for the Group
including banking relationships and foreign currency
hedging. 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.

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

The financial position, cash flows and liquidity position are
described in the financial statements and the associated
notes. In addition, the notes to the financial statements
include RM's objectives, policies and processes for managing
its capital, financial risk management objectives, and
exposure to credit and liquidity risk.

The Group ended the year with a net debt of £1.3m which is a
decrease of £13.7m on the prior year end position of £15.0m.
The average net debt position during the year was £16.3m
with the highest borrowing point being £29.6m relative to the
banking revolving credit facility of £70 million.

The financial statements have been prepared on a going
concern basis which the Directors consider to be appropriate
for the following reasons.

The Directors have prepared cash flow forecasts for the period
of not less than 12 months from the date of approval of these
financial statements which indicate that, taking account of
reasonably plausible downsides as discussed below, the
Company will have sufficient funds to meet its liabilities
as they fall due for that period. The facility is committed
until 2022 and is subject to covenant tests related to the
leverage of the Group and interest cover annually in May
and November. Management are not aware of any reasons
why the extension would be not be granted, if requested to
the lenders.

Throughout FY20 the COVID-19 pandemic has impacted the
Group primarily as a result of widespread school closures
and the cancellation of UK and some International summer
exam sessions. In December, prior to the recent COVID-19
school closures the Group was trading in line with internal
budgets and forecasts. During previous periods of school
closures and subsequent limited school re-openings, the
RM Education division continued to provide software,
services and technology to UK schools, but the volume of
hardware and new installations fell slightly. The RM Results
division continues to provide digital assessment solutions
for International awarding bodies and is currently in
discussions with these customers about the impact of
COVID-19 on their exam cycles. While returning close to
previous performance during the schools re-opening in
FY20, sales of consumables to UK and International
schools by the Group’s third division, RM Resources, have
been materially lower over the periods of lockdown
driven by the volume of pupils in schools and nurseries.

Actions taken by management to reduce the impact of
COVID-19 included a temporary furloughing of employees,
later repaid, a deferral of pension deficit payments, also
later repaid, and pausing of discretionary spending and
capital projects. The proposed FY19 final dividend was also
cancelled to protect Group cash flow. All business units were
profitable in FY20.

The Group has assessed a number of scenarios for going
concern purposes and is using a base case scenario
assessment based on the known COVID-19 restrictions at
January 2021, namely that UK schools will remain closed
in quarter 1 FY21, the UK Government announcements of
exam cancellations included and reduced international exam
volumes ('base case'). Management has considered a severe
but plausible downside scenario based on further lockdowns
after March 2021 in varying months across the going concern
period to reflect the risk of further school closures in
quarter 4 FY21 and quarter 1 FY22 ('downside scenario').
Under this downside scenario, the forecasts assume that
trading during future lockdowns is equivalent to that
experienced to date in the current Government imposed
lockdown during January 2021. This is similar to levels
experienced in June 2020 when only certain year groups
had returned to school.

Under the downside scenario, management would take
the decision to reduce further discretionary spend. The
levels of discretionary spend reductions are being actively
reassessed with the announcements by UK Government
indicating their desires to get schools operating normally as
soon as practical. Under the downside scenarios the Group
has headroom against its available facilities without using
all its available options in relation to cash management, and
considers there are sufficient controllable actions it can take,
even if a more severe downside case were to materialise,
to operate within the facility’s covenants. At present the
Directors consider a more severe downside case to be highly
unlikely, given the vaccine rollout and the communicated
desire by the UK Government to prioritise the reopening of
schools at the earliest opportunity.

Therefore, the Board has a reasonable expectation that the
Group and Company has adequate resources to continue
in operational existence and meet their liabilities as they
fall due for a period of not less than 12 months from the
date of approval of these financial statements. For this
reason, the Group and 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.

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

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

2. Operational execution – including:

• Major adverse performance in a key contract or

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

• Delays and failure to exploit the benefits of 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.

• Further impacts of COVID-19 lockdowns and

exam cancellations.

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
11 February 2021

STRATEGIC REPORT
\

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.

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. David has tendered his
resignation and leaves his role on 31 March 2021.

P A U L D E A N
Non-Executive Director (a) (r) (n)

Paul Dean joined 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.
He was previously the Senior Independent Director and Chair
of the Audit Committee Chair at Porvair plc and Polypipe plc,
Group Finance Director of Ultra-Electronics plc from
2008 to 2013 and Group Finance Director of Foseco plc from
2005 to 2008. Paul is a Chartered Management Accountant.

V I C K Y G R I F F I T H S
Independent Non-Executive Director (a) (r) (n)

Vicky Griffiths joined the Board on 1 July 2020 as a
Non-Executive Director. She spent five years as a teacher
of Maths and Economics at both primary and secondary
level and currently sits on the board of multi-academy
trust, Bellevue Place Education Trust. She trained at Bain
and Company and was responsible for operational and
business risk at Brevan Howard Asset Management. She is
now a Partner at executive search firm, Independent Search
Partnership, as well as Senior Independent Director of the
British Olympic Foundation, a Trustee of Vincent’s Club at
Oxford University and she sits on the Main Committee of
the MCC at Lords.

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.
Neil is a Chartered Accountant (CIMA).

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

The Directors submit their report together with the audited
consolidated and Company financial statements for the year
ended 30 November 2020.

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

D I V I D E N D S

Subject to shareholder approval, a final dividend of
3.00 pence per share is proposed; no interim dividend has
been paid during the year ended 30 November 2020.
In the year ended 30 November 2019, only an interim
dividend of 2.00 pence per share was paid.

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 that appropriate
facilities are available in order that the Group can continue to
meet its 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 the importance of its activities being
carried out in an environmentally friendly and compliant
manner. We attribute great importance to environmental
matters and considerations 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. Over the course of the year we have undertaken a
review of our current activity and strategy with the support of
a third party provider. On the back of this the Executive are
currently reviewing the Group’s sustainability strategy with the
intention of identifying projects that enhance our sustainable
business practices.

RM Resources’ new HQ and distribution centre built at Harrier
Park has been assessed as “very good” by BREEAM standards
and is built with heat retention glass, rain-water harvesting,
PIR LED lighting and electric vehicle recharging. When it
becomes operational, this new building will be significantly
more efficient and sustainable than the current four sites it
will replace and there will also be benefits in reduced logistics
and packaging. Further details on this will be provided once
the site becomes operational.

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 2020.

Set out overleaf 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-2020).

G O V E R N A N C E

Emissions by scope

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

S I G N I F I C A N T A G R E E M E N T S

Year ended 30 September 2020

Year ended 30 September 2019

Year ended 30 September 2018

Scope

Source

Country

Tonnes CO2℮

Tonnes CO2℮ Tonnes CO2℮

Absolute totals

Absolute totals
Tonnes CO2℮ Tonnes CO2℮

Absolute totals
Tonnes CO2℮

Scope 1

Van/car travel

India

Gas

Electricity

India

Electricity

Australia

Scope 2
(location
based)

Total

Note: CO2℮ means CO2 equivalent

187

555

431

481

746

947

1,693

409

676

719

595

418

789

805

634

1,091

1,331

2,422

1,276

1,439

2,715

The Group has reduced its emissions in 2020 compared to 2019 by 729 tonnes, a reduction of 30%. This is partly attributable to a
25% reduction in the first half of the year, compared to the same period in the previous year, due to ongoing benefits of building
consolidation across the Group. In the second half of the year the reduction compared to the previous year was 40% due to offices
being closed due to COVID-19.

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

Year ended
30 September 2020

Year ended
30 September 2019

Year ended
30 September 2018

Scope 1

Scope 2

Total

0.40

0.50

0.90

0.54

0.67

1.21

0.66

0.74

1.40

The aggregate energy consumption by the Group during the year ended 30 September 2020 was 5,275,330 KwH with 87% consumption
in the United Kingdom and 13% offshore. This is based on the information provided by suppliers.

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

Given the nature of its operations, the Company has always taken data protection matters 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 to which all staff are required to
adhere, 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 Board 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.

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:

• Raising health and safety awareness;

• Effective training;

• Risk reduction and management; and

• Accident reduction.

During the global COVID-19 pandemic there has been significant
focus in ensuring the safety and well-being of all employees.
Further details are in the Corporate Governance Report.

M O D E R N S L AV E R Y

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 with 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:

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

The Group has an overseas branch in Singapore.

Our Modern Slavery statement for the year ending
30 November 2019 is available on the website www.rmplc.com.

D I R E C T O R S

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.

C O M M U N I T Y

RM engages in a number of community activities across the
Group which are managed and organised on a divisional and
geographical basis.

In the UK, this has included making key remote learning
products available for free during the COVID-19 lockdown and
subsequent school closures and raising funds for educational
charities that are chosen by the staff in each division.

In India, the RM ESI Foundation was established in 2007
to provide support in and around Trivandrum, India. The
Foundation provides help to bright, underprivileged children
to pursue their education and to government-owned schools.
In 2020, 49 students were supported through the foundation.

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 products whilst staff work to develop new and more
effective systems and products. The Company incurred £7.9m
of research and development in the year, which was expensed
in the income statement (2019: £6.6m). This primarily relates
to product research, maintenance and related expenditure
which does not meet capitalisation criteria.

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 (until 24 May 2020)
David Brooks
Paul Dean (from 4 February 2020)
Vicky Griffiths (from 1 July 2020)
Patrick Martell
Neil Martin
Deena Mattar (until 31 July 2020)

Biographical details of the current Directors are given in the
Directors’ Biographies section of the Annual Report. The
appointment and removal of Directors is governed by the
constitutional documents of the Company and the Companies
Act 2006. The Directors may from time to time appoint one or
more Directors. 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.

GOVERNANCE
D I R E C T O R S ' P O W E R S

The Board manages the business of the Company under the powers set out in the constitutional documents. These powers include
the Directors’ ability to issue or buy-back shares. Shareholders’ authority to empower the Directors to purchase the Company’s
own ordinary shares is sought at the AGM each year. The constitutional documents can only be amended, or replaced, by a special
resolution passed in general meeting by at least 75% of the votes cast.

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

At the Annual General Meeting held on 26 March 2020, members renewed the authority under:

M A N A G E M E N T R E P O R T

For the purposes of compliance with DTR 4.1.5R(2) and
DTR 4.1.8R, the required content of the “Management Report”
can be found in the Strategic Report or this Directors’
Report, including the material incorporated by reference.
As permitted, some of the matters to be included in the
Directors’ Report have been included in the Strategic Report
such as the business review and future prospects.

(1) section 551 of the Companies Act 2006 to allot ordinary shares up to an aggregate nominal authority of £639,047. This authority has
not been used since the Annual General Meeting; and

S I G N I F I C A N T E V E N T S S I N C E T H E
E N D O F T H E F I N A N C I A L Y E A R

(2) 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 higher of 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 these authorities at the next Annual General Meeting scheduled for 8 April 2021.

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

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 2020, the RM plc Employee Share Trust owned 1,168,921 ordinary shares in
the Company (1.39% 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.

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 2021, 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 2021

No. of shares
Direct

No. of shares
Indirect

Schroders Investment Management Ltd

Castlefield Fund Partners Ltd

Aberforth Partners LLP

BlackRock Inc

Canacord Genuity Group Inc

Majedie Asset Management Ltd

Artemis Fund Managers Ltd

14,263,444

13,000,000

10,142,345

8,779,532

4,725,312

3,930,360

3,667,412

17.006%

15.50%

12.09%

10.46%

5.63%

4.69%

4.37%

14,263,444

13,000,000

10,142,345

8,779,532

4,725,312

3,930,360

3,667,412

Details of such events have been included in the
Strategic Report.

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, KPMG LLC, 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 appoint Deloitte LLP as auditor of the
Company will be proposed at the next Annual General
Meeting. Details of the audit tender process are set out in
the Audit Committee Report.

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.

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.

The Directors consider the Annual Report and Accounts,
taken as a whole, is fair, balanced and understandable
and provides the information necessary for shareholders
to assess the Group’s position and performance, business
model and strategy, and provide appropriate guidance on its
future prospects.

GOVERNANCER 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 are listed in this
Directors’ 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 and Directors’ Reports include 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.

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

The forthcoming Annual General Meeting will be held on
8 April 2021 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
11 February 2021

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

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

The Board consists of the Chief Executive Officer, Chief
Financial Officer and four Non-Executive Directors including
the Chairman. The Chairman was considered independent
on appointment. The Board considers all of the Non-
Executive Directors (including the Non-Executive Directors
starting in the last 12 months) to be independent of the
management of the Company and free from any business or
other relationship which could materially interfere with the
exercise of their independent judgment. The Directors bring
to the Board a wide range of financial and business skills and
extensive experience and knowledge suited to the nature of
the Company.

The Board of Directors meets regularly on a formal basis
and holds additional ad hoc meetings as necessary 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 principal risks of the Group. The Chairman
holds meetings with the Non-Executive Directors without the
Executive Directors present when considered appropriate.

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.

Any concerns about the operation of the Board or the
management of the Company that cannot be resolved are
recorded in the Board minutes.

All Directors have access to the advice and services of
the Company Secretary, and all the Directors are able to
take independent professional advice, if necessary, at the
Company’s expense.

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

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.

This Corporate Governance Report which incorporates
the relevant sections of the reports of the three
Board Committees, summarises how the provisions of the
UK Corporate Governance Code 2018 (‘Code’) have been
applied and how the Board and Board Committees have
fulfilled their responsibilities during the year.

Governance
This is the first report for the Company under the revised
Code and on behalf of the Board, I confirm that the Company
has complied with the provisions of the Code throughout
the 12 month period ended 30 November 2020. In respect
of provision 25, the Terms of Reference of the three Board
Committees were formally updated in October 2020 to reflect
the new provisions of the Code, although the Committees
complied with the provisions of the Code throughout the
12 month period ended 30 November 2020.

Composition
During 2020, Deena Mattar and Andrew Blundell retired
from the Board having provided insightful guidance and
contributions during their tenure. Paul Dean and Vicky Griffiths
were welcomed as new Non-Executive Directors and bring
skills and experiences that are valuable and complementary
to the Board. Patrick Martell was appointed as Senior
Independent Director on the retirement on Deena Mattar.

We are also conducting a search for a new CEO as
David Brooks has tendered his resignation after
25 years’ service with RM.

Stakeholders
We believe strongly that the long-term success of the
Company is linked to ensuring accountability, transparency
and fairness in dealings with stakeholders. You can read
more about this on page 38.

John Poulter
Chairman

The Board

The Board is collectively responsible for the sustainable long-term success of the Group.

The key roles of the Board are:

• Setting the strategic direction of the Group.

• Overseeing implementation of the strategy and ensuring that the Group is suitably

resourced to achieve its objectives and effectively engages with stakeholders.

• Overall responsibility for the management of risk and for reviewing the effectiveness

of the framework for internal control and risk management.

Chairman

Senior Independent Director

Non-Executive Directors

• Responsible for overall leadership

• Deputises for the Chairman and acts

• Share full responsibility for the

and governance of the Board and

as intermediary for other Directors,

execution of the Board’s duties.

ensures constructive relations between

if needed.

• Scrutinise and challenge

Executive and Non-Executive Directors.

• Meets with the Non-Executive

strategic proposals.

• Sets the agenda, ensures adequate

Directors, without the Chairman

• Monitor the performance of

time is available for discussion

present, when considered

management on an ongoing basis.

of agenda items and promotes a

appropriate, and leads the appraisal

culture of openness and debate at

of the Chairman’s performance.

Board meetings.

• Available to respond to shareholder

• Provides support and advice to the

concerns if they have concerns which

Chief Executive Officer.

contact through the normal channels

• Ensures effective communications

has failed to resolve.

with shareholders.

Audit Committee

Remuneration Committee

Nomination Committee

• Oversees and monitors the

• Reviews and recommends the

• Reviews the structure, size and

Company’s financial statements,

accounting processes and audits

(internal and external).

framework and policy for the

remuneration of the Executive

composition of the Board and

its Committees.

Directors and senior executives.

•

Identifies and nominates suitable

• Ensures that risks are identified

• Reviews workforce remuneration

and assessed, and that sound

and related policies.

executive candidates to be

appointed to the Board.

systems of risk management and

• Considers how the remuneration

• Considers wider aspects of

internal control are in place.

policy supports the business strategy

succession planning.

• Reviews matters relating to fraud

of the Group.

and whistleblowing reports.

Group Chief Executive

• Responsible for the executive management of the Group as a whole and delivering

the strategic and commercial objectives agreed by the Board.

• Leads the Executive management team.

• Maintenance and protection of the Group’s reputation.

• Ensures the affairs of the Group are conducted with the highest standards of integrity.

• Builds positive relationships with the Group’s stakeholders.

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

The Board has delegated authority to three committees: Audit, Remuneration, and Nomination, the Executive Directors are not
members of these Committees. The Terms of Reference for each Committee setting out their responsibilities have been reviewed
and amended to reflect the changes introduced by the Code this year and are available on www.rmplc.com. For each Committee,
information on their composition and activities is provided in the respective reports.

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 as well as attendance figures for each Director are set out in
the table below. This includes a number of additional ad hoc meetings held by the Board during 2020 to discuss the impact of the
COVID-19 pandemic. All Directors attended all meetings held during the period they were Directors.

Number of meetings held in the period

John Poulter

Andy Blundell (left 24 May 2020)

David Brooks

Paul Dean (joined 4 February 2020)

Vicky Griffiths (joined 1 July 2020)

Patrick Martell

Neil Martin

Deena Mattar (left 31 July 2020)

Board
Meetings

Audit
Committee

Remuneration
Committee

Nomination
Committee

All Directors received papers for all meetings in advance.
Where a Director was unable to attend a meeting, they had the opportunity to provide comments.

