TIDMRTC
RNS Number : 8121P
RTC Group PLC
22 February 2021
22 February 2021
RTC Group Plc
("RTC", "the Company" or "the Group")
Final results for the year ended 31 December 2020
RTC Group Plc (AIM: RTC.L) is pleased to announce its audited
results for the year ended 31 December 2020.
Highlights
-- Group revenue GBP81.4m (2019: GBP94.9m), 14% decrease.
-- Profit from operations reduced to GBP1.1m (2019: GBP2.0m), 45% decrease.
-- Net cash inflow from operating activities GBP5.1m (2019: GBP2.9m), 76% increase.
-- Net cash increased to GBP1.9m (2019: Net debt GBP2.8m). The Group has no term debt.
-- Earnings per share (basic) 4.66p (2019: 9.60p).
-- No final dividend is proposed. Total dividends in respect of
the year to 31 December 2020 Nil (2019: 3.95p).
Commenting on the results Andy Pendlebury, CEO said:
"2020 was a year like no other in our history. The pandemic
which hit the world with such ferocity and devastating effect
focused our minds primarily on the safety, health and well-being
and livelihoods of our employees and extended workforce deployed
throughout the world. Their safety remains our single most
important priority and, until this virus is brought under control,
the Group will not compromise on this commitment.
Given the seismic impact of the closure of large parts of our
economy I believe our results are extremely respectable and our
cash position significantly enhanced.
Although, as we publish our accounts, we continue to wait for
the Government to confirm its exit plan, we believe there are many
reasons to feel hopeful about the Group's prospects."
Enquiries:
RTC Group Plc Tel: 0133 286 1842
Bill Douie, Chairman
Andy Pendlebury, Chief Executive
SPARK Advisory Partners Limited (Nominated Tel: 0203 368 3550
Adviser)
Matt Davis / Mark Brady
www.Sparkadvisorypartners.com
Panmure Gordon (Broker) Tel: 020 7886 2500
Nick Lovering
www.panmure.com
About RTC
RTC Group Plc is an AIM listed recruitment business that focuses
on white and blue-collar recruitment, providing temporary and
permanent labour to a broad range of industries and customers in
both domestic and international markets through its geographically
defined operating divisions.
UK division
Through its Ganymede and ATA Recruitment brands the Group
provides a wide range of recruitment services in the UK.
Ganymede specialise in recruiting the best technical and
engineering talent and providing complete workforce solutions to
help build and maintain infrastructure and transportation for a
wide range of UK and international clients. Ganymede is a market
leader in providing a diverse range of people solutions to the
rail, energy, construction, highways and transportation sectors.
With offices strategically located across the country, Ganymede
provides its clients with the benefit of a national network of
skilled personnel combined with local expertise.
ATA Recruitment provide high-quality technical recruitment
solutions to the manufacturing, engineering and technology sectors.
Working as an engineering recruitment partner supporting businesses
across the UK. ATA Recruitment has a strong track record of
attracting and recruiting the best engineering talent for our
clients. ATA's regional offices which are strategically located in
Leicester and Leeds each have dedicated market-experts to ensure
ATA delivers excellence to both our clients and candidates.
The Group headquarters are located at the Derby Conference
Centre which also provides office accommodation for its operating
divisions in addition to generating rental and conferencing income
from space not utilised by the Group.
International division
Through its GSS brand the Group works with customers across the
globe that are focused on delivering projects in a variety of
engineering sectors. GSS has a track record of delivery in some of
the world's most hostile locations. Working closely with its
customers GSS provides contract and permanent staffing solutions on
an international basis, providing key personnel into new projects
and supporting ongoing large-scale project staffing needs. GSS
typically recruit across a range of disciplines and skills from
operators and supervisors, through to senior management level.
www.rtcgroupplc.co.uk
Chairman's statement
For the year ended 31 December 2020
I am pleased to present the final report for the year.
Group
2020 has been a particularly challenging year with all but the
first two months being deeply affected by the rapid onset and
escalation of the COVID virus. Nonetheless protective measures
commenced during January and decisions on a strategic level to
focus on balance sheet preservation and cost control were taken
immediately.
Trading in the Group continued to deliver satisfactory results
for most of the first quarter but the rumble of thunder, distinctly
audible in the first three months, morphed into very difficult
conditions from March onwards in certain areas of the business.
These were mainly focussed on the Derby Conference Centre and some
parts of UK recruitment. The wisdom of our specialisation in
infrastructure and international contract recruitment was
demonstrated as revenues in railway maintenance in the UK and
services to military installations overseas continued with only
limited drops in revenues.
