RTC GROUP PLC — Earnings Release 2012

Mar 26, 2013

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RNS Number : 8862A

RTC Group PLC

26 March 2013

This announcement replaces the ' Final Results' announcement released on 26/03/2013 at 9:50am under RNS number 8780A.  The figure for 2012 profit per share from continued operations has been corrected to 4.26p and note 3 has been updated accordingly.  All other details remain unchanged.

The full amended text is shown below.

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

Audited results for the year ended 31 December 2012

RTC Group Plc, a support services group which provides recruitment and conferencing services, is pleased to announce its audited results for the year ended 31 December 2012.

Highlights

·        Group revenue from continuing operations  up 39% to £43m (2011: £31m)

·        Group operating profit from continuing operations before exceptional items of £592,000 (2011: loss £87,000)

·        Profit for the year attributable to equity holders of £575,000 (2011: loss  £611,000)

·        Profit per share from continued operations of 4.26p (2011: loss 4.17p)

The Board does not believe that it would be prudent to use its financial resources to recommend a dividend at this time (2011: nil).

Commenting on the results Bill Douie, Chairman, said:

"2012 has been a year of strong growth both in turnover and operating profit.  However, it comes as no surprise to us all that material recovery from the recent recession remains patchy and volatile.  Nonetheless, we are confident that we have a range of activities which all hold much promise for the Group.  In addition, ATA UK was restructured with effect from 1 January 2013 and we are currently investing in additional headcount and recruitment technology.  We therefore expect to be approximately break-even for the first half of the financial year and generate the vast majority of projected profits in the second half as these staff become fully effective and we start to see the benefits of the additional investment in the new structure. We believe this longer term strategy will permit sustainable and profitable growth in the years to come."

Enquiries:

RTC Group Plc	01332 861 835
Bill Douie, Chairman
Andy Pendlebury, Chief Executive
Allenby Capital Limited - Nominated Adviser & Broker	020 3328 5656
Jeremy Porter, Corporate Finance
Mark Connelly, Corporate Finance

Chairman's statement

For the year ended 31 December 2012

I am pleased to present the audited results for the year ended 31 December 2012.

Group

2012 has been a year of strong growth both in turnover and operating profit.  As a result we have achieved a pleasing performance in Group operating profits before exceptional items of £592,000 (2011: loss £87,000), contributing to a group pre-tax profit of £474,000.

Trading

ATA Recruitment

UK white collar recruitment performed extremely well in markets which continue to be volatile.

Revenue is up 30% at £20.601m and operating profit was £0.252m (2011: loss £206,000).

ATA Global Supply Solutions

2012 saw the first full year effect of the largest element of our contract in Afghanistan. Operating teething problems have been eliminated, with travel arrangements running smoothly and currency conversion costs reduced. Revenue is up 66% at £13.736m (2011: £8.239m) and operating profit was £123,000 (2011: loss of £87,000).     

Ganymede Solutions

Another year of good growth across all disciplines. Revenue was up 42% at £6.885m and operating profit was £201,000 (2011: profit of £171,000 before exceptional items). During the year RTC Group plc purchased the remaining 10% non-controlling interest in Ganymede Solutions Limited previously held by Gary Hewett, for £41,000, making it a 100% owned subsidiary.

The Derby Conference Centre                                                                                                                                           

The market for conferencing remains tight and highly competitive.

Revenue was £1.741m (2011: £1.763m) and operating profit was £16,000 (2011: £35,000).

Capital investment

Our enhanced trading performance has enabled us to make a modest increase in capital expenditure of £71k after providing for working capital to service increased turnover.

Balance sheet

The Group balance sheet has strengthened during the year, with net working capital increasing by £316,000 to £529,000 (2011: £213,000) and a slightly increased ratio of current assets to current liabilities of 1.07 (2011: 1.03).  Our gearing ratio has fallen to 3.0 from 4.9. Gearing is calculated as current bank borrowing over equity.  Net debt at 31 December 2012 was £3.5m (2011: £3.1m). The Group continues to be focussed on cash generation and ensuring a robust balance sheet to support the growth of the business.

Dividends

Notwithstanding the reported profitability for the period, the directors do not feel it prudent to recommend any dividend payment for 2012.

Management

The new management structure established early in the year has bedded in well and we are confident in its ability to deliver future growth for the Group.

Chairman's statement

For the year ended 31 December 2012

The Group Board

As recently announced Andrew Bailey left the Group and we wish him well.  I would like to express our thanks for the diligence and unswerving loyalty he has displayed during his many years with the Group. 

I would also like to welcome Sarah Dye to the Group as Finance Director.