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

No Director should undertake additional appointments without the prior approval of the Board.
No such appointments have been undertaken in the year ended 30 November 2020.

B O A R D T E N U R E

Details of the tenure of the members of the Board as at the date of this report are set out in the table below.

Tenure

Percentage of Board

0-2 years

2-5 years

5+ years

33%

I N D U C T I O N

All Directors receive an induction on joining the Board.
Paul Dean and Vicky Griffiths joined the Board this year and
met with all Board Directors, members of the Executive and
other relevant employees individually. They also received
an information pack containing all key Company documents
relevant to their role and responsibilities. Visits to Company
sites have not been feasible due to COVID-19 restrictions but
will be set up once feasible.

B O A R D E V A L U A T I O N

The performance of the Board and each Board Committee is
reviewed on an annual basis and a review was conducted in
October 2020.

The performance of the:

• Chairman is assessed by the Non-Executive Directors,
led by the Senior Independent Director without the
Chairman present;

D I R E C T O R S ’ C O N F L I C T S
O F I N T E R E S T S

There are procedures in place to identify, authorise and
manage any conflict of interest of any Director with those of
the Company and these procedures have operated effectively
during the year. There have been no conflicts of interest.

None of the independent Non-Executive Directors nor
the Chairman have 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.

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

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

• Chief Executive Officer is assessed by the Chairman, in

consultation with the other Non-Executive Directors; and

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

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

As a result of these reviews, it is considered that the
performance of each of the Directors continues to be effective
and that each Director demonstrates sufficient commitment
to their role and enhances the collective effectiveness of the
Board. Communication during the COVID-19 pandemic was
felt to be good. A number of practical suggestions to improve
the running of meetings were made and implemented. An
external facilitated Board evaluation was considered but not
felt it would be useful given the recent changes to the Board.

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 meetings.

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.

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

The Board is committed to ensuring appointments to the
Board promote diversity so that it has a range of perspectives,
experiences and backgrounds necessary to support good
decision making. Currently there is one female Board
member. The Board recognises the objective of 33% female
members of the Board and increasing ethnic diversity, within
the context of current Board size.

GOVERNANCES T A K E H O L D E R E N G A G E M E N T

Employees

Shareholders

Suppliers

Engagement with our key stakeholders is vital to building a
business that provides valued products and services to our
customers, that employees are proud to be part of and that
rewards shareholders.

The Board takes steps to understand the priorities and needs
of stakeholders when setting RM’s strategy and when making
decisions that are most likely to promote the long-term
sustainable success of the Company for the benefit of its
members as a whole. In doing so, the Board has had regard to
the matters set out in section 172 of the Companies Act 2006.

Examples of some of the principal decisions taken by the
Board during the year are set out below:

Customers

Customers are central in setting the strategy and direction for
the Company. It is therefore important to the Company to
manage actively its relationships with its customers through
regular contact in order to understand the products and
services that help them deliver their educational objectives.
This includes the range of products and services we provide
to support teachers in the classroom and the development
of examination and assessment software that improves the
efficiency and effectiveness of the assessment of learners.
The Board discusses at each meeting any issues arising in
relation to our key customers, the services we provide to
them and future changes to those relationships. This year
this has included support for customers as they move to
remote learning for many of their learners as well an increase
in online assessments. The Board also approves all major
new contracts.

The potential impact of the COVID-19 pandemic on our
customers in schools and examination authorities was
considered by the Board early in the crisis and we sought to
continue to supply customers with the products they required
and maintain the IT services of the schools we support so
that they could continue to stay open. We worked with
examination authorities when exams were delayed
or cancelled.

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 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. Further information is
provided in the Strategic Report.

Through monthly business unit briefings, regular senior
leader catch-up sessions with employees and staff surveys,
people at all levels of the organisation are given the chance
to ask questions and share their views on the business.
In addition, as a response to the COVID-19 pandemic, an
Employee Forum of approximately 40 employees was set up
to help review the impact of the pandemic on the business
and staff. Feedback from such employee engagements and
the Employee Forum was shared with the Board.

During 2020, Patrick Martell was appointed as the designated
Non-Executive Director for workplace engagement. A
timetable of activities was prepared for Patrick to engage with
employees in different settings and with employees across
the organisation. In this role, Patrick meets with groups of
employees in various formats including the Employee Forum
and the Senior Leadership Team to hear about and discuss
their experiences of working at RM. Patrick reports back to
the Board to help provide an insight into employee views and
priorities during Board discussions and decision-making.

The health and safety of employees is of paramount
importance to the Board. In response to the pandemic,
IT equipment was provided to help employees work from
home and our distribution centres were re-configured and
processes changed to ensure they were safe for all staff.
Training was rolled out to help employees understand the
health and safety aspects of home working and weekly
well-being and mental health drop-in sessions were set up.
Our distribution centres have remained in operation and
members of the Executive have regularly visited distribution
centres to review the operation of COVID-19 safety measures.

The Annual General Meeting is an important event attended
by all Board members and provides an opportunity for
shareholders to ask them questions directly. Due to the
COVID-19 restrictions, attendance at the last AGM was difficult.
Directors were though available to speak with institutional
shareholders on request and the CEO and Chairman have
done so this year.

During the year, investor events and results conference
presentations were held - face to face and virtually - to speak
directly to shareholders. In order to maintain dialogue with
institutional shareholders, the Executive Directors offer to
meet with them following interim and final announcements
of results, or otherwise, as appropriate.

The Board is kept appraised of the views of major
shareholders through regular dialogue with its broker and
other advisors and from the feedback provided by the
Executive Directors and Chairman respectively, following
meetings held with shareholders. Shareholder feedback
this year has covered strategy, dividends, succession and the
impact of COVID-19 and this forms a part of the discussions at
Board meetings. The impact of not paying dividends during
the year to shareholders was given significant consideration
by the Board, as was the decision to adjourn the Annual
General Meeting. The Board also receives regular updates on
shareholder register changes and analyst communications.

Regular review meetings are held with key suppliers to
help build a strong relationship. Reviews and audits are
made of suppliers to help ensure they are not involved in
modern slavery.

The Board reviews and discusses the 6 monthly payment
practices reports for all subsidiaries; the figures are available
at Companies House.

Environment/Communities

RM continues to be a trusted and reliable partner to schools
across the country and increasingly around the world. It was
important therefore during the COVID-19 pandemic for the
Company to ensure schools continued to receive the goods
and services they required to stay open.

The Board made the decision to pay back all the money it
had received under the Coronavirus Job Retention Scheme
once it was clear this additional financial support was
not needed.

The Company provided free of charge hundreds of home
learning materials and activities to UK schools during the first
national lockdown.

We participated in the DfE discussions held during the first
national lockdown on how to support schools to enable
vulnerable students to access online education tools. We
have also participated in the DfE cloud platform scheme to
help staff at schools to access information and systems while
working at home.

GOVERNANCEThe main features of the systems of internal financial
control include:

• A financial planning process with an annual budget

approved by the Board; the 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 overseen by the

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.

• Strategic planning that anticipates both opportunities and

any resource challenges.

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

Both the Board and Audit Committee have reviewed the
operation and effectiveness of this framework of internal
control for the period and up to the date of approval of the
Annual Report. Further details are provided in the Strategic
and Audit Committee Reports.

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. The Group 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 the framework for the Group’s internal
control, which have been effective during 2020 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.

The Directors have overall responsibility for establishing
financial and other reporting procedures to provide them
with a reasonable basis on which to make proper judgments
as to the financial position and prospects of the Group, and
they 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.

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

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

• Monitoring the integrity of the financial statements of
the Company and the Group including consideration
of whether the reporting is fair, balanced and
understandable, and applying the same assessment to
any formal announcements relating to the Company’s
financial performance.

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

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

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

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

• 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 approving remuneration
levels, terms of engagement, and implementing the
policy on non-audit services), assessing the auditor’s
independence and objectivity, monitoring the quality and
effectiveness of the external audit process, reviewing the
audit plan and reviewing the findings of the audit with
the Company’s auditor.

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

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

The Audit Committee reviewed and considered the
following areas:

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

• Whether the Group has followed appropriate

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

• The consistency of, and any changes to, accounting

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

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

• The effect of the introduction of IFRS 16 on the accounts of

the Group and the key judgements involved.

• The supporting assumptions and considerations behind
the adoption of the statements relating to going concern
and financial viability.

• The fair, balanced and understandable nature of the

Company’s financial report.

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

The Audit Committee considers that the significant
accounting judgements upon which the accounts are based
relate primarily to revenue recognition for long-term contracts
under IFRS 15. In these contracts the arrangements are often
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 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.

The Audit Committee received papers which included regular
updates on the key judgements and estimates arising on the
more complex and significant contracts in respect of IFRS 15.

The Audit Committee also considers that there is
considerable estimation in the assumptions used
in deriving the defined pension scheme valuations.
The Audit Committee reviews the key assumptions
proposed by the Group’s actuaries which include:

• CPI/RPI rates

• Mortality rates

• Discount rates

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 2020 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

At the start of the year the Audit Committee comprised
Deena Mattar, FCA (Chairman), Andy Blundell and
Patrick Martell, all of whom were independent Non-Executive
Directors. On 4 February 2020 Paul Dean FCMA was
appointed as Chairman of the Audit Committee, and on the
same date Deena Mattar resigned as Chairman of the Audit
Committee. Andy Blundell resigned on 24 May 2020 and
Deena Mattar resigned on 31 July 2020. Vicky Griffiths was
appointed to the Audit Committee on 1 July 2020. The Group
considers that Deena Mattar (as a Fellow of the Institute of
Chartered Accountants in England and Wales and former
FTSE250 Finance Director) and subsequently Paul Dean (as
a Chartered Management Accountant and former FTSE250
Finance Director) have 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 four 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 or in connection
with the audit tender process.

Audit Committee meetings have formal agendas, which cover
all of the areas of responsibility set out in the Committee’s
terms of reference and also include an evaluation of the
Audit Committee. 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
6 April 2020, the re-appointment of KPMG LLP as Group
external auditor.

KPMG has been the Group’s auditor since 2011 which was
when the previous 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.
Following a new internal appointment within KPMG LLP, John
Bennett stepped down as lead audit partner after the interim
results were presented and Robert Seale was appointed as
the new lead audit partner.

During the year the Group conducted a formal competitive
and comprehensive audit tender process led by the Audit
Committee. The Board has approved the Audit Committee
recommendation that Deloitte LLP be appointed as external
auditor for the financial year ending 30 November 2021.
KPMG LLP remained as the external auditor for the financial
year ended 30 November 2020.

There are no contractual obligations restricting
the Group’s choice of external auditor, other than
PriceWaterhouseCoopers LLP (who were not independent as
a result of working on RM’s ERP programme).

The Audit Committee were comfortable that the current audit
partner from KPMG and the proposed audit partner from
Deloitte are independent from the Group. This assessment is
based on internal review of relations and confirmation by the
audit firms themselves.

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

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

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

The Audit Committee approved the continuation 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 financial controls include controls to address
fraud risks (and there have been no material fraud instances
during the year). 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. The external auditor does not rely on internal
audit to substitute any audit work required to form their
opinion on the financial statements.

Whilst on-site internal audit activities have been reduced due
to COVID-19 pandemic impacts, we have continued routine
audits that review adherence to our agreed controls and
processes in our India subsidiary and have completed audits
of our RM Resources inventory and procurement processes,
both performed by external audit firms.

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 to the Company 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 6.3% of the annual
audit fee, which relates to the Banking Facility Covenant
Compliance review and the Interim Review. These activities
are required to be performed by the auditor.

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

Control environment

The Board has put in place an organisational structure with
clearly defined lines of responsibility and delegation of
authority to Executive management. A Group-wide approval
matrix is in place. Individuals are made aware of their level
of authority and their budgetary responsibility which enables
them to identify and monitor financial performance. There
are established policies and procedures, which are subject
to regular review. 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 issued.

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 against the previous year to identify any
significant variances. Forecasts are produced each month
during the year, with variances to budget being measured.

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.

Paul Dean
Chairman, Audit Committee
11 February 2021

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 anonymously about
possible improprieties. No concerns were raised during the
year. Any matters raised would be independently investigated
and any actions required followed-up and reported to
the Board.

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.

GOVERNANCER 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 2020.

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 2020.

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 policy
on Executive Director remuneration and setting the
remuneration of the Chairman, Executive Directors and
Executive. The Committee receives regular updates on
remuneration and related policies across the Group and is
aware of how the remuneration of Directors compares to
other employees. In particular, the Committee keeps under
review incentive plans to ensure these plans are structured
appropriately and are consistent.

During the year, the Committee reviewed its own terms
of reference to determine whether its responsibilities
were properly described. The amended terms were
formally updated on 23 October 2020. 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 2020 comprised Patrick Martell
(Chairman), Andy Blundell, Paul Dean, Vicky Griffiths, Deena
Mattar and John Poulter, at such times as they were members
of the Board. The members of the Committee comprise the
independent Non-Executive Directors and the Chairman of
the Board. 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.

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 matters and decisions were
considered by the Committee:

• Agreement of the bonuses payable in respect of the

financial year ended 30 November 2019; although the
target was met, after considering the bonuses to be paid
to the workforce, the Executive Directors were awarded a
reduced bonus of 45% of base salary.

• Approval of the Remuneration Report for the year ended

30 November 2019.

• The grant of LTIP awards to senior executives in March 2020.

• Workforce remuneration was considered in setting

Executive Director remuneration in January 2020 and no
pay increases were awarded to Executive Directors, in line
with the wider workforce.

• David Brooks tendered his resignation in 2020 and is

accordingly treated as a Voluntary Leaver for the purposes
of the termination policy in the Remuneration Policy and
no payments for loss of office are being made.

4 . P R O P O S E D N E W
R E M U N E R A T I O N P O L I C Y

5 . 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 Committee reviewed the existing Remuneration
Policy which was last voted on at the 2018 Annual General
Meeting. In doing so the Committee addressed the matters
set out in provision 40 of the Code, see paragraph 1 of
the Remuneration Policy, and current best practice. The
Committee also considered the impact of the COVID-19
pandemic and the difficulty this has created in setting
long-term performance measures.

The views of the workforce on Executive Director
remuneration were not expressly sought but employees were
kept updated on the salary/fee sacrifice of the Board and
Executive during the COVID-19 pandemic and remuneration
generally. The Committee considered investor feedback
and the overwhelming support for the Remuneration Report
in the voting results at the Annual General Meeting and the
Remuneration Policy when it was last voted on. Voting figures
are in paragraph 9 of Part C of this report.

No remuneration consultants were engaged during the
year. Benchmarking data on Executive Remuneration in the
FTSE SmallCap market data provided by a specialist executive
remuneration consultancy was reviewed and the Company
is broadly aligned with the lower quartile for FTSE SmallCap
companies; no fees were paid for such data and the
consultants do not have any other connection with the
Company or individual Directors. The Committee is satisfied
the data is objective and independent.

The Committee considered workforce remuneration and
policies in its review of the current Remuneration Policy
and their alignment with rewards and incentives offered
in Executive Director remuneration. Benefits and pension
entitlements are the same for Executive Directors as for
the majority of the workforce and the Committee reviewed
various internal measures including pay ratios and pay gaps
in reviewing salaries and variable pay.

The policy was therefore considered to be appropriate and
operating as expected; supporting the Company’s strategy
and long-term goals. The main proposed changes to the new
policy are set out in paragraph 1 of the Remuneration Policy
and have been made to comply with the Code.

The key remuneration outcomes during or in relation to the
year ended 30 November 2020 were as follows:

• On 11 March 2020, the LTIP award granted in March 2017
vested in full. The vesting of that award was subject to
performance measures set out in paragraph 1 of Part C of
this report.

• LTIP awards granted on 16 March 2020 were based on the
share price before the impact of the COVID-19 pandemic.
No adjustment has been made for the smaller number of
options awarded at the higher share price.

• The Board members and Executive Committee

members agreed to take a salary/fee reduction of 25%
and 20% respectively for 6 months from April 2020 to
September 2020 in support of actions by the Company
to conserve cash.

• No performance targets have been altered during the year
due to the impact on trading of the COVID-19 pandemic.

• No pay rises were awarded to Executive Directors for the
year ended 30 November 2020. The average pay rise
across the wider workforce was 1.6%.

• No bonus was due to Executive Directors for the year
ended 30 November 2020, a discretionary bonus of
up to 1% has been paid to the wider workforce.

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

The Committee considers that the overall pay outcome for
the year ended 30 November 2020 is justified given the overall
performance of the business, in the context of the impact
of the COVID-19 pandemic, and the performance of the
Executive Directors.

Patrick Martell
Chairman, Remuneration Committee
11 February 2021

GOVERNANCE

P A R T B – R E M U N E R A T I O N

P O L I C Y

This new Remuneration Policy shall become effective
immediately following the 2021 Annual General Meeting,
subject to its approval at that meeting.

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 support the strategy
and 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 and workforce remuneration.
The Chairman of the Remuneration Committee is available
to discuss remuneration with shareholders as required.
The policy should ensure that the payments made to
Executives reflect their performance, are not excessive and
are aligned with the purpose and values of the Company.

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

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

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

Part A of this report contains information on the
decision-making process in respect of the new policy.
The main changes to the policy have been made to comply
with the Code. These changes are the introduction of a 2 year
post-termination minimum shareholding policy for Executive
Directors and revision to the circumstances when malus,
clawback and discretion may be exercised.

No Director should be involved in deciding their own remuneration.
The members of the Remuneration Committee shall not have any
personal financial interest in the Company other than through fees
received or as a shareholder. Furthermore, they shall not be involved
in the day-to-day running of the business and shall have no personal
conflict of interest which could materially interfere with the exercise of
their independent judgement or discretion.

