Final Results
RDF Group plc ("RDF" or the "Group")
Preliminary Results
for the year ended 31st March 2006
The Board of RDF Group plc, (LSE: RFG), the IT solutions company, is pleased to
announce its preliminary results for the year ended 31 March 2006.
Financial highlights
* Sales increased by 112 per cent. to £19.7m (2005: £9.3m)
* Profit before tax increased by 125 per cent. to £1.2m (2005: £0.5m)
* Fully diluted earnings per share increased to 7.56p (2005: 3.00p)
* Proposed final dividend of 1.0 pence per share, making a total dividend for
2006 of 1.75 pence per share, an increase of 75 per cent on 2005.
Operational highlights
* The Group has further developed its Managed Services business which has
grown by 50 per cent. in the past year and now employs over 100
consultants.
* The Group's Resources division achieved a turnover of £10.5m in its first
full year of operation and now deploys 200 contractors working at client
sites.
* The Group's Permanent Recruitment division is showing significant growth
since the previous year and is expected to continue to increase its
contribution to the profitability of the business.
George Kynoch, Chairman, commented:
"I am pleased to report another year of excellent progress for the Group,
doubling our turnover and profit and significantly widening our customer base.
The Board is confident of continued progress in the coming year".
Chairman's Statement
Introduction & Results
I am pleased to report the results for the year ended 31 March 2006. Turnover
for the period was more than doubled at £19.7 million (2005: £9.4 million)
resulting in a profit before tax of £1.16m (an increase of 125 per cent. on the
2005 figure of £0.52m). Earnings per share for the period are 7.75p (2005:
earnings per share of 3.12p). Your Board is proposing the payment of a final
dividend of 1.00 pence per share, payable on 26 July 2006, to those
shareholders on the register at noon on 16 June 2006. This will provide a total
dividend for the year of 1.75 pence per share (an increase of 75 per cent. on
2005).
Business Review
Overview
Your directors are pleased to report excellent growth in both RDF Consulting
(managed software delivery) and RDF Resources (IT contract and permanent staff
recruitment). The Group has more than doubled both income and gross margin
across these businesses. The Group continued to receive good levels of business
from its retained clients throughout the year as well as progressing new client
opportunities.
RDF Consulting
RDF Consulting has continued to provide high quality, cost-effective software
delivery services, with revenues growing by 50 per cent. in the year. The Group
continues tight control of the cost of supply of IT resources for its software
delivery teams which has resulted in further improvements in margin.
The Group has recently occupied additional space in its Brighton Headquarters
to support this increase in business.
RDF Resources
RDF Resources has shown significant growth in revenues for both contract and
permanent IT staff recruitment throughout the year (300 per cent. on 2005). The
sales team has been expanded and client base has grown accordingly, with over
50 clients invoiced during the year. Gross profit margins for contract
recruitment have been improved from 7 per cent. at the beginning of the year to
11 per cent. by the end of the year. The introduction of permanent recruitment
has contributed towards profit growth and has assisted in the Group's strategy
of up-selling to its core managed software services.
Outlook
Your directors are looking forward to continued growth in both RDF Consulting
and RDF Resources in the current year. Our existing clients are predicting
levels of business consistent with last year and the pipeline for business with
new clients is looking healthy. RDF Consulting is in discussions with several
new clients, who we are confident will produce significant new business in the
coming year.
Cost of resource supply will remain a challenge to the Group, with upward
pressure on IT staffing rates in the UK. However, the Group is confident that
it can manage these costs through its proven ability to blend retained staff,
graduate recruitment and training and near-shore supply through Eastern
European partners.
To provide an enhanced service to existing and new City-based clients, the
Group will be opening a London office shortly. This office will also be the
focus for further development of the Group's management and technical
consultancy business. Executive management is constantly reviewing other UK
locations, with a view to supporting new initiatives and sales opportunities.
As part of the Group's commitment to sustained growth, we are continuing to
review our approach to targeting potential complimentary acquisitions alongside
our strategy for organic growth.
I should like to take this opportunity on behalf of the Board to thank all the
staff of RDF for their unstinting efforts which have contributed towards this
significant performance improvement. I should also like to thank our advisors
and my Board colleagues for their continuing support and advice during such an
interesting period of development for your company.