As mentioned in our interim statement, we were able to deliver a
profit in the period and made valuable improvements in our cash
position. The expectation at that time was that the second half
would continue to be as difficult as the first and that history
told us that there was a considerable possibility of a second wave
of infections but we were confident that we could continue to trade
profitably. The outcome for the second half and the year as a whole
have justified that confidence and we have been assisted by a
successfully negotiated conclusion of phase one of our contract to
supply smart meter Installation engineers to the electricity supply
industry where revenues were guaranteed over the first three
years.
During the year full use has been made of Government initiatives
established to assist the UK Economy which have assisted all our
businesses to continue to operate normally, albeit at reduced
levels.
Our UK technical & engineering recruitment operations, now
part of Ganymede, had a difficult year in fragile market
conditions, but were able to produce a creditable trading result.
In other areas, Ganymede continued to prosper with slightly reduced
levels of demand in both rail and infrastructure and in the energy
division despite the slower than expected growth of our contract to
train and supply operatives to serve the roll out of the government
smart meter policy.
Our international division, Global Staffing Solutions, continued
in line with expectations. However, global travel bans impacted
some workforce mobilisation activities.
Capital investment
We continue to invest in the development of our businesses.
Dividends
In the conditions which have unfolded in 2020 it was considered
prudent to suspend the payment of dividends and to concentrate on
balance sheet improvement in preparation for the expected need to
invest in business changes and developments in the future. It is
unlikely that we will be recommending a return to payments in the
near future.
Staff
I should like to thank our staff at all levels for their
loyalty, hard work and enthusiasm during the course of a most
taxing year.
Outlook
On a positive note, we remain confident that the present global
medical emergency will eventually be put behind us, but we see no
signs of that at this time as we pin our hopes on science and
vaccines. Notwithstanding that expectation, the process of recovery
as it comes is likely to suffer for some time from the aftershocks
from these conditions and the inevitable re-shaping of human
behaviour coupled with the continued efforts to reduce the carbon
footprints of world energy production and consumption and the
settling down of our departure from the EU. We believe that we have
explored these matters and that we have a roadmap for successful
trading in the years to come. The establishment of strong and
stable Government, the passing at long last of our exit from the
European Union and the establishment of a robust trading
arrangement with Europe, give us cause to anticipate more a
predictable and promising future.
W J C Douie 21 February 2021
Chairman
Chief Executive's operational and strategic review
For the year ended 31 December 2020
Overview
In 2020, we faced a year like no other in our history. The COVID
pandemic which hit the world with such ferocity and devastating
effect focused our minds primarily on the safety, health and
well-being and livelihoods of our employees and our extended
workforce deployed throughout the world.
The speed at which decisions were being made by global
governments were at times impacting our Group on a daily basis,
with all our operational businesses having to modify operational
procedures at very short notice. The commitment, agility and
flexibility displayed by our teams across the Group during the most
uncertain and worrying of times was truly incredible and it is both
fitting and right that it features heavily throughout this
report.
From a trading perspective and given the seismic impact of the
closure of large parts of our economy, and the domino effect across
many industries, I believe our results in the circumstances are
extremely respectable.
Revenues at GBP81m, whilst down 14% from last year, still
generated a healthy gross profit of GBP10.2m which once subsidiary
overheads and central service costs, which in many cases were kept
at constant levels as we maintained our long term commitment to
both rail apprentice training and our energy industry recruitment
plan, were applied we still made a healthy profit from operations
of GBP1.1m. At the same time, we considerably reduced our net
working capital and debt through sound cash management and by
working closely with our largest clients. We significantly reduced
our gearing and generated a healthy net cash inflow from trading
activities. The Group has no term debt and has again enhanced total
equity for our investors.
The revenue streams affected most severely by the pandemic and
which impacted Group profitability most were Ganymede's energy
business, where all domestic site visits were prohibited during the
lockdown and suffered a slower recovery post lockdown due to
consumer confidence; our white collar permanent and temporary
business, which suffered from the combination of an immediate drop
off in activity as a consequence of the lockdown, the resulting
travel restrictions and diluted industry confidence, as COVID
forced many clients to re-evaluate their business plans and demand
levels; and the Derby Conference Centre (DCC) which was effectively
closed or placed in a constant state of heightened restrictions
throughout the year. It was therefore down to our bellwether
businesses of Rail and International to provide the underpinning of
our profitability during this incredibly tough year.
