Last checked at 31 Mar 2009 07:00
RTC Group Plc ("RTC" or "the Company")
Preliminary results for the year ended 31 December 2008
RTC Group Plc, formerly ATA 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 2008.
HIGHLIGHTS
Group operating profits before exceptional items of £533,000 (2007: £747,000).
Group pre-tax profits of £295,000 (2007: £746,000).
Underlying, fully diluted, earnings per share before exceptional items of 4.43p (2007:6.07p).
Dividends the Board believes that it would not be prudent to use financial resources to pay a dividend at this time. The dividend for the year therefore remains at 1.5 p per share (2007: 4.0p).
Recruitment made continued progress and achieved operating profits of £1,046,000 (2007: £849,000).
Training had a slow start with an improved second half performance and incurred operating losses of £130,000 (2007: profit £202,000).
Conferencing significantly grew its revenues and restructured its operations incurring operating losses of £383,000 (2007: loss £304,000).
Exceptional write down of goodwill given the uncertainty in the market place and the recent performance of the Training Division, an impairment charge of £250,000 has been recognised against the value of the goodwill relating to the training business (2007 : £Nil)
Commenting on the results Bill Douie, Chairman, said:
"There do not seem to be any real signs of reversal of the current downward momentum in world GDP and we must expect to experience difficult times in the short term. Against this background, we have continually assessed at board level the potentially damaging impact this could have both in terms of each of our individual businesses and on the Group as a whole. It should therefore be noted that we commenced 2009 with no borrowings and with cash in the bank".
30 March 2009
ENQUIRIES:
RTC Group Plc Tel: 01332 263 122
Bill Douie, Executive Chairman.
Andy Pendlebury, Chief Executive Officer.
Andrew Bailey, Chief Operating Officer.
Evolution Securities Limited Tel: 0207 071 4300
Jeremy Ellis / Chris Clarke
CHAIRMAN'S STATEMENT
GROUP
Whilst in the main the Group has had another positive year, trading conditions began to deteriorate as the year progressed, a process which accelerated markedly in the final quarter. Nonetheless, Recruitment continued to perform well and delivered a pleasing growth of turnover and profits, whilst Training suffered a reduction in business due to a slow first half and, although revenues continued to rise at The Derby Conference Centre, the combination of the costs of implementing new operational structures and the appointment of a new Managing Director impacted on 2008 profitability. 2009 is expected to benefit significantly from these changes. The Group as a whole delivered pre-tax profits of £295,000 and earnings per share of 1.58p, after recording an impairment charge of £250,000 against goodwill.
TRADING
Recruitment Division (ATA Recruitment Limited and Ganymede Solutions Limited)
The Recruitment Division continued to perform well with the business generating Net Fee Income of £7.2m. However the impact of recessionary influences became evident during the final quarter. Commendable operating profits of £1.05m (2007: £0.85m) have been achieved, in a fast changing marketplace, assisted by growth in existing and entry into additional vertical markets and material increases in second half turnover at Ganymede Solutions.
Training Division (Catalis Limited)
The Catalis training business has continued to perform steadily, generating revenues slightly lower than those of the previous year. Net margins have suffered as a consequence of the slow build up of revenues during the year and pricing pressures from contract renegotiations. The cost structure of the business has now been reviewed and changes where appropriate will be implemented this year. The division posted an operating loss of £0.13m (2007: profit £0.20m).
Conferencing Division (The Derby Conference Centre Limited)
The re-furbished premises at our conference centre in Derby enjoyed a 50% growth in turnover, however as mentioned previously profitability was impacted by the need to invest in a more appropriate operational structure and the need to appoint a new Managing Director to capitalise on the future market opportunities of the business. The division posted an operating loss of £0.38m (2007: £0.30m)
Goodwill
The Board has taken the view that given the inherent uncertainty in the marketplace and the recent performance of the Training Division, an impairment of £250,000 should be charged to the value of the goodwill of the training business. There is no goodwill in the Group Balance sheet pertaining to any division other than the Training Division.
Capital Investment
During the year the opportunity was taken to continue to upgrade our premises at London Road, Derby and to refurbish and re-brand the ATA Recruitment national branch network. Total capital investment during the year was £0.3m (2007: £0.5m).
DIVIDENDS
The Board believes that it would not be prudent to use financial resources to pay a dividend at this time. The dividend for the year therefore remains at 1.5p per share (2007: 4.0p).
