Interim Results
RDF Group PLC
01 November 2006
RDF GROUP PLC
INTERIM RESULTS
For the six months ended 30 September 2006
RDF Group plc, the I.T. services group, with offices in Brighton, Bristol,
Edinburgh and London, today announces its interim results for the six months to
30 September 2006.
Key points:-
•Sales increase 16% to £10.6m (2005: £9.2m)
•Operating profit before exceptional items up 36% to £0.75m (2005: £0.55m)
•Pre-tax profits increased 13% to £0.60m (2005:£0.53m)
•Earnings per share increased 16% to 3.94p (2005: 3.40p)
•Net assets per share increased 46% to 20.75p (2005: 14.2p)
•Interim dividend up 33% to 1.00 pence (2005: 0.75 pence)
Commenting on the results, Chief Executive David Wood, said:
'We have been very pleased with the trading performance of the business during
the first half of the year. New offices have been opened in London and Bristol
and are performing ahead of expectations. The Group has a healthy pipeline of
ongoing work and we are looking forward to the second half following the
reorganisation of the Board in August. The new Board is actively working on
acquisitions to enhance the business.
I would like to take this opportunity to personally thank all of our staff,
clients and suppliers for their continued commitment and support as we keep
moving the business forwards.'
CHAIRMAN'S STATEMENT
For the six months ended 30 September 2006
Strategic Developments
RDF Group continues to develop its business across the IT services sector
through the three business streams of:
- Managed Services, providing bespoke software development, support and
maintenance;
- Contract Services, offering high-value contract staff; and
- Permanent Recruitment, assisting companies in hiring IT staff.
In addition the Board are seeking to extend the Group's service offerings, both
organically and through acquisitions.
During the first half of the year, the Group has successfully opened two new
offices in London and Bristol and increased its capacity in both Brighton and
Edinburgh. The strong level of enquiries referred to in the last full year
statement are being converted into new business.
Profitable Growth
RDF Group is pleased to report that it has continued to build on its success at
the year end with sustained growth in both turnover and profit for the six
months ended 30 September 2006.
Turnover for the period has increased to £10.6 million from £9.2 million, an
increase of 16% on the first six months of 2005. Operating profit before
exceptional charges has increased by 36% to £756,000 from £553,000 in the same
period last year. Post tax profits for the period are also up to £410,000 from
£354,000 after exceptional costs. These exceptional costs arose following,
the Company's suspension from having its shares traded on AIM and were the
compensation payments to the previous non-executive directors and costs
associated with the subsequent lifting of the AIM suspension.
The Group's operating margin increased to 22.9% from 20.4% due to firm cost
control.
Undiluted earnings per share before exceptional items were 4.70 pence, an
increase of 38% on the restated 3.40 pence for the same period last year.
The Group's net assets now exceed £2.15m, compared with £1.48m on 30 September
2005 - equivalent to a net asset per share value of 20.75 pence, compared to
17.75 pence at 31st March 2006 - a 17% increase in six months.
There was a trading cash inflow of £852,000 in the first half of the year,
compared with £485,000 in the first half of last year. The Group spent £221,000
of this on capital expenditure on existing and new infrastructure, which when
added to the cash outflow after tax, dividends and financing resulted in an
increase in cash balances of £335,000, compared to last year's £358,000. At the
end of the period, the Group had combined cash balances of £581,000 - an
increase of 158% on the £225,000 it had at the same time last year.
Dividend Growth
The Board's policy is to increase cash returns to shareholders progressively
over time, taking into account both underlying profitability and the cash flow
requirements of the business. In line with this policy we have declared an
interim dividend of 1.00p. This is an increase of 33% on the 0.75 pence for the
period to 30 September 2005. The interim dividend will be paid to those
shareholders on the register at close of business on 17 November 2006.
The shares will be declared ex-dividend on 15 November 2006.
Current Trading
The Board is confident that the second half of this financial year will see
continued growth in demand for its services, with confirmed commitment levels on
retained business being matched by an expected further growth in new business.
The directors will continue to invest in strategic sales and marketing
opportunities, to raise the Group's profile and further increase revenues.
The directors are focused on expanding the number of Managed Service clients
through new sales initiatives and the up-selling of higher value services to
existing clients. The Group is actively engaged with a number of initiatives to
increase the range of IT-related services it can offer to its clients.
Jim Carr
Chairman
31 October 2006
GROUP PROFIT AND LOSS ACCOUNT
For the six months ended 30 September 2006
Six months ended Year Ended
30 September 31 March
Notes 2006 2005 2006
£'000 £'000 £'000
(restated) (restated)
(unaudited) (unaudited)
Turnover 2 10,644 9,193 19,673
Cost of sales (8,207) (7,285) (15,532)
------ ----- ------
Gross profit 2,437 1,908 4,141
------ ----- ------
Operating expenses
Administrative expenses (1,681) (1,355) (2,982)
------ ----- ------
Operating profit before
exceptional items 756 553 1,159
Exceptional items 3 (113) - -
------ ----- ------
Operating profit 643 553 1,159
Net interest payable (40) (20) (43)
------ ----- ------
Profit on ordinary activities
before taxation 603 533 1,116
Taxation on profit from
ordinary activities (193) (179) (342)
------ ----- ------
Profit for the financial
period 8 410 354 774
------ ----- ------
Earnings per share (pence) 5
Basic 3.94 3.40 7.44
Diluted 3.88 3.32 7.26
All disclosures relate only to continuing operations.
