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RTC Group PLC  -  RTC   

Final results for the year ended 31 December 2016

Released 07:00 27-Feb-2017

RNS Number : 8449X
RTC Group PLC
27 February 2017
 

27 February 2017

 

RTC Group Plc

 

("RTC", "the Company" or "the Group")

 

Final results for the year ended 31 December 2016

 

RTC Group Plc (AIM: RTC.L), the engineering and technical recruitment company, is pleased to announce its audited results for the year ended 31 December 2016.

 

Highlights

 

·     Group revenue £67.9m (2015: £64.9m)

·     Gross profit £12.1m (2015: £12.7m)

·     Profit before tax £1.1m (2015: £1.3m)

·     Earnings per share (basic) 5.80p (2015: 7.85p)

·     Cash inflow from operations £1.7m (2015: £0.5m)

 

During the year, the Company paid an interim dividend of £152,549 (2015: £136,631) to its equity shareholders. This represents a payment of 1.1p (2015: 1.0p) per share. A final dividend of £277,363 (2015: £277,363) has been proposed but has not been accrued within these financial statements. This represents a payment of 2.0p (2015: 2.0p) per share.  A resolution regarding the recommended final dividend is to be considered at the Company's forthcoming 2017 Annual General Meeting, which is due to be held on 19 April 2017.  If shareholders approve the recommended final dividend, then this will be paid on 3 July 2017 to all holders of shares who are on the register of members at the close of business on 9 June 2017, with an ex-dividend date of 8 June 2017.

 

Commenting on the results Andy Pendlebury, CEO said:

"2016 was another positive year for RTC. Ganymede continues to build its reputation as a leading supplier to Network Rail on its CP5 maintenance and renewals programmes. ATA's regional branch network delivered another solid year and the ATA project business, despite its third quarter difficulties, rebounded strongly in the last quarter of the year. Whilst overall Group revenue has only increased modestly from 2015 and gross margin and net profit were not as originally hoped, cash generation was strong and we are pleased to be able to propose a 2.0p per share final dividend.

We will continue to build value for shareholders through the further implementation of the Board's strategic plan of building and investing in complimentary subsidiary businesses.   RTC will seek to develop new opportunities for growth through the delivery of both independent and integrated solutions for existing and new clients.  Our success in capturing multi-subsidiary business opportunities is growing and as more clients are aggressively accelerating supply chain consolidation, we believe our strategic advantage will gather pace."

Enquiries:

 

RTC Group Plc

Tel: 0133 286 1835

Bill Douie, Chairman


Andy Pendlebury, Chief Executive




SPARK Advisory Partners Limited (Nominated Adviser)

Matt Davis / Mark Brady

www.Sparkadvisorypartners.com

 

                                      Tel: 0203 368 3550

Whitman Howard Limited (Broker)

Nick Lovering / Francis North

www.Whitman-howard.com

Tel: 020 7659 1234

 

About RTC

 

RTC has three principal trading subsidiaries engaged in recruitment services:

 

·     ATA is one of the UK's leading engineering and technical recruitment consultancies. Supplying white and blue collar engineering and technical staff to a broad range of SME clients and vertical markets;

·     Ganymede is focused on the supply and operation of blue collar contingent labour into safety critical markets; and

·     GSS predominantly provides managed service solutions for international clients.

 

www.rtcgroupplc.co.uk

 

Note: This announcement contains inside information which is disclosed in accordance with the Market Abuse Regulation.

 

 



Chairman's statement

For the year ended 31 December 2016

 

I am pleased to present the final report for the year.

 

Group

2016 has seen continued expansion of Group revenues at £67.9m (2015: £64.9m) but has been marked by some important changes, both internal and external.  This has resulted in a setback in Group gross profits at £12.1m (2015: £12.7m) and Group pre-tax profits at £1.1m (2015: £1.3m).  Basic earnings per share at 5.80p (2015: 7.85p) have been further affected by a higher tax charge in 2016 (refer note 3).

 

The international division, Global Staffing Solutions, has enjoyed a better than expected year as operations in Afghanistan stabilised and other sources of revenue emerged.  We have, however, decided to discontinue our venture in Qatar.

