2 March 2015

RTC Group Plc

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

Audited results for the year ended 31 December 2014

RTC Group Plc (AIM: RTC.L), a support services group which predominantly provides recruitment services, is pleased to announce its audited results for the year ended 31 December 2014.

Highlights

·     Group revenue up 4% to £51m (2013: £49m)

·     Net fee income increased 10% to £10.18m (2013: £9.23m)

·     Profit from operations up 27% to £1.11m (2013: £0.87m)

·     Profit before tax ahead by 38% to £1.02m (2013: £0.74m)

·     Earnings per share (basic) up 56% to 5.92p (2013: 3.79p)

During the year the Company paid a 2014 interim dividend of £67,558 (2013: £Nil) to its shareholders, which represented a payment of 0.5p per share (2013: Nil). The Directors have recommended a final dividend of £135,116, which represents a further 1p per share (2013: £Nil) giving a total dividend of 1.5p for the year ended 31 December 2014.  A resolution regarding this recommended final dividend is to be considered at the Company's forthcoming 2015 Annual General Meeting, which is due to be held on 22 April 2015.  If shareholders approve the recommended final dividend, then this will be paid on 24 April 2015 to all holders of shares who are on the register of members at the close of business on 27 March 2015, with an ex-dividend date of 26 March 2015.

Commenting on the results Andy Pendlebury, CEO said:

"I am extremely proud of the progress the Group has made during 2014.  We have continued to grow underlying profit and shareholder value ahead of much of our competition, as can be seen from our profit and earnings per share progression and each of our core recruitment businesses are well positioned to capitalise on the growth which is anticipated across all our respective markets. 

We have now established an extremely dynamic and innovative culture across the Group and we believe that this, coupled with giving all of our businesses the freedom they need to compete in highly dynamic markets will ensure we continue to attract the brightest and most ambitious people, which is vital as we pursue our future growth plans. 

Finally, our continued success is a direct result of the hard work, support and unparalleled commitment of everybody employed in our business and the Group Board is extremely proud of our collective achievement."

Enquiries:

Chairman's statement

For the year ended 31 December 2014

I am pleased to present the final report for the year to 31st December 2014.

Group

2014 has again been a year of growth both in turnover and profit.  As a result, although turnover growth was modest at £51m, representing an increase of 4% over 2013, we have achieved Group operating profits of £1.11m and a Group pre-tax profit of £1.02m, increases of 27% and 38% respectively versus the previous year. This is a clear indication of major increases in efficiency coupled with reductions in interest charges arising from more effective credit control.

Net cash from operating activities 'free-cash' has markedly increased partly as a result of increased profitability and partly arising from improvements in terms of trade, particularly in debtor days.  In pursuance of Group strategy we have recommenced the payment of dividends and have made an acquisition for a cash consideration of £891,000.

Capital investment

Our enhanced trading performance has enabled us to continue carefully focused increases in capital expenditure with a particular emphasis on improvements in IT.

Acquisition

On 28th November we completed the purchase of RIG Energy Limited, a provider of contract and permanent gas engineers, extending and diversifying the range of safety critical clients served by Ganymede.  RIG Energy has now been successfully integrated into Ganymede and has been rebranded Ganymede Energy. It achieved operating profits in the year to 31st December 2014 of £218,000 of which £43,000 were in December and are included in RTC Group's consolidated results for 2014.

Dividends

As stated in my report for the year to December 2013, we have established a policy of paying dividends to shareholders from free cash flow.  In pursuance of this objective, during the year, the share premium account has been cancelled and the reserve transferred to the profit and loss account in accordance with approval given at our last Annual General Meeting. Your Directors are satisfied that profitability, free cash flow and shareholder equity are now sufficiently robust to permit a modest return to the dividend list .  During the year the Company paid a 2014 interim dividend of £67,558 (2013: £Nil) to its shareholders, which represented a payment of 0.5p per share (2013: Nil). Your Directors have now recommended a further final dividend of £135,116 (1p per share), making a total of 1.5p per share for the year ended 31 December 2014 (2013: £Nil).  A resolution regarding this recommended final dividend is to be considered at the Company's forthcoming 2015 Annual General Meeting, which is due to be held on 22 April 2015.  If shareholders approve the recommended final dividend, then this will be paid on 24 April 2015 to all holders of shares who are on the register of members at the close of business on 27 March 2015, with an ex-dividend date of 26 March 2015.