MANAGEMENT
Continuing our drive for enhancement of top level management, during 2008 we were fortunate to secure the services of Gary Hewett as Managing Director of Ganymede Solutions Limited and ATA Verticals. Following the decision to separate ATA Recruitment Limited into two distinct divisions Andy Hardaker was appointed Managing Director of ATA Selection. Mike Ebbitt, Managing Director of The Derby Conference Centre Limited brings extensive and valuable experience to that area of our activities. It is anticipated that the management team will continue to be strengthened in 2009.
OUTLOOK
Much has been said about the economic downturn for 2009 and beyond. There do not seem to be any real signs of reversal of the current downward momentum in world GDP and we must expect to experience difficult times in the short term. Against this background, we have continually assessed at board level the potentially damaging impact this could have both in terms of each of our individual businesses and on the Group as a whole. It should therefore be noted that we commenced 2009 with no borrowings and with cash in the bank. It is possible that opportunities may arise in 2009/10 to acquire businesses complementary to our own which have suffered more financial difficulties than RTC, and we are prepared to evaluate such opportunities provided they will enhance earnings in the near term.
STAFF
There can be no more appropriate time for me to thank all our staff for their efforts and successes in 2008 and to acknowledge the universal strength and determination they have displayed.
W.J.C. Douie, Chairman 30 March 2009
CHIEF EXECUTIVE'S STATEMENT
2008 has been an extremely exciting year for RTC Group. Following approval by our shareholders to change our name from ATA Group Plc to RTC Group Plc, we began a comprehensive public relations and re-branding exercise across each of our businesses to provide better clarity of the various business services provided by the Group to strengthen market positioning in each of our target sectors. Initial feedback from clients indicates the changes have provided greater awareness of the total Group capabilities and the cost benefit of procuring multiple services from RTC Group. In addition, our commitment to further enhance the facilities at all our recruitment branches during 2008 has had an immediate impact with all users - employees, candidates and clients - expressing the positive impact the changes have had on our image and professionalism. Furthermore, as employing leading recruitment consultants is seen as a key performance differentiator in the future growth of the business, our refreshed image and facilities will help attract the best candidates seeking careers in the recruitment sector.
Key personnel changes committed to in 2008 have also been successfully completed and will provide a greater foundation for the future growth of each of our businesses and the Group as a whole. Managing Directors have now been appointed for Ganymede and ATA Vertical Markets (Gary Hewett), ATA Selection (Andy Hardaker) and the Derby Conference Centre (Mike Ebbitt). The appointment of a Managing Director for the Catalis training business is a key objective for 2009 with Andrew Bailey, Group Chief Operating Officer, acting on an interim basis. With regard to these key appointments, I was particularly pleased to see Andy Hardaker appointed as Managing Director of ATA Selection. Andy has been with the Group since leaving University and it is both a healthy sign of our pool of emerging talent to see an internal candidate appointed to the Managing Director's role and further testimony of the Group's commitment to implementing a sound strategy to senior management succession planning. Each of our businesses face uniquely different challenges and whilst we are in the midst of incredibly uncertain times, I am confident that each of our Managing Directors is well placed to manage our businesses through and beyond current market uncertainty. Significant sales growth at both Ganymede and within ATA Vertical markets and a better understanding of cost and operations management at the Derby Conference Centre provide early signs of encouragement that our decision to appoint new Managing Directors was and still remains pivotal to the future success of RTC Group.
Our strategy to increasingly recruit external candidates across all business has also proved successful and this, coupled with a series of in-house and external commercial and sales based training programmes, has improved our approach to client development and contract management. We began 2009 with an increasingly focused and better equipped team of employees dedicated to growing a diverse and profitable Group of businesses.
I am confident that the combined impact of our Group-wide re-branding and public relations campaign, the appointment of a new Managing Director for each of our businesses and our continued commitment to an in-house training programme and external recruitment policy has placed us in a strong position to combat the impact of the deeply concerning and fragile business trading environment. On this point your Group Board is constantly monitoring all aspects of divisional expenditure with each of the Group's Managing Directors and appropriate contingency plans assuming a wide range of performance scenarios are constantly reviewed to ensure we maintain both a healthy balance sheet and a solid yet flexible approach to the growth of RTC Group.
