Last checked at 1 Apr 2010 07:00
RTC Group Plc ("RTC", "the Company" or "the Group")
Preliminary results for the year ended 31 December 2009
RTC Group Plc, a support services group, which provides recruitment, training and conferencing services, is pleased to announce its preliminary results for the year ended 31 December 2009.
HIGHLIGHTS
Group operating loss before exceptional items of £1,740,000 (2008: profit £533,000).
Exceptional write down of goodwill given the uncertainty in the market place and the recent performance of the Training Division, an impairment charge of £674,000 has been recognised against the value of the goodwill relating to the training business (2008 : £250,000), writing the goodwill in this business down to £nil.
Group pre-tax loss after exceptional item of £2,419,000 (2008: profit £295,000).
Underlying, fully diluted, loss per share before exceptional items of 18.52p (2008: earnings 4.43p).
Dividends the Board believes that it would not be prudent to use financial resources to pay a final dividend at this time (2008: nil).
Recruitment incurred an operating loss of £718,000 (2008: profit £1,046,000).
Training incurred an operating loss of £631,000 (2008: loss £130,000).
Conferencing incurred an operating loss of £391,000 (2008: loss £383,000).
ENQUIRIES:
RTC Group Plc Tel: 01332 861 835
Bill Douie, Executive Chairman
Andy Pendlebury, Chief Executive
Evolution Securities Limited Tel: 0207 071 4300
Jeremy Ellis / Chris Clarke
Chairman's Statement
Group
The deterioration of trading conditions first experienced during 2008, which began to accelerate in the latter part of that year, further intensified in 2009, reaching a climax in the second quarter. By that time all trading activities were badly affected, although the slowdown in Conferencing continued to worsen as the year progressed. Major cost reduction programmes, initiated in 2008, were reinforced and, by the half year, the bulk of actions had been completed.
As a consequence, most of the costs associated with retrenchment occurred in the first half of the year resulting in an amplified operating loss. As projected in the interim results statement, the loss in the second half of the year was substantially reduced (before exceptional items) although the trading performance of Conferencing continued to deteriorate to the year end.
Trading
The Recruitment division performed well in very difficult conditions having engaged in a major programme of cost reduction and stabilisation, enhancing the quality of personnel in the locations. By the end of the first quarter volumes in both permanent and contract reached a low which was maintained for most of the rest of the year. The opportunity was taken to build further the strengths in our vertical markets and, by the end of the year there were encouraging signs that conditions were gradually improving and that the hard work in vertical markets was beginning to bear fruit.
A major drive for business in our labour supply company, Ganymede Solutions Limited, resulted in more than doubled turnover.
The Catalis training business continues to focus primarily in the rail sector where activity fell sharply as Network Rail significantly reduced spend across the industry during 2009. Although a number of serious cost cutting initiatives were deployed to counter this, retaining highly skilled training staff remains pivotal to the long term success of the business and we believe it would therefore be inappropriate to reduce headcount any further at this stage. By the year end initiatives taken to break even had been achieved but the costs of reduction and trading losses had badly affected the trading account.
The Derby Conference Centre made a promising start to 2009, enjoying enhanced gross margins resulting from major gains in efficiency masterminded by the new Managing Director. The expected slowdown in demand was slow to materialise as many of the regular clients were slow to react to the worsening economic environment. The downward trend in demand quickened during the year and operating losses in the second half increased.
Although there can be no room for over-optimism, overall Group trading performance appeared to have stabilised by the year end.
Capital Investment
During the year only essential repairs and maintenance expenditure was incurred.
Dividends
Your directors do not feel able to recommend any dividends for 2009.
Management
We completed the appointment of senior management for our operating subsidiaries during 2008 and without exception all experienced unprecedented levels of turbulence and challenges within their respective sectors. I am confident that our management team led by our Chief Executive is well placed to capitalise on growth opportunities as they emerge during 2010.
Corporate Governance
RTC Group is by any standards a small company which punches above its weight in respect of Corporate Governance experience. This is not the time to add unnecessary overheads but we will re-visit the subject of non-executive directors at a more stable economic time.
Outlook
We acquitted ourselves reasonably well in 2008, a year which became increasingly difficult. I would have liked to be able to paint a better picture for 2009 but there can be no doubt that conditions were severe verging on extreme in 2009 across the sectors in which we operate, particularly in the middle two quarters. The Company was well placed at the outset of the recession in having no borrowings and available banking facilities, a situation which has contributed greatly to our ability to get through this difficult period.