The Group Board

During the year, John White wished to pursue other business interests and consequently resigned his position as a director.  I would like to thank John for his strong support during difficult times. 

We have been fortunate in securing the services of Tim Jackson as a Non-Executive director.  Tim has particularly relevant experience in recruitment as past finance director of Staffline Group Plc in a period of fast growth both organically and by acquisition.  In addition to his role as non-executive director, Tim is a member of the remuneration and audit committees and provides help and advice in the identification and evaluation of potential acquisitions.

Outlook

In addition to the use of free cash flow to finance an acquisition and return to the payment of dividends working capital improvements in ATA have permitted a significant investment in additional consultants. 

As previously announced, Ganymede has been successful in achieving a further and significantly enhanced award as a result of the Network Rail CP5 procurement process. Ganymede will enter into a Contract with Network Rail to provide contingent labour services including the supply of safety critical, track and E&P (electrification and plant) resources in the West, South West and North East England, the Midlands and Wales. The Contract will run for a period of five years from April 2015 and has an estimated order book value of between £80m to £100m. Following this Contract, Ganymede will be one of Network Rail's largest suppliers of contingent labour to their maintenance and renewals programme. The outlook for other Ganymede rail business is promising and Ganymede Energy has made a strong start and is expected to perform well in 2015.

GSS continues to support NATO operations in Afghanistan through its contract with Kellogg Brown and Root (KBR) and whilst, as anticipated, the number of personnel is reducing, the withdrawal will be more gradual than originally anticipated and our support will continue into 2015 and possibly 2016. The business is also securing new contracts with KBR in other regions and is in discussions with a range of clients to provide work force solutions on a range of non-military opportunities. 

The Derby Conference Centre (DCC) continues to provide our prestigious Head Office location and is making steady profits providing facilities for us and other business users. 

Although the global situation must continue to cause some apprehension, the UK economy continues to perform surprisingly well and we are confident that 2015 will see further growth.

Employees

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

W J C Douie                                                                                                                                        2 March 2015

Chairman                                                                                           

Chief executive's operational and strategic review

For the year ended 31 December 2014

1.    Introduction

2014 began on an optimistic note having delivered a very positive set of results in 2013.  Continuing this momentum, the delivery of another significant year of profit growth, was therefore the key strategic imperative for the Group Board.  I am delighted to say that our results for this year have exceeded our original expectations at the beginning of the year. 

All subsidiary businesses were profitable, established strong footholds in their respective markets and collectively delivered, for the third year in a row, increased sales, gross profit, operating profit and net cash collection. 

I firmly believe that the turnaround plan and strategic actions set out five years ago by the Group Board to de-risk and rebuild the Group have achieved their desired effect and the group now has an extremely exciting future ahead of it.  

I have outlined in section 2 below, the key components of the turnaround plan and strategic actions which were agreed by the Group Board in 2008.

2.     Turnaround/strategic action plan:

In 2007/08 as newly appointed CEO I conducted an in depth review of the Groups' capabilities, resources and businesses. I identified a range of strategic issues which were the main obstacles to the successful growth of the business. Whilst the actions identified as solutions for each strategic issue would take varying lengths of time to be fully effective, the chart below captures the underlying issues, range of actions needed to drive the desired changes and the outcomes which have enabled the Group to reposition itself as a highly focused and profitable recruitment Group.

It is especially pleasing that the Group achieved this challenging turnaround plan in the midst of a severe recession hitting the World economy and in particular the United Kingdom recruitment sector, which was brutally affected.  Whilst many in the sector failed to survive the severity of its impact, RTC Group has doubled revenue, significantly improved its balance sheet and laid the foundations for the next phase of the Group's growth plan.   

3.    Group Structure

We now have a very clear and focussed structure with three highly successful and complementary recruitment brands supported by our Group central services unit, located at our headquarters, the Derby Conference Centre (DCC).