 

ATA had a largely satisfactory year but was affected by some delays in decisions concerning infrastructure projects during the third quarter.  The year ended on a strong note.

 

The UK labour supply division, Ganymede, continued to prosper with demand in the Railway industry for blue collar workers exceeding expectations leading to a busy year end and an extremely pleasing performance for the year.

 

2016 was a year of major change at the Derby Conference Centre, which is contained within the Central Services segment, as new lease arrangements bedded in and space vacated by an outgoing tenant was successfully re-let by the year end.  Major changes in the utilisation of the buildings were completed and the entire premises are now available for revenue earning purposes including the re-siting of our head office functions. These changes and associated costs resulted in an operating loss which is not expected to be repeated

 

Cash inflow from operations of £1.7m (2015: £0.5m) was strong and has been both invested in the Derby site in line with Group strategy and paid out in dividends to shareholders.

 

Capital investment

Our strong trading performance has enabled us to continue carefully focused increases in capital expenditure for systems improvement and the investment of £1.1m to re-structure the Derby site. 

 

Dividends

In pursuance of our policy, an interim dividend of 1.1p has been paid, (2015: 1.0p).  The Directors are now proposing a final dividend for the 2016 year of 2.0p per share, (2015: 2.0p), subject to approval by shareholders at the Annual General Meeting on 19th April 2017.

 

 



Chairman's statement

For the year ended 31 December 2016

 

 

Outlook

RTC has started 2017 positively, building on the strong finish to 2016.  ATA and Ganymede are well placed to take advantage of economic growth and any increases in infrastructure spending, particularly on our overstretched railway system. Global Staffing Solutions is now stable, has continuing flows of demand from its longstanding client in Afghanistan and is their preferred supplier for other operations internationally.  The Derby Conference Centre has, with one exception, now completed expenditure on improvements and is experiencing solid demand for its services. 

 

These are exciting times with many opportunities and although the global situation must continue to cause apprehension the UK economy continues to perform gratifyingly well and as a result we view the future with confidence.

 

 

Staff

I should like to thank our staff at all levels for their loyalty, hard work and enthusiasm.

 

 

 

W J C Douie                                                                                                                        26 February 2017

Chairman                                                                                                                                                                                                           

 

 



Chief executive's operational and strategic review

For the year ended 31 December 2016

 

Background

Over the past few years, I have outlined for our shareholders an honest and open assessment of the key challenges the Group has faced whilst changing its strategic direction.  This began in 2014 with a detailed assessment of the range of strategic issues, many survival-based, which the Group faced, along with the actions taken and resulting outcomes to reposition the Group for future prosperity. A new Group structure and accompanying business model was presented and in 2015, following another year of significant growth, the Group Board reaffirmed both its belief in, and commitment to, this strategy. As Group Chief Executive, whilst I am disappointed that our plan was impacted negatively by post BREXIT uncertainties, I believe what we are building at RTC is extremely solid and capable of rebounding from this short-term disturbance.

Subsidiary company review 2016

ATA

2016 was a year of mixed fortunes for our ATA business. Having started the year very positively across both divisions of projects and branch network, our projects business was impacted significantly due to delays on a number infrastructure projects supported by the business. This affected the permanent revenue stream of ATA in the third quarter and was the driver behind the Group trading update issued in October 2016. ATA was not the only recruitment business to be broadsided by these economic events with many businesses highlighting potential trading concerns. I am pleased to say that the projects business rebounded solidly in the last quarter of the year and regained much of the ground lost.

Our branch network, which has been supporting UK manufacturing companies for over 50 years, had another solid year during which we began the process of consolidating the number of branches to increase efficiencies and provide greater focus through a smaller number of larger branches. Continued investment in database technology across both parts of ATA is bringing greater knowledge sharing for candidate management and client development, and a range of social media interface tools are being explored to provide better connectivity with both clients and candidates.

Ganymede

2016 was an exceptionally strong year for Ganymede. An 17% increase in organic revenue generated a 27% uplift in gross profit which translated into a near 50% increase in contribution to the Group. Gross profit conversion, the measure of net contribution as a percentage of gross profit, rose by over 16% from 2015.