Finally, competing in highly competitive markets is ordinarily tough but these extraordinary trading conditions have challenged every aspect of all our operations and placed many additional burdens on our staff. I would, therefore, like to join our Chairman in acknowledging and complimenting all our colleagues employed around the Group. We are both thankful and proud to see such a united belief in the Group's capabilities and future prospects.
Andy Pendlebury, Group Chief Executive 30 March 2009
CHIEF OPERATING OFFICER'S STATEMENT
Year Ended 31 December 2008
Group Trading Summary 2008
Group revenue from continuing operations has increased by 9% compared with 2007, driven by growth in Recruitment and Conferencing. Overall gross margin reflects changes in sale mix and tightening market conditions, resulting in an operating profit before exceptional items for the year of £533,000 compared with £747,000 in 2007.
| | 2008 | 2007 |
| | £’000 | £’000 |
| | | |
| Revenue | | |
| Recruitment | 20,646 | 18,602 |
| Training | 3,773 | 4,064 |
| Conferencing | 1,429 | 949 |
| | 25,848 | 23,615 |
| | | |
| Gross margin | | |
| Recruitment | 3,607 | 3,467 |
| Training | 1,239 | 1,542 |
| Conferencing | 338 | 227 |
| | 5,184 | 5,236 |
| | | |
| Operating profit/(loss) before exceptional items | | |
| Recruitment | 1,046 | 849 |
| Training | (130) | 202 |
| Conferencing | (383) | (304) |
| | 533 | 747 |
Recruitment
Recruitment Net Fee Income, representing total fees earned, net of contractor wages, grew by 3% in 2008 to £7.2m (2007: £7.0m).
Permanent recruitment services focused on the provision of staff to technical engineering and manufacturing roles through our network of regional offices and technical sales, rail and construction from our East Midland locations. The new market sector of energy serviced from our North West location, initially focusing on renewable energy, made a pleasing contribution. Whilst the overall number of permanent placements made in the year fell by 4%, a 2% increase in the average fee per placement partly offset the impact, resulting in a 3% reduction in revenue compared with 2007. 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 2008 the average placements per permanent consultant were 10% ahead of 2007 reflecting a reduction in consultant numbers in line with our internal recruitment policy.
White collar contract recruitment in the Group's core markets of technical manufacturing, engineering and rail continued to grow on the solid base established in previous years. The Construction sector performed well in the first half of the year but the second half was impacted by a slow down in the construction market. Consultants focusing in this sector were reassigned into other areas, retaining skills and relationships, awaiting the resumption of activity in this market. Overall contract revenue grew by 17.5% compared with 2007. Contract heads out per consultant, as a key measure of performance, delivered an 83% increase on 2007, reflecting both an increase in contractor heads out and a reduction in contract consultant numbers in line with our internal recruitment policy.
Despite a reduction in total man hours from 2007, our blue collar labour supply business, Ganymede, continued to develop at pace, with the final quarter showing a significant ramp up in the demand for man hours.
The continued expansion and diversification of contract recruitment activity, in both white and blue collar disciplines, remains a key aim of the Group.
Training
Training activity in Health and Safety and Sentinel based Rail Safety grew by 49% and 6% respectively compared with 2007. Technical training was impacted in the first half of the year by the renegotiation of supply contracts with a number of larger customers, but performed better in the second half resulting in an overall 7% reduction in revenue compared with 2007. Train Services, which provides training and consultancy to the Train and Freight operating companies was impacted by the outcome of franchise changes at the end of 2007, resulting in a 29% reduction in revenue compared with 2007. Overall training revenues were 7% down on 2007. Both trainer utilisation at 4% and course take up at 1% were below 2007 levels, reflecting the reduction in training revenue. These two key indicators are applied to measure the performance of the business. The target markets and underlying cost structure of this business are now under review with the objective of returning the training business to profitability.
Conferencing
The conferencing activity, concentrated in the refurbished Derby Conference Centre, was re-launched in the summer of 2007. The key performance measure of room utilisation has continued to improve resulting in a 53% increase in external sales compared with 2007. Whilst revenues have increased profitability remains the key challenge for this business. The senior management team was restructured in the second half of the year and a cost containment and reduction exercise is now underway focused on improving operational efficiencies and eliminating losses within the conferencing business.
Staff Development
The Group continues to believe that the key to future success is strongly linked to people development. We therefore operate a number of internal and external initiatives, designed to develop individuals in sales, operational, management and leadership skills. Staff retention is a key performance indicator of the business and is monitored closely.