Outlook

It comes as no surprise to us all that material recovery from the recent recession remains patchy and volatile.  Nonetheless, we are content that we have a range of activities which all hold much promise for the Group and are expected to permit continued growth in the years to come.  We intend to continue to concentrate on exploring opportunities for additional business in all areas of recruitment covered by our three core business activities, whilst making the fullest possible use of our premises in Derby both as a profit centre and as our Head Office. 

ATA UK was restructured with effect from 1 January 2013 and we are currently investing in additional headcount and recruitment technology.  We therefore expect to be approximately break-even for the first half of the financial year and generate the vast majority of projected profits in the second half as these staff become fully effective and we start to see the benefits of the additional investment in the new structure. We believe this longer term strategy will permit sustainable and profitable growth in the years to come.

We remain committed to our goal of building a focused group with both sustainability and profitability which will deliver increased earnings per share for our investors and we intend to continue to use free cash flow to enhance our balance sheet, to provide working capital for expansion and to invest in the future wherever necessary.

Staff

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

W J C Douie                                                                                                                                        26 March 2013

Chairman                                                                                   

Chief Executive's statement

For the year ended 31 December 2012

2012 delivered a much more positive set of results for the Group. The investments that were made in previous years in operational systems and procedures alongside the appointment of additional finance and support staff have paid off and we are now beginning to capture the profits from the continued growth in sales revenue and gross profit across all areas of the business.

The shape of our business continues to change and I believe we have significantly diluted our exposure and risk to the United Kingdom market place which continues to suffer from sluggish growth as both bank lending to the small and medium size business community and public and private sector investment in major infrastructure projects remain disappointingly slow.

Our international business which comprises of ATA Global Staffing Solutions (ATA GSS) and ATA India (ATAI) now generates around 30% of group revenue and some 25% of gross profit. ATA GSS continues to build on its contract to supply staff to Afghanistan and we now deploy over 1200 personnel from over 25 countries to support our clients. ATA GSS is now recognised as the largest employment business supplying temporary labour to clients in the region and we remain extremely optimistic about future growth opportunities on both this and other emerging international projects.

ATAI, which originated as a strategic partnership to source international staff for Afghanistan, was formerly launched as part of RTC during 2012, and continues to establish itself in one of the world's fastest growing economies. ATAI have already secured some long term contracts within the domestic Indian market and in collaboration with our ATA UK business, is sourcing staff for UK clients diversifying into the Indian market place and sourcing Indian candidates for placement with clients seeking scarce skills within the United Kingdom.

Whilst the UK recruitment market remains difficult, ATA UK has continued to secure new clients across both the SME and blue chip market sectors.  Furthermore, and despite tough pricing conditions and heavy discounting from much of the competition as new business opportunities are becoming increasingly harder to find, the business is steadily growing its client base and net fee income.

Ganymede Solutions has continued to accelerate its presence in the blue collar rail sector on both mainline and underground networks and is now working with a broad range of prime and second tier contractors. Whilst historically the business has concentrated activities primarily in the transport sector, new opportunities are being explored across other blue collar labour intensive markets.

Our conference and events business, the Derby Conference Centre (DCC), continues to capture business across all areas of activity in what remains an extremely crowded and competitive market. In order to keep the unique edge that the Art Deco styled facility offers clients, a capital investment plan was approved for the DCC during the year to ensure the business can continue to attract long term sustainable revenue.

Chief Executive's statement

For the year ended 31 December 2012

Finally, the significance of the turnaround in profits for 2012 is testament to the quality, commitment and belief of the company's management team and employees across all areas of the business and your board of directors is extremely thankful for everybody's contribution.

A M Pendlebury                                                                                                                               26 March 2013

Group Chief Executive 

Consolidated statement of comprehensive income

For the year ended 31 December 2012

				2012					2011
		Notes			£'000				£'000
	Revenue				42,963				30,670			*
	Cost of sales				(37,735)				(26,668)			*
	Gross Profit				5,228				4,002
	Administrative expenses				(4,636)				(4,467)
	Operating profit/(loss)				592				(465)
	Analysed as:
	Operating profit/(loss) before exceptional items				592				(87)
	Exceptional administrative expense	5			-				(378)
	Operating profit/(loss) after exceptional items				592				(465)
	Financing expense				(118)				(96)
	Profit/(loss) before tax				474				(561)
	Income tax	6			101				62
	Net profit/(loss) from continuing operations (Loss) from discontinued operations	5			575               -				(499)            (112)
	Loss from discontinued operations				-				(112)
	Net profit/(loss) and total comprehensive income for the year				575				(611)
	Basic and diluted:
Profit/(loss) per share - continuing operations (pence)			3			4.26					((4.17)
	Profit/(loss) per share - discontinued operations (pence)	3			-					(0.93)
	Profit/(loss) per share - continuing and discontinued operations (pence)				4.26					(5.10)

There is no dilutive effect of share options.

* The 2011 results have been restated. Recruitment revenue and cost of sales have been grossed up in respect of billable travel expenses previously netted off in error (see note 4).