George Kynoch
18 May 2006
GroupProfit and Loss Account
For the year ended 31 March 2006
Notes 2006 2005
(restated)
£'000 £'000
GROUP TURNOVER 19,673 9,390
Cost of sales 15,532 7,126
Gross profit 4,141 2,264
Administrative Expenses 2,937 1,729
OPERATING PROFIT 1,204 535
Interest Receivable 1 1
1,205 536
Interest payable (44) (21)
PROFIT ON ORDINARY ACTIVITIES BEFORE 1,161 515
TAXATION
Taxation 2 355 191
PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION 806 324
Dividends 3 130 52
RETAINED PROFIT FOR THE FINANCIAL YEAR 676 272
Basic earning per share (pence) 4 7.75 3.12
Diluted earnings per share (pence) 4 7.56 3.00
The operating profit for the year arises from the Group's continuing operations
Group Balance Sheet
As at 31 March 2006
Notes 2006 2005
(restated)
£'000 £'000
FIXED ASSETS
Tangible assets 195 167
CURRENT ASSETS
Debtors 4,279 2,846
Cash at bank 246 51
4,525 2,897
CREDITORS
Amounts falling due within one year 2,883 1,907
NET CURRENT ASSETS 1,642 990
TOTAL ASSETS LESS CURRENT LIABILITIES 1,837 1,157
PROVISIONS FOR LIABILITIES AND CHARGES
Deferred taxation 15 11
1,822 1,146
CAPITAL AND RESERVES
Called up equity share capital 208 208
Share premium account 103 103
Profit and loss account 1,511 835
SHAREHOLDERS' FUNDS 1,822 1,146
Group Cash Flow Statement
As at 31 March 2006
Notes 2006 2005
(restated)
£'000 £'000
Net cash flow from operating activities 913 334
Returns on investments and servicing of (43) (20)
finance`
Taxation (267) (18)
Capital expenditure and financial investment (94) (11)
509 285
Equity dividends paid (130) (104)
379 181
Financing (184) 61
INCREASE IN CASH IN THE PERIOD 195 242
RECONCILIATION OF NET CASH FLOW MOVEMENTS TO MOVEMENT IN NET FUNDS
2006 2005
£'000 £'000
Increase in cash in the period 195 242
Net cash inflow from bank loans 184 (61)
CHANGE IN NET FUNDS 379 181
NET DEBT AT 1 APRIL 2005 (133) (314)
NET FUNDS AT 31 MARCH 2006 246 (133)
Notes to the Preliminary Results
1. Basis of preparation
a) The financial information for the years ended 31 March 2005 and 31 March
2006 above does not constitute the Company's statutory financial statements but
is extracted from the audited accounts for those years. The auditors have
reported on those accounts; their reports were unqualified and did not contain
statements under Section 237 (2) or (3) of the Companies Act 1985. The amounts
shown for the year ended 31 March 2005 are restated on adoption of FRS21, which
changes the accounting for dividends, as outlined below.
b) The audited accounts for the year ended 31 March 2005 have been delivered to
the Registrar of Companies. The Annual Report and Financial Statements for the
year ended 31 March 2006 will be delivered to the Registrar of Companies
following the Annual General Meeting. Copies will be available to the public at
the Company's registered office: 2 Bartholomews, Brighton BN1 1HG
c) The Group's accounting policies have been applied consistently, except for
the adoption of FRS21 Events after the balance sheet date. This results in a
change of accounting policy for dividends, whereby dividends are charged in the
financial statements in the period in which they become a legal obligation.
This change in accounting policy has no impact on the group's profit after tax
or cash flows, but increases retained reserves and net assets at 31st March
2005 by £52,000. There is no change to the Company's ability to pay dividends
or to the Company's dividend policy.
2. Taxation
The Group's effective tax rate was 30.5 per cent. for 2006 (FY05: 37 per
cent.).
3. Dividends
The Group has adopted Financial Reporting Standard 21, events after the balance
sheet date, resulting in a change of accounting policy for dividends, whereby
dividends are charged in the financial statement in the period in which they
become a legal obligation.
The Board of Directors are recommending a final dividend of 1.0 pence per share
for the year, increasing the total dividend for 2006 to 1.75 pence per share.
4. Earnings per share
Basic earnings per share is computed by dividing the net profit attributable to
ordinary shareholders by the weighted average number of ordinary shares in
issue during the year, which was 10,400,000.
Diluted earnings per share is computed by dividing the net profit attributable
to ordinary shareholders by the weighted average number of ordinary shares in
issue after adjusting for the effects of all potential dilutive ordinary shares
that were outstanding during the year 260,902 (FY05: 409,685).
5. Circulation to Shareholders
Copies of the Company's Annual Report will be sent to shareholders on 24 May
2006 with further copies available from the Company Secretary, RDF Group plc, 2
Bartholomews, Brighton, BN1 1HG