29 February 2016

RTC Group Plc

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

Final results for the year ended 31 December 2015

RTC Group Plc (AIM: RTC.L), the support services group which predominantly provides recruitment services, is pleased to announce its audited results for the year ended 31 December 2015.

Highlights

·     Group revenue up 27% £65m (2014: £51m)

·     Gross profit up 25% £12.7m (2014: £10.2m)

·     Profit before tax up 30% £1.3m (2014: £1.0m)

·     Earnings per share (basic) 7.85p (2014: 5.92p) up 33%

During the year the Company paid an interim dividend of £136,631 (2014: £67,558) to its equity shareholders. This represents a payment of 1p (2014: 0.5p) per share. A final dividend of £273,263 (2014: £135,116) has been proposed but has not been accrued within these financial statements. This represents a payment of 2.0p (2014: 1.0p) per share. A resolution regarding this recommended final dividend is to be considered at the Company's forthcoming 2016 Annual General Meeting, which is due to be held on 20 April 2016.  If shareholders approve the recommended final dividend, then this will be paid on 1 July 2016 to all holders of shares who are on the register of members at the close of business on 3 June 2016, with an ex-dividend date of 2 June 2016.

Commenting on the results Andy Pendlebury, CEO said:

"I am delighted to be able to report that in 2015 we continued to make significant progress with the strategic direction we set for the Group culminating in another year of impressive results. Our strategy has enabled us to dilute our exposure to competitive market conditions enabling our financial performance to continue to accelerate at pace".

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:

About RTC

RTC has three principal trading subsidiaries engaged in recruitment services:

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

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

·     GSS predominantly provides managed service solutions for international clients.

·     The Derby Conference Centre (DCC) provides accommodation for the Group and hotel and conferencing facilities for local businesses.

www.rtcgroupplc.co.uk

Chairman's statement

For the year ended 31 December 2015

I am pleased to present the final report for the year to 31st December 2015.

Group

2015 has again been a year of growth with turnover up 27% and profit before tax up 26%, a clear indication of volume growth in addition to further increases in efficiency.  The figures are after a full year of amortisation charges arising from our acquisition for cash of RIG Energy in November 2014.

ATA exceeded our expectations and Ganymede mobilised and delivered the new Network Rail contract as planned. Following the termination of NATO military action in Afghanistan, the expected reductions in personnel supplied to that country, which have now stabilised at lower levels, have reduced revenue at GSS but this has been more than offset by growth in all our other businesses.

Cash generated from operations has been used to reduce the debt arising from the acquisition of RIG Energy, infrastructure and establishment costs necessary in the build-up of Ganymede fixed and variable costs in preparation for the commencement of activity arising from the Network Rail contract and in our return to dividends.

Capital investment

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

Dividends

As stated in my report for the year to December 2013, we have established a policy of paying dividends to shareholders. In pursuance of this policy, an interim dividend of 1.0p has been paid, (2014: 0.5p).  Your Directors are now proposing a final dividend for the 2015 year of 2.0p per share, (2014: 1.0p), subject to approval at the Annual General Meeting on 20 April 2016.

The Group Board

During the year, Tim Jackson, who joined us as a non-executive director, decided to focus more time on his charity interests and left the Board.  We are conscious of the value provided to boards of smaller listed companies by non-executive directors but are keen to invite only those who have particular qualities to add to our type of business.  I am happy to announce that we have secured the services of Brian May, Chief Executive of Renew Holdings plc, who has an impressive record of steering and driving his company during a period of development and growth. 

Staff

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

Outlook

As previously announced, Ganymede has been successful in achieving a further and significantly enhanced contract with Network Rail for the provision of on track labour over the next five years and is now their largest supplier of contingent labour. This contract commenced operation in May and has now stabilised at monthly activity figures at the top end of the expected range. The contract is running smoothly and we look forward to a full year's contribution in 2016.   ATA is well placed to continue to grow throughout 2016 following continued investment in system and people. GSS is continuing as a supplier of personnel into Afghanistan at reduced but stable levels and the outlook there is for greater and longer than expected involvement.  Promising negotiations are taking place to provide similar services in other geographical locations. The DCC continues to provide our prestigious head office location and is making steady profits from conferencing and other business activities.  Having completed our review of the Derby site, we have concluded a new fifteen year lease on the property and have embarked on a largely self-financing program of improvements to the buildings at the completion of which we will have premises which are completely in use and of a quality to our and our clients' demanding requirements.