Environmental Policy
The Group monitors its activities to minimise impact on the environment and has undertaken various initiatives in order to reduce waste.
Information Technology and the Internet
The Group's investment in Information Technology to support business activities, through both a real time wide area network and front and back office systems to support the growth in volume activities, is complete. Expenditure during the year was therefore restricted to maintenance and upgrades to those systems. Future expenditure will be aimed at gaining operational efficiency through evolution into the latest technologies and leveraging business benefits through increased and varied profile and presence on the internet.
The internet attracts many of the candidate applications to the recruitment business. The web based capability built to take advantage of this market dynamic has continued to gain profile in our vertical market sectors. Whilst in the final quarter of the year the market climate changed from being candidate to vacancy driven, to mitigate any future impact of increased cost of candidate recruitment, the recruitment business will continue to enhance its web presence and embrace mobile technologies to further improve candidate efficiencies and communication. Third party job boards will, however, continue to play an integral role in candidate recruitment. To maximise the return on third party spend, we have invested in systems which enable us to measure the response rates from advertisements, on individual sites in terms of both volume and quality. Reflecting this and improvements in internal processes, expenditure to attract candidates in 2008 fell by 16% compared with 2007.
We will continue to investigate and adopt technology which delivers increased efficiencies and reduced cost of operation within all of our businesses.
Share Options
The Government EMI scheme was adopted in 2001. Further options have been granted in 2008. The management team and key staff will continue to be the focus of such initiatives.
Andrew Bailey, Group Chief Operating Officer 30 March 2009
Group Income Statement
Year ended 31 December 2008
| 2008 | 2007 | |||
| £'000 | £'000 | £'000 | £'000 | |
| Revenue | 25,848 | 23,615 | ||
| Cost of sales | (20,664) | (18,379) | ||
| Gross Profit | 5,184 | 5,236 | ||
| Administrative expenses - normal | (4,651) | (4,489) | ||
| Operating profit before exceptional items | 533 | 747 | ||
| Administrative expenses - exceptional | (250) | - | ||
| Operating profit after exceptional items | 283 | 747 | ||
| Investment income | 12 | 5 | ||
| Finance costs | - | (6) | ||
| 12 | (1) | |||
| Profit before tax | 295 | 746 | ||
| Income tax expense | (157) | (248) | ||
| Profit for the year attributable to equity holders | 138 | 498 | ||
| Earnings per share | ||||
| - continuing operations | 1.58p | 6.07p | ||
| Fully diluted earnings per share | ||||
| - continuing operations | 1.58p | 6.07p | ||
Group Statement of Changes in Equity
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 | - | - | - | (361) | (361) | |
| At 31 December 2008 | 90 | 2,117 | 50 | 33 | 1,865 | 4,155 |
| Year ended 31 December 2007 | ||||||
| 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 2007 | 82 | 1,817 | 50 | 25 | 2,088 | 4,062 |
| Profit for the year | - | - | - | - | 498 | 498 |
| Total recognised income and expense for 2007 | 82 | 1,817 | 50 | 31 | 2,375 | 4,355 |
| Share based payment reserve | - | - | - | (6) | - | (6) |
| Dividends | - | - | - | - | (287) | (287) |
| At 31 December 2007 | 82 | 1,817 | 50 | 25 | 2,088 | 4,062 |
Group Balance Sheet
31 December 2008
| 2008 | 2007 | |||
| Assets | £'000 | £'000 | £'000 | £'000 |
| Non current assets | ||||
| Intangible assets | 674 | 924 | ||
| Property, plant and equipment | 757 | 738 | ||
| Deferred tax asset | 73 | 55 | ||
| 1,504 | 1,717 | |||
| Current assets | ||||
| Inventories | 8 | 8 | ||
| Trade and other receivables | 5,420 | 4,982 | ||
| Cash | 108 | 266 | ||
| 5,536 | 5,256 | |||
| Total assets | 7,040 | 6,973 | ||
| Liabilities | ||||
| Current liabilities | ||||
| Trade and other payables | (2,810) | (2,665) | ||
| Current borrowings | - | (4) | ||
| Current tax payable | (75) | (242) | ||
| (2,885) | (2,911) | |||
| Non current liabilities | ||||
| Non current borrowings | - | - | ||
| Total liabilities | (2,885) | (2,911) | ||