The engagement of any third party remuneration consultant
is the responsibility of the Remuneration Committee and their
appointment must be objective and independent.

Section 40 disclosures

Clarity

Simplicity

The disclosures related to the remuneration and the performance metrics for
LTIPs are clear.

Remuneration for Directors and the workforce are simple and well understood.

Risk of excessive reward, proportionality

Bonus and LTIPs awards are linked to performance, have stretching targets with
low percentage pay-outs at threshold and are subject to discretion.

Predictability

Maximum opportunities are set out in the policy.

Alignment with Culture

Metrics for awards are closely aligned to strategy. The shareholding policy and holding
periods provide a clear link to long-term performance and shareholder alignment.

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 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, their operation, the maximum opportunity available and the nature of any applicable performance metrics.

Element

Fixed Pay

Base Salary

Purpose and
link to strategy Operation

Maximum
opportunity

Performance
metrics

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

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

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

None.

Base salaries will
be determined
as outlined in
the "Operation"
column opposite.1

Pension2

Benefits

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

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 the majority of the
UK workforce within the Group. Cash allowance
alternative is offered where individuals are subject to
HMRC pension limits (subject to there being the same
overall cost to the Group).

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

None.

Pension benefits will not be augmented on exit.

The benefits are the same as for the majority of
employees within the Group and are reviewed
periodically to ensure that offerings are in line with
market practice.

The cost of such
benefits varies in
accordance with
market conditions.

None.

The main benefits are: private healthcare3,
group income protection, life assurance,
car allowance, mobile phone allowance,
enhanced family leave and sick pay.

Other benefits may be added or removed in line with
benefits awarded to the majority of employees.2

GOVERNANCEElement

Purpose and link to strategy Operation

Maximum opportunity

Performance metrics

Variable Pay

Annual Bonus

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

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:

reflect expectations of the investor community;

• be stretching but realistic;
•
• avoid unnecessary risk-taking; and
• encourage long-term planning and decision-making.

The Remuneration Committee has discretion, where it believes it to be appropriate,
to override the formulaic outcome arising from the annual bonus plan.5

Annual bonuses are subject to malus and clawback provisions (see further overleaf).5

Annual bonuses are not pensionable.

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.

Performance measures and weightings are set by the
Committee at the beginning of each year as outlined in
the “Operation” column opposite. Typically, they relate to
profit but may be other financial and strategic measures.4

Any bonuses more than 100% of base salary will be paid in the form of
shares that must be held for a minimum of 2 years (on the same basis
as LTIP vested shares subject to a holding period).

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

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

LTIPs

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

Awards (nil cost options or share 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.

200% of base salary per annum.

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

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 and been exercised, dividends or dividend equivalents
can be paid on the relevant shares.

LTIP awards are subject to the Remuneration Committee’s discretion, where it believes
it to be appropriate, to override the formulaic outcome arising from the LTIP.5

LTIP awards are subject to malus and clawback provisions (see further below).5

LTIP awards are not pensionable.

LTIP awards vest on a change in control of the Company, subject to assessment
by the Committee at the time as to the level of vesting (if any) that is appropriate,
considering (among other things) the extent to which the relevant performance
targets have been met and how much of the relevant performance period(s) has
passed. Awards subject to a holding period shall be released from this.

Performance measures and weightings are set by the
Committee at the date of grant to align with shareholders’
interests. These will normally be measured over a 3 year
period and may include EPS, TSR and other financial,
strategic or shareholder return measures.4

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.4

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

Notes:

1. There is no maximum base salary or maximum for any of the benefits.

3. The CFO is also provided with a private healthcare package for his immediate family.

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

4. The LTIP performance measures for LTIP awards are set out in paragraphs 2 and 11 of Part C of this report.

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.

Details of the expected measures for 2021 are set out in paragraph 8 of Part C.

5. These new provisions apply to bonuses paid and LTIPs granted after the date of this policy’s commencement.

GOVERNANCEThe following table sets out a summary of the various components of remuneration for Non-Executive Directors, their purpose and link
to strategy, its operation, the maximum opportunity available, the nature of any applicable performance metrics.

Element

Fixed Pay

Fee

Purpose and
link to strategy

Operation

Maximum
Opportunity

Performance
Metrics

None.

The maximum total
remuneration payable
to a Non-Executive
Director including the
Chairman is £160,000
per annum.

To reward
individuals for
fulfilling their roles
and attract good
candidates.

The Committee makes recommendations to
the Board on the Chairman’s remuneration.
The Chairman and the Executive Directors
determine the remuneration of Non-Executive
Directors. Remuneration data is considered during
the process, including fees paid for comparable
roles in companies of a similar size and complexity
as the Company.

The Chairman is paid a single fee. Other
Non-Executive Directors are paid an annual fee
covering Board and Committee membership, with
Committee chairs, the Senior Independent Director
and the designated HR representative receiving
an additional fee.

1. The annual and additional fees for additional responsibilities are paid monthly.

2. Fees were last reviewed during the year ended 30 November 2018 and increased to be more in line with current market rates.

3. Fees are not performance-related but reflect the time commitment and responsibilities of the role.

4. Out-of-pocket expenses (such as travel costs) incurred in performing those duties are reimbursed by the Company.

5. Remuneration for Non-Executive Directors does not include share options or other performance-related elements.

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

The Committee has implemented the following shareholding policy for all Executive Directors 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 appointment 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.

3. For a one year period after termination of employment, Executive Directors are required to retain ordinary shares in the Company

equivalent in value to the lower of 100% of their base annual salary and the Executive Director’s actual shareholding on termination of
employment. This only applies in respect of shares owned as a result of LTIP awards granted after the implementation of this policy.

4. The Committee has the discretion to waive the above requirements when the Committee considers appropriate.

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 Director will be in accordance with the
Remuneration Policy in place at the time of the appointment.

In respect of Executive Directors: 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 likelihood of performance requirements being met in respect 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.

Whilst the Nomination Committee may hold initial
discussions with prospective candidates on remuneration,
the Remuneration Committee will formally decide on the
remuneration arrangements.

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 Committee
can reduce the payment of any bonus payment if
they consider that there is any reason that makes it
appropriate to do so. This includes (without limitation)
the circumstances applicable to clawback as outlined
below but could also include any other matters that the
Committee considers appropriate; and

the clawback applies where the bonus payment
was based on erroneous or misleading data or any
misstatement of accounts, misconduct by an Executive
Director, or the Group suffers serious reputational damage
or corporate failure (‘Serious Grounds’). The clawback
operates for a period of up to 18 months after the end of
the relevant financial year to which the bonus relates, or if
longer any holding period.

In respect of each award under the LTIP Schemes:

•

the malus applies when there are any Serious Grounds
or any other circumstances where, in the reasonable
opinion of the Committee, the malus provisions should be
operated in relation to that Participant; and

the clawback applies where there are any Serious Grounds
where in the reasonable opinion of the Committee,
the clawback should be operated in relation to that
Participant. The clawback under the LTIP Scheme
operates to the later of (a) one year from the relevant LTIP
award vesting and (b) the completion of the next audit of
the Group’s accounts after the award vests.

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. The changes to the
malus, clawback and discretion provisions of this policy
shall not apply in relation to LTIP and bonus awards made
before the adoption of this Remuneration Policy. 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.

• When it believes it is appropriate, overriding the formulaic
outcome, either upwards or downwards, applicable to
the LTIP or bonus scheme, discretion will only be applied
in exceptional circumstances and will be explained to
shareholders in the following Remuneration Report.

• Amendments to 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 expectations
of shareholders.

GOVERNANCE8 . 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

9 . 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

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 2021. 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 59% of base salary for David Brooks and 60% of base salary for Neil Martin). The
illustrations for LTIP awards assume (i) the position that there is no change in share price between the date of grant of an award and the
date of vesting and (ii) the effect of a 50% increase in the share price over this period.

Chief Executive Officer

£000

1,800

1,600

1,400

1,200

1,000

800

600

400

200

Minimum

On-target

Maximum

+50%

LTIPs

Variable Pay

Fixed

Base

Benefits

Pension

Total

Minimum (£000)

365

On-target

On-target is assumed to be an annual

400

738

bonus equal to 55% (on target) of

base salary and an LTIP vesting of

25% (threshold) of maximum

Maximum

Full pay-out of annual variable pay

1,349

i.e., 110% of base salary

Maximum vesting of LTIP awards

Maximum

As above for maximum plus

1,623

+50% share

50% share price growth over the

price growth

performance period

The respective proportions for the fixed, variable and LTIP components are:

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

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

Employees are provided with a competitive benefits package including (as appropriate) private healthcare, group income protection,
life assurance, car allowance and mobile phone allowance. Pension contributions of up to 7% of base salary depending on employee
contribution rates are provided for the majority of UK employees. 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 the
performance of their operating subsidiary and the Group overall.

Members of senior management participate in long-term incentive arrangements based on the same performance measures as the
Executive Directors.

1 0 . 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. In exceptional circumstances, a longer notice period initially,
reducing down to 12 months, to secure the appointment of an external recruitment may be agreed.

Details of the Directors’ service contracts and/or letters of appointment who served for all or part of the year ended 30 November 2020
are shown in the table below:

Minimum: 100% fixed pay. On-target: 54% fixed pay, 27% variable pay & 19% LTIPs. Maximum: 30% fixed pay, 30%, variable pay & 40% LTIPs.

Maximum with 50% share price growth: 25% fixed pay, 25% variable pay & 50% LTIPs.

Initial agreement date

Expiry date of
current agreement

Notice to be given
by employer and individual

Chief Financial Officer

£000

1,800

1,600

1,400

1,200

1,000

800

600

400

200

Minimum

On-target

Maximum

+50%

LTIPs

Variable Pay

Fixed

Base

Benefits

Pension

Total

Minimum (£000)

298

On-target

On-target is assumed to be an annual

334

610

bonus equal to 55% (on target) of

base salary and an LTIP vesting of

25% (threshold) of maximum

Maximum

Full pay-out of annual variable pay

1,109

i.e., 110% of base salary

Maximum vesting of LTIP awards

Maximum

As above for maximum plus

1,332

+50% share

50% share price growth over the

price growth

performance period

The respective proportions for the fixed, variable and LTIP components are:

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

Maximum with 50% share price growth: 25% fixed pay, 25% variable pay & 50% LTIPs.

John Poulter

Andy Blundell

David Brooks

Paul Dean

Vicky Griffiths

Neil Martin

Patrick Martell

Deena Mattar

1 May 2013

25 May 2017

1 July 2012

30 April 2022

24 May 2020

Indefinite

4 February 2020

3 February 2023

1 July 2020

28 September 2015

30 June 2023

Indefinite

1 January 2014

31 December 2022

1 June 2011

31 July 2020

6 months

3 months

12 months

3 months

12 months

3 months

GOVERNANCE1 1 . P O L I C Y O N T E R M I N A T I O N

All Non-Executive Directors have letters of appointment with the Company for an initial period of three years, subject to
annual re-appointment at each Annual General Meeting. Notice periods are as set out in paragraph 10 above.
No compensation is payable on termination, other than any accrued fees and expenses.

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

‘Good Leaver’

Voluntary Resignation

‘Bad Leaver’

Circumstances
of departure

Salary and benefits
for notice period

Typically termination for cause.

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

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

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

Immediate termination with
no notice period.

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

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

‘Good Leaver’

Voluntary Resignation

‘Bad Leaver’

Unvested LTIP awards

Normal circumstances

Forfeited.

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

All awards will be time pro-rated.

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

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

All awards will be time pro-rated.

Normal circumstances

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

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

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

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

Vested LTIP awards
subject to a
holding period

Other

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

Forfeited.

None.

Bonus accrued prior
to termination

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

Any bonus award that is held as
shares that are subject only to a
holding period will be released in
full to the Executive at the end of
the holding period.

No accrued bonus is payable.

Any bonus award that is held as
shares that are subject only to a
holding period will be released in
full to the Executive at the end of
the holding period.

The Committee reserves the right to make additional exit payments to an Executive Director where such payments are made in
good faith to discharge an existing legal obligation (or by way of damages for breach of an obligation) or by way of settlement or
compromise of any claim arising in connection with the termination of office or employment.

GOVERNANCE
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

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 2020 and, in
respect of those Directors, the equivalent figures for the year ended 30 November 2019:

Salary/fees

£000

Taxable

benefits

£000

Annual

bonus

£000

LTIPs

Retirement

Termination

(vested)

benefits

payments

£000

Total

£000

Total

Fixed

£000

Total

Variable

£000

Name

20202

2019 2020

2019 2020 2019 2020

2019

Executive

David Brooks

3191

3581

Neil Martin

2611

2971

Non-Executive

John Poulter

118

135

Andy Blundell3

Paul Dean3

Vicky Griffiths3

Patrick Martell4

Deena Mattar3

Total

Notes:

161

438

134

400

241

211

231

211

792

553

354

392

438

161

697

467

297

333

400

134

118

135

118

135

827

923

295

838

0 1,736 1,288

898

993

838

295

LTIPs:

LTIP awards that vested in 2020

On 11 March 2020, the award granted to David Brooks and Neil Martin under the PSP Scheme in March 2017 vested in full, reflecting
the extent to which the performance criteria were met. Each performance criteria was equal to 50% of the award. The performance
criteria was based on (1) the Company’s relative TSR performance measured from the average of the FTSE SmallCap (ex. Investment
Trusts) Index during January and February 2017 to the average of the Index during January and February 2020. The Company’s
performance placed it at the 86th percentile. Vesting was based on a straight-line scale between 25% vesting at the 50th percentile
and 100% vesting at the 75th percentile (or above); and (2) the Company’s growth in adjusted earnings per share (EPS) between the
year ended 30 November 2016 and the year ended 30 November 2019. Vesting was based 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. The earnings per share criteria. As the accounting basis in FY17 was different from the accounting basis in FY19 in
respect of two areas (Share Based Payments (SBP) and IFRS 15), in order to make the FY19 EPS consistent with calculations at the
time of the award, the following adjustments were made: (1) the pre-tax SBP charges of £0.7m were added to FY19 figures (they were
previously treated as exceptional); (2) the tax rate of 19% was used (as the rate applicable to SBP to determine the tax adjustment of
SBP), and (3) the post-tax IFRS 15 profit adjustment of £1.243m was added. This adjusted the EPS from 26.4 pence to 28.57 pence.

Based on the above performance criteria, all the award vested and no discretion was exercised.

As such, 175,000 Options vested for David Brooks and 160,000 Options vested for Neil Martin. Based on the share price as at the
date of vesting (250 pence), the value of the award at that date for David Brooks was £437,500 and for Neil Martin was £400,000.
While that figure is shown in the table above, neither Mr Brooks nor Mr Martin have exercised those Options and so have not
actually realised that value. The actual value each will receive will depend upon the value of those Options as at the date they
are exercised. Those Options are exercisable until 29 October 2027.

Compared to the share price used to calculate the number of shares granted (185 pence), this represents a 35% share price
increase since the grant date to the end of the performance period. The Committee is satisfied that the implied values vesting to
Executive Directors and the overall single figures of remuneration for the year are appropriate taking into account the performance
of the Company. No discretion has therefore been exercised for the change in share price. The amount of the award attributable to
share price appreciation for David Brooks is £113,750 and for Neil Martin is £104,000. No cash dividend payment is due on vesting.

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

LTIP awards that vest in 2021

2. The Board members agreed to take a salary/fee reduction of 25% for 6 months from April 2020 to September 2020 and the salary/fees figures

above show the reduced amount paid in 2020.

3. The fees shown are a pro-rata proportion of the fee for Directors who have stepped down or been appointed during the year.

Includes a pro-rata proportion of the fee for the role as designated NED for HR.

5. The table has been audited.

The following provides details of how the ‘single figure’ has been calculated:

Taxable benefits:

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

Annual bonus:

At the start of the year, the Committee decided that on-target bonuses for the year ending 30 November 2020 for Executive Directors
would be based upon the Company achieving an adjusted profit before tax in the year of £27.8m with a threshold of £26.6m,
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 it was as a result of an abnormal or unplanned level of movement in work-in-
progress or as a result of exceptional items.

The Committee considered the Company’s performance relative to that target. Group operating profit before tax was £14.4m.
In light of that performance, the Committee determined that no bonus would be due.

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.

The LTIP award granted to Neil Martin in March 2018 will vest in March 2021. The targets for this award are set out in
paragraph 11 of this Part C. The EPS target will not be met and no options will vest for this part of the award. The TSR target
cannot be determined yet but is currently expected to partially vest. Details of the amount that vest will be contained in the
Remuneration Report next year. The award granted to David Brooks in March 2018 was forfeited when he resigned.

Past Directors:

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

Retirement benefits:

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

David Brooks is also a member of RM Education Ltd’s defined benefit pension scheme which closed to future accrual with effect from
31 October 2012. During the year, the increase in Mr Brooks’ accrued pension under that scheme was nil. The transfer value of accrued
benefits under that scheme as at 30 November 2020 was £1,092,977 (2019: £1,010,010). Mr Brooks’ normal retirement age is 60.

Termination payments:

There were no termination payments in the year.

GOVERNANCE2 . 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

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

During the year ended 30 November 2020, the following long-term incentive awards were made.1

Type of
share
award

Nil cost
Option1

Name

David
Brooks2

Neil Martin

Nil cost
Option1

Face value
of award
£000

Grant date

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

16 March 2020

2153

12.5% for EPS element

n/a

February 2023

12.5% for TSR element

16 March 2020

1803

12.5% for EPS element

n/a

February 2023

12.5% for TSR element

A summary of
performance targets
and measures

50% on EPS
performance4

50% on relative TSR
performance5

50% on EPS
performance4

50% on relative TSR
performance5

Notes:

1. Awards granted under the PSP Scheme.

2. The awards granted to David Brooks in March 2020 were forfeited when he resigned.

3. The face value of the award has been calculated by multiplying the maximum number of shares in the award

(125,000 shares for David Brooks and 105,000 shares for Neil Martin) by the share price on the date of grant of the award
(171.5 pence). The exercise price per share of £0.00.