The UK economy continues to perform surprisingly well and we are confident that 2016 will see further growth.

Bill Douie                                                                                                                            28 February 2016

Chairman                                                                                                                                 

Chief executive's operational and strategic review

For the year ended 31 December 2015

Overview

In the 2014 annual accounts I outlined the key findings and recommendations of the strategic review I carried out upon appointment to office. This review resulted in a wide ranging reshaping of the Group to create the necessary platform and environment to ensure the long term viability and future prosperity of the Group. Our strategy centred on building and investing in independent subsidiary businesses with strong management, motivated employees and clearly definable brands capable of competing in a broad range of highly competitive industry sectors. Additionally by leveraging the combined and complementary capabilities of the individual businesses, the Group would establish a firm footing in a range of markets capturing significant value for shareholders through providing a highly competitive and unique range of solutions to a broad range of clients seeking a single point recruitment solution. 

I am delighted to be able to report that in 2015 we continued to make significant progress with the strategic direction we set for the Group culminating in another year of impressive results. Our strategy has enabled us to dilute our exposure to competitive market conditions enabling our financial performance to continue to accelerate at pace with revenue up  27%, gross profit up 25% and gross profit conversion unchanged, profit before tax up 26% and earnings per share up 33%. These results have contributed to a further strengthening of the Group's balance sheet enabling the Board to recommend a 2p final dividend representing a 100% increase on 2014 whilst at the same time providing valuable investment capital for the Board to pursue its ambitious growth plans. Furthermore, we believe our results provide valuable reassurance to the Board and its shareholders that the strategic path being followed is underpinned by sound commercial, operational and financial management. 

Subsidiary company review

ATA

ATA has had another excellent year of growth. The investments made in headcount and management/consultant development has continued to expand the depth and breadth of experience in the business resulting in increased sales, gross profit, and gross profit conversion. The business comprises two distinctly separate yet complementary income streams. Key accounts typically supports large corporate clients with a range of individually tailored solutions to support their unique needs and the ATA branch network which services a broad range of SME businesses predominately focused around the engineering and manufacturing sectors.

Whilst both divisions have their own uniquely successful business models they share common systems, procedures and training and development strategies enabling ATA to share industry knowledge and the business to leverage shared capabilities and opportunities. This offers a significant source of competitive advantage to ATA as many of its clients, especially multi-national and subsidiary based groups are able to access corporately tailored solutions with regionally managed relationships through a single point relationship with ATA. This provides the opportunity for ATA to offer attractive commercial terms for clients whilst maintaining its solid margin performance through reducing transaction time and associated overhead costs.  

Ganymede

2015 was a hugely important year for Ganymede. Having been awarded the highest possible volume for contingent labour by Network Rail in its five year £30bn CP5 Rail Enhancement Programme, the business was under significant pressure to integrate the additional personnel the increased volume had demanded. I am delighted to report that Ganymede successfully achieved all regional integration plans and manpower deployment expectations and it is operating at the top end of the estimated five year £100m run rate. Furthermore, all additional and exceptional investment costs to facilitate the enlarged contract value were successfully absorbed in the initial ramp up period. Ganymede's 2015 financial performance reflects this huge achievement with the business doubling its 2014 revenue, delivering significantly enhanced contribution to the Group and becoming the biggest of RTC's subsidiary businesses having grown revenue 60 fold since the implementation of the Group's strategic change programme in 2008. A remarkable achievement which would qualify for recognition in all the major UK fast track award programmes.

In addition to the CP5 programme that Ganymede operates directly with Network Rail the business supports a range of other major rail clients working on infrastructure, electrification and maintenance enhancement programmes for Network Rail and the business is optimistic about its long term growth plans within the rail sector.

Towards the end of 2014 Ganymede acquired RIG Energy providing the opportunity to diversify into the energy sector with the specific long term objective of supporting the Government's smart meter roll out programme. I am delighted to say that the business has been successfully integrated into the core operation and has already proved value enhancing. Again we remain extremely optimistic about the long term prospects for Ganymede's Energy division and we believe the acquisition will deliver Ganymede the expected additional long term value ahead of expectations.  