We have cut our costs significantly in the operating subsidiaries and have managed to markedly enhance the range and quality of central services without any material increase in central costs.
Although the collapse in confidence borne from problems in Banking and Finance in Q1 2009 has now abated, at least for the time being, there remain many problems to overcome before a return to calmer trading waters can be expected. There are credible reasons to fear that the economic shocks are not over and we must expect recovery to be extended. Nonetheless, there are emerging signs of rebuilt confidence and optimism across a number of our sectors. Accordingly, the Board will continue its review of all Group activities to ensure that structure and activities of the Group are appropriate to optimise the speed and extent of our return to profitability.
Trading in the first quarter has been affected to a degree by adverse weather conditions but, that aside, the Group is generally performing at or near to expectations in 2010. You will note that we have delayed the Annual General Meeting this year until June, not least because we expect to have completed our review of Group activities and will have more extensive trading performance under our belt. I expect to issue an update at that time.
Staff
As always, but this year in particular, there can be no more appropriate time for me to thank all our staff for their efforts and loyalty in 2009 and to acknowledge the universal strength and determination they have displayed.
WJC Douie, Chairman 31 March 2010
Chief Executive's Statement
2009 was a very tough year for the RTC Group. What was expected at the end of 2008 to develop into the most damaging economic crisis in recent history became a reality. Its impact across the Group was severe with many of our clients having to take immediate and in some cases brutal cost cutting decisions to ensure their own survival and future competitiveness in their respective sectors.
Each of the Group's operating businesses experienced a significant and rapid decline in revenues caused through a variety of consequences of the global economic meltdown. ATA Selection which supports mainly small to medium size manufacturing and engineering organisations was hit two fold. Firstly, through the enormous deterioration in domestic and international demand and secondly through the reluctance of the banking sector to provide adequate working capital and investment funding for the sector. Our ATA Vertical recruitment business which supports large scale rail, construction and infrastructure projects was equally affected as many developments were either put on hold or shelved indefinitely.
The Derby Conference Centre, our business which provides a complete range of conferencing and private function facilities fell victim to a large scale moratorium on conferencing spend as clients chose to use in house facilities to reduce costs, whilst Catalis our rail and safety training business operating out of Derby, Clapham and various client premises was, along with many other suppliers in the rail industry, significantly affected as Network Rail generated much lower levels of demand at the beginning of their new five year investment cycle.
To counter these events we initiated our own extensive cost cutting measures around the group and throughout 2009 we intensified our efforts to improve the business structurally and seek further optimisation of all individual company costs and central administration processes. The combined effects of the cost savings which began to filter through during the second half of 2009, our strong financial position as we entered the downturn and our track record of integrity, quality and professional excellence gives us optimism that despite the continuing fragility of the Global economic environment our strategy is still very sound. Whilst we appreciate that it is going to take considerable hard work, planning and agility, we believe we are now well placed to take advantage of the opportunities for growth which will emerge as the global economy rebounds.
On a positive note, not all our businesses suffered the same fate during this troubled period with Ganymede Solutions, our on track rail business, having picked up significant market share as its reputation in the rail maintenance and renewals market continues to impress major rail customers. Also our newly formed Defence and Aerospace vertical has won a large scale overseas deployment in a new target market for the Group and we successfully integrated the acquisition of Global Choice Recruitment, our oil and gas recruitment business, delivering new international opportunities.
Finally, as we look back at an exceptionally challenging 2009, we would like to acknowledge and thank our shareholders and clients for their continued loyalty and all of our employees who have worked tirelessly to deliver the services we provide to our clients.
A Pendlebury, Chief Executive 31 March 2010
Finance Director's Statement
Group Trading Summary 2009
Group revenue from continuing operations fell by 26% compared with 2008, with revenue declining across all divisions. Overall gross margin fell by 42% reflecting both reduced revenues per employee in tough market conditions and the impact of the 20% reduction in direct headcount. The operating loss before exceptional items for the year was £1,740,000 compared with an operating profit of £533,000 in 2008.