Consolidated statement of changes in equity

For the year ended 31 December 2012

	Share capital	Share premium account	Capital redemption reserve	Share based payment reserve	Accumulated losses	Total equity
	£'000	£'000	£'000	£'000	£'000	£'000
At 1 January 2012	135	2,468	50	33	(2,049)	637
Net profit and total comprehensive income for the year	-	-	-	-	575	575
Share acquisition	-	-	-	-	(41)	(41)
Share based payment reserve	-	-	-	(33)	33	-
At 31 December 2012	135	2,468	50	-	(1,482)	1,171

	Share capital	Share premium account	Capital redemption reserve	Share based payment reserve	Accumulated losses	Total equity
	£'000	£'000	£'000	£'000	£'000	£'000
At 1 January 2011	90	2,117	50	30	(1,438)	849
Net loss and total comprehensive income for the year Share issue (net of expenses)	- 45	- 351	- -	- -	(611) -	(611) 396
Share based payment reserve	-	-	-	3	-	3
At 31 December 2011	135	2,468	50	33	(2,049)	637

The share based payment reserve comprises the cumulative share option charge under IFRS 2 less the value of any share options that have been exercised or have lapsed.

Consolidated statement of financial position

As at 31 December 2012

		2012		2011
Assets		£'000	£'000	£'000	£'000
Assets
Non-current
Property, plant and equipment		403		292
Deferred tax asset		239		132
			642		424
Current
Inventories		13		14
Trade and other receivables		8,059		6,444
			8,072		6,458
Total assets			8,714		6,882
Liabilities
Current
Trade and other payables		(4,034)		(3,096)
Current borrowings		(3,509)		(3,149)
Total liabilities			(7,543)		(6,245)
Net assets			1,171		637
Equity
Share capital			135		135
Share premium			2,468		2,468
Capital redemption reserve			50		50
Share based payment reserve			-		33
Accumulated losses			(1,482)		(2,049)
Total equity			1,171		637

Consolidated statement of cash flows

For the year ended 31 December 2012

		2012	2011
		£'000	£'000
Cash flows from operating activities
Operating result from continuing operations		592	(465)
Adjustments for:
Employee equity settled share options		-	3
Depreciation		149	156
Loss on sale of property, plant and equipment		-	5
Change in inventories		1	(4)
Change in trade and other receivables		(1,621)	(1,657)
Change in trade and other payables		938	1,030
Cash movement from discontinued operations		-	(112)
Cash generated from operations		59	(1,044)
Interest paid		(118)	(96)
Net cash from/(used in) operating activities		(59)	(1,140)
Cash flows from investing activities
Purchases of property, plant and equipment		(260)	(174)
Purchase of shares in subsidiary companies		(41)	-
Net cash from/(used in) investing activities		(360)	(174)
Cash flows from financing activities
Proceeds from issue of share capital		-	396
Net cash inflow from financing activities		-	396
Net (decrease)/increase in cash and cash equivalents from continuing operation		(360)	(918)
Total net (decrease) in cash and cash equivalents		(360)	(918)
Cash and cash equivalents at the beginning of the year		(3,149)	(2,231)
Cash and cash equivalents at the end of the year		(3,509)	(3,149)

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 principal activities of the Group are described in note 4.

The announcement of results of the Group for the year ended 31 December 2012 was authorised for issue in accordance with a resolution of the directors on 26 March 2013.

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 2012.  There have been no significant changes in the basis upon which estimates have been determined, compared to those applied at 31 December 2011 and no change in estimate has had a material effect on the current period.

2.  Dividends

The Board do not recommend the payment of a final dividend for the year.

3.  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 diluted earnings per share is based on the basic earnings per share adjusted to allow for all dilutive potential ordinary shares.

The outstanding share options were not considered to be dilutive in 2012 or 2011.  

	Basic 2012	Basic 2011	Diluted 2012	Diluted 2011
Continuing operations
Earnings/(loss) £'000	575	(499)	474	(499)
Weighted average number of shares	13,511,626	11,974,276	13,511,626	11,974,276
Earnings/(loss)  per share (pence)	4.26p	(4.17p)	3.51p	(4.17p)
Discontinued operations
Earnings/(loss) £'000	-	(112)	-	(112)
Weighted average number of shares	-	11,974,276	-	11,974,276
Earnings/(loss)  per share (pence)	-	(0.93p)	-	(0.93p)
Continuing and discontinued operations
Earnings/(loss) £'000	575	(611)	474	(611)
Weighted average number of shares	13,511,626	11,974,276	13,511,626	11,974,276
Earnings/(loss)  per share (pence)	4.26p	(5.10p)	3.51p	(5.10p)

4.     Segment analysis

The Group is a provider of recruitment and conferencing services and operates a division for each. The recruitment division comprises three distinct business units - ATA Recruitment UK (ATA UK) servicing the UK SME engineering market and a number of vertical markets; ATA Global Supply Solutions (ATA GSS) servicing the international market and Ganymede Solutions (GSL) supplying blue collar labour into rail, trades and labour and other markets.