4. Fifty percent of the award is 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 respectively.

5. Fifty percent of the award is 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 SmallCap (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%).

6. This table has been audited.

The following graph shows the value, by 29 November 2020, of £100 invested in RM plc on 30 November 2010 compared with the value
of £100 invested in the FTSE SmallCap (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

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

RM plc

FTSE SmallCap Index (ex. Investment Trusts)

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

The table below sets out details of:

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

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

20111

20122

20133

2014

2015

2016

2017

2018

2019

2020

426

286

379

576

1,246

655

713

982

553

58%4

75%

50%

45%

73%

64%

41%

792

91%

100%

36%

100%

N/A⁵

100%

Single figure (£000)

Annual variable element award rates
against maximum opportunity

Long-term incentive vesting rates
against maximum opportunity

Notes:

1. Terry Sweeney to 24 October 2011 (single figure: £369,000).

Rob Sirs from 25 October 2011 to 30 November 2011 (single figure: £57,000).
2. Rob Sirs from 1 December 2011 to 31 January 2012 (single figure: £49,000).

Martyn Ratcliffe from 1 February 2012 to 30 November 2012 (single figure: £237,000).
3. Martyn Ratcliffe from 1 December 2012 to 28 February 2013 (single figure: £52,000).

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

4. Relates to David Brooks only. Martyn Ratcliffe had no annual variable remuneration.
5. During the year none of the Group’s LTIPs were due to vest.

GOVERNANCE5 . 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 2020 and the immediately preceding financial year,
the total remuneration paid to all employees as compared to other significant distributions and payments.

Total remuneration to employees1

Total remuneration to Directors

Dividends paid

Corporation tax paid

Defined benefit pension cash contribution

Notes:

1. Excludes remuneration paid to Directors.

2020
£m

60.7

0.9

Nil

2.6

4.1

2019
£m

67.2

1.3

6.3

3.6

4.6

For the year ending 30 November 2020, due to COVID-19, the CEO’s single figure has been impacted by a voluntary pay reduction of
25% for 6 months and reduced variable pay due to business performance.

Year

2020

Method

25th Percentile Pay Ratio

Median Pay Ratio

75th Percentile Pay Ratio

14.9:1

10.7:1

7.1:1

The table below provides further information on the total remuneration figure used for each quartile employee, and the salary
component within this.

Year

25th Percentile

2020

Salary

2020

Total pay

Notes:

£22,000

£23,811

Median

£30,875

£33,164

75th Percentile

£35,000

£50,174

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 S

1. Option A was chosen as the statistically most accurate calculation. The total remuneration on a full-time equivalent basis as at

The following table sets out the percentage change for the following elements of remuneration paid to Directors and UK employees
during the year ended 30 November 2020.

Remuneration

Salary/fees

Taxable benefits

Annual bonus

Notes:

UK Employees

2.03%

2.01%

CEO

-0.81%

-34.02%

-100%

CFO Other Directors

-0.47%

-100%

N/A

1. The comparator group for changes in base salary, benefits and bonus on a full-time equivalent basis comprises all the Group’s

employees in the UK (excluding Directors).

2. The elements of remuneration have been calculated in the same way as the single figure of remuneration.

The mean average has been used.

3. Salary sacrifices by the Executive Directors due to COVID-19 pandemic have been ignored for the purposes of this table.

4. Bonus includes annual bonus and commission only and not any other non-performance related payments made to employees

(e.g. Christmas bonuses, long service awards). Bonuses in this paragraph 6 relate to those actually paid in respect of the year ended
30 November 2020.

7 . C E O P AY R A T I O

Executive

David Brooks

Neil Martin

Non-Executive

30 November 2020 for all UK employees was calculated and employees ranked accordingly.

In light of FY20 financial performance, the bonus was set as zero. In future years, the bonus calculation for employees will be
estimated based on their full-time equivalent target bonus due to the limited time between the end of the financial year and the
publishing of the Annual Report.

3. Full-time equivalent P11D values for benefits such as Private Medical Healthcare have been used for anyone in receipt of the

particular benefit as at 30 November 2020.

4. Pension values are not calculated on the same basis as the CEO’s figure, but rather based on the employer contribution as a

percentage of salary as at 30 November 2020. This approach allows meaningful data for a large group of individuals to be obtained
in a more efficient way.

5. The ratio is considered consistent with the roles and responsibilities of the CEO and those of employees.

8 . S T A T E M E N T O F I M P L E M E N T A T I O N

Salary and fees: Since the start of the financial year, having applied the principles set out in the table above, the Committee has
decided not to increase the base salary of David Brooks and Neil Martin or the fees for Non-Executive Directors. The base salary and
fees of Directors at the date of this report is:

The following table sets out the CEO pay ratios for the year ended 30 November 2020. This compares the Chief Executive Officer’s
total remuneration (as shown above in paragraph 1 of this Part C) with the equivalent remuneration for the employees paid at the
25th (P25), 50th (P50) and 75th (P75) percentile of RM's UK workforce. The total remuneration for each quartile employee, and the salary
component within this, is also outlined in the table below.

Chairman (including the Chair of Nomination Committee)

Senior Independent Director (additional fee)

Chair of Committee/Designated NED for HR (additional fee)

Our median for all employee to CEO pay ratio is 10.7:1 which the Committee considers is within a reasonable range considering the
structure and nature of our business. A large proportion of the CEO’s pay is in the form of variable pay through the annual bonus and
long-term incentive plan which link to and are therefore impacted by business performance.

Non-Executive Director base fee

Notes:

1. This is an annual rate. David Brooks will receive his salary up to 31 March 2021.

£000

3651

298

135

GOVERNANCEBenefits and pension benefits: These are expected to remain unchanged, as stated in paragraph 1 above.

1 1 . 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

Bonus: The structure and operation of the bonus for the year ending 30 November 2021 will be the same as during 2020.
The bonus opportunity, as per the Remuneration Policy, will be 55% of base salary expected to be paid for on-target performance,
up to a maximum of 110% of base salary.

LTIPs: It is anticipated that, during the year ending 30 November 2021, an award will be made to the new CEO and Neil Martin,
under the RM plc Performance Share Plan 2019. Those awards will be of options with an exercise price of £0.00 and the face value
of the awards will be c.100% of base salary.

Performance measures for the bonus and LTIPs: The Board have considered performance measures and targets for the bonus and
LTIP for the year ending 30 November 2021. Specifically, they have considered performance measures and targets based on those
used in recent years. The Board has however decided to delay setting these due to the uncertainties created by the impact of the
COVID-19 pandemic. Financial targets will be set when the Board has a clearer view of realistic and stretching targets that satisfy the
requirements of the Remuneration Policy. It is the intention of the Board to set these as soon as circumstances permit. These will be
disclosed in next year’s Annual Report.

9 . 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 26 March 2020 in respect of the Remuneration Report for the year ended
30 November 2019, and at the Annual General Meeting held on 27 March 2018 in respect of the Remuneration Policy was as follows:

Resolution to approve the Remuneration Policy in 2018

Resolution to approve the Remuneration Report in 2020

1 0 . 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%

98.57%

% of votes
against

Number of votes
withheld

0.01%

1.43%

506,109

1,140

The beneficial interests of the Directors including connected persons in the ordinary shares of RM plc as at 30 November 2020 were:

Holding as at
30 November 2020

Current holding
as % of base salary1

Shareholding
policy met2

Holding as at
30 November 2019

87,500

440,878

20,000

2,900

5,000

115,416

302%

95%

Yes

87,500

440,878

5,000

115,416

John Poulter

David Brooks

Paul Dean

Vicky Griffiths

Patrick Martell

Neil Martin

Notes:

1. Calculated based on the average share price for the period 1 December 2019 to 30 November 2020 (£2.23) and base salaries as at

1 January 2021.

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 2020 and the date of this report.

As at 30 November 2020, the Executive Directors had the following interests in the Company’s share plans1:

PSP Awards2

David Brooks3

Date of Grant

13 March 2018

14 March 2019

16 March 2020

Neil Martin

Notes:

No. of Shares/Options

Performance Conditions

No. of Shares/Options

Performance Conditions

135,000

122,000

105,000

See notes 4, 5 and 6

See notes 4, 7 and 8

See notes 4 and 9

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

(Accounts and Reports) (Amendment) Regulations 2013, the figures in the above table do not include the shares or share-based
awards referred to in paragraph 1 of this Part C or in the table in paragraph 10 of this Part C.

2. Granted under “The RM plc Performance Share Plan 2010” and from 16 March 2020 under the

“RM plc Performance Share Plan 2019”. All PSP awards are subject to a minimum vesting period of 3 years.

3. The awards granted in 2018, 2019 and 2020 to David Brooks were forfeited when he resigned.

4. The PSP awards granted in 2018, 2019 and 2020 were awards of options, with an exercise price of £0.00 per option. 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. If the options granted in March 2020
vest, they would be exercisable in the period 15 March 2022 to 14 March 2030.

5. Fifty percent 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.

6. Fifty percent of the award is based on the Company’s relative TSR performance which shall be measured against the average of the
TSR performance of the companies within the FTSE SmallCap (ex. Investment Trusts) Index (Comparator Group) during January
and February 2018 to the average during January and February 2021 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 25% vesting at the 50th percentile and
100% vesting at the 75th percentile (or above).

7. Fifty percent 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.

8. Fifty percent of the award is based on the Company’s relative TSR performance which shall be measured against the average of the
TSR performance of the companies within the FTSE SmallCap (ex. Investment Trusts) Index (Comparator Group) during January
and February 2018 to the average during January and February 2021 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 25% vesting at the 50th percentile and
100% vesting at the 75th percentile (or above).

9. The performance conditions and other information relevant to these awards are set out in paragraph 2 (Directors’ long-term

incentive plans) above.

GOVERNANCE1 2 . 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

1 4 . 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

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

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

1 3 . 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. No external
advice or services have been received during the year.
External benchmarking data has been provided by the
HR Department and the Company Secretary provides advice
to the Nomination and Remuneration Committees on
Service Agreements.

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). 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 paragraphs of
this Part C of this report have been audited by KPMG LLP:

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

• Total pension entitlements, as described in the notes to

paragraph 1.

• Directors’ shareholdings, as set out in paragraph 10.

• Directors’ interests in share plans, as set out in

paragraphs 1, 2 and 11.

• CEO Pay Ratio set out in paragraph 7.

By Order of the Board

Patrick Martell
Chairman, Remuneration Committee
11 February 2021

1 . T H E N O M I N 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:

• Evaluating the balance of skills, experience, knowledge,
independence and diversity on the Board, drawing up
selection criteria for Board appointments, and identifying
and nominating candidates for Board positions.

• Ongoing succession planning and appointment

procedures for Board and Executive level appointments.

• Overseeing the development of a diverse pipeline for

succession for the Board and Executive.

During the year, the Committee reviewed its own terms of
reference to determine whether its responsibilities were
properly described. The amended terms were formally
updated on 23 October 2020. 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 Nomination Committee during the
year ended 30 November 2020 comprised John Poulter,
Patrick Martell and, while they were Non-Executive Directors,
Andy Blundell, Deena Mattar, Paul Dean and Vicky Griffiths.
The members of the Committee comprise the independent
Non-Executive Directors and the Chairman of the Board. The
other Directors attend meetings as and when required and
by invitation. While the Chairman chairs the Nomination
Committee, the Senior Independent Director would do so
if the Committee were dealing with the appointment of a
new Chairman.

3 . M A J O R A C T I V I T I E S O F T H E
N O M I N A T I O N C O M M I T T E E

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

• The recommendation for reappointment at the Annual

General Meeting of all Directors based on the evaluation of
the Board and its Committees.

• The search for replacement Non-Executive Directors for
Andy Blundell and Deena Mattar who stood down on
24 May 2020 and 31 July 2020 respectively. All remaining
members of the Board were involved in the process.

• Korn Ferry was engaged as an external search consultant

for the Non-Executive Director searches and is engaged for
the CEO position; they do not have any other connection
with the Company or individual Directors (other than in
relation to similar previous appointments).

• The nomination of Paul Dean from 4 February 2020 and

Vicky Griffiths from 1 July 2020 as Non-Executive Directors
after consideration of the skills, experience and knowledge
required, the benefits of diversity, and their independence
and ability to devote sufficient time to carry out their role.

• The nomination of Paul Dean as Non-Executive Director
and Chairman of the Audit Committee, was effective
4 February 2020. Paul brings extensive experience as an
Audit Committee Chairman.

• The nomination of Vicky Griffiths as a Non-Executive

Director was effective from 1 July 2020. Vicky brings a
range of experience across risk management, executive
recruitment and the education sector.

• The search for a replacement CEO for David Brooks who

will leave the Company on 31 March 2021.

• The review of its succession plans and the selection
criteria and appointment procedures for Board
and Executive changes to ensure they are based on
merit and objective criteria; this included reviewing
the Board Diversity Policy (set out in the Corporate
Governance Report).

• The review of the gender balance and diversity on

the Executive and direct reports, with the purpose of
maintaining a diverse pipeline. There is a good gender
balance across these roles (see the Workforce section in
the Strategic Report for more information).

• The review of the diversity objectives and strategies for the
Company (see Strategic Report for further information).

• The approval of this Nomination Report for the year ended

30 November 2020.

John Poulter
Chairman, Nomination Committee
11 February 2021

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 2020
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 2020 and of the Group’s profit for the year
then ended;

the Group financial statements have been properly
prepared in accordance with international accounting
standards in conformity with the requirements of the
Companies Act 2006;

the parent Company financial statements have been
properly prepared in accordance with international
accounting standards in conformity with the requirements
of, 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
to the extent applicable.

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 ten financial years ended
30 November 2020. 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

£0.88m (2019: £1.15m)

4.31% (2019: 4.7%) of normalised
profit before tax averaged over
3 years (2019: normalised profit
before tax)

Coverage

94% (2019: 97%) of
Group profit before tax

Key audit matters

Recurring risks

RM Results
long-term contracts

Recoverability of parent
Company’s investment
in subsidiaries

New: Pensions obligation

Event driven

New: Going concern

vs 2019

▲

◀▶

▲

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

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

RM Results
long-term contracts

Revenue: £31.6m
(2019: £37.7m)

Refer to page 42
(Audit Committee
Report), page 88
(accounting policy)
and page 96 (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 with
regard to variable consideration and
service performance measures. This can
involve significant judgements that may
impact the recognition of revenue and
contract profits including, among others,
those over:

• 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 estimation of variable

consideration relating to the scanning
performance obligation.

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 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 performance obligations by agreeing
to supporting information including third party
cost invoices.

• We critically assessed the estimation of variable

consideration in the scanning performance obligation and
the assumptions used in forecasting future exam session
volumes by comparing to publicly available information.
We performed an assessment of whether differences
identified through these procedures, were material.

• We inspected material contract variations and assessed
whether the variation was an extension of an existing
performance obligation or a new performance
obligation and assessed how revenue had been
recognised for each.

Sensitivity analysis: We performed sensitivity analysis
over the key inputs in the variable consideration
calculations, such as script volumes, in order to assess the
impact on revenue recognised.

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, the
allocation of revenue to the performance obligations and
the estimation of variable consideration to be acceptable
(result on 2019 KAM: acceptable).

GOVERNANCET H E R I S K

O U R R E S P O N S E

T H E R I S K

O U R R E S P O N S E

Going concern

Disclosure quality

Our procedures included:

Refer to page 42
(Audit Committee
Report) and page 86
(accounting policy).

The financial statements explain how the
Board has formed a judgement that it is
appropriate to adopt the going concern
basis of preparation for the Group and
parent Company.

Benchmarking assumptions: Critically assessing
assumptions in base case and downside scenarios
relevant to liquidity, in particular in relation to cash-flow
by comparing to external data and our knowledge of the
Group and the sector in which it operates.

That judgement is based on an evaluation
of the inherent risks to the Group’s and
Company’s business model and how
those risks might affect the Group’s and
Company’s financial resources or ability
to continue operations over a period of at
least a year from the date of approval of
the financial statements.

The risks most likely to adversely affect the
Group’s and Company’s available financial
resources over this period were:

• The impact of Coronavirus on sales,
profitability and cash flow based
on widespread school closures and
cancellation of UK exam sessions

Funding assessment: We inspected the confirmation
from the lender of the level of committed financing, and
the associated covenant requirements. We re-performed
all covenant compliance calculations based on the final
consolidated numbers.

Historical comparisons: Assessing the historical
accuracy of the Group’s cash flow forecasts and growth
rates by reviewing the accuracy of previous forecasts made
by the Group against actual performance.

Sensitivity analysis: We considered sensitivities over the
level of headroom on covenants, and the level of available
financial resources indicated by the Group’s financial
forecasts taking account of reasonably possible (but not
unrealistic) adverse effects that could arise from these risks
individually and collectively.

• The impact of Coronavirus on the
ability of the Group to operate
above the level required by their
banking covenants

Evaluating directors’ intent: We challenged the
achievability of the actions the Directors consider
they would take to improve the position should the
risks materialise.

The risk for our audit was whether or not
those risks were such that they amounted
to a material uncertainty that may have
cast significant doubt about the ability to
continue as a going concern. Had they
been such, then that fact would have been
required to have been disclosed.