There are no recognised gains or losses other than the profit for the period.
Profit before exceptional items 6
Profit before tax 716 533 1,116
Profit after tax 489 354 774
GROUP BALANCE SHEET
As at 30 September 2006
Six months ended Year Ended
30 September 31 March
Notes 2006 2005 2006
£'000 £'000 £'000
(restated) (restated)
(unaudited) (unaudited)
Fixed assets
Tangible assets 426 198 195
CURRENT ASSETS
Debtors 3,755 3,487 4,287
Cash at bank and in hand 581 255 246
----- ----- -----
4,336 3,742 4,533
----- ----- -----
Creditors: amounts falling due
within one year (2,553) (2,460) (2,883)
----- ----- -----
Net current assets 1,783 1,282 1,650
----- ----- -----
Total assets less current
liabilities 2,209 1,480 1,845
Creditors: amounts falling
after more than one year (51) - -
----- ----- -----
2,158 1,480 1,845
----- ----- -----
Capital and reserves
Called up share capital 208 208 208
Share premium account 103 103 103
Profit and loss account 7 1,847 1,169 1,534
----- ----- -----
Equity shareholders' funds 2,158 1,480 1,845
----- ----- -----
CASHFLOW STATEMENT
For the six months ended 30 September 2006
Six months ended Year ended
30 September 31 March
Notes 2006 2005 2006
£'000 £'000 £'000
(restated) (restated)
(unaudited) (unaudited)
Net cash inflow from operating
activities 8 852 485 913
Returns on investments and
servicing of finance
Interest paid (40) (20) (43)
Taxation
UK corporation tax (132) - (267)
Net capital expenditure and
financial investment (221) (55) (94)
---- ---- -----
459 410 509
Equity dividends paid (104) (52) (130)
---- ---- -----
Net cash inflow before financing 355 358 379
Financing
Payment to cancel share options (20) - -
---- ---- -----
Net cash inflow/ (outflow) from
financing (20) - -
---- ---- -----
Increase in cash in the period 335 358 379
Net funds at 1 April 2006 246 (133) (133)
---- ---- ----
NET FUNDS AT 30 SEPTEMBER 2006 581 225 246
==== ==== ====
NOTES TO THE INTERIM STATEMENT
For the six months ended 30 September 2006
1. Basis of Preparation
The interim financial statements have been prepared on the basis of the
accounting policies set out in the Company's 2006 statutory accounts subject to
the following change:-
The adoption of Financial Reporting Standard 20, Share Based Payments, which
requires the company to reflect in its profit and loss account the effects of
share based payments such as employee share options. The company's accounting
policy is to charge the value of shares granted since 7 November 2002, and not
vested before 1 April 2006, to the profit and loss account on a straight line
basis over the period from grant to vesting.
The comparative figures for the six months ended 30 September 2005 and the year
ended 31 March 2006 have been restated to reflect this change of accounting
policy.
These statements are unaudited and were approved by the Board of Directors on 31
October 2006. The financial information contained in these statements does not
constitute statutory accounts as defined in Section 240 of the Companies Act
1985. The financial information for the year ended 31 March 2006 has been
extracted from the statutory accounts for that year, as adjusted for the change
in accounting policy referred to above. The statutory accounts for the year
ended 31 March 2006, which received an unqualified audit report, have been filed
with the Registrar of Companies.
2. Turnover Analysis
Sales by service type are:
Six months ended Year Ended
30 September 31 March
2006 2005 2006
£'000 £'000 £'000
(restated) (restated)
(unaudited) (unaudited)
Managed Software Development 5,039 3,973 8,799
Temporary Agency Staffing 5,279 5,061 10,496
Permanent Recruitment Fees 316 159 348
Software and Other Sales 10 0 30
------ ----- ------
10,644 9,193 19,673
====== ===== ======
All the Group's sales are in the United Kingdom.
3. Exceptional Items
Following the resignation of the non-executive directors on 8 August 2006, the
company's nominated adviser and broker, John East and Partners, resigned.
As a result the company's shares were suspended from dealing on AIM.
The cost incurred in relation to the resignation of the non-executive directors
and the professional fees for assisting with the lifting of the suspension
were £113,000.
The suspension was lifted on 12 September 2006, following the appointment of
Smith & Williamson Corporate Finance Limited as the company's nominated adviser
and broker.