Over the past 18 months, incremental efficiencies implemented as part of the Network Rail CP5 programme have gradually surfaced and enabled the business to continue to invest heavily in its approach to safety critical management and enhance and increase the effectiveness of its management structure and processes whilst posting an impressive financial performance. Additionally, and of significant importance, is that the growth in rail revenue has come from a blend of new business from within the CP5 programme and associated Network Rail business through solid operational performance and new business from other rail infrastructure companies showing the business's ability to seek out and capture market share from its main competitors.



Chief executive's operational and strategic review

For the year ended 31 December 2016

 

Ganymede Energy, acquired in 2014 to provide a diversification opportunity into the domestic energy and utility sector, had a very solid second year of growth and is making significant progress in pursuit of its ambitious growth plans in support of the Government's smart meter roll out programme. Ganymede's experience in mobilising high volumes of workers to multi-site locations in highly safety critical environments is a significant source of competitive advantage to the Ganymede Energy business and is already attracting impressive attention from many of the smart meter roll out companies.

Global Staffing Solutions

During 2016 Global Staffing Solutions successfully bid for and won various follow-on contracts for its work supporting KBR in Afghanistan and Iraq. There was an element of margin sacrifice during the year to secure the contracts and a range of efficiency savings offset some of the impact. The reduction in contribution also reflected the investment committed to investigate and implement a pilot business in Qatar. Following a 12 month in country review of the scale and scope of the opportunity and a thorough assessment of the associated risk, the Board deemed the business too risky to pursue and the operation was folded.  The focus of growth continues to centre around the strategic partnership with KBR and supporting their international bid programme with NATO and other direct government contracts.

Derby Conference Centre

A key component of the Central Services segment, the Derby Conference Centre, which is the headquarters for the RTC Group, underwent a significant enhancement and refurbishment programme in 2016. The facility is now unique in its heritage, being a grade II listed building with significant client history, a highly desirable headquarters for the Group, rental office accommodation site with full capacity rental from 1 January 2017, conferencing centre capable of hosting over 1,000 delegates, a business centre with first class networking facilities and hotel accommodation with over 50 bedrooms.

Whilst its current and forecast revenue and contribution are expected to be modest when compared with other Group subsidiaries, the business it plays a pivotal role in assisting the Group to develop inter-subsidiary business.  Through the Conference Centre, RTC has attracted a significant number of blue-chip clients to host events which has led to networking opportunities for other Group subsidiary businesses. A forthcoming Department for International Trade event to be held on 1 March 2017 is a good example of this. The event will host the Swiss rail inward investment mission where many rail companies from the Midlands will congregate in Derby to meet with two of Switzerland's most significant rail organisations; Stadler Rail and SBB. Ganymede and ATA will be in attendance and exploring new business opportunities in both white and blue collar recruitment.

This ability to leverage all aspects of Group subsidiary assets is a central plank of our strategic business model and a clear competitive advantage on our competitors.



Chief executive's operational and strategic review

For the year ended 31 December 2016

 

 

Our people

The biggest determinant of our achievements are our people and our company has survived incredible change, endured extreme competition in all our markets and despite these challenges created a business with enormous opportunities because of the quality of people we employ across the whole Group. We have achieved some fantastic things together and many more lie ahead for us. Our work ethic, culture and ethos set us apart and are a great source of our competitive advantage. Therefore, on behalf of the Board of directors of RTC, I would like to say a huge thank you to everybody employed in our businesses.     

 

 

 

 

 

A M Pendlebury

Group Chief Executive                                                                                                                  26 February 2017

 



Finance Director's statement

For the year ended 31 December 2016

 

Financial highlights

In the year ended 31 December 2016, Group delivered revenue of £67.9m (2015: £64.9m).  Group gross margin reduced to 18% (2015: 20%) as a result of a change in business mix from permanent to contract revenue reflecting the short-term issues at ATA.

 

Acquisitions

The Group continues to look for acquisition opportunities that meet our strategic requirements.

 

Taxation

The total tax charge for the year was £0.3m (2015: £0.2m). The variance between this and the expected charge if a 20% corporation tax rate was applied to the profit for the year is explained in note 3.

 

Dividends

During the year, the Company paid an interim dividend of £152,549 (2015: £136,631) to its equity shareholders. This represents a payment of 1.1p (2015: 1.0p) per share.