GSS

Whilst GSS has seen reduced revenue through the anticipated decline in personnel deployed in Afghanistan, the extent of the decline has not been as severe as expected and the business continues to generate a positive contribution to the Group. Furthermore, and given the rising tension in the region, we are becoming increasingly confident that the headcount and resultant revenue will be maintained for longer than was originally anticipated. In addition to the core business and clients that GSS supports, considerable investment has been made to explore wider international opportunities predominately centred around the Middle East and in particular Qatar where the Qatari government is under increasing pressure to implement more ethical recruitment solutions as it deploys hundreds of thousands of migrant workers to support its 2022 FIFA World Cup infrastructure programme and its broader 2030 national vision strategy. On this I am delighted to report that following a lengthy period of exploratory discussions GSS has recently formed Qatar based company, GSS Qatar LLC. Over the next six months we will be exploring the scale of the opportunity for GSS to provide large volume migrant workers on a variety of long term infrastructure projects in Qatar. 

DCC

As well as providing the corporate headquarters for the Group, its internal management services division and regional offices for ATA and Ganymede, the DCC had another very successful year competing in the highly populated conferencing, events and accommodation sector in the East Midlands. Many of the large national and international hotel chains are located in Derby providing a highly crowded market place with discounting a key feature of the competitive strategy of the DCC's prime competition. The DCC has focused its client strategy around service, exceptionally high product quality and a value for money proposition. This has proved highly successful with both repeat business and new business capture steadily increasing.

During 2015 DCC negotiated a new long term lease with its landlord which will guarantee the Group a further 15 years at the DCC and enable the DCC to invest in a range of new business services to capture a larger share of the region's growing entrepreneurial business community. A major refurbishment programme has recently commenced and the Board believe once completed the DCC will be one of the prime business locations in the region offering a broad range of business services providing long term sustainable revenue for the Group.

Risk

The Board believe the Group has a sensible balance of risk across its client portfolio with the majority of revenue generated through long term contracts with blue chip businesses. This classification of client is seen as low risk by the Board and represents a substantial part of future long term income generation. In addition to providing business services to blue chip organisations our subsidiary businesses support many national SME companies across a broad range of sectors. Whilst this client grouping exposes the Group to a higher risk profile this is mitigated by a range of pre-business assessment criteria including company and bank searches and attracts both higher margins and shorter payment terms. Our final client category relates to international business. This client base represents the highest level of risk to the Group and is therefore subject to the highest level of internal approval. Approval to accept international business includes minimal margin requirement, a down payment deposit for recruitment activity and given the speed and value of debt acceleration on large volume contracts up-front payment of contractor salaries, only risking our profit against performance management. Finally regular debt management meetings are held with all subsidiary businesses on a monthly basis to discuss individual client debt management.

Our people

I would like to finish this strategic review by thanking everybody in our subsidiary businesses and Group headquarters for the contribution they have made both individually and collectively. We have grown substantially in recent years and this has brought many challenges to all corners of our Group. We have a team ethic which transcends all our businesses and departments and the collective belief in our Group is a major source of our competitive advantage which should not be undervalued. We are capable of growing far beyond our current position in the sectors and markets we operate in and the Board are extremely proud of everybody who has helped create this unique culture.  

Future growth strategy

The Board remains confident that its strategy of growing the Group through a combination of organic investment in existing subsidiary businesses coupled with strategic acquisition of complementary and value add businesses offers the most attractive long term opportunity to create value for its shareholders. Our subsidiary businesses are all well placed in growing markets and have demonstrated their ability to differentiate their core offering from other main stream competitors. This will become increasingly vital as markets tighten and pressures intensify in the battle for revenues and margin retention. We will not overpay for targeted acquisitions as synergy savings rarely deliver the levels of perceived benefit promoted by sellers' agents. Our track record on this is good and we will continue to patiently seek out targeted opportunities that provide immediate value enhancing returns to our shareholders. 

Andy Pendlebury

Group Chief Executive                                                                                                                  28 February 2016

Finance Director's statement

For the year ended 31 December 2015

Financial highlights

In the year ended 31 December 2015, Group revenue increased by 27% to £65m (2014: £51m) reflecting good performances in all Group businesses.

Revenue growth has flowed directly through to profit from operations of £1.4m also an increase of 27% on 2014. Gross margin was maintained at 20% (2014: 20%). Overall administrative expenses increased in line with revenue.

Acquisitions

The Group continues to monitor and research good acquisition opportunities that meet our strategic requirements.

Taxation

The total tax charge for the year was £0.2m (2014: £0.2m). The small variance between this and the expected charge if a 20.25% 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 7.85p (2014: 5.92p) an increase of 33% on 2014.

Dividends

During the year the company paid an interim dividend of £136,631 (2014: £67,558) to its equity shareholders. This represents a payment of 1.0p (2014: 0.5p) per share.