Assessing transparency: Assessing the completeness
and accuracy of the matters covered in the going concern
disclosure by reviewing consistency between the
disclosure and management’s model.

Our results

We found the going concern disclosure without
any material uncertainty to be acceptable
(2019 result: acceptable).

Pension obligations

Subjective valuation

Our procedures included:

Assessing the valuer’s credentials: We critically
assessed the competence and independence of the
external actuaries who are engaged by the Group to
estimate the pension scheme obligations for the purpose
of the financial statements.

Benchmarking assumption: We challenged, with
the support of our own actuarial specialists, the key
assumptions applied, being the discount rate, inflation
rate and mortality/life expectancy against externally
derived data.

Assessing transparency: We exercised judgement to
assess the clarity of the Group’s disclosures in respect of
the sensitivity of the obligations to these assumptions.

Our results

We found the carrying amount of the pension obligation
(before deducting scheme assets) and the carrying value
of the level 3 asset to be acceptable
(2019: result: acceptable).

Defined Benefit Pension
Obligation: £305.7m
(2019: £263.1m)

Level 3 insurance asset:
£29.4m (2019: £27.9m)

See Note 26 on
page 119 for details
of the Group pension
schemes and their
obligations as at
30 November 2020.

Also refer to page 42
(Audit Committee
Report).

Significant estimates are made in
estimating the Group’s defined benefit
pension obligations and small changes
in the assumptions and estimates used
to value the Group’s pension obligation
(before deducting scheme assets) would
have a significant effect on the Group’s net
pension deficit.

The Research Machines Plc 1988 Pension
Scheme holds plan assets, in the form
of insurance policies, for which the
valuation is linked to the valuation of the
pension obligation.

The effect of these matters is that, as part
of our risk assessment, we determined
that the valuation of pension obligations,
and the resulting valuation of insurance
policies, has a high degree of estimation
uncertainty with a potential range of
reasonable outcomes greater than our
materiality for the financial statements
as a whole, and possibly many times
that amount. The financial statements
(Note 26) disclose the sensitivity estimated
by the Group.

We consider that due to the significant
change in the economy this year with
discount rates materially moving as a
result of changes in the CPI/RPI basis used
in the calculation and updates for GMP
equalisation there is increased potential
volatility in calculating the defined benefit
pension obligation.

GOVERNANCET H E R I S K

O U R R E S P O N S E

Recoverability of
parent Company’s
investment in
subsidiaries

Investments: £126.6m
(2019: £125.8m)

Refer to page 42
(Audit Committee
Report), page 88
(accounting policy)
and page 109
(financial disclosures).

Low risk, high value

Our procedures included:

The carrying amount of the parent
Company’s investments in subsidiaries
represents 94% (2019: 84%) 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 statements,
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; and

Assessing transparency: Assessing whether the
Group's disclosures about the sensitivity of the outcome
of the impairment assessment to changes in key
assumptions reflected the risks inherent in the valuation
of the investment.

Our results

We found the Group’s assessment of the recoverability of
the parent Company’s investment in subsidiaries to be
acceptable (2019 result: acceptable).

Materiality for the parent Company financial statements as a whole was set at £0.7m (2019: £0.75m), determined with reference to a
benchmark of Company total assets, of which it represents 0.5% (2019: 0.5%).

We agreed to report to the Audit Committee any corrected or uncorrected identified misstatements exceeding £44,000 (2019: £57,500),
in addition to other identified misstatements that warranted reporting on qualitative grounds.

Of the Group’s ten (2019: ten) reporting components, we subjected three (2019: four) to full scope audits for Group reporting.

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

Group revenue

98%

(2019: 99%)

Total proﬁt and losses
that make up
Group proﬁt before tax

Group total assets

84%(2019: 97%)

98%(2019: 97%)

Full scope for Group audit purposes 2020

Full scope for Group audit purposes 2019

Residual components

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 £0.88m
(2019: £1.15m) 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 and averaged over the current year
and the previous 2 years of £20.4m (prior
year: 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 of £24.7m).

Normalised proﬁt before tax
averaged over three years
£20.4m (2019: £24.7m)

Group materiality
£0.88m (2019: £1.15m)

£0.88m
Whole financial statements materiality

(2019: £1.15m)

£0.7m
Materiality at three components

(2019: £0.55m to £0.75m)

The remaining 2% (2019: 1%) of total Group revenue, 16% (2019: 3%) of the total profits and losses that made up Group profit before
tax and 2% (2019: 3%) of total Group assets is represented by seven (2019: six) reporting components, none of which individually
represented more than 12% (2019: 2%) 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 components.

The Group team performed the work on all components, including the audit of the parent Company. The Group team determined the
component materialities, which were determined at £0.7m (2019: £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.

Profit before tax
Group materiality

(2019: £0.058m)

£0.044m
Misstatements reported
to the Audit Committee

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 the Group or to cease their operations, and as
they have concluded that the Company’s and the Group’s
financial position means that this is realistic. They have also
concluded that there are no material uncertainties that could
have cast significant doubt over their ability to continue as a
going concern for at least a year from the date of approval of
the financial statements ('the going concern period').

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

We identified going concern as a key audit matter (see
section 2 of this report). Based on the work described in our
response to that key audit matter, we are required to report
to you if:

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

•

the related statement under the Listing Rules set
out on page 22 is materially inconsistent with our
audit knowledge.

We have nothing to report in these respects.

5 . W E H A V 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 and emerging 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 23 that they have carried out a
robust assessment of the principal and emerging 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.

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

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.

Corporate governance disclosures

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.

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

•

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

• 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

Directors’ responsibilities

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

Auditor’s responsibilities

Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or other
irregularities (see overleaf), 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.

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.

GOVERNANCEThe 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.

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

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

Robert Seale (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor

Chartered Accountants
15 Canada Square, Canary Wharf
London, E14 5GL

11 February 2021

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

Year ended 30 November 2020

Year ended 30 November 2019

Adjusted

Adjustments

Note

£000

Total

£000

Adjusted

Adjustments

£000

188,999

223,765

(114,669)

(365)

(115,034)

(132,140)

74,330

(365)

73,965

91,625

Total

£000

223,765

(132,140)

91,625

(59,647)

(1,842)

(61,489)

(63,985)

(3,462)

(67,447)

(248)

(705)

(953)

14,435

(2,912)

11,523

27,640

(3,462)

24,178

(1,055)

153

(1,055)

(1,155)

(8)

153

(1,163)

13,401

(2,912)

10,489

26,638

(3,470)

23,168

(2,552)

477

(2,075)

(4,746)

640

(4,106)

10,849

(2,435)

8,414

21,892

(2,830)

19,062

Profit for the year

Items that will not be reclassified subsequently to profit or loss

Defined benefit pension scheme remeasurements

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

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

Fair value gain/(loss) on hedged instruments

Exchange loss on translation of overseas operations

Other comprehensive expense

Total comprehensive (expense)/income

Note

Year ended
30 November 2020

Year ended
30 November 2019

£000

8,414

(16,302)

2,851

346

(205)

(13,310)

(4,896)

£000

19,062

(8,033)

1,418

(806)

(211)

(7,632)

11,430

The notes on pages 86 to 138 form an integral part of these financial statements.

Revenue

Cost of sales

Gross profit

Operating expenses

Impairment losses

Profit from operations

Investment income

Finance costs

Profit before tax

Tax

Profit for the year

Earnings per ordinary share

- basic

- diluted

Paid and proposed dividends per share

- interim

- final

13.1p

13.0p

26.6p

26.4p

10.2p

10.1p

3.00p

23.2p

23.0p

2.00p

The results for the year ended 30 November 2020 have been presented under IFRS 16.
The previous year’s results have not been restated (see Note 33).

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 86 to 138 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 2020

At 30 November 2019

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
Right-of-use assets
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 (liabilities)/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

Note

12
13
14
15
26
19
18
9

17
19
18
20

22
24
9
26
23

£000

49,322
22,354
8,423
19,391
665
63
3,420
5,333
108,971

18,594
31,317
728
4,793
2,030
5,941
63,403
172,374

(61,491)
(163)
(435)
(2,480)
(64,569)
(1,166)

(20,987)
(3,998)
(3,339)
(19,318)
(4,779)
(52,421)
(116,990)
55,384

1,917
27,080
(841)
94
(65)
(702)
27,901
55,384

£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

The notes on pages 86 to 138 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 11 February 2021.

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 2018

1,917

27,080

(1,423)

Profit for the year

Other comprehensive expense

Total comprehensive
(expense)/income

Transactions with owners of the Company:

Share options exercised

Share-based payment
fair value charges

Ordinary
dividends paid

416

£000

395

£000

Total
£000

(286)

26,030

53,807

19,062

(806)

(211)

(6,615)

(7,632)

(806)

(211)

12,447

11,430

(416)

686

(6,348)

At 1 December 2019

1,917

27,080

(1,007)

(411)

(497)

32,399

59,575

Profit for the year

Other comprehensive
income/(expense)

Total comprehensive
income/(expense)

Transactions with owners of the Company:

Share-based payment
awards exercised

Share-based payment fair
value charges

166

8,414

346

(205)

(13,451)

(13,310)

346

(205)

(5,037)

(4,896)

(166)

705

At 30 November 2020

1,917

27,080

(841)

(65)

(702)

27,901

55,384

The notes on pages 86 to 138 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 2020

Year ended
30 November 2019

Note

7
8

5
13
14, 15
5

21
5

14
13

11
23

Profit before tax
Investment income
Finance costs
Profit from operations
Adjustments for:
Pension GMP
Amortisation and impairment of intangible assets
Depreciation and impairment of property, plant and equipment
Gain on disposal of other asset
Loss on disposal of other intangible assets
(Gain)/loss on disposal of property, plant and equipment
Gain on foreign exchange derivatives
Share-based payment charge
Increase/(decrease) in provisions
Defined benefit pension scheme administration cost

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

Increase/(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
Acquisition net of cash acquired
Acquisition-related costs
Proceeds on disposal of investment asset
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
(Repayment)/drawdown of borrowings
Borrowing facilities arrangement and commitment fees
Interest paid
Payment of leasing liabilities

Net cash (used in)/generated by 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

10,489
(21)
1,055
11,523

170
3,778
3,718
(713)
-

(949)
(625)
705
1,443
37
19,087
3,557
2,520
(1,111)

6,012
(2,284)
27,781
(4,094)
(2,589)
21,098

21
-
-
1,560
2,900
(5,801)
(2,660)
(3,980)

-
(12,000)
(226)
(501)
(2,523)
(15,250)
1,868
1,528
65
3,461

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

The notes on pages 86 to 138 form an integral part of these financial statements.

£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

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

Note

At 30 November 2020

At 30 November 2019

£000

126,530

7,329

133,859

411

459

134,318

(151)

(64,122)

(64,273)

(63,814)

(4,779)

(69,052)

65,266

1,917

27,080

(841)

37,016

65,266

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

The notes on pages 86 to 138 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 11 February 2021.

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

At 1 December 2018

Profit for the year

Total comprehensive income

Transactions with owners of the Company:

Share options exercised

Share-based payment fair value charges

Ordinary dividends paid

At 30 November 2019

Profit for the year

Total comprehensive income

Transactions with owners of the Company:

Share-based payment awards exercised

Share-based payment fair value charges

redemption

Retained

Capital

Share capital

premium

Own shares

reserve

earnings

Note

£000

Total
£000

1,917

27,080

(1,423)

31,009

58,677

416

7,965

(416)

686

7,965

686

(6,348)

1,917

27,080

(1,007)

32,896

60,980

166

3,581

(166)

705

3,581

705

At 30 November 2020

1,917

27,080

(841)

37,016

65,266

The notes on pages 86 to 138 form an integral part of these financial statements.

Profit before tax

Investment income

Finance costs

Profit/(loss) from operations

Adjustments for:

Gain on disposal of non-current receivable

Operating cash flows before movements in working capital

Decrease/(increase) in receivables

(Decrease)/increase in payables

Cash generated from/(used in) operations

Dividends received

Net cash generated from/(used in) operating activities

Investing activities

Proceeds from sale of non-current receivables

Interest received

Net cash generated from investing activities

Financing activities

Dividends paid

Interest paid

(Repayment)/drawdown of borrowings

Borrowing facilities arrangement and commitment fees

Net cash (used in)/generated from 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 2020

£000

3,170

(5,159)

2,113

124

(673)

(549)

9,816

(3,269)

5,998

5,000

10,998

1,520

(292)

(12,000)

(226)

(12,518)

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

The notes on pages 86 to 138 form an integral part of these financial statements.

FINANCIAL STATEMENTS

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

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

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 £3,581,000
(2019: £7,965,000).

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

in accordance
The accounting policies are drawn up
(IAS)
International Accounting Standards
those
with
and
(IFRS)
International Financial Reporting Standards
issued by the International Accounting Standards Board
(IASB) and adopted
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.

for use

These accounting policies have been consistently applied to
the years presented, except in relation to IFRS 16 Leases that
has been applied from 1 December 2019.

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 and below.

The financial statements have been prepared in accordance
with international financial reporting standards adopted
pursuant to Regulation (EC) No 1606/2002 as it applies in the
European Union in accordance with international accounting
standards in conformity with the requirements of the
Companies Act 2006 ('Adopted IFRS'). They are prepared on
a historical cost basis except for certain financial instruments,
share-based payments and pension assets and liabilities
which are measured at fair value. In addition, assets held for
sale are stated at the lower of previous carrying amount and
the fair value less costs to sell. The preparation of financial
statements, in conformity with generally accepted accounting
principles, requires the use of estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Although
these estimates are based on the Directors’ best knowledge
of current events and actions, actual results ultimately may
differ from those estimates.

Going concern

The financial statements have been prepared on a going
concern basis which the Directors consider to be appropriate
for the following reasons.

The Directors have prepared cash flow forecasts for the
period a period of not less than 12 months from the date
of approval of these financial statements/ to the end of
May 2022 which indicate that, taking account of reasonably
plausible downsides as discussed below, the Company will
have sufficient funds to meet its liabilities as they fall due
for that period. The Group has a bank facility ('the facility')
which totalled £70m at the date of this report and is subject
to annual covenant tests in May and November related to
the leverage and interest cover of the Group. The Group had
net debt of £1.3m at 30 November 2020; the average net debt
position during the year was £16.3m with the peak borrowing
point being £29.6m. The facility is committed until June 2022
with the option of a further two-year extension to June 2024.
Management are not aware of any reasons why the extension
would be not be granted, if requested to the lenders.

Throughout FY20 the COVID-19 pandemic has impacted the
Group primarily as a result of widespread school closures
and the cancellation of UK and some International summer
exam sessions. In December, prior to the recent COVID-19
school closures the Group was trading in line with internal
budgets and forecasts. During previous periods of school
closures and subsequent limited school re-openings, the
RM Education division continued to provide software,
services and technology to UK schools, but the volume of
hardware and new installations fell slightly. The RM Results
division continues to provide digital assessment solutions for
International awarding bodies and is currently in discussions
with these customers about the impact of COVID-19 on their
exam cycles. While returning close to previous performance
during the schools re-opening in FY20, sales of consumables
to UK and International schools by the Group’s third division,
RM Resources, have been materially lower over the periods
of lockdown driven by the volume of pupils in schools
and nurseries. Actions taken by management to reduce
the impact of COVID-19 included a temporary furloughing
of employees, later repaid, a deferral of pension deficit
payments, also later repaid, and pausing of discretionary
spending and capital projects. The dividend proposed at
FY19 was also reversed to maximise Group cash flow. All
business units were therefore profitable throughout FY20.

The Group has assessed a number of scenarios for going
concern purposes and is using a base case scenario
assessment based on the known COVID-19 restrictions at
January 2021, namely that UK schools will remain closed
in quarter 1 FY21, the UK Government announcements of
exam cancellations included and reduced international
exam volumes ('base case'). Management has considered
a potentially plausible downside scenario based on further
lockdowns after March 2021 in varying months across the
period going concern period to reflect the risk of further
school closures in quarter 4 FY21 and quarter 1 FY22
('downside scenario'). Under this downside scenario, the
forecasts assume that trading during future lockdowns
is equivalent to that experienced to date in the current
Government imposed lockdown on 4 January 2021. This is
similar to levels experienced in June 2020 when only certain
year groups had returned to school.

Under the downside scenario, management has taken
the decision to pause certain discretionary spend. These
discretionary spend pauses are being actively reassessed
with the announcements by UK Government indicating
their desires to get schools operating normally as soon
as practical. Under the downside scenario the Group has
headroom against its available facilities without using all
its available options in relation to cash management, and
considers there are sufficient controllable actions it can take,
even if a more severe downside case were to materialise,
to operate within the facility’s covenants. At present the
Directors consider a more severe downside case to be highly
unlikely, given the vaccine rollout and the communicated
desire by the UK Government to prioritise the reopening of
schools at the earliest opportunity.

Therefore, the Board has a reasonable expectation that the
Group has adequate resources to continue in operational
existence and meet their liabilities as they fall due for a period
of not less than 12 months from the date of approval of these
financial statements. For this reason, the Group continues to
adopt the going concern basis of accounting in preparing the
annual financial statements.

Alternative Performance Measures (APMs)

In response to the Guidelines on APMs issued by the
European Securities and Markets Authority (ESMA) and the
Financial Reporting Council (FRC), additional information on
the APMs used by the Group is provided below.

The following APMs are used by the Group:

- Adjusted operating profit

- Adjusted profit before tax

- Net debt (see Note 23)

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.

FINANCIAL STATEMENTSConsolidation

Revenue

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

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

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

Investment in subsidiaries

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

Business combinations

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

•

the fair value of the consideration transferred; 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.
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.

The 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
controls 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 judgment 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

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 licences (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 licences 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 licences is discussed in more detail below.

