Preliminary results for the year ended 31 December

RNS Number : 5998D

RTC Group PLC

18 May 2012

 



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

Preliminary results for the year ended 31 December 2011

RTC Group Plc, a support services group, which provides recruitment and conferencing services, is pleased to announce its preliminary results for the year ended 31 December 2011.

HIGHLIGHTS

-       Group revenue from continuing operations of £29.5m (2010: £19.6m)

-       Group operating loss from continuing operations before exceptional items of £87,000 (2010: £492,000)

-       Loss for the year attributable to equity holders of £611,000 (2010: £958,000)

-       Loss per share from continued and discontinued operations of 5.10p (2010: 10.62p)

-       Dividends the Board believes that it would not be prudent to use financial resources to declare a final dividend at this time (2010: nil)

-       Recruitment made an operating profit before exceptional items of £211,000 (2010: £210,000)

-       Conferencing made an operating profit of £35,000 (2010: loss £277,000)

Commenting on the results Bill Douie, Chairman, said:

"Our strategic plan has identified significant opportunities to build on our expertise in managed service operations globally, in development of our presence in India, in the services to SME industrial clients through our branch network in England and in labour supply in the UK.  Implementation of the management development and re-structuring programme has given us a team capable of pursuing those opportunities."

ENQUIRIES:

RTC Group Plc                                                                                                   Tel: [phone]

Bill Douie, Executive Chairman

Andy Pendlebury, Chief Executive

Allenby Capital Limited                                                                                   Tel: [phone]

Jeremy Porter, Corporate Finance

Mark Connelly, Corporate Finance

Chairman's Statement

I am pleased to present the final report for the year ended 31^st December 2011.

GROUP

2011 has been the first complete year when the Group has traded in its new reorganised structure.  Although the Derby Conference Centre is not an obvious core business in a recruitment company it is a sound and profitable business and serves to provide, in addition, a Head Office for the Group.  All other businesses in the Group are involved in Recruitment and fall into three divisions:  UK white collar recruitment, International Managed Service and UK labour supply.

TRADING

ATA Recruitment Limited

UK white collar recruitment provides personnel, both permanent and contract, mainly to industrial clients in vertical markets through our premises in the Derby Conference Centre and to the SME industrial market through six UK branches.  Both markets have continued to make steady progress.  In the period under review, revenues were up 16% at £15.825m, generating an operating profit of £357,000 (2010 : £15,000)

International Managed Service has continued to expand its operations in NATO premises in Afghanistan.  Revenues in 2011 were up 221% at £7,088m but significant operating difficulties during a period of rapid turnover increases resulted in an operating loss of (£66,000) (2010 : profit £169,000).  All of the operational problems have now been eliminated and the business is running profitably. 

Ganymede Solutions Limited had another good year in its traditional markets of Rail, Infrastructure, Trades and labour.  An initial entry into the Telecoms sector was not successful and resulted in a material non-recurring loss of £378,000 in the first half of the year.  Revenues were up 74% at £4.843m and operating profit, before exceptional items, were £194,000 (2010 : £26,000).

The Derby Conference Centre continued to make steady improvements in performance in a difficult market environment.  Revenues were up 36% in the period under review at  £1.763m, generating an  operating profit of £35,000  (2010 : loss £277,000).

Non - recurring item.  As announced in our interim statement, our entry into the Telecoms industry, whilst providing contractors to high quality end-user clients, was serviced through a third party agent who proved to be of inferior quality, resulting in an exceptional loss of £378,000.  This business area has been discontinued and investigations by the relevant authorities into potential fraud by the third party are ongoing.   As a direct consequence, Group liquidity was adversely affected and movements between dollar, euro and sterling accounts, which would not normally have taken place, led to exchange losses and costs of £274,000.

Overall Group trading performance, built on three growing recruitment businesses, improved at the operating profit level, but the final outcome was materially adversely affected by both the growing pains in the Managed Services division and our unsuccessful entry into Telecoms contract recruitment.