Purchase of own shares and formation of EBT

During the period the Company purchased 675,581 Ordinary Shares at 70p per share to implement a long term strategic reward programme to incentivise key employees as the Group enters the next phase of its exciting growth plan. The Company established an EBT to hold the shares. The EBT is considered an extension of the Company's activities and therefore assets (except investments in the Company's shares) and liabilities which are the subject of the trust are included in the consolidated accounts on a line-by-line basis.  The cost of shares held by the EBT is presented as a separate debit reserve within equity named 'Own Shares Held'.

Lease of the Derby site

A new 15 year lease was entered into in respect of the Group's Derby site. Thus securing the future headquarters for the Group and enabling us to implement our growth strategy for The Derby Conference Centre.

Statement of financial position, cash generation and financing

The Group balance sheet has strengthened during the year. Net working capital has increased to £1.8m (2014: £1.2m) largely reflecting the increased activity relating to the new Network Rail contract in Ganymede. The ratio of current assets to current liabilities has been maintained at 1.2 (2014: 1.2).  The Group's gearing ratio, which is calculated as total borrowings over net assets, has increased slightly to 1.4 (2014: 1.3) and interest cover has increased to 14.1 (2014: 12.1) which is further evidence of improvement in the Group's financial position and effective cash control and proactive management of the Group's cost of borrowing.

Cash generated from operations was £0.5m (2014: £2.3m) with operating cash conversion 17% (2014: 198%). As promised in our 2014 annual report, we invested in our continued growth through supporting infrastructure during 2015 and the purchase of own shares.

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. The next review is due in February 2017. The Group is currently operating well within its facility.

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

Sarah Dye                                                                                                                                            28 February 2016

Group Finance Director                                                                                                                                                

Consolidated statement of comprehensive income

For the year ended 31 December 2015

Consolidated statement of changes in equity

For the year ended 31 December 2015

The information for the prior reporting period is as follows:

Consolidated statement of financial position

As at 31 December 2015

The financial statements were approved and authorised for issue by the Board and were signed on its behalf on 28 February 2016 by:

A M Pendlebury                                                                                           S Dye                                       

Director                                                                                                            Director

Consolidated statement of cash flows

For the year ended 31 December 2015

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 2015 was authorised for issue in accordance with a resolution of the directors on 28 February 2016.

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 2015.  There have been no significant changes in the basis upon which estimates have been determined, compared to those applied at 31 December 2014 and no change in estimate has had a material effect on the current period.

2.     Segment analysis

The Group is a provider of recruitment services 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; GSS servicing the international market and Ganymede supplying labour into safety critical environments, mainly rail.

Segment information is provided below in respect of ATA, Ganymede, GSS and the DCC 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 DCC.

During 2015, one customer in GSS contributed 10% or more of that segment's revenues being £9.6m (2014: £12.2m) and one customer in Ganymede also contributed 10% or more of that segment's revenues being £15.5m (2014: £6.1m).

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

The information for the prior reporting period is as follows:

3.            Tax expense

Factors affecting the tax expense

The tax assessed for the year is less than (2014: greater than) would be expected by multiplying profit on ordinary activities by the standard rate of corporation tax in the UK of 20.25% (2014: 21%).  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 £379,000 (2014: £397,000).

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 from 20% to 19% from 1 April 2017 and then to 18% from 1 April 2018.

4.         Basic and diluted earnings per share

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

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

5.         Dividends

During the year the Company paid an interim dividend of £136,631 (2014: £67,558) to its equity shareholders. This represents a payment of 1p (2014: 0.5p) per share. A final dividend of £273,263 (2014: £135,116) has been proposed but has not been accrued within these financial statements. This represents a payment of 2.0p (2014: 1.0p) per share.

6.        Report and accounts

The above financial information does not constitute the Company's statutory accounts for the years ended 31 December 2015 or 2014 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 2014 have been filed with the Registrar of Companies.

Full audited accounts of RTC Group plc for the year ended 31 December 2015 will be made available on the Company's website at www.rtcgroupplc.co.uk later today and will be dispatched to shareholders on 16 March 2016 and then be available from the Company's registered office:- The Derby Conference Centre, London Road, Derby, DE24 8UX.

The Company's Annual General meeting will be held at 12 noon on 20 April 2016 at the offices of Wragge Lawrence Graham & Co LLP, 4 More London Riverside, London, SE1 2AU.