FINANCIAL STATEMENTSContract modifications

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 and in the current year also relate to
cancellation of exam sessions. 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 licences delivered by the Group can be either
'right-to-access' or 'right-to-use' licences. Right-to-access
licences require continuous upgrade and updates for the
software to remain useful, all other licences are treated as
right-to-use licences. The assessment of whether a licence
is a right-to -access licence or a right-to-use licence involves
judgement. The key determinant of whether a licence is
a right-to-access licence is whether the Group is required
to undertake activities that significantly affect the licence
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 licence performance obligation all the facts and
circumstances in determining whether the licence revenue
is recognised over time or at a point in time from the go live
date of the licence.

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 benefits 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.

Intangible assets

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

Goodwill

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

The recoverable amount of goodwill is tested for impairment
annually or when events or changes in circumstance indicate
that it might be impaired. Impairment charges are deducted
from the carrying value and recognised immediately in profit
or loss. For the purpose of impairment testing, goodwill
is allocated to each of the Group’s cash generating units
expected to benefit from the synergies of the combination.
If the recoverable amount of the cash generating unit is less
than the carrying amount of the unit, the impairment loss is
allocated first to reduce the carrying amount of any goodwill
allocated to the unit and then to the other assets of the unit
pro-rata on the basis of the carrying amount of each asset in
the unit. An impairment loss recognised for goodwill is not
reversed in a subsequent period.

Research and development costs

Research and development costs associated with the
development of software products or enhancements and
their related intellectual property rights are expensed
as incurred until all of the following criteria can be
demonstrated, in which case they are capitalised as an
intangible asset:

a. the technical feasibility of completing the intangible asset

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

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

sell it; and

c. ability to use or sell the intangible asset; and

d. how the intangible asset will generate probable future

economic benefits. Among other things, the Group can
demonstrate the existence of a market for the output of
the intangible asset or the intangible asset itself or, if it
is to be used internally, the usefulness of the intangible
asset; and

the availability of adequate technical, financial and other
resources to complete the development and to use or sell
the intangible asset; and

f. an ability to measure reliably the expenditure attributable

to the intangible asset during its development.

The technological feasibility for the Group’s software products
is assessed on an individual basis and is generally reached
shortly before the products or services are released, and late
in the development cycle. Capitalised development costs are
amortised on a straight-line basis over their useful lives, once
the product is available for use. Useful lives are assessed on a
project-by-project basis.

Other intangible assets

Expenditure on internally generated goodwill and brands is
recognised in the income statement as an expense as incurred.

Other intangible assets that are acquired by the Group
are stated at cost less accumulated amortisation and
accumulated impairment losses.

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

Intellectual property and database assets

3 – 10 years

Property, plant and equipment

Property, plant and equipment assets are stated at cost,
less accumulated depreciation and any accumulated
impairment losses where appropriate.

Property, plant and equipment are depreciated by equal
annual instalments to write down the assets to their
estimated disposal value at the end of their useful lives
as follows:

Freehold property

Up to 50 years

Leasehold building improvements

Up to 25 years

Plant and equipment

Computer equipment

Vehicles

3 – 10 years

2 – 5 years

2 – 4 years

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 19. 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 31. 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

From 1 December 2019, at the inception of the lease, the Group
recognises a right-of-use asset at cost, which comprises the
present value of minimum lease payments determined at the
inception of the lease. Right-of-use assets are depreciated
using the straight-line method over the shorter of estimated
life or the lease term. Depreciation is included within
administrative expenses in the consolidated income statement.
Amendment to lease terms resulting in a change in payments
or the length of the lease results in an adjustment to the
right-of-use asset and liability. Right-of-use assets are reviewed
for impairment when events or changes in circumstances
indicate the carrying value may not be fully recoverable.
Right-of-use assets (excluding property leases) exclude leases
with a low value and term of 12 months or less. These leases
are expensed to the income statement as incurred.

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 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 2020 (being 1,168,921 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 26

• Revenue from contracts over time – see Note 3

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 2019 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 33:

•

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 has applied IFRS 16
using the modified retrospective approach, with the
cumulative effect of applying the standard recognised in
retained earnings on 1 December 2019. The details of the
changes and quantitative impact are set out in Note 33.

FINANCIAL STATEMENTS3 . R E V E N U E

Year ended 30 November 2020

Supply of products

Rendering services

Licences

Year ended 30 November 2019

Supply of products

Rendering services

Licences

RM Resources

RM Education

Transactional

Over time

RM Results

Over time

£000

92,356

£000

13,809

533

92,442

14,342

114,184

342

114,526

17,512

1,598

19,110

£000

36,319

14,317

50,636

38,275

14,180

52,455

£000

30,542

1,037

31,579

36,860

814

37,674

Total

£000

106,165

66,947

15,887

188,999

131,696

75,477

16,592

223,765

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 licenses, the residual amount. Judgements include determination of performance obligations
and allocation of revenue to performance obligations. Scanning revenues of £2,305,098 (2019: £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.

There is estimation relating to the output methodology (of script volumes) to determine the transaction price. This estimation has been
reassessed in the year in light of the impact of COVID-19 on the UK and Internationally. The Group has assumed that script volumes will
be significantly lower in the UK in 2021 following recent government announcements and International script volumes will be slightly
lower to those experienced in 2019.

Whilst management have performed sensitivity analysis over the assumptions used, due to the uncertainty, combination of variables
across many contracts and geographical basis of exam sessions, management do not believe that disclosing a potential range of outcomes
would provide meaningful information on a consolidated basis and, due to commercial sensitivities, cannot provide at a contract level.

The table below shows the time bands of the expected timing of revenue to be recognised on over-time contracts at 30 November 2020.

Time bands of over-time contracts order book

At 30 November 2020

< 1 year

1-2 years

2-5 years

>5 years

At 30 November 2019

< 1 year

1-2 years

2-5 years

RM Education

Over time

RM Results

Over time

£000

5,812

5,005

8,868

19,685

8,101

4,659

1,499

14,259

£000

17,324

15,505

22,848

1,429

57,106

18,511

23,610

18,412

60,533

Total

£000

23,136

20,510

31,716

1,429

76,791

26,612

28,269

19,911

74,792

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.

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

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 2020

£000

RM Resources*

RM Results

RM Education

Corporate Services

80,956

6,362

777

848

2,196

1,303

92,442

3,081

20,473

5,042

1,250

225

4,589

31,579

6,607

63,977

533

412

64,978

9,296

(4,549)

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

Total

£000

165,406

11,937

1,189

2,098

2,421

5,948

188,999

14,435

(1,155)

13,401

(2,912)

10,489

FINANCIAL STATEMENTS

Year ended 30 November 2019

£000

RM Resources*

RM Results

RM Education

Corporate Services

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)

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 £1,352,000 (2019: £1,944,000).

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

Segmental assets

At 30 November 2020

Segmental

Other

Total assets

At 30 November 2019

Segmental

Other

Total assets

RM Resources

RM Results

RM Education

Corporate Services

£000

117,493

£000

22,304

£000

17,049

£000

1,510

RM Resources

RM Results

RM Education

Corporate Services

£000

105,489

£000

20,072

£000

13,208

£000

1,562

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

Total

£000

158,356

14,018

172,374

Total
£000

140,331

10,375

150,706

Included within the disclosed segmental assets are non-current assets (excluding deferred tax assets) of £95,086,000 (2019: £76,559,000)
located in the United Kingdom, £7,343,000 (2019: £8,475,000) located in Australia and £645,000 (2019: £638,000) 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 and impairment 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

(Gain)/loss on disposal of property, plant and equipment

Loss on disposal of other intangible assets

Gain on disposal of other asset

Cost of inventories recognised as an expense

Staff costs

Operating lease expense

Operating lease income

Foreign exchange gain

Inventory write-offs

Note

14, 15

(Decrease)/increase in inventory obsolescence provision

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 2020

Year ended
30 November 2019

£000

3,778

686

3,032

3,718

24,630

7,773

27,244

59,647

1,842

61,489

(949)

(713)

68,653

60,561

121

(229)

1,529

(57)

334

393

£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

FINANCIAL STATEMENTS

Adjustments to cost of sales and administrative expenses

Year ended
30 November 2020

Year ended
30 November 2019

The adjustments have the following impact on key metrics:

Adjustments to cost of sales

Exceptional inventory adjustments

Adjustments to administrative expenses

Amortisation of acquisition-related intangible assets

Acquisition-related costs

Property-related (income)/costs

Impairment of intangible assets

Gain on sale of Essex LEP loan

Pension GMP

Restructuring costs

Total adjustments to administrative expenses

Total adjustments

Recurring items:

£000

365

1,986

(670)

705

(673)

170

1,029

2,547

2,912

£000

1,577

728

335

822

3,462

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; gain on held for sale assets and related transaction costs; changes in the provision for exceptional
property costs; the gain/loss on sale of operations and restructuring and acquisition costs. 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 period the Group disposed of the asset held for sale at 30 November 2019, which was a warehouse that will no longer be
required following the estates strategy review and a non-current other receivable. These transactions resulted in a profit of £1.3m.

The Group’s previously announced an estates strategy review, includes moving to one new automated warehouse. As a result of the
new warehouse functionality, we have undertaken a review of inventory and the inventory that is not compliant with the automated
solution has been written off. Normal inventory write downs are included in operating profit.

The restructuring costs in the current year, relate to a Group restructuring programme that was announced in December 2019 and
completed in the year. The costs in the prior year relate to the estates review noted above.

The impairment costs relate to aspects of the ERP solution we are investing in, that will require rework.

The Group provided for the increase in estimated liability of equalising GMPs in our defined benefit pension schemes of £170,000 that
arise from the recent Court ruling on valuation of transfer values.

During 2019 the Group acquired SoNET Systems Pty Limited (Note 21) and incurred £728,000 of associated acquisition costs
comprising advisor fees, related intangible impairment and integration costs.

During 2019 the Group exited a number of key properties and entered into new properties resulting in non-recurring exceptional costs
of £335,000.

The Group previously announced an estates strategy review that will mean relocating a number of activities in the RM Resources
division to one location. During 2019 the timing and impact of this was reviewed and includes a provision for improved contributions
to the impacted defined benefit scheme.

2020

2019

Measure

Adjustment

Adjusted measure

Measure

Adjustment

Adjusted measure

£000

11,523

10,489

£000

2,912

£000

14,435

13,401

£000

24,178

23,168

£000

3,462

3,470

£000

27,640

26,638

Profit from operations

Profit before tax

Earnings per share (see Note 10)

2020

2019

Measure

Adjustment

Adjusted measure

Measure

Adjustment

Adjusted measure

Basic (pence)

Diluted (pence)

10.2

10.1

2.9

2.9p

13.1

13.0

23.2

23.0

3.4

3.4p

26.6

26.4

6 . S T A F F N U M B E R S A N D C O S T S

The average number of persons (including Directors) employed by the Group during the year was as follows:

Research and development, products and services

Marketing and sales

Corporate services

Year ended
30 November 2020

Year ended
30 November 2019

Number

1,346

258

199

1,803

Number

1,415

321

237

1,973

The above figures have been calculated on a Full Time Equivalent basis. The actual average number for the year is 1,837.

Aggregate emoluments of persons employed by the Group comprised:

Wages and salaries

Termination costs

Social security costs

Other pension costs

Share-based payments (Note 28)

Year ended
30 November 2020

Year ended
30 November 2019

£000

51,025

1,261

4,004

3,566

705

60,561

£000

56,106

929

4,828

4,632

713

67,208

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

100

101

FINANCIAL STATEMENTS

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

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

Bank interest

Other finance income

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

Borrowing facilities arrangement fees and commitment fees

Net finance costs/(income) on defined benefit pension scheme

Unwind of discount on onerous lease and dilapidations provisions

Interest on lease of right-of-use assets

Interest on bank loans and overdrafts

Note

9 . T A X

a) Analysis of tax charge in the Consolidated Income Statement

Current taxation

UK corporation tax

Adjustment in respect of prior years

Overseas tax

Total current tax charge

Deferred taxation

Temporary differences

Adjustment in respect of prior years

Overseas tax

Total deferred tax charge

Total Consolidated Income Statement tax charge

Year ended
30 November 2020

Year ended
30 November 2019

£000

136

153

Year ended
30 November 2020

Year ended
30 November 2019

£000

469

151

352

1,055

£000

592

(6)

555

1,163

Year ended
30 November 2020

Year ended
30 November 2019

£000

1,632

(305)

391

1,718

345

(9)

357

2,075

£000

4,179

(479)

385

4,085

247

(288)

4,106

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

Year ended
30 November 2020

Year ended
30 November 2019

£000

(240)

(18)

(328)

(2,408)

297

(220)

(2,851)

£000

(735)

(38)

(353)

(624)

437

(105)

(1,418)

c) Reconciliation of Consolidated Income Statement tax charge

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

Year ended 30 November 2020

Year ended 30 November 2019

Adjusted

Adjustments

£000

Total

£000

Adjusted

Adjustments

£000

Total

£000

Profit/(loss) on ordinary activities before tax

13,401

(2,912)

10,489

26,638

(3,470)

23,168

Tax at 19% (2019: 19%) thereon:

2,546

(553)

1,993

5,061

(659)

4,402

Effects of:

- change in tax rate on carried forward deferred tax assets

(137)

391

254

- other expenses not deductible for tax purposes

194

(119)

- other temporary timing differences

- impairments

- effect of profits in various

overseas tax jurisdictions

- Prior period adjustments - UK

(158)

(196)

(354)

133

(4)

(511)

(28)

133

(32)

(511)

Tax charge/(credit) in the Consolidated Income Statement

2,552

(477)

2,075

4,746

(640)

4,106

The adjustment in respect of prior years reflects the tax impact of the movement in share price on share-based payment on exercise and
timing of redundancy payments. The adjustment in respect of prior years reflects the tax impact of the movement in pension balances.

Factors that may affect future tax charges

The standard rate of corporation tax in the UK for the period is 19%.

102

103

FINANCIAL STATEMENTS
d) 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 the movements thereon are as follows:

Group

At 1 December 2018

Acquired through subsidiary

(Credit)/charge to income

Credit/(charge) to equity

At 30 November 2019

(Credit)/charge to income

Credit/(charge) to equity

At 30 November 2020

Defined

Accelerated tax

benefit pension

Share-based

Short-term timing

Acquisition related

depreciation

scheme obligation

payments

differences

intangible assets

£000

1,021

(305)

716

(387)

329

£000

392

624

1,016

2,527

3,543

£000

396

(78)

105

423

162

(66)

519

£000

1,548

(437)

1,274

(121)

(211)

942

£000

(2,789)

(807)

268

(3,328)

(11)

(3,339)

Total

£000

568

(738)

(21)

292

101

(357)

2,250

1,994

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.

No deferred tax liability is recognised on temporary differences of £561,000 (2019: £581,000) 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 2020

Year ended 30 November 2019

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)

8,414

2,435

82,576

Adjusted basic earnings

10,849

82,576

Diluted earnings per ordinary share

10.2

2.9

13.1

19,062

82,341

2,830

21,892

82,341

Basic earnings

8,414

82,576

10.2

19,062

82,341

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

Diluted earnings

Adjustments (see Note 5)

888

8,414

2,435

83,464

Adjusted diluted earnings

10,849

83,464

(0.1)

10.1

2.9

13.0

577

19,062

82,918

2,830

21,892

82,918

23.2

3.4

26.6

23.2

(0.2)

23.0

3.4

26.4

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 2019 – nil p per share (2018: 5.70p)

Interim dividend for the year ended 30 November 2020 – nil p per share (2019: 2.0p)

Year ended
30 November 2020

£000

Year ended
30 November 2019

£000

4,698

1,650

6,348

The proposed final dividend of 3.00p per share for the year ended 30 November 2020 was approved by the board on 8 February 2021.
The dividend is subject to approval by Shareholders at the annual general meeting. The anticipated cost of this dividend is £2,481,183.

104

105

FINANCIAL STATEMENTS

1 2 . G O O D W I L L

Group

Cost

At 30 November 2018

Acquired during the year (Note 21)

Exchange differences

At 30 November 2019

Exchange differences

At 30 November 2020

Accumulated impairment losses

At 1 December 2018, 30 November 2019 and 30 November 2020

Carrying amount

At 30 November 2020

At 30 November 2019

The carrying amount of goodwill is allocated as follows:

Group

RM Resources

RM Results

£000

54,858

4,153

(210)

58,801

215

59,016

(9,694)

49,322

49,107

Year ended
30 November 2020
£000

Year ended
30 November 2019
£000

42,208

7,114

49,322

42,208

6,899

49,107

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% (2019:
2.0%) which aligns to market growth and inflation expectations. Growth rates for the initial 3 year period include a more material
double digit growth rate for the divisions from 2020, due to recovery from COVID-19 and the impact of investments. Pre-tax discount
rates used are 15.3% for RM Resources and 13.9% for RM Results (2019: RM Resources and RM Results 12.3%).

Sensitivity analysis

The sensitivity of goodwill carrying values to reasonably possible changes in key assumptions has been performed. A change of 2% in
the discount rate or a 2% reduction in the growth rate beyond 2023 would not change the conclusion of the impairment review which
has significant headroom remaining.