|
| 2009 | 2008 |
|
| £'000 | £'000 |
| Revenue |
|
|
|
|
|
|
| Recruitment | 15,343 | 20,646 |
| Training | 2,694 | 3,773 |
| Conferencing | 1,136 | 1,429 |
|
| 19,173 | 25,848 |
|
|
|
|
| Gross Margin |
|
|
|
|
|
|
| Recruitment | 1,713 | 3,607 |
| Training | 813 | 1,239 |
| Conferencing | 475 | 338 |
|
| 3,001 | 5,184 |
|
|
|
|
| Operating profit from continuing operations before exceptional items |
|
|
|
|
|
|
| Recruitment | (718) | 1,046 |
| Training | (631) | (130) |
| Conferencing | (391) | (383) |
|
| (1,740) | 533 |
Recruitment
The recruitment division consists of three trading entities. ATA Recruitment Limited, which operates both the ATA Selection division servicing the UK SME engineering market through its network of regional offices and ATA Verticals which provides to a number of markets through ATA Rail, ATA Energy and ATA Defence & Aerospace. Global Choice Recruitment Limited provides Oil & Gas recruitment and Ganymede Solutions Limited supplies blue collar labour into rail and other markets.
Recruitment Net Fee Income, representing total fees earned net of contractor wages, reduced by 41% in 2009 to £4.3m (2008: £7.2m).
Permanent placements made in the year fell by 54%, although revenue per placement rose 4% reflecting a higher level of fees in our vertical markets. The number of permanent placements made is a key measure of performance of the business and is measured on the basis of the vacancies filled per individual consultant. In 2009 the average placements per permanent consultant fell 17% from 2008 reflecting tougher market conditions.
White collar contract revenue fell by 36% compared with 2008, with the closing number of heads out falling by 37%.
Blue collar labour, supplied through Ganymede Solutions Limited, increased the number of hours supplied by 129%. This revenue growth has been achieved through a significant investment in the Company that resulted in gaining a contract to supply Network Rail for a further five years and from being a preferred supplier to a number of tier 1 suppliers.
Training
The training division consists of Catalis Limited, a leading training supplier into the rail market.
Revenue in 2009 was down 29% on 2008, impacted by renegotiated prices to secure signalling contracts in 2008, reduced market volumes in Rail Safety and the restructuring of the TRS & Operations division to reflect market demand. The Company responded to these lower revenues by reducing its cost base, such that trainer headcount was reduced by 25% and that utilisation per trainer was down by only 8%.
Conferencing
The conferencing division consists of The Derby Conference Centre Limited. Its revenue was down 21%, largely as a result of its largest customer to take much of its conferencing in-house.
Costs have been reduced significantly such that the division was able to achieve a 40% reduction in direct costs year on year.
Overheads
Group overheads increased slightly to £4,741,000 (2008: 4,651,000) , which reflects additional costs of making headcount reductions and also of investing in Ganymede Solutions. These costs have off-set savings that have been made across the businesses.
Finance Costs
Finance costs of £5,000 (2008: £12,000 investment income) reflect the Group's use of its invoice discounting facility during the year.
Tax
A tax credit of £74,000 has arisen during the year as a result of some losses being able to be carried back.
Cash flow and funding
Net cash used during the year was £256,000 leaving the Group with net borrowings of £148,000. As revenues declined the group benefited from reducing its working capital, with debtors falling from £4.9m to £2.3m.
The Group is funded through an invoice discounting facility with Lloyds TSB. This facility will allow the Group to fund future increases in working capital as revenues recover.
Principal Risks and Uncertainties
The ongoing impact on the groups operations of the current economic climate continues to be the principal risk and uncertainty to the group.