CAPITAL INVESTMENT

During the year, although capital investment was limited by the need to divert the majority of incoming cash flow into working capital to finance growth in trading volumes, it was possible to continue the upgrade of the Derby Conference Centre premises as further space was brought back into use.

DIVIDENDS

Your directors believe that it would not be prudent to use financial resources to declare a final dividend at this time.

MANAGEMENT

During the year, development of our management structure at all levels continued apace and following the year-end a re-structure has taken place following the creation of two operating divisions, each with its own management team reporting direct to the CEO and three Operations Directors have been appointed.  These moves, in addition to reflecting the qualities of the affected individuals and the growth of the underlying businesses are also necessary to provide an appropriate level of management to ensure the capture of growth opportunities which have been identified in our strategic plan.

THE GROUP BOARD

During the year we appointed our two key senior managers and a Non - Executive Director, John T White, to the Group Board, who were all confirmed at the Annual General Meeting on 22^nd June 2011.  Since the year end Gary Hewett, Executive Director, has left the Group.

ISSUE OF NEW EQUITY

Under the authority granted at the Annual General Meeting in 2010, we announced on 3 May 20011, a subscription of new shares in the Company, by certain directors and senior management, raising £396,000 net of expenses. 

BALANCE SHEET

As at 31 December 2011 the Group had net assets of £637,000 (2010: 849,000). Group borrowings at the end of the year stood at £3,149,000 (2010: £2,231,000) leaving £2,051,000 undrawn of the Group's £5.2m invoice discounting facility.

CORPORATE GOVERNANCE

RTC Group takes very seriously its corporate governance obligations. Whilst we recognise the potential input of an appropriate number of Non-Executive Directors we presently feel that the appointment of one is adequate at this stage in the Group growth profile.  We are indebted to John White for his help and guidance in 2011.

OUTLOOK

The Group has now completed a major and essential re-organisation and is entirely focused on recruitment services with the addition of conferencing activities at our Head Office premises.  Major inroads have been made in international markets led by our contract to serve NATO establishments in Afghanistan and the establishment, post year end, of our new 90% owned company in India. Operating difficulties in the International Division have also been eliminated. Our strategic plan has identified significant opportunities to build on our expertise in managed service operations globally, in development of our presence in India, in the services to SME industrial clients through our branch network in England and in labour supply in the UK. Implementation of the Management development and re-structuring programme has given us a team capable of pursuing those opportunities.

We look forward to further growth of revenues and a material improvement in underlying profitability in 2012.

STAFF

We continue to enjoy the benefits of a growing team of loyal and conscientious management and staff.  They have my admiration and thanks and I feel privileged to work with them.

W.J.C. Douie, Chairman                                                                                                   17 May 2012

Consolidated Statement of Comprehensive Income

Year ended 31 December 2011

		2011				2010
	Notes			£'000		£'000
Revenue	5			29,519		19,639
Cost of sales				(25,517)		(16,720)
Gross Profit				4,002		2,919
Administrative expenses				(4,467)		(3,353)
Operating Loss				(465)		(434)
Analysed as
Operating Loss before exceptional items	5			(87)		(492)
Administrative (expenses) / income - exceptional	7			(378)		58
Operating Loss after exceptional items				(465)		(434)
Financing expense				(96)		(18)
Loss before tax				(561)		(452)
Income tax	6			62		18
Net Loss from continuing operations Loss from discontinued operations	4			(499)               (112)		(434)            (524)
Loss for the year and total comprehensive income for the year attributable to equity holders of the parent				(611)		(958)
Basic and diluted:
Loss per share - continuing operations (pence)	3		(4.17)		(4.81)
Loss per share - discontinued operations (pence)	3		(0.93)		(5.81)
Loss per share - continuing and discontinued operations (pence)	3		(5.10)		(10.62)