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

Customer

Intellectual

property &

Website

Other

relationships

Brands

database assets

platform

software assets

£000

Total

£000

Group

Cost

At 1 December 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

Additions

Exchange differences

Disposals

325

2,876

(325)

2,876

149

2,520

3,536

25,235

154

(726)

1,958

(4)

3,005

(169)

(5)

(266)

6,101

2,660

(13)

4,747

3,159

(159)

(243)

(1,551)

31,188

2,660

234

(4)

At 30 November 2020

2,285

18,066

3,025

1,954

8,748

34,078

Accumulated amortisation
and impairment losses

At 1 December 2018

Charge for the year

Transfers between categories

Exchange differences

Disposals

At 30 November 2019

Charge for the year

Impairment

Exchange differences

Disposals

644

216

(234)

626

454

1,819

1,207

3,026

1,207

325

154

(325)

154

325

715

867

402

(716)

1,268

473

(4)

3,267

246

(402)

(5)

(266)

2,840

366

953

(12)

6,770

2,690

(5)

(1,541)

7,914

2,825

953

(4)

At 30 November 2020

1,108

4,233

499

1,737

4,147

11,724

Carrying amount

At 30 November 2020

At 30 November 2019

1,177

1,561

13,833

15,040

2,526

2,722

217

690

4,601

3,261

22,354

23,274

106

107

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 . R I G H T - O F - U S E A S S E T S

Group

Cost

Freehold land

Short leasehold

Computer

& buildings

improvements

Plant & equipment

equipment

£000

Vehicles

£000

Total

£000

At 1 December 2018

8,004

6,073

8,491

248

26,938

Acquired

Additions

Transfers between categories

Exchange differences

Reclass to assets held for sale (Note 20)

(1,771)

Disposals

At 30 November 2019

Additions

Transfers between categories

Exchange differences

6,233

(433)

Reclass to assets held for sale (Note 20)

(5,800)

Disposals

At 30 November 2020

Accumulated depreciation and impairment

At 1 December 2018

Charge for the year

Reclass to assets held for sale (Note 20)

Exchange differences

Disposals

At 30 November 2019

Charge for the year

Transfers between categories

Reclass to assets held for sale (Note 20)

Exchange differences

Disposals

At 30 November 2020

Carrying value

At 30 November 2020

1,263

175

(373)

1,065

118

(430)

(752)

(1)

At 30 November 2019

5,168

299

(14)

(1,774)

4,584

(52)

(326)

262

(13)

(1,772)

4,014

(143)

(38)

4,122

2,102

(16)

(284)

(694)

5,230

5,237

430

(48)

(9)

(40)

588

(1)

(46)

(40)

4,249

10,800

8,579

5,537

3,839

6,959

441

(254)

(16)

(671)

660

(22)

(637)

3,339

6,960

3,930

3,870

319

570

6,930

1,891

422

159

(28)

(641)

8,403

521

(83)

(119)

(143)

356

400

(34)

(72)

(143)

7,467

1,112

1,443

(7)

(64)

248

(14)

(10)

227

156

(6)

(59)

137

(7)

(10)

165

111

2,876

159

(65)

(2,055)

(3,173)

24,698

5,801

(197)

(6,254)

(193)

23,855

17,754

1,584

(627)

(57)

(3,139)

15,515

1,204

(930)

(163)

(194)

15,432

8,423

9,183

Group

Cost

At 30 November 2019

Adoption of IFRS 16

Additions

Disposals

At 30 November 2020

Accumulated depreciation and impairment

At 30 November 2019

Charge for the year

Disposals

At 30 November 2020

Carrying value

At 30 November 2020

Land & buildings

Plant & equipment

£000

Vehicles

£000

Total

£000

5,688

15,574

(1,411)

19,851

1,648

(150)

1,498

920

472

1,392

678

423

120

(51)

492

188

(20)

168

7,031

16,166

(1,462)

21,735

2,514

(170)

2,344

18,353

714

324

19,391

1 6 . 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 2020 were:

Name

RM Education Limited

TTS Group Limited

Principal activity

Country of

incorporation

Class of
share

% held

Software, services & systems

England

Ordinary

100%

Dormant

England

Ordinary

100%

RM Education Solutions India Pvt Limited *

Software and corporate services

India

Ordinary

100%

RM Pension Scheme Trustee Limited

Hedgelane Limited

Hammond Bridge 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%

Australia

Ordinary

100%

Australia

Ordinary

England

Ordinary

100%

108

109

FINANCIAL STATEMENTS

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

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

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 Schools Limited was liquidated.

The investment in subsidiary undertakings comprises:

Group

Components

Finished goods

Company

Cost

At 1 December 2018

Acquisition

Disposal

Share-based payments

At 30 November 2019

Share-based payments

At 30 November 2020

Impairment

At 1 December 2018

Disposal

At 30 November 2019

At 30 November 2020

Carrying value

At 30 November 2020

At 30 November 2019

Investment in

Capital contribution

share capital

share-based payments

£000

Total

£000

112,461

12,739

125,200

112,470

(88)

(70)

686

13,355

705

14,060

(62)

686

125,825

705

126,530

(88)

112,470

14,060

13,355

126,530

125,825

At 30 November 2020 an impairment review was undertaken which indicated that no impairment in the investments held by the
Company was required (2019: 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 which has significant headroom.

2020

£000

18,594

2019

£000

22,120

22,151

2020

£000

3,037

1,906

(861)

4,148

2020

£000

728

3,420

4,148

2019

£000

1,435

2,879

(1,277)

3,037

2019

£000

844

2,193

3,037

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

1 8 . 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

Additions

Foreign exchange

Amortised in the period

At 30 November

Analysed by:

Current

Non-current

At 30 November

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

110

111

FINANCIAL STATEMENTS

1 9 . 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

Current

Financial assets

Trade receivables

Other receivables

Accrued income

Amounts owed by Group undertakings

Non-financial assets

Prepayments

Non-current

Financial assets

Amounts owed by Group undertakings

Other receivables

Currency profile of receivables

Sterling

US Dollar

Australian Dollar

Euro

Indian Rupee

Singapore Dollar

Other

Group

Company

2020

£000

2019

£000

2020

£000

2019

£000

Group

Government

Commercial

2020

£000

13,245

9,662

22,907

2019

£000

9,250

12,093

21,343

22,907

21,343

1,498

1,997

1,897

2,384

26,402

25,624

4,915

31,317

5,614

31,238

22,957

22,984

939

7,329

847

31,380

32,177

7,377

23,831

28,004

1,190

390

143

619

613

421

26,093

3,869

1,475

640

7,329

16,882

6,949

31,380

32,177

7,377

23,831

Trade receivables included an allowance for estimated irrecoverable amounts at 30 November 2020 of £1,030,000 (2019: £259,000),
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

2020

£000

2019

£000

18,720

15,734

3,279

4,314

705

203

619

676

22,907

21,343

2 0 . 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 had five distribution centres across three locations. RM is moving to a single,
automated distribution site. As part of this process, the Group sold the freehold property in Shrewsbury during the year which was
held for sale as at 30 November 2019 and is selling its freehold properties based in Trowbridge and Kirkby. The amortised cost of the
properties and other fixed assets integral to those properties of £4,793,000 has been reclassified (from property, plant and equipment
and selected computer hardware) to a current asset held for sale because it is expected that the sale will be completed (or agreements
to complete signed) during 2021. The assets are 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% although
they are repayable on demand the Directors have no expectation that the amounts will be collected in the next 12 months and have
therefore presented these as non-current.

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 which was sold in the year (see Note 5).

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.

112

113

FINANCIAL STATEMENTS
2 1 . A C Q U I S I T I O N S O F S U B S I D I A R I E S

Acquisitions

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.

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.

Effect of acquisition

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

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

Acquisition-related costs

Fair value on acquisition

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.

No changes have been made in the 12 month period to fair values.

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

£000

4,747

307

208

(538)

(853)

(38)

(738)

(28)

3,164

4,153

7,317

(208)

7,109

114

115

FINANCIAL STATEMENTS

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

2 3 . B O R R O W I N G S

Current liabilities

Financial liabilities

Trade payables

Lease liabilities

Other taxation and social security

Other payables

Derivative financial instruments

Accruals

Amounts owed to Group undertakings

Non-financial liabilities

Deferred income

Non-current liabilities

Financial liabilities

Lease liabilities

- due after one year but within two years

- due after two years but within five years

- after five years

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

2020

£000

Company

2019

£000

2020

£000

2019

£000

20,620

19,136

4,067

6,847

2,503

10,740

4,364

2,081

461

11,849

44,853

37,891

151

64,122

64,273

138

72,789

72,927

16,638

61,491

13,340

51,231

64,273

72,927

2,301

4,500

11,346

1,356

1,309

175

20,987

82,478

1,783

1,561

139

3,483

54,714

64,273

72,927

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

2020

£000

2019

£000

2020

£000

2019

£000

77,072

50,141

64,273

72,927

972

1,600

755

2,079

1,005

1,535

868

1,165

82,478

54,714

64,273

72,927

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.

Group and Company

Bank loan

Add capitalised fees

Borrowings

2020

£000

(5,000)

221

(4,779)

2019

£000

(17,000)

466

(16,534)

The borrowings in the year and details of the facility are detailed in Note 31.
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 £1.3m as at 30 November 2020 (2019: £15.0m).

2 4 . P R O V I S I O N S

Group

At 1 December 2018

Acquisition

Utilisation of provisions

Release of provisions

Increase in provisions

Unwind of discount

At 30 November 2019

Utilisation of provisions

Release of provisions

Increase in provisions

Impact of foreign exchange

At 30 November 2020

Note

Onerous lease

Employee-related

and dilapidations

restructuring

£000

3,518

(1,940)

(802)

853

381

1,236

£000

2,617

(1,221)

(12)

836

2,220

(2,284)

1,092

1,028

Other

£000

3,237

(872)

2,380

(525)

314

2,169

Total

£000

9,372

(3,161)

(1,686)

878

5,453

(2,284)

(525)

1,787

4,433

The onerous lease was exited in 2019. 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 £1.1m of the utilisation relates to this programme. A separate restructuring
programme was announced in December 2019 and completed during the year. The majority of the restructuring provision is expected
to be utilised during 2022.

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 £525,000 primarily relates
to onerous contract risks that have either been re-negotiated or terminated during the year and the increase in provisions relate to new
contract risks identified in the year.

116

117

FINANCIAL STATEMENTS

During the year the overall movement on long-term provisions was an increase of £130,000 (2019: increase of £1,160,000).

Disclosure of provisions

Group

Current liabilities

Non-current liabilities

2 5 . S H A R E C A P I T A L

Company and Group

Allotted, called-up and fully paid

As at 30 November 2018, 2019 and 2020

Ordinary shares issued carry no right to fixed income.

2020

£000

435

3,998

4,433

2019

£000

1,585

3,868

5,453

Ordinary shares of 22/7p

‘000

83,875

£000

1,917

2 6 . D E F I N E D B E N E F I T S C H E M E S

a. Defined contribution scheme

The Group operates or contributes to a number of defined
contribution schemes for the benefit of qualifying employees.
The assets of these schemes are held separately from those of
the Company. The total cost charged to income of £2,861,000
(2019: £4,489,000) represents contributions payable to these
schemes by the Group at rates specified in employment
contracts. At 30 November 2020 £233,000 (2019: £308,000)
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 £157,000
(2019: £143,000). The amount due in respect of these
schemes at 30 November 2020 was £75,000 (2019: £51,000).
The balance sheet liability is included within provisions
(see Note 24) and incorporates information from over
14 local government pension schemes. The provision is
calculated by reference to the latest published triennial
valuations and the Group discloses the net position of the
Group's share of assets and liabilities.

There is judgment in determining the appropriate accounting
treatment for the participation in these schemes as either a
defined benefit or defined contribution scheme, in particular
as to whether actuarial and investment risk fall in substance
on the Company.

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 number of the Group’s employees in that Scheme is
small (and none by 30 November 2020) 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. An estimate for Guaranteed Minimum
Pensions (‘GMPs’) transfer values was expensed (see below for
further explanation).

Scheme assets are measured at bid-price, where available, at
30 November 2020. 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 2020 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.

118

119

FINANCIAL STATEMENTSAt 30 November 2020 there were amounts outstanding of
£308,300 (2019: £308,000) for one month's deficit payment
and £nil (2019: £nil) for Scheme expenses. The escrow bank
account that was set up to manage the deficit risk in 2014
was closed during 2019 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.

The Consortium CARE Scheme (CARE Scheme)

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
advisers where appropriate. The valuation of the scheme at
31 December 2019 was a deficit of £5.9m.

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. 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).

Administrative expenses and taxes

Current service costs

Operating expense

Interest cost

Interest on Scheme assets

Net interest (expense)/gain

Past service costs

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

Return on Scheme assets excluding interest on Scheme assets

Expense recognised in the Statement of Comprehensive Income

Expense recognised in total comprehensive income

Note

Year ended
30 November 2020

Year ended
30 November 2019

£000

(7)

(30)

(37)

(5,611)

5,528

(83)

(350)

(470)

(406)

(44,944)

2,197

(43,153)

26,851

(16,302)

(16,772)

£000

(174)

(88)

(262)

(7,219)

7,225

(256)

1,586

(45,476)

2,150

(41,740)

33,707

(8,033)

(8,289)

The effect of changes in financial assumptions is principally due to the reduction in the discount rate, see sensitivity information
further below in this Note 26.

GMP equalisation

Since the 30 November 2018 year-end an allowance has been made for the possible liabilities arising from potential adjustment of
benefits to allow for inequalities in any Guaranteed Minimum Pensions for current members. In November 2020, the High Court ruled
on the Lloyds Bank GMP inequalities case regarding the equalisation of post-1990 GMP within transfer values paid since 17 May 1990.
An estimated allowance for the potential costs of equalising the transfer values has been made. In the Director’s view, the range of
outcomes is not material even though this is an estimate.

RPI/CPI reform

On 25 November 2020, the government and UK Statistics Authority confirmed that RPI will be changing from February 2030 to bring
it into line with the CPIH index, with no compensation to the holders of index-linked gilts. In the year ended 30 November 2020, the
Group has revised the RPI and CPI assumptions to reflect the expectations that these reforms proceed as planned. The impact of
these changes in assumptions has increased the closing deficit by around £3m.

120

121

FINANCIAL STATEMENTS

Reconciliation of the Scheme assets and obligations through the year

Obligation by participant status

RM Scheme

CARE Scheme

Platinum Scheme

Year ended
30 November 2020

Year ended
30 November 2019

£000

Active

Vested deferreds

Retirees

Year ended
30 November 2020

Year ended
30 November 2019

£000

1,463

254,650

49,601

305,714

£000

976

216,540

45,623

263,139

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

Benefits paid

Past service cost (GMP)

Current service costs

Contributions from employees

At end of year

Pension deficit

Pension surplus

239,696

5,159

25,518

3,700

(5,924)

14,815

310

1,081

319

(607)

2,653

252

(7)

(44)

268,149

15,918

2,994

(241,542)

(19,920)

(1,677)

(5,160)

(39,980)

5,924

(130)

(280,888)

(12,739)

(413)

(2,731)

607

(40)

(22,497)

(6,579)

(38)

(442)

(180)

(30)

(6)

(2,329)

665

257,164

5,528

26,851

(7)

4,094

(6,575)

287,061

(263,139)

(5,611)

(43,153)

6,575

(350)

(30)

(6)

(305,714)

(19,318)

665

(18,653)

218,330

7,225

33,707

(174)

4,618

(6,561)

257,164

(220,634)

(7,219)

(41,740)

6,561

(88)

(19)

(263,139)

(6,951)

976

(5,975)

Net pension deficit

(12,739)

(6,579)

Included within the CARE Scheme obligations is an unfunded liability of £183,000 (2019: £190,000)
which is a liability of the Group and not the Scheme.

Reconciliation of net defined benefit obligation

Year ended
30 November 2020

Year ended
30 November 2019

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

(5,975)

(470)

(16,302)

4,094

(18,653)

£000

(2,304)

(256)

(8,033)

4,618

(5,975)

Under the current agreements, the Group expect to pay approximately £4,400,000 in contributions in the year ending 30 November 2021.

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

Weighted average duration of defined benefit obligation

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)

Year ended
30 November 2020

Year ended
30 November 2019

£000

1,629

135,547

2,995

117,486

29,404

287,061

986

128,445

2,653

97,191

27,889

257,164

Year ended
30 November 2020

Year ended
30 November 2019

1.60%

1.50%

1.60%

2.90%

2.10%

N/A

1.50%

2.80%

2.00%

2.15%

2.10%

2.20%

2.95%

1.85%

1.50%

2.85%

2.00%

S2PA CMI 2019 1.25%

S2PA CMI 2018 1.25%

23 years

22.4

23.7

22.3

23.6

122

123

FINANCIAL STATEMENTS

Expected cash flows

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

Expected employer contributions for the following year ended 30 November

Expected total benefit payments

Year 1

Year 2

Year 3

Year 4

Year 5

Years 6 - 10

Year ended
30 November 2020

Year ended
30 November 2019

£000

4,583

3,831

4,258

4,625

4,860

5,334

£000

4,325

3,540

3,850

4,285

4,633

4,947

The RM plc Employee Share Trust (EST) was established in March 2003 to hedge the future obligations of the Group in respect of shares
awarded under the RM plc Co-Investment Plan, RM plc Performance Share Plan and Deferred Bonus Plan. The EST has waived any
entitlement to the receipt of normal dividends in respect of all of its holding of the Company’s ordinary shares. The EST’s waiver of
dividends may be revoked or varied at any time.

Company and Group

At 1 December 2018

Shares released to award holders

At 30 November 2019

Shares released to award holders

At 30 November 2020

Ordinary shares of 22/7p

Number ‘000

2,013

(614)

1,399

(230)

1,169

£000

1,423

(416)

1,007

(166)

841

33,946

32,025

The valuation of the shares is weighted average cost. The maximum number of own shares held in the year 1,398,921.