4.    Group business model

Our business model centres around establishing each of our core recruitment businesses as strong independent market leaders in their respective sectors.  In addition, the businesses leverage their collective capabilities by collaborating on a range of domestic and international projects with clients

looking to reduce transaction costs and minimise supply complexity.  Our business model is attracting a significant amount of interest and we are currently exploring a range of opportunities with potential clients seeking to establish single-source solutions on large scale contracts.  

The subsidiary businesses are provided with central service support across all aspects of financial accounts and management, marketing, legal/human resources and information technology and systems management, all centrally located at our headquarters, the DCC.  The DCC also attracts external revenue by utilising spare capacity for other business users, sub-lease of office space and through facilitating a range of regional and national events.  Whilst not material in comparison to overall Group revenue and profit, the DCC has been transformed by its MD Mike Ebbitt from a cost centre constantly draining Group cash into a unique facility providing first class headquarter accommodation and profitable revenue from third party sources.

A diagram showing the Group's business model is set out in our Annual Report 2014 which will be made available Company's website at www.rtcgroupplc.co.uk later today.

5.    Operational Review

All Group businesses had another successful year of trading.  The head count investments made in our ATA subsidiary during the latter half of 2013 began to deliver encouraging results during 2014 and given the positive UK economic recovery ATA has continued to invest in the recruitment of additional consultants throughout the year.  In addition, due to wide spread optimism about the pace of the UK recovery, ATA will seek to continue investing in the growth of both its regional branch network and major account business throughout 2015. 

GSS continues to support NATO through its relationship with our client, Kellogg Brown and Root, and whilst there has been a continued demobilisation of international military personnel from Afghanistan over the past year, a larger than anticipated GSS support structure remained in Afghanistan throughout 2014.  It is also anticipated that this will continue throughout 2015 and potentially into 2016.  In addition GSS has been securing additional military support contracts in other NATO supported regions and non-military support operations across the Middle East, Africa and Europe. 

Ganymede continues to position itself as a leading supplier of safety critical contingent labour to the rail industry and following the recent award relating to part of CP5, is now set to become one of network rails' largest strategic partners for its maintenance and renewal programme.  Growth in 2014 was again well ahead of our expectations and the new five year work programme with network rail alongside its other rail sector business will see Ganymede establish itself as one of the UK's most respected contingent labour suppliers to the rail industry.  Furthermore the acquisition of RIG Energy towards the end of 2014 enables Ganymede to diversify into the energy sector and given the size of the smart meter rollout programme expected to be completed by 2020, we are very optimistic about Ganymede's future growth prospects.

The DCC had another promising year and delivered a healthy return on activities for the Group.  In addition to providing a unique home for our Group's headquarters, the DCC hosted a number of high profile events during 2014 and continues to establish its reputation as one of the major providers of facilities for business users in the Midlands. 

6.    Long term value plan

We believe that the long-term support and commitment of all our stakeholders is a vital component to the success of the Group as we enter the next phase of our growth plan.  We have therefore established a long-term value plan for each stakeholder Group to measure our progress in pursuit of this commitment.

7.    Summary

I am extremely proud of the progress that the Group has made during 2014.  We continue to seek to grow underlying profit and shareholder value ahead of much of our competition, as can be seen from our key performance indicators on page 14 of our annual report, and each of our core recruitment businesses are well positioned to capitalise on the growth which is anticipated across all of our respective markets. 

We have now established an extremely dynamic and innovative culture across the Group.  We believe that giving all of our businesses the freedom they need to compete in highly dynamic markets will allow us to continue to attract the brightest and most ambitious people, which is vital as we pursue our future growth plans. 

Finally, our continued success is a direct result of the hard work, support and unparalleled commitment of everybody employed in our business and the Group Board is extremely proud of our collective achievement.

Andy Pendlebury

Group Chief Executive                                                                                                  2 March 2015

Finance Director's statement

For the year ended 31 December 2014

Financial highlights

In the year ended 31 December 2014, Group revenue increased by 4% to £51m (2013:£49m) reflecting good performances in all Group businesses.