Segmental information is provided below in respect of ATA UK, ATA GSS, GSL and conferencing.

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

The Conferencing division services are wholly provided in the UK. A growing proportion of the Recruitment division revenues now derive from overseas activity.

Revenues are generated from permanent and temporary recruitment in the Recruitment division and from the provision of a conferencing and hotel facility in Derby for the Conferencing division.   

All revenues have been invoiced to external customers other than £126,000 (2011: £90,000) within the Derby Conference Centre which comprised rental income from other Group segments.  During 2012, one customer in the ATA GSS segment contributed greater than 10% of that segment's revenues being £13.7m (2011: £8.2m).

The segmental information for the reporting period is as follows:

	ATA UK	ATA GSS	GSL	DCC	Total Group
	2012	2012	2012	2012	2012
	£'000	£'000	£'000	£'000	£'000
Segment continuing operations
Sales from external customers	20,601	13,736	6,885	1,741	42,963
Cost of sales	(18,292)	(12,472)	(6,228)	(743)	(37,735)
Segment gross profit	2,309	1,264	657	998	5,228
Administrative expenses	(1,982)	(1,141)	(442)	(922)	(4,487)
Depreciation	(75)	-	(14)	(60)	(149)
Segment operating profit	252	123	201	16	592

	ATA UK	ATA GSS	GSL	DCC	Total Group
	2011	2011	2011	2011	2011
	£'000	£'000	£'000	£'000	£'000
Segment continuing operations
Sales from external customers	15,825	8,239	4,843	1,763	30,670
Cost of sales	(14,321)	(7,537)	(4,085)	(725)	(26,668)
Segment gross profit	1,504	702	758	1,038	4,002
Administrative expenses	(1,651)	(789)	(578)	(915)	(3,933)
Depreciation	(59)	-	(9)	(88)	(156)
Segment operating (loss)/profit before exceptional items	(206)	(87)	171	35	(87)
Exceptional administrative expense	-	-	(378)	-	(378)
Segment operating (loss)/profit	(206)	(87)	(207)	35	(465)

Certain 2011 figures have been restated. Recruitment revenue and cost of sales have been grossed up in respect of billable travel expenses of £1.15m in ATA GSS previously netted off. The previously reported gross profit figure remains unchanged.

All assets and liabilities are held in the United Kingdom.

5.  Exceptional administrative costs

		2012	2011
		£'000	£'000
	Provision for bad debt	-	378
		-	378

During 2011 the Group experienced a non-recurring exceptional bad debt of £378,000 including legal fees, from an isolated customer and relating to the Group's entry into the Telecoms sector. This business area was discontinued in 2011.

1. Income tax

	Continuing operations					2012	2011
						£'000	£'000
	Analysis of tax :-
	Current tax
	UK corporation tax					-	-
	Adjustment in respect of previous periods					-	-
						-	-
	Deferred tax
	Origination and reversal of temporary differences					(107)	(62)
	Adjustment in respect of previous periods					6	-
	Tax					(101)	(62)

Factors affecting the tax expense

The tax assessed for the year is greater than would be expected by multiplying profit on ordinary activities by the standard rate of corporation tax in the UK of 24.5 % (2011: 26.5%).  The differences are explained below:-

					2012		2011
					£'000		£'000
	Profit/(loss) on ordinary activities before tax					474                  (561)
	Profit/(loss) multiplied by standard rate of tax					116                  (149)
	Non-deductible expenses				17		21
	Losses carried forward				-		66
	Utilisation of losses				(240)		-
	Adjustment in respect of previous periods				6		-
	Income Tax (credit) / charge for the year				(101)		(62)

Factors that may affect future tax charges

Estimated losses available to offset against future taxable profits on continuing operations in the UK amount to approximately £813,000 (2011: £1,329,000). The Chancellor of the Exchequer has announced that the rate of corporation tax will be reduced each year until 2015 when it will remain at 20%. In accordance with relevant accounting standards, calculation of the deferred tax asset is based on a tax rate of 23%, being the rate which was enacted at the year-end date.

7.   Report and accounts

The above financial information does not constitute the Company's statutory accounts for the years ended 31 December 2012 or 2011 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 2011 have been filed with the Registrar of Companies.

Full audited accounts of RTC Group plc for the year ended 31 December 2012 will be made available on the Company's website at www.rtcgroupplc.co.uk later today and will be dispatched to shareholders week commencing 1 April 2013 and then be available from the Company's registered office:- The Derby Conference Centre, London Road, Derby, DE24 8UX.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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