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

--------------------------------- 30 November 2020 ---------------------------------

30 November 2019

-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

287.1

287.5

286.7

286.9

287.2

288.4

Present value of Scheme obligations

(305.7)

(312.8)

(298.8)

(300.5)

(311.1)

(316.1)

Net pension deficit

(18.6)

(25.3)

(12.1)

(13.6)

(23.9)

(27.7)

Actuarial assumptions

Discount rate (RM Scheme)

1.60%

1.50%

1.70%

1.60%

Discount rate (CARE Scheme)

1.50%

1.40%

1.60%

1.50%

Discount rate (Platinum Scheme)

1.60%

1.50%

1.70%

1.60%

Rate of RPI

Rate of CPI

Mortality table

2.90%

2.80%

3.00%

2.90%

2.10%

2.00%

2.20%

2.10%

--------------------------- S2PA CMI 2019 1.25% ---------------------------

S2PA CMI 2018 1.25%

The key estimation sensitivities are the discount rate applied to pension liabilities together with RPI/CPI and mortality as shown
in the above table. We note that every 0.1% movement in discount rate has a c.£7m impact on the deficit and a 0.1% movement
in RPI has a c.£5m impact.

Over the last year, with the COVID-19 pandemic impacting globally, equity markets and corporate bond yields have been volatile.
This has caused the deterioration in the discounts rates and increased our pension obligation at 30 November 2020. Whilst the
COVID-19 pandemic has led to this volatility in the market, it is too early for mortality assumptions to see any impacts.

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.

124

Base

£m

257.2

(263.2)

(6.0)

2.15%

2.10%

2.15%

2.95%

1.85%

2 8 . S H A R E - B A S E D P AY M E N T S

The Group operates the following executive and employee equity-settled share-based payment 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 2020. 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. The weighted average fair value of the award made during
the year was £1.225 per share and key assumptions include risk free rate of 0.32%, dividend yield of 4.5% and volatility of Company
share price of 41%.

Share-based payment awards exercised in the period and disclosed in the statement of changes in equity represents the impact on
retained earnings of releasing the fair value charge accrued under IFRS 2 Share-based payment, which for deferred bonus scheme is
partially matched by the release of own shares held.

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 2018

Granted during the year

Lapsed during the year

Exercised during the year

At 30 November 2019

Granted during the year

Lapsed during the year

Exercised during the year

At 30 November 2020

Maximum number of shares

Market price on grant

2,374,255

954,000

(623,000)

(614,255)

2,091,000

712,500

(530,000)

(270,000)

2,003,500

£2.42

£1.72

125

FINANCIAL STATEMENTS

The plans outstanding at 30 November 2020 had a weighted average contractual life of 1.3 years (2019: 1.3 years). The weighted average
exercise price was £nil (2018: £nil). The weighted average market share price at date of exercise was £2.43 (2019: £2.44).

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 27.

Performance conditions – estimation uncertainty

Assigning a fair value charge to share-based payments requires estimation of: the projected share price; the number of instruments
which are likely to vest; other non-market based performance conditions.

3 0 . L E A S E S A N D C O M M I T M E N T S

Lease commitments

Following the adoption of IFRS 16 in the year, the outstanding lease commitments for leases that fall within the scope of
IFRS 16 are recognised in the balance sheet as lease liabilities (see Note 22). Other leases that are of low value or less than
a year (except properties) are disclosed in the table below.

Group

Within 1 year

In years 2 to 5 inclusive

2020

£000

2019

£000

2,557

4,339

6,896

2019 has not been restated for the adoption of IFRS 16 and as such the commitments are all shown in the above table. The difference
between the lease commitments as presented above for the prior year and the lease liability on transition date is due to the transition
adjustments for rent-free periods on property leases, the consideration of the enforceable lease terms on some property leases and
that some leases presented above are not captured under IFRS 16.

2 9 . 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 no operating leases.

Capital commitments

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.

At 30 November 2020 amounts contracted but not provided for total £1,896,000 and relate to outstanding commitments on the
ERP project cost (2019: £2,499,700). The Company had no capital commitments during the year.

126

127

FINANCIAL STATEMENTS

3 1 . 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

Trade and other payables – non-current

Group

Company

Note

2020

£000

2019

£000

2020

£000

2019

£000

26,402

25,624

22,957

5,941

939

5,534

7,329

847

32,406

32,097

7,329

23,804

(44,853)

(37,891)

(64,273)

(72,927)

(18,147)

Bank loans and overdrafts

(7,259)

(20,540)

(4,779)

(16,534)

(70,259)

(58,431)

(69,052)

(89,461)

All financial assets are classified as loans and receivables.

All liabilities classified as financial liabilities are held at amortised cost except for forward foreign exchange contracts of £76,000
(2019: £461,000) which are classified as fair value through profit or loss.

The Directors consider that the carrying amount of all financial assets and financial liabilities approximates their fair value, therefore
fair value information for financial assets and financial liabilities not shown at fair value is not disclosed.

It is, and has been throughout the period under review, the Group’s policy that no trading in financial instruments shall be undertaken
and the Group does not hold or issue derivative financial instruments for speculative purposes.

The main risks arising from the Company’s financial assets and liabilities are market risk (foreign currency risk and interest rate risk),
credit risk and liquidity risk. The Board reviews and agrees policies on a regular basis for managing the risks associated with these
assets and liabilities.

Foreign currency risk

a) Translation

All financial assets are classified as loans and receivables.

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 75-100% 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 75-85% 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:

2020

Forward contract

Forward contract value

Mark to market value

Currency

US Dollar

Indian Rupee

Contract type

Currency ‘000

Buy

1,680

622,227

£000

(1,288)

(6,218)

(7,506)

2019

£000

(1,318)

(6,264)

(7,582)

Fair value

£000

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)

£000

(10,418)

(8,759)

(19,177)

£000

170

291

461

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 £7,506,000 (2019: £18,716,000) and fair value liability
of £76,000 (2019: £461,000) 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 £385,000
(2019: debit of £814,000) 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 2020 (2019: 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.

128

129

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 (decrease)/increase if there were a 10% increase 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

2020

2019

Nominal value

Fair value

Nominal value

Fair value

£000

(7,506)

£000

(18,716)

£000

461

2020

Income

£000

Equity

£000

2019

Income

£000

(23)

(555)

(23)

(549)

325

(245)

(660)

Equity

£000

(245)

(1,387)

332

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 £16,309,000 (2019: £24,134,000) and the maximum borrowings position was £29,619,000 (2019: £38,682,000).

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. During the year a 2020 extension to 3.5 Net Debt/EBITDA was agreed with the lenders. 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 £5.0m 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

Floating rate

Interest free

£000

Total

£000

Floating rate

Interest free

Sterling cash and cash equivalents/(overdraft)

(8)

(4,006)

2020

2019

133

1,704

158

108

355

839

158

108

355

972

£000

105

1,758

1,641

681

760

364

225

Total

£000

(3,901)

1,758

1,641

681

760

364

225

125

3,336

3,461

(4,006)

5,534

1,528

5,000

17,000

US Dollar

Euro

Indian Rupee

Singapore Dollar

Australian Dollar

New Zealand Dollar

Swedish Krona

Cash and cash equivalents

Borrowings – Sterling

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

2020

2019

Weighted average

Floating rate

interest rate

Floating rate

interest rate

£000

5,941

(2,480)

(5,000)

0.41

1.67

1.54

5,534

847

(4,006)

(17,000)

1.25

11.75

3.27

2.00

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

Group

1% increase in interest rates

1% decrease in interest rates

2020

2019

Income sensitivity

Equity sensitivity

Income sensitivity

Equity sensitivity

£000

(15)

£000

(15)

£000

(155)

155

£000

(155)

155

130

131

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 19 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

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 payable

Dividends received

Year ended
30 November 2020

Year ended
30 November 2019

£000

(891)

(1,153)

5,000

(964)

(1,341)

11,000

Total amounts owed between the Company and its subsidiary undertakings are disclosed in Notes 19 and 22 respectively.

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.

c) Other related party transactions

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 2 . R E L A T E D P A R T Y T R A N S A C T I O N S

a) Key management personnel

The remuneration of the Directors and other key management personnel of the Group during the year, in aggregate, was:

Group

Short-term employee benefits

Post-employment benefits

Termination payments

Share-based payments

Year ended
30 November 2020

Year ended
30 November 2019

£000

1,574

129

427

2,216

£000

2,590

135

238

408

3,371

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 £800 (2019: £1,107).
At the year end there is a balance of £nil (2019: £nil) outstanding.

Grant Thornton LLP

Deena Mattar, Non-executive Director of RM plc until 31 July 2020, is a non-executive of the Partnership Oversight Board of Grant Thornton.
There were no services in the period to 31 July 2020.

In the prior year; payments were made of £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.

UBM plc

Patrick Neil Martell, Non-executive Director of RM plc, is Chief Executive Officer of Informa plc. In the year a payment of £3,900 was made to
UBM plc, a subsidiary of Informa plc, relating to an online subscription for legal guidance (2019: £9,136).

Bellevue Place Education Trust

Vicky Griffiths, a Non-executive Director is a director of Bellevue Place Education Trust. RM Resources made sales of £112.
At the year end there is a balance of £nil outstanding.

Dulwich College Junior School

Share-based payments above include a fair value charge for executive Directors of £40,054 (2019: £231,355) in respect of awards to
David Brooks and £199,686 (2019: £203,289) in respect of Neil Martin.

The husband of Vicky Griffiths, a Non-executive Director is Head Teacher of Dulwich College Junior School.
RM Resources made sales of £3,996. At year end there is a balance of £891 outstanding.

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

132

133

FINANCIAL STATEMENTS

3 3 . I M P A C T O F A D O P T I O N O F I F R S 1 6 – L E A S E S

IFRS 16 Leases sets out the principles for the recognition, measurement, presentation and disclosure of leases. It has replaced existing
lease guidance, including IAS 17 Leases and IFRIC 4. IFRS 16 is effective for annual periods beginning on or after 1 January 2019.

The Group has used the modified retrospective adoption approach under which the Group has applied all of the requirements of IFRS 16
with effect from 1 December 2019.

The Group has made opening balance sheet adjustments arising from changes to the accounting for lease contracts.
The impact of the new standard at 1 December 2019 is set out below:

As reported

IFRS 16 impact

Adopted IFRS 16

£000

Non-current assets

Right-of-use assets

Other non-current assets

Current assets

Total assets

Current liabilities

Trade and other payables

Lease liabilities

Other current liabilities

Net current assets/(liabilities)

Non-current liabilities

Total liabilities

Net assets

89,129

61,577

150,706

(51,231)

(5,708)

(56,939)

4,638

(34,192)

(91,131)

59,575

7,031

210

(7,241)

(7,031)

7,031

89,129

96,160

61,577

157,737

(51,021)

(7,241)

(5,708)

(63,970)

(2,393)

(34,192)

(98,162)

59,575

As a lessee, the Group previously classified leases as operating or finance leases based on its assessment of whether the lease
transferred significantly all of the risks and rewards incidental to ownership of the underlying asset to the Group. Under IFRS 16, the
Group recognises right-of-use assets and lease liabilities for all the leases on its balance sheet. The Group used the following practical
expedients when applying IFRS 16 to leases previously classified as operating leases:

• applied the exemption not to recognise right-of-use assets and liabilities for leases of low value or for which the lease term ends

within 12 months of the date of initial application if the lease is not anticipated to renew, on a lease-by-lease basis

• excluded initial direct costs from the measurement of the right-of-use asset at the date of initial application

• used hindsight when determining the lease term if the contract contains options to extend or terminate the lease

• applied the exemption not to separate non-lease components such as service charges from lease rental charges

Previously the Company determined at contract inception whether an arrangement was or contained a lease under IFRIC 4:
Determining whether an Arrangement contains a Lease. The Company now assesses whether a contract is or contains a lease based
on the definition of a lease, as explained in Note 1. On transition to IFRS 16, the Company elected to apply the practical expedient to
apply IFRS 16 only to contracts that were previously identified as leases. Contracts that were not previously identified as leases under
IAS 17 and IFRIC 4 were not reassessed for whether there is a lease under IFRS 16. Therefore, the definition of a lease under IFRS 16 was
applied only to contracts entered into or changed on or after 1 December 2019.

Under transition rules for leases classified as operating leases, lease liabilities were measured at the present value of the remaining
lease payments, discounted at the Group’s incremental borrowing rate at 1 December 2019. The weighted average discount rate on
transition was 1.98%.

Operating lease commitment at 30 November 2019

Discounted using incremental borrowing rate at 1 December 2019

Short-term and low-value leases

Extension and termination options reasonably certain to be exercised

Lease liabilities recognised at 1 December 2019

Extension options

£000

6,896

6,552

(165)

854

7,241

Some property leases contain options exercisable by the Group to vary the lease term. The Group assesses at the lease
commencement date or at the date of transition whether it is reasonably certain to exercise its options and the most likely lease term is
used in determining the lease liability.

The Group has estimated that the potential future lease payments, should it exercise the extension option, would result in an increase
in lease liability of £3.2m.

Right-of-use assets are measured at cost, which comprised the initial amount of the lease liability adjusted for any lease payments
made at or before the adoption date, less any lease incentives received at or before the adoption date.

At 1 December 2019 the Group had no lease commitments previously classified as finance leases under IAS 17.

The Group is not required to make any adjustments on transition to IFRS 16 for which it acts as a lessor.

134

135

FINANCIAL STATEMENTS

Detailed primary statement restatements

Impact on the Consolidated Statement of Financial Position

Detailed primary statement restatements arising from the adoption of IFRS 16 are set out below.

Impact on the Consolidated Income Statement

As reported

IFRS 16 impact

adoption of IFRS 16

Amounts before

Revenue

Cost of sales

Gross profit

Operating expenses

Impairment losses

Profit from operations

Investment income

Finance costs

Profit before tax

Tax

Profit for the period

£000

188,999

(115,034)

73,965

(61,489)

(953)

11,523

(1,055)

10,489

(2,075)

8,414

£000

153

220

(151)

(13)

£000

188,999

(115,101)

73,898

(61,642)

(953)

11,303

(904)

10,420

(2,062)

8,358

The IFRS 16 impact includes an increase in depreciation of £2.5m and a reduction of lease expenses of £2.7m.

Non-current assets

Goodwill

Other intangible assets

Property, plant and equipment

Right-of-use assets

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

Corporation tax assets

Cash and short-term deposits

Total assets

Current liabilities

Trade and other payables

Tax liabilities

Provisions

Overdraft

Net current (liabilities)/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

49,322

22,354

8,423

19,391

665

3,420

5,333

108,971

18,594

31,317

728

4,793

2,030

5,941

63,403

172,374

(61,491)

(163)

(435)

(2,480)

(64,569)

(1,166)

(20,987)

(3,998)

(3,339)

(19,318)

(4,779)

(52,421)

(116,990)

55,384

1,917

27,080

(841)

(65)

(702)

27,901

55,384

IFRS 16 impact

adoption of IFRS 16

Amounts before

£000

19,391

2,660

(13)

2,647

22,038

(3,835)

(1,188)

(18,147)

(21,982)

£000

49,322

22,354

8,423

665

3,420

5,333

89,580

18,594

28,657

728

4,793

2,043

5,941

60,756

150,336

(57,656)

(163)

(435)

(2,480)

(60,734)

(2,840)

(3,998)

(3,339)

(19,318)

(4,779)

(34,274)

(95,008)

55,328

1,917

27,080

(841)

(65)

(702)

27,845

55,328

136

137

FINANCIAL STATEMENTSRight-of-use assets: non-current assets have been impacted
due to recognition of right-of-use assets on 1 December 2019.
The right-of-use assets are initially measured at cost, which
comprises the initial amount of the lease liability adjusted for
any lease payments made at or before the adoption date less
any lease incentives received at or before the adoption date
(reclassified on the opening balance sheet).

Lease liabilities: Financial liabilities have been impacted due
to the recognition of lease liabilities. This liability is initially
measured at the present value of the lease payments that are
not paid at the adoption date, discounted using the Group’s
incremental borrowing rate. The lease payments comprise
fixed payments, including in-substance fixed payments such
as service charges and variable lease payments that depend
on an index or a rate, initially measured using the minimum
index or rate at commencement date. The lease liabilities
have been classified between current and non-current.

Impact on the Half year Condensed Consolidated
Statement of Cash Flows

As a result of the adoption of IFRS 16, certain reclassifications
are required in relation to the recognition of right-of-use
assets and lease liabilities. Although IFRS 16 has no impact
on the Group's total cash flow, outflows from financing
activities increase while cash outflows from operating
activities decrease, as recognition of rental costs, previously
recognised solely as cash outflows from operations are now
apportioned between finance charges and reduction of the
lease obligation.

Impact on the Consolidated Statement of Changes in
Equity

Consolidated statement of changes in equity as at 1 December
2019 shows the cumulative effect of initially applying IFRS 16 as
nil impact.

138

139

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 2020 final dividend

Record date for 2020 final dividend

Annual General Meeting

Payment of 2020 final dividend

Announcement of 2021 interim results

18 March 2021

19 March 2021

8 April 2021

30 April 2021

July 2021

Preliminary announcement of 2021 results

February 2022

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
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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.

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and updates. To sign up to receive e-communications go to
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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.

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

C O M P A N Y S E C R E T A R Y

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

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

Headland PR Consultancy LLP
1 Suffolk Lane
London EC4R 0AX

R E G I S T R A R

Link Group
10th Floor
Central Square
29 Wellington Street
Leeds LS1 4DL

L E G A L A D V I S O R

Osborne Clarke
One London Wall
London EC2Y 5EB

140

141

GOVERNANCE142B Park Drive

Milton Park

Milton

Abingdon

Oxfordshire

OX14 4SE

Telephone: +44 (0)8450 700 300

Stock code: RM.