JM Kendall, Finance Director 31 March 2010
Consolidated Statement of Comprehensive Income
Year ended 31 December 2009
|
| 2009 | 2008 | ||
|
| £'000 | £'000 | £'000 | £'000 |
|
|
|
|
|
|
| Revenue | 19,173 |
| 25,848 |
|
| Cost of sales | (16,172) |
| (20,664) |
|
| Gross Profit |
| 3,001 |
| 5,184 |
| Administrative expenses - normal | (4,741) |
| (4,651) |
|
| Operating (loss)/profit before exceptional items |
| (1,740) |
| 533 |
| Administrative expenses - impairment of goodwill | (674) |
| (250) |
|
| Operating (loss)/profit after exceptional items |
| (2,414) |
| 283 |
| Investment income | - |
| 12 |
|
| Finance costs | (5) |
| - |
|
|
|
| (5) |
| 12 |
| (Loss)/profit before tax |
| (2,419) |
| 295 |
| Income tax expense |
| 74 |
| (157) |
| (Loss)/profit for the year attributable to equity holders |
| (2,345) |
| 138 |
|
|
|
|
|
|
| There are no further components of other comprehensive income which are not included in the (loss)/profit for the year. | ||||
|
|
|
|
|
|
| (Loss)/earnings per share |
|
|
|
|
| - continuing operations |
| (25.99) |
| 1.58p |
|
|
|
|
|
|
| Fully diluted (loss)/earnings per share |
|
|
|
|
| - continuing operations |
| (25.99) |
| 1.58p |
Consolidated Statement of Changes in Equity
Year ended 31 December 2009
|
| Share capital | Share premium account | Capital redemption reserve | Share based payment reserve | Retained earnings | Total equity |
|
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| At 1 January 2009 | 90 | 2,117 | 50 | 33 | 1,865 | 4,155 |
| Loss for the year | - | - | - | - | (2,345) | (2,345) |
| Total recognised income and expense for 2009 | 90 | 2,117 | 50 | 33 | (480) | 1,810 |
| Shares issued | - | - | - | - | - | - |
| Share based payment reserve | - | - | - | 5 | - | 5 |
| Dividends - note 10 | - | - | - | - | - | - |
| At 31 December 2009 | 90 | 2,117 | 50 | 38 | (480) | 1,815 |
Year ended 31 December 2008
|
| Share capital | Share premium account | Capital redemption reserve | Share based payment reserve | Retained earnings | Total equity |
|
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| At 1 January 2008 | 82 | 1,817 | 50 | 25 | 2,088 | 4,062 |
| Profit for the year | - | - | - | - | 138 | 138 |
| Total recognised income and expense for 2008 | 82 | 1,817 | 50 | 25 | 2,226 | 4,200 |
| Shares issued | 8 | 300 | - | - | - | 308 |
| Share based payment reserve | - | - | - | 8 | - | 8 |
| Dividends - note 10 | - |
| - | - | (361) | (361) |
| At 31 December 2008 | 90 | 2,117 | 50 | 33 | 1,865 | 4,155 |
Consolidated Statement of Financial Position
31 December 2009
|
| 2009 | 2008 | ||
|
Assets | £'000 | £'000 | £'000 | £'000 |
| Non current assets |
|
|
|
|
| Intangible assets | - |
| 674 |
|
| Property, plant and equipment | 691 |
| 757 |
|
| Deferred tax asset | 55 |
| 73 |
|
|
|
| 746 |
| 1,504 |
| Current assets |
|
|
|
|
| Inventories | 9 |
| 8 |
|
| Trade and other receivables | 2,919 |
| 5,420 |
|
| Cash and cash equivalents | 505 |
| 108 |
|
|
|
| 3,433 |
| 5,536 |
| Total assets |
| 4,179 |
| 7,040 |
| Liabilities |
|
|
|
|
| Current liabilities |
|
|
|
|
| Trade and other payables | (1,711) |
| (2,810) |
|
| Current borrowings | (653) |
| - |
|
| Current tax payable | - |
| (75) |
|
| Total liabilities |
| (2,364) |
| (2,885) |
| Net assets |
| 1,815 |
| 4,155 |
|
|
|
|
|
|
| Equity attributable to equity holders of the parent |
|
|
|
|
| Share capital |
| 90 |
| 90 |
| Share premium |
| 2,117 |
| 2,117 |
| Capital redemption reserve |
| 50 |
| 50 |
| Share based payment reserve |
| 38 |
| 33 |
| Retained earnings |
| (480) |
| 1,865 |
| Total equity |
| 1,815 |
| 4,155 |
Consolidated Statement of Cash Flows
Year ended 31 December 2009
|
| 2009
| 2008
|
|
| £'000 | £'000 |
| Cash flows from operating activities |
|
|
| Operating result from continuing operations | (2,414) | 283 |
| Adjustments for: |
|
|
| Employee equity settled share options | 5 | 8 |
| Depreciation | 312 | 311 |
| Impairment of goodwill | 674 | 250 |
| Profit on sale of property, plant and equipment | 4 | (4) |
| Change in inventories | (1) | - |
| Change in trade and other receivables | 2,593 | (505) |
| Change in trade and other payables | (1,099) | 145 |
| Cash generated from operations | 74 | 488 |
| Interest received | - | 12 |
| Interest paid | (5) | - |
| Income taxes paid | (75) | (275) |
| Net cash from/(used in) operating activities | (6) | 225 |
| Cash flows from investing activities |
|
|
|
Purchases of property, plant and equipment | (254) | (334) |
|
Proceeds from sale of property, plant and equipment | 4 | 8 |
| Disposal of businesses | - | - |
| Net cash from/(used in) investing activities | (250) | (326) |
|
|
|
|
| Cash from/(used) before financing | (256) | (101) |
| Cash flows from Financing activities |
|
|
|
Capital element of finance lease rental payments | - | (4) |
| Issue of ordinary share capital | - | 308 |
|
Equity dividends paid | - |
(361) |
| Net cash used in financing activities | - | (57) |
| Net (decrease)/increase in cash and cash equivalents | (256) | (158) |
| Cash and cash equivalents at the beginning of the period | 108 | 266 |
| Cash and cash equivalents at the end of the period | (148) | 108 |
Notes
1. CORPORATE INFORMATION
The preliminary statement of annual results of the Group for the year ended 31 December 2009 were authorised for issue in accordance with a resolution of the directors on 31 March 2010. RTC Group Plc is a public limited company incorporated and domiciled in England whose shares are publicly traded. The principal activities of the Group are described in note 5.