4. Dividends
A final dividend for the year ended 31 March 2006 of 1.00 pence per share
(31 March 2005: 0.50 pence per share) was paid during the period in bringing
the total dividend for the full year ended 31 March 2006 to 1.75 pence per
share (31 March 2005: 1.00 pence per share).
In respect of the current period, the directors declare that an interim
dividend of 1.00 pence per share will be paid to shareholders on 1 December 2006
to those shareholders on the register at close of business on 17 November 2006.
The shares will be declared ex-divided on 15 November 2006. The dividend is not
included as a liability in the interim statement.
5. Earnings per Share
The calculation of basic earnings per share of 3.94 pence (30 September 2005:
3.40 pence, 31 March 2006: 7.44 pence) is based on the profit on ordinary
activities after taxation of £410,000 (30 September 2005: £354,000, 31 March
2006: £774,000) and on the weighted average number of shares in issue during the
period and throughout the previous year of 10,400,000.
The fully diluted earnings per share amounting to 3.88 pence (30 September 2005:
3.32 pence, 31 March 2006: 7.26 pence) has been calculated on the basis of
adding 153,664 (30 September 2005: 273,186, 31 March 2006: 260,900) to the
weighted average number of shares to take account of the dilutive effect of
outstanding share options to give 10,553,664 (30 September 2005: 10,673,186, 31
March 2006: 10,660,900) shares in issue assuming that options where the exercise
price is lower than fair value are exercised.
6. Profit Before Exceptional Items
Profit before exceptional items and the related earnings per share are shown as
the Board considers them to be relevant guides to the performance of the Group.
The tax charge for the period is equivalent to 30.0% (30 Sept 2005 30.0%, 31
March 2006 30.0%) of Profit before exceptional items.
Six months ended Year Ended
30 September 31 March
2006 2005 2006
£'000 £'000 £'000
(restated) (restated)
(unaudited) (unaudited)
Profit for the financial period 410 354 774
Taxation 193 179 342
Exceptional items 113 - -
---- ---- -----
Profit before exceptional items 716 533 1,116
Underlying tax charge (see below) (227) (179) (342)
---- ---- -----
489 354 774
==== ==== =====
Earnings per share (pence) before exceptional items
Basic 4.70 3.40 7.44
Diluted 4.63 3.32 7.26
The underlying tax charge is calculated as follows:-
Taxation on ordinary activities (193) (179) (342)
Adjustments to calculate
underlying tax charge
Taxation on exceptional items (34) - -
---- ---- ----
Underlying tax charge (227) (179) (342)
==== ==== ====
7. Profit and Loss Account
Six months ended Year Ended
30 September 31 March
2006 2005 2006
£'000 £'000 £'000
(restated) (restated)
(unaudited) (unaudited)
At 1 March 1,534 845 845
Share based payments 27 22 45
Compensation paid in lieu of
cancelled options (20) - -
Profit for the period 410 354 774
Dividends paid in the period (104) (52) (130)
----- ----- -----
1,847 1,169 1,534
===== ===== =====
8. Reconciliation of Operating Profit to Net Cash Inflow From Operating
Activities
Six months ended Year Ended
30 September 31 March
2006 2005 2006
£'000 £'000 £'000
(restated) (restated)
(unaudited) (unaudited)
Operating profit 643 553 1,159
Depreciation charges 44 24 66
Share based payments 27 22 45
Decrease / (Increase) in debtors 530 (635) (1,433)
(Decrease) / Increase in creditors (392) 521 1,076
---- ---- -----
Net cash inflow from operating activities 852 485 913
---- ---- -----
9. Copies of Report
The interim statement will be posted to all shareholders and will be available
on request from the Company Secretary, RDF Group plc, 2 Bartholomews,
Brighton, BN1 1HG.
INDEPENDENT REVIEW REPORT BY BAKER TILLY
Introduction
We have been instructed by the company to review the financial information set
out on pages 3 to 9 and we have read the other information in the interim
statement and considered whether it contains any apparent misstatements or
material inconsistencies with the financial information.
This report, including the conclusion, has been prepared for and only for the
company for the purpose of their interim statement and for no other purpose. We
do not, therefore, in producing this report, accept or assume responsibility for
any other purpose or to any other person to whom this report is shown or into
whose hands it may come save where expressly agreed by our prior consent in
writing.
Directors' responsibilities
The interim statement, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The directors are
responsible for preparing the Interim Statement in accordance with the AIM
Market Rules which require that the accounting policies and presentation applied
to the interim figures must be consistent with those that will be adopted in the
company's annual accounts.
Review of work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board as if that Bulletin applied. A review
consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and based thereon assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with Auditing Standards and therefore provides a lower
level of assurance than an audit. Accordingly we do not express an audit opinion
on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 September 2006
BAKER TILLY
Chartered Accountants
International House
Queens Road
Brighton
East Sussex
BN1 3XE
31 October 2006
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