Revenue growth has flowed through to an overall profit from operations of £1.11m, an increase of 27% on 2013.  Gross margin was 20% (2013: 19%), reflecting efficiencies across all of our businesses.

Acquisitions

On 28 November 2014 the Group acquired RIG Energy Limited ("RIG Energy") for cash consideration of £0.9m. RIG Energy is a specialist engineering recruitment agency which is focussed on providing domestic and commercial gas engineers.  The business has now been successfully integrated into Ganymede and has performed in line with our expectations.

The Group will continue to actively monitor and research good acquisition opportunities that meet our strategic requirements.

Taxation

The total tax charge for the year was £218,000 (2013: £224,000). The small variance between this and the expected charge if a 21% corporation tax rate was applied to the profit for the year is explained in note 3.

Earnings per share

The basic earnings per share figure is 5.92p (2013:  3.79p) reflecting the 38% increase in profits before tax in 2014.

Cancellation of share premium

Following the approval of the cancellation of the share premium account by shareholders at the Company's Annual General Meeting on 21 May 2014, by order of the High Court, the cancellation became effective on 27 November 2014. Following the cancellation, the total number of ordinary shares of 1p each in issue remained unchanged at 13,511,626 shares. The cancellation enhances the Company's ability to make future distributions to shareholders.

Dividends

During the year the company paid an interim dividend of £67,558 (2013: £Nil) to its equity shareholders. This represents a payment of 0.5p (2013: Nil p) per share.

Statement of financial position, cash generation and financing

The Group balance sheet has strengthened during the year with the acquisition of RIG Energy creating an intangible asset of £0.7m, in respect of customer lists. Net working capital has been maintained near 2013 levels at £1.2m (2013: £1.1m) despite an increase in turnover, and there is a similar ratio of current assets to current liabilities of 1.16 (2013: 1.14).  The Group's gearing ratio, which is calculated as total borrowings over net assets, has fallen to 1.3 (2013: 2.3) and interest cover has increased to 12.1 (2013: 6.5) which is further evidence of improvement in the Group's financial position and improved cash generation during the year.

Post tax cash generation during the year has been strong, with cash generated from operations of £2.3m (2013: £0.2m). Effective credit control succeeded in maintaining levels of working capital similar to 2013 despite the increase in revenue and the acquisition of RIG Energy for a cash consideration of £0.9m.

It is pleasing to note that as an indicator of the quality of our earnings, free cash flow as a percentage of our underlying profit before interest and taxation is 198% (2013: 28%). It is our intention to continue to invest in our growth and supporting infrastructure during 2015, which should lead to further reductions in this percentage.

The Group's current bank facilities include an overdraft of £50,000 and a confidential invoice discounting facility of up to £7.0m with HSBC. Both are renewable annually with the next review due 28 February 2016. The Group is currently operating well within its facility cap.

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 focussed on cash generation and building a robust balance sheet to support the growth of the business

Sarah Dye                                                                                                                                            2 March 2015

Group Finance Director                                                                                               

Consolidated statement of comprehensive income

For the year ended 31 December 2014

Consolidated statement of changes in equity

For the year ended 31 December 2014

Cancellation of share premium

Following the approval of shareholders at the Company's Annual General Meeting on 21 May 2014 of the cancellation of the share premium account, by order of the High Court, the cancellation became effective on 27 November 2014. Following the cancellation, the total number of ordinary shares of 1p each in issue remained unchanged at 13,511,626 shares.

Consolidated statement of financial position

As at 31 December 2014

The financial statements were approved and authorised for issue by the Board and were signed on its behalf on 2 March 2015 by:

A M Pendlebury                                                                                           S Dye                                       

Director                                                                                                            Director

Consolidated statement of cash flows

For the year ended 31 December 2014

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 2014 was authorised for issue in accordance with a resolution of the directors on 2 March 2015.

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 2014.  Other than the restatement of gross profit detailed below, there have been no significant changes in the basis upon which estimates have been determined, compared to those applied at 31 December 2013 and no change in estimate has had a material effect on the current period.