 

The Derby site

Following the signing of a new 15-year lease in 2015, surplus space at the Derby site has now been re-let on 5-7 year leases in line with the Group's strategy for reducing central costs by maximising revenue from the site. The Derby Conference Centre within Central Services contributes further towards this aim by generating income from its business club, conferencing and corporate events.

Statement of financial position, cash generation and financing

Net working capital has decreased to £1.4m (2015: £1.8m) largely reflecting capital spend at the Derby site. The ratio of current assets to current liabilities is similar at 1.1 (2015: 1.2).  The Group's gearing ratio, which is calculated as total borrowings over net assets, has decreased slightly to 1.3 (2015: 1.4) and interest cover is 11.3 (2014: 14.1) Cash inflow from operations was £1.7m (2015: £0.5m) with operating cash conversion 143% (2015: 34%).

 

The Group's current bank facilities include an overdraft of £50,000 and a confidential invoice discounting facility of up to £9.0m with HSBC. Both are renewable annually. The next review is due in February 2018. The Group is currently operating well within its facility.

The Board closely monitors the level of facility utilisation and availability, to ensure that there is sufficient headroom to manage current operations and support the growth of the business. The Group continues to be focused on cash generation and building a robust balance sheet.

 

 

 

 

 

S L Dye                                                                                                                                  26 February 2017

Group Finance Director                                                                                



Consolidated statement of comprehensive income

For the year ended 31 December 2016

 

 


 

 

2016

2015

 

 

Note

£'000

£'000

Revenue



67,900

64,899

Cost of sales



(55,794)

(52,198)

Gross profit


 

12,106

12,701

Administrative expenses



(10,929)

(11,321)

Profit from operations



1,177

1,380

Finance expense



(104)

(98)

Profit before tax


 

1,073

1,282

Tax expense


3

(273)

(172)

Total comprehensive income for the year



800

1,110


 

 

 

 

 

 

 

 

 

Earnings per ordinary share


 

 

 

Basic


4

5.80p

7.85p

Fully diluted


4

5.44p

7.49p

 

 

 



Consolidated statement of changes in equity

For the year ended 31 December 2016

 

 


Share capital

Share premium

Own shares held

 

Capital redemption reserve

Share based payment reserve

Retained earnings

Total equity


£'000

£'000

£'000

£'000

£'000

£'000

£'000

At 1 January 2016

143

66

(473)

50

54

3,080

2,920

Total comprehensive income for the period

-

-

-

-

-

800

800

Dividends

-

-

-

-

-

(430)

(430)

Share options exercised

2

30

-

-

(5)

5

32

Share based payment charge

-

-

-

-

46

-

46

At 31 December 2016

145

96

(473)

50

95

3,455

3,368

 

 

The information for the prior reporting period is as follows:

 


Share capital

Share premium

Own shares held

 

Capital redemption reserve

Share based payment reserve

Retained

earnings

Total equity


£'000

£'000

£'000

£'000

£'000

£'000

At 1 January 2015

135

-

-

50

26

2,230

2,441

Total comprehensive income for the period

-

-

-

-

-

1,110

1,110

Dividends

-

-

-

-

-

(272)

(272)

Own shares purchased

-

-

(473)

-

-

-

(473)

Share options exercised

8

66

-

-

(12)

12

74

Share based payment charge

-

-

-

-

40

-

40

At 31 December 2015

143

66

(473)

50

54

3,080

2,920

 

 

Consolidated statement of financial position

As at 31 December 2016

 


 

2016

2015



£'000

£'000

Assets


 

 

Non-current


 

 

Goodwill


132

132

Other intangible assets


642

736

Property, plant and equipment


1,260

345

Deferred tax asset


33

40


 

2,067

1,253

Current




Cash and cash equivalents


60

58

Inventories


12

13

Trade and other receivables


11,183

11,743


 

11,255

11,814

Total assets


13,322

13,067


 



Liabilities


 

 

Current


 

 

Trade and other payables


(5,429)

(5,925)

Corporation tax


(132)

(132)

Current borrowings


(4,289)

(3,982)



(9,850)

(10,039)


 



Non-current liabilities


 

 

Deferred tax liabilities


(104)