| Net assets | 4,155 | 4,062 | ||
| Equity attributable to equity holders of the parent | ||||
| Share capital | 90 | 82 | ||
| Share premium | 2,117 | 1,817 | ||
| Capital redemption reserve | 50 | 50 | ||
| Share based payment reserve | 33 | 25 | ||
| Retained earnings | 1,865 | 2,088 | ||
| Total equity | 4,155 | 4,062 | ||
Group Cash Flow Statement
Year ended 31 December 2008
| 2008 | 2007 | |
| £'000 | £'000 | |
| Cash flows from operating activities | ||
| Operating result from continuing operations | 283 | 747 |
| Adjustments for: | ||
| Employee equity settled share options | 8 | (6) |
| Depreciation | 311 | 318 |
| Impairment of goodwill | 250 | - |
| Profit on sale of property, plant and equipment | (4) | (29) |
| Change in inventories | - | (5) |
| Change in trade and other receivables | (505) | (1,675) |
| Change in trade and other payables | 145 | 724 |
| Cash generated from operations | 488 | 74 |
| Interest received | 12 | 5 |
| Interest paid | - | (6) |
| Income taxes paid | (275) | (220) |
| Net cash from/(used in) operating activities | 225 | (147) |
| Cash flows from investing activities | ||
| Purchases of property, plant and equipment | (334) | (451) |
| Proceeds from sale of property, plant and equipment | 8 | 78 |
| Disposal of businesses | - | 145 |
| Net cash from/(used in) investing activities | (326) | (228) |
| Cash from/(used) before financing | (101) | (375) |
| Cash flows from Financing activities | ||
| Capital element of finance lease rental payments | (4) | (11) |
| Issue of ordinary share capital | 308 | - |
| Equity dividends paid | (361) | (287) |
| Net cash used in financing activities | (57) | (298) |
| Net (decrease)/increase in cash and cash equivalents | (158) | (673) |
| Cash and cash equivalents at the beginning of the period | 266 | 939 |
| Cash and cash equivalents at the end of the period | 108 | 266 |
Notes
1. CORPORATE INFORMATION
The preliminary statement of annual results of the Group for the year ended 31 December 2008 were authorised for issue in accordance with a resolution of the directors on 30 March 2009. 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
On 12 September 2008 an interim dividend of 1.5p net per share was resolved by the Board to be paid to shareholders on the register on 14 November 2008. The interim dividend was paid on 12 December 2008.
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 profit after tax expense of £138,000 (2007: £498,000) and a weighted average of 8,751,394 (2007: 8,203,331) shares in issue.
The earnings per share before exceptional items is calculated by using the profit after tax of £138,000 (2007: £498,000) and adding back the exceptional administrative charge of £250,000 (2007: £Nil) relating to the impairment of goodwill.
| 2008 | 2007 | |
| Earnings per share before exceptional items | 4.43p | 6.07p |
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 1985 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 Chief Operating Officers' Statement.
The segmental analysis of turnover, Gross Margin and Operating profit before exceptional goodwill write off is as follows: -
| 2008 | 2007 | ||
| £'000 | £'000 | ||
| Revenue | |||
| Recruitment | 20,646 | 18,602 | |
| Training | 3,773 | 4,064 | |
| Conferencing | 1,429 | 949 | |
| 25,848 | 23,615 | ||
| Gross Margin | |||
| Recruitment | 3,607 | 3,467 | |
| Training | 1,239 | 1,542 | |
| Conferencing | 338 | 227 | |
| 5,184 | 5,236 | ||
| Operating profit from continuing operations before exceptional items | |||
| Recruitment | 1,046 | 849 | |
| Training | (130) | 202 | |
| Conferencing | (383) | (304) | |
| 533 | 747 | ||
6. INCOME TAX EXPENSE
| 2008 | 2007 | |
| £'000 | £'000 | |
| Analysis of tax expense :- | ||
| Current Tax | ||
| UK corporation tax | 172 | 266 |
| Adjustment in respect of previous periods | 3 | (75) |
| 175 | 191 | |
| Deferred Tax | ||
| Origination and reversal of temporary differences | (18) | 6 |
| Adjustment in respect of previous periods | - | 51 |
| Tax expense | 157 | 248 |
Report & Accounts
The above results do not represent the statutory accounts. The statutory accounts for 2007 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 2008 have been approved, received an unqualified audit report and did not contain a statement under Section 237 (2) or (3) of the Companies Act 1985. 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.