During the year, like many other companies across the United
Kingdom, the Group accessed grants from the Government's
Coronavirus Job Retention Scheme. In doing this, we took the
decision to include our PAYE contract workers as well as permanent
members of staff as we believed that whilst there would be an
element of non-recoverable cost through additional national
insurance and pension contributions, we felt it was morally the
right thing to stand by our extended workforce during such
difficult times. The decision also made sense from a business
continuity perspective. Of the GBP2.5m claimed by the Group around
35% related to our permanent employees and the remaining 65% was to
support our contract workforce who, without this commitment by the
Group, would have been left to suffer the fate of many flexibly
engaged workers. We believe our reputation and brand value has been
significantly enhanced through this initiative.
Finally, although the pandemic has impacted our short term
financial performance and whilst at this stage we cannot predict
with any degree of clarity what 2021 holds for the global economy,
the Board is confident that our business model of investing in
long-term strategic partnerships with blue-chip infrastructure
based clients remains the key to the future long-term success of
the Group.
Impact of COVID
The COVID restrictions, which began with a full lockdown in
March and continued in some form throughout the rest of the year
through the regional tiering system, impacted trading across all
Group companies.
Our UK recruitment business, Ganymede, which represents the
largest share of Group revenue was impacted in a number of ways.
Permanent recruitment activities, predominantly driven by our ATA
brand, were impacted significantly especially as the lockdown
effectively prohibited travel and face to face interviews which is
the main ingredient of the permanent recruitment process. A
significant amount of work-in-progress activity and new order book
business which was at varying stages of the placement cycle, was
cancelled with zero or marginal cost recovery and this was a huge
disappointment to the consultants across the business who had
expended many hours identifying hard to find candidates.
Our energy business was instructed to stand down all engineers
working on our long-term smart meter installation contracts as
visits to domestic dwellings, other than for emergency work, were
prohibited. This was a significant blow to the business especially
as many of the engineers had just completed extensive periods of
training to work on the Government's smart meter programme. Whilst
activities were able to resume after the first lockdown was lifted,
momentum remained slow until the last quarter as subdued demand
reflected the public's worries regarding COVID transmission.
Unlike other parts of the Group that suffered predominantly
revenue-based implications, COVID's impact on our largest business,
Rail, presented more operational and cost-based challenges as the
Government declared the sector an essential industry and all
employees engaged were given key worker status. In order to protect
our workers, our own and client employees and members of the
public, enhanced levels of detailed risk assessment including:
travel to and from operational sites and track locations; reduced
numbers of operatives per vehicle along with design and
installation of protective vehicle screening; sourcing, preparing
and deploying thousands of additional pieces of personal protective
equipment along with hundreds of additional vehicles at short
notice; and through the training and employment of a significant
number of COVID Marshalls to ensure the safe implementation of and
adherence to new COVID secure working process and procedures. This
has been and remains a huge logistical challenge for the sector and
through working in close collaboration with other suppliers and
competitors and being financially supported and guided by Network
Rail the sector has managed to keep essential rail maintenance and
enhancement activities fully operational during the pandemic.
Our conferencing business, the DCC, which began the year with a
healthy order book of conferences, private events and accommodation
demand was, like many others in the sector, effectively closed
overnight. Whilst the business enjoyed a short reprieve during the
summer months albeit with reduced activity, it suffered a further
blow when then Government enforced a second sector closure at the
end of October which effectively eliminated the opportunity for
businesses to recoup some of the lost revenue during the busy year
end festivities. This was naturally a significant blow to the team
especially as, like many in the sector, they had invested heavily
in ensuring a COVID secure environment for their employees and
their customers. However, the DCC business is atypical of the
hospitality industry in that whilst it does provide conferencing,
hotel and event services, it also caters for many smaller meetings
(some of which continued for key workers), provides a training
facility for workers engaged in Ganymede's key contracts and
derives rental income from surplus space at the Derby site.
Our international brand, GSS was initially well shielded from
the impact of COVID with most of the workforce deployed in both
secure compounds and in remote locations. However, as the year
progressed it became increasingly clear that international travel
was becoming a greater concern to governments globally and that the
threat to the containment and worry of increased spread of the
disease would necessitate a range of travel restrictions and in
some cases complete bans. Whist this impacted revenue as some
ex-patriate workers who typically worked on a rota basis were
unable to return to their work locations, it was mitigated through
a combination of deploying local workers and a number of
ex-patriates choosing not take up rotation leave during the
pandemic. New contract placements were also affected with start
dates being deferred until 2021.