(108)

Net assets


3,368

2,920


 

 

 

Equity


 

 

Share capital


145

143

Share premium 


96

66

Capital redemption reserve


50

50

Own shares held


(473)

(473)

Share based payment reserve


95

54

Retained earnings


3,455

3,080

Total equity


3,368

2,920

 

The financial statements were approved and authorised for issue by the Board and were signed on its behalf on 26 February 2017 by:

 

 

 

 

A M Pendlebury                                                                                           S L Dye                                    

Director                                                                                                            Director

 



Consolidated statement of cash flows

For the year ended 31 December 2016

 

 



2016

2015



£'000

£'000

Cash flows from operating activities




Profit from operations


1,177

1,380

Adjustments for:


 

 

Depreciation and amortisation


382

305

Loss on disposal


5

-

Employee equity settled share options charge


46

40

Change in inventories


1

6

Change in trade and other receivables


560

(2,476)

Change in trade and other payables


(483)

1,212

Cash inflow from operations


1,688

467

Income tax paid


(270)

(226)

Net cash inflow from operating activities


1,418

241

Cash flows from investing activities


 

 

Purchases of property, plant and equipment


(1,129)

(54)

Purchase of intangible assets


(79)

(206)

Net cash used in investing activities


(1,208)

(260)

Cash flows from financing activities


 

 

Interest payments


(104)

(98)

Lease purchase payments


(11)

(11)

Dividends paid


(430)

(272)

Proceeds from exercise of share options


30

74

Purchase of own shares


-

(473)

Net cash outflow from financing activities


(515)

(780)

Net decrease in cash and cash equivalents from operations


(305)

(799)



 

 

Total net decrease in cash and cash equivalents


(305)

(799)

Cash and cash equivalents at beginning of period


(3,924)

(3,125)

Cash and cash equivalents at end of period


(4,229)

(3,924)

 



 

1.  Corporate information and basis of preparation

 

RTC Group Plc is a public limited company incorporated and domiciled in England whose shares are publicly traded. 

The announcement of results of the Group for the year ended 31 December 2016 was authorised for issue in accordance with a resolution of the directors on 26 February 2017.

 

The financial information included in this announcement has been compiled in accordance with the recognition and measurement criteria of International Financial Reporting Standards ("IFRS"), including International Accounting Standards ("IAS") and interpretations issued by the International Accounting Standards Board ("IASB") and its committees, and as adopted by the EU. This announcement does not itself however contain sufficient information to comply with IFRS.

 

The accounting policies adopted are consistent with those described in the annual financial statements for the year ended 31 December 2016.  There have been no significant changes in the basis upon which estimates have been determined, compared to those applied at 31 December 2015 and no change in estimate has had a material effect on the current period.

 

 

2.  Segment analysis

 

The Group is a provider of recruitment services that has its headquarters at the Derby Conference Centre which is contained within the Central Services segment.  The recruitment business comprises three distinct business units - ATA predominantly servicing the UK engineering market; GSS servicing the international market and Ganymede supplying labour into safety critical environments.

Segment information is provided below in respect of ATA, Ganymede, GSS and Central Services which, as well as being the head office and providing all central services for the Group, generates income from excess space at the Derby site including rental and conferencing facilities.

 

The Group manages the trading performance of each segment by monitoring operating contribution and centrally manages working capital, borrowings and equity.

 

Revenues are generated from permanent and temporary recruitment in the recruitment division.  Revenue is analysed by origin of customer/point of invoicing and as such all recruitment division revenues are supplied in the United Kingdom. 

 

During 2016, one customer in GSS contributed 10% or more of total revenue being £9.6m (2015: £9.6m) and one customer in Ganymede also contributed 10% or more of total revenue being £21.2m (2015: £15.5m).

 



 

The segment information for the current reporting period is as follows:

 

 

 



Recruitment


Central

Total


ATA

GSS 

Ganymede

Services

Group


£'000

£'000

£'000

£'000

£'000

External sales revenue

25,692

9,575

31,345

1,288

67,900

Cost of sales

(20,469)

(8,409)

(26,190)

(726)

(55,794)

Gross profit

5,223

1,166

5,155

562

12,106

Administrative expenses*

(3,854)

(787)

(2,795)

(3,105)

(10,541)

Amortisation of intangibles*

(41)

-

(132)

-

(173)

Depreciation*

(87)

(1)

(28)

(99)

(215)

Profit from operations

1,241

378

2,200

(2,642)

1,177

Tax expense





(273)

 

*combine to represent administrative expenses of £10,929,000 in the consolidated statement of comprehensive income.