There is no dilutive effect of share options

Consolidated Statement of Changes in Equity

Year ended 31 December 2011

	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
Loss and total comprehensive income for the year	-	-	-	-	(611)	(611)
Share issue (net of expenses)	45	351	-	-	-	396
Share based payment reserve	-	-	-	3	-	3
At 31 December 2011	135	2,468	50	33	(2,049)	637

Year ended 31 December 2010

	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 2010	90	2,117	50	38	(480)	1,815
Loss and total comprehensive income for the year	-	-	-	-	(958)	(958)
Share based payment reserve	-	-	-	(8)	-	(8)
At 31 December 2010	90	2,117	50	30	(1,438)	849

The Share based payment reserve comprises of 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 2011			2011			2010
Assets	Notes	£'000	£'000	£'000	£'000
Non current assets
Property, plant and equipment		292		279
Deferred tax asset		132		70
			424		349
Current assets
Inventories		14		10
Trade and other receivables		6,444		4,787
			6,458		4,797
Total assets			6,882		5,146
Liabilities
Current liabilities
Trade and other payables		(3,096)		(2,066)
Current borrowings		(3,149)		(2,231)
Total current liabilities			(6,245)		(4,297)
Net assets	5		637		849
Equity attributable to equity holders of the parent
Share capital			135		90
Share premium			2,468		2,117
Capital redemption reserve			50		50
Share based payment reserve			33		30
Accumulated losses			(2,049)		(1,438)
Total equity			637		849

The financial statements were approved and authorised for issue by the Board and were signed on its behalf on 17 May 2012 by:

A Bailey                                                                    Director

A M Pendlebury                                                      Director

Consolidated Statement of Cash Flows

Year ended 31 December 2011

		2011	2010
		£'000	£'000
Cash flows from operating activities
Operating result from continuing operations		(465)	(432)
Adjustments for:
Employee equity settled share options		3	(8)
Depreciation		156	153
Loss on sale of property, plant and equipment		5	-
Change in inventories		(4)	1
Change in trade and other receivables		(1,657)	(2,400)
Change in trade and other payables		1,030	652
Cash generated from operations		(932)	(2,034)
Interest paid		(96)	(18)
Income tax received		-	97
Net cash from/(used in) operating activities		(1,028)	(1,955)
Cash flows from investing activities
Purchases of property, plant and equipment		(174)	(24)
Proceeds from sale of property, plant and equipment		-	40
Net cash from/(used in) investing activities		(174)	16
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		(806)	(1,939)
Cash movement from discontinued operations Operating Activities		(112)	(130)
Cash movements from discontinued operations investing  activities		-	(14)
Net (decrease) in cash and cash equivalents from discontinued operations		(112)	(144)
Total net (decrease) in cash and cash equivalents		(918)	(2,083)
Cash and cash equivalents at the beginning of the year		(2,231)	(148)
Cash and cash equivalents at the end of the year		(3,149)	(2,231)

Notes

1.     CORPORATE INFORMATION

The announcement of audited results of the Group for the year ended 31 December 2011 was authorised for issue in accordance with a resolution of the directors on 17 May 2012. 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 5.

The financial information included in this announcement has been compiled in accordance with 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 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 2010. There have been no significant changes in the basis upon which estimates have been determined, compared to those applied at 31 December 2010 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.     LOSS PER SHARE

The calculation of basic and diluted earnings per share from continuing and discontinued operations is based on a loss after tax expense of £611,000 (2010: loss £958,000) and a weighted average of 11,974,276 (2010: 9,022,564) shares in issue.

The outstanding share options were not considered to be dilutive in 2011 nor 2010.