Restatement of gross profit

Following a review by the directors of the Group's policy for presenting costs arising within the recruitment segments against companies within the same industry the Group has restated the prior year consolidated statement of comprehensive income in order to re-allocate certain expenses within cost of sales to administrative expenses in order to enhance comparability with those companies. The expenses reallocated to administrative expenses are those not directly attributable to contractors. The effect of the re-allocation was to increase administrative expenses for the year ended 31 December 2013 by £3.7m and reduce cost of sales by £3.7m and increasing gross profit by £3.7m. There was no change to reported revenue or profit from operations or earnings per share. Segment reporting in note 2 has been restated to reflect the change in basis of allocation.

2.     Segment analysis

The Group is a provider of recruitment services and conferencing services that is based at the Derby Conference Centre.  The recruitment business comprises three distinct business units - ATA predominantly servicing the UK SME engineering market and a number of vertical markets; Global Staffing Solutions servicing the international market and Ganymede Solutions supplying labour into safety critical environments, mainly rail.

Segment information is provided below in respect of ATA, Global Staffing Solutions, Ganymede Solutions and the Derby Conference Centre which, as well as being the head office for the Group, provides hotel 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.  Hotel and conferencing services are wholly provided in the UK at the Derby Conference Centre.

All revenues have been invoiced to external customers.  During 2014, one customer in the Global Staffing Solutions segment contributed 10% or more of that segment's revenues being £12.2m (2013: £14.8m).

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

The segmental information restated for the prior reporting period is as follows:

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

3.            Tax expense                                                                                               

   Factors affecting the tax expense

The tax assessed for the year is greater than (2013: greater than) would be expected by multiplying profit on ordinary activities by the standard rate of corporation tax in the UK of 21 % (2013: 23.5%).  The differences are explained below:-

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 £397,000 (2013: £449,000).

The provision for deferred tax is calculated based on the tax rates enacted or substantially enacted at the balance sheet date. 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%.

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

5.         Dividends

During the year the company paid an interim dividend of £67,558 (2013: £Nil) to its equity shareholders. This represents a payment of 0.5p (2013: Nil p) per share. A final dividend of £135,116 (2013: £Nil) has been proposed but has not been accrued within these financial statements. This represents a payment of 1.0p (2013: Nil p) per share.

6.         Business combinations

On 28 November 2014 the Company acquired RIG Energy Limited, based in Milton Keynes, and assumed control by acquiring 100% of the voting rights.  The acquisition met a strategic objective of the Group in respect of diversification in the supply of labour into other 'safety critical environments'.

An adjustment was required to the book values of the assets and liabilities of the business acquired in order to present the net assets at estimated values in accordance with the Group accounting policies. The purchase was accounted for as an acquisition. Goodwill is primarily related to growth expectations, expected future profitability, the skill and expertise of the acquired workforce and expected cost synergies. The goodwill that arose from this acquisition is not expected to be deductible for tax purposes.

Acquisition costs recognised as expenses (included within administrative expenses) amounted to £29,560.

Consideration transferred

The acquisition was settled in cash amounting to £891,000 (£875,000 was paid on 28 November 2014 and the balance of £16,000 relating to the excess of net assets per the completion accounts was settled post year end).

Identifiable net assets

The value of the trade and other receivables acquired as part of the business combination amounted to £841,000 which equated to the gross contractual amount.

Contribution to the Group results

The acquisition contributed post acquisition revenues of £409,000 and profits totalling £43,000. If the acquisition had been made on 1 January 2014 revenues of £4,948,000 and profit from operations before amortisation of intangible assets of £218,000 would have been included and the Group revenues would have been £55,946,000 and the Group profit from operations would have been £1,327,000.

7.   Report and accounts

The above financial information does not constitute the Company's statutory accounts for the years ended 31 December 2014 or 2013 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 2013 have been filed with the Registrar of Companies.

Full audited accounts of RTC Group plc for the year ended 31 December 2014 will be made available on the Company's website at www.rtcgroupplc.co.uk later today and will be dispatched to shareholders on 20 March 2015 and then be available from the Company's registered office:- The Derby Conference Centre, London Road, Derby, DE24 8UX.

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