2. DIVIDENDS
The Board do not recommend the payment of a final dividend for the year.
3. EARNINGS PER SHARE
The calculation of earnings per share is based on a loss after tax expense of £2,345,000 (2008: profit £138,000) and a weighted average of 9,022,564 (2008: 8,751,394) shares in issue. Details of share options in place may be found in note 17.
The outstanding share options were not considered to be dilutive in 2009 nor 2008.
The earnings per share before exceptional items is calculated by using the loss after tax of £1,671,000 (2008: profit £138,000) and adding back the exceptional administrative charge of £674,000 (2008: £250,000) relating to the impairment of goodwill.
|
|
| 2009 | 2008 |
| (Loss)/earnings per share before exceptional items |
| (18.52) | 4.43p |
4. BASIS OF PREPARATION
These financial statements have been prepared in accordance with 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 for the first time, and those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
5. SEGMENTAL ANALYSIS
RTC Group Plc is a support services group which provides recruitment, training and conferencing services The Group's results are derived from these three classes of business, which are primarily conducted in the United Kingdom although there is a small international element. Further details of the classes of business is provided in the Finance Director's Statement.
The segmental analysis of turnover, Gross Margin and Operating profit before exceptional goodwill write off is as follows: -
|
| 2009 | 2008 |
|
| £'000 | £'000 |
| Revenue |
|
|
|
|
|
|
| Recruitment | 15,343 | 20,646 |
| Training | 2,694 | 3,773 |
| Conferencing | 1,136 | 1,429 |
|
| 19,173 | 25,848 |
|
|
|
|
| Gross Margin |
|
|
|
|
|
|
| Recruitment | 1,713 | 3,607 |
| Training | 813 | 1,239 |
| Conferencing | 475 | 338 |
|
| 3,001 | 5,184 |
|
|
|
|
| Operating profit from continuing operations before exceptional items |
|
|
|
|
|
|
| Recruitment | (718) | 1,046 |
| Training | (631) | (130) |
| Conferencing | (391) | (383) |
|
| (1,740) | 533 |
6. INCOME TAX EXPENSE
|
|
| 2009 | 2008 |
|
|
| £'000 | £'000 |
|
| Analysis of tax :- |
|
|
|
|
|
|
|
|
| Current Tax |
|
|
|
| UK corporation tax | - | (172) |
|
| Adjustment in respect of previous periods | 92 | (3) |
|
|
|
|
|
|
|
| 92 | (175) |
|
|
|
|
|
|
| Deferred Tax |
|
|
|
| Origination and reversal of temporary differences | (18) | 18 |
|
| Adjustment in respect of previous periods |
| - |
|
| Tax | 74 | (157) |
|
|
|
|
|
Report & Accounts
The above results do not represent the statutory accounts. The statutory accounts for 2008 have been filed with the Registrar of Companies, received an unqualified audit report and did not contain a statement under Section 237 (2) or (3) of the Companies Act 1985.
The statutory accounts for the year ended 31 December 2009 have been approved, received an unqualified audit report and did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006. The accounts will be mailed to shareholders shortly and will be available from the Company's registered office:- The Derby Conference Centre, London Road, Derby, DE24 8UX.