4.     Discontinued Operations

In August 2011, the Board decided to discontinue the activity of Global Choice Recruitment Ltd. (2010: on 25 June 2010, the Board decided to discontinue funding the Group's Training Division and hence the Board of Catalis Limited put this company into administration). The loss for the discontinued operations is stated after charging:

		2011	2010
		£'000	£'000
	Revenue	76	1,458
	Cost of sales	(109)	(1,044)
	Gross Profit/(loss) Administrative expenses - normal	(33) (79)	414 (694)
	Operating loss	(112)	(280)
	Financing income/(expense)	-	-
	Loss on ordinary activities before taxation	(112)	(280)
	Attributable income tax expense	-	-
	Loss on disposal of discontinued operations		(244)
	Net loss attributable to discontinued operations	(112)	(524)

Details of net assets disposed as a result of the administration of Catalis Limited and the associated loss for the period resulting from this are as follows:

		2011	2010
		£'000	£'000
	Non current assets
	Property plant and equipment	-	202
	Current assets	-	321
	Current liabilities	-	(279)
	Net assets disposed of	-	244
	Consideration	-	-
	Loss on disposal	-	(244)

5.     Segmental Analysis

The Group is a provider of Recruitment and Conferencing Services and operates a division for each, made up from a number of legal entities. Segmental information is provided below in respect of Recruitment and Conferencing operations. The Group manages its divisions, the trading performance and working capital by monitoring operating profit before exceptional items and centrally manages Group taxation, capital structure and spend, including net equity and net debt.

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

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.  Revenues of £7.1m (2010: £2.2m) in the recruitment division were derived from a single external customer. 

        The segmental analysis of revenue, gross margin, operating profit before exceptional goodwill write off and net assets is as follows: -

							2011		2010
							£'000		£'000
	Revenue
	Recruitment						27,756		18,344
	Conferencing						1,763		1,295
							29,519		19,639
	Gross Margin
	Recruitment						2,964		2,356
	Conferencing						1,038		563
							4,002		2,919
	Operating (loss) from continuing operations before exceptional items
	Recruitment						211		210
	Conferencing						35		(277)
	Group costs						(333)		(425)
							(87)		(492)

				2011	2010
				£'000	£'000
	Other information
	Depreciation:
	Recruitment			68	86
	Conferencing			88	122
				156	208
	Capital expenditure:
	Recruitment			106	24
	Conferencing			68	14
				174	38

	2011	2011	2011	2010	2010	2010
	£'000	£'000	£'000	£'000	£'000	£'000
	Assets	Liabilities	Net	Assets	Liabilities	Net
Recruitment	5,828	(5,555)	273	4,548	(3,977)	571
Conferencing	604	(305)	299	403	(212)	191
Non-trading/Group	449	(385)	64	195	(108)	87
Continuing	6,881	(6,245)	636	5,146	(4,297)	849
Discontinued
Recruitment	1	-	1	-	-	-
Training	-	-	-	-	-	-
Total	6,882	(6,245)	637	5,146	(4,297)	849

        All assets and liabilities are held in the United Kingdom.

6.     Income Tax

	Continuing operations					2011	2010
						£'000	£'000
	Analysis of tax :-
	Current Tax
	UK corporation tax					-	-
	Adjustment in respect of previous periods					-	(3)
						-	(3)
	Deferred Tax
	Origination and reversal of temporary differences					(62)	-
	Adjustment in respect of previous periods					-	(15)
	Tax					(62)	(18)

7.     Exceptional Administrative Costs

		2011	2010
		£'000	£'000
	Profit on disposal of property plant and equipment	-	121
	Reorganisation costs	-	(63)
	Provision for bad debt	378	-
		378	58

As further explained in the Chairman's statement, during the year the Group has experienced a non recurring bad debt of £378,000, including legal fees to date, from a 3^rd party agent.

Report & Accounts

The above financial information does not constitute the Company's statutory accounts for the years ended 31 December 2011 or 2010 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 2010 have been filed with the Registrar of Companies.

Full audited accounts of RTC Group plc for the year ended 31 December 2011 will be dispatched to shareholders, made available on the Company's website at www.rtcgroupplc.co.uk and will be available from the Company's registered office:- The Derby Conference Centre, London Road, Derby, DE24 8UX in advance of the AGM.

 

END

 

 

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