 

The segment information for the prior reporting period is as follows:

 



Recruitment


Central

Total


ATA

GSS 

Ganymede

Services

Group


£'000

£'000

£'000

£'000

£'000

External sales revenue

26,676

9,693

26,682

1,848

64,899

Cost of sales

(20,591)

(8,205)

(22,621)

(781)

(52,198)

Gross profit

6,085

1,488

4,061

1,067

12,701

Administrative expenses*

(4,446)

(1,016)

(2,448)

(3,105)

(11,015)

Amortisation of intangibles*

-

-

(132)

-

(132)

Depreciation*

(113)

(1)

(8)

(52)

(174)

Profit from operations

1,526

471

1,473

(2,090)

1,380

Tax expense





(172)

 

*combine to represent administrative expenses of £11,321,000 in the consolidated statement of comprehensive income.

 

All operations are continuing. All assets and liabilities are held in the United Kingdom.

 

 

 

 

 



 

3.            Tax expense

 

               


2016

2015

Continuing operations

£'000

£'000

Analysis of tax:



Current tax



UK corporation tax

235

172

Adjustment in respect of previous period

35

2


270

174

Deferred tax



Origination and reversal of temporary differences

3

(2)

Tax

273

172

 

   Factors affecting the tax expense

The tax assessed for the year is greater than (2015: less than) would be expected by multiplying profit on ordinary activities by the standard rate of corporation tax in the UK of 20% (2015: 20.25%).  The differences are explained below:

 

Factors affecting tax expense




2016

2015


£'000

£'000

Result for the year before tax

1,073

1,282

Profit multiplied by standard rate of tax of 20% (2015: 20.25%)

215

260

Non-deductible expenses

45

11

Tax credit on exercise of options

(22)

(101)

Adjustment in respect of previous period

35

2

Tax charge for the year

273

172

 

 

 

 



 

 

4.         Basic and diluted earnings per share

 

The calculation of basic earnings per share is based on the earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year.

The calculation of all fully diluted earnings per share is based on the basic earnings per share adjusted to allow for dilutive potential ordinary shares.


Basic

Fully diluted


2016

2015

2016

2015

Earnings £'000

800

1,110

800

1,110

Basic weighted average number of shares

13,783,879

14,136,688

13,783,879

14,136,688

Dilutive effect of share options



933,326

688,491

Fully diluted weighted average number of shares



14,717,206

14,825,178

Earnings per share (pence)

5.80p

7.85p

5.44p

7.49p

 

5.         Dividends

During the year, the Company paid an interim dividend of £152,549 (2015: £136,631) to its equity shareholders. This represents a payment of 1.1p (2015: 1.0p) per share. A final dividend of £277,363 (2015: £277,363) has been proposed but has not been accrued within these financial statements. This represents a payment of 2.0p (2015: 2.0p) per share.

 

6.        Report and accounts

 

The above financial information does not constitute the Company's statutory accounts for the years ended 31 December 2016 or 2015 but is derived from those accounts. The auditor has reported on these accounts; their report was unqualified, did not draw any matters by way of emphasis without qualifying their report and did not contain statements under s498 (2) or (3) Companies Act 2006 or equivalent preceding legislation. The statutory accounts for 2015 have been filed with the Registrar of Companies.

 

Full audited accounts of RTC Group Plc for the year ended 31 December 2016 will be made available on the Company's website at www.rtcgroupplc.co.uk later today and will be dispatched to shareholders on 14 March 2017 and then be available from the Company's registered office - The Derby Conference Centre, London Road, Derby, DE24 8UX.

 

The Company's Annual General meeting will be held at 12 noon on 19 April 2017 at the offices of Gowling WLG (UK) LLP, 4 More London Riverside, London, SE1 2AU.

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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Final results for the year ended 31 December 2016 - RNS