Finally, COVID had a significant and immediate impact on the way
Group central services employees were able to perform their vital
roles. Numerous members of staff engaged in the welfare and
wellbeing of employees, the payroll of thousands of workers
deployed around the world, group cash management and financial
control and Group IT and multiple operating system management had
to be interlinked across multiple home working and Group system
networks at crisis management speed.
Naturally, all this has come at a financial cost to the Group
but our single most important goal is the ongoing safety, health
and wellbeing of all our employees and until this virus is brought
under control the Group will not compromise on this commitment to
its employees who remain its number one priority.
Business review
Given the speed and depth of the various lockdowns and tiered
restrictions imposed by global governments, the year was one of
contrasting performance across the Group businesses.
UK division
Our Rail business which provides the largest volume of Group
revenue and profit has delivered another consistent and very strong
performance providing further confidence in the merit of our
long-term strategic commitment to invest alongside clients
supporting the United Kingdom transportation infrastructure sector.
Whilst the challenge facing our conferencing, international, white
collar and energy businesses centred around mitigating the
consequences of lost revenue through COVID, our rail business faced
a very different set of challenges as the sector was deemed a key
worker industry. The steps taken to protect our staff working on
the rail network, as outlined earlier, played a significant and
important role in ensuring that our business was able to maintain
activity levels throughout the year. Ganymede, as Network Rail's
largest provider of contingent labour across its maintenance and
renewals programme, is now established as one of the country's
leading providers of rail personnel. In addition to our number one
position with Network Rail, Ganymede supports various prime
contractors including Balfour Beatty Rail, the South Rail Systems
Alliance headed by Colas, the Transpennine Route Upgrade and
Transport for Wales projects. Operationally Ganymede is both well
respected and well placed to grow with the major long-term rail
infrastructure programmes around the country.
During the year we opened Ganymede Projects which has been
established to undertake minor 'civils' work projects alongside our
traditional track maintenance and renewals labour support business.
The business has already received encouragement and support from
existing clients, and we believe this business unit has the
opportunity to become a growing source of value add, revenue and
healthy profit margin over the longer-term horizon.
We are very proud that, during the pandemic, Ganymede's safety
directorate identified, trained and implemented, with many clients
across the sector, the role of Rail COVID Marshall to ensure the
safety and wellbeing of workers employed in the industry. This
valuable initiative has enabled a safer and more confident working
environment for the workforce. We are also pleased that during the
year Ganymede expanded its apprentice training programme with
clients to attract young people into the rail engineering sector
and alongside this has continued with its long-term commitment to
support and invest in the 'Women in Rail' initiative. The DCC has
played host to events on numerous occasions and various RTC Group
executives have attended and contributed across a range of
important issues which the sector is addressing to encourage women
into the sector.
Our UK engineering projects business and regional branch
network, which typically focus on white collar recruitment, saw a
significant decline in both permanent fees and temporary placement
margins when compared to 2019. Much of this, especially permanent
activity which, as a direct consequence of Government travel
restrictions and national lockdowns, was either considerably
delayed or, in many cases, cancelled. This was hugely disappointing
to our consultants, candidates and clients who had collectively
expended many hours prior to the imposition of the national
lockdown and wider restrictions.
On a more positive note, and in order the address the sudden
drop off in face to face recruitment activity due to COVID
prohibiting the traditional interview process, we accelerated the
development and implementation of our online interviewing platform
'Ganymede Connect'. This initiative which enables consultants,
clients and candidates to interact collectively online and share
interview notes, presentations and negotiation skills in a variety
of online formats between differing parties has been extremely well
received by both clients and candidates and proved successful in
increasing activity levels and associated revenue during the second
half of the year.
It is worth noting that IR35 legislation, which was due to
become operational from April 2020, was deferred until April 2021
and whilst this has provided an element of respite for those
companies and individuals affected by the forthcoming legislation,
it has impacted white collar contract revenue during 2020 in part
due to the uncertainty caused by both the interpretation and
application of the legislation and the HMRC implementation
delay.
Our Energy business had anticipated promising growth in 2020 as
smart meter technology issues had finally been ironed out resulting
in a common platform for consumer installations. In addition, the
large investment made by the Group in sourcing, training and
preparing for the deployment of large numbers of skilled smart
meter installers had finally begun to provide the critical mass
necessary to assist the sector achieve its large roll-out
commitment to the Government. However, this was brought to an
abrupt halt with the national lockdown. During the period March to
July 2020 80% of activity and associated revenue was cancelled.
Whilst the installation programme regained momentum in August,
dampened consumer confidence deferred the upturn in demand until
the final quarter of 2020. This combined with the decision by prime
contractors to defer their recruitment growth until 2021 had a
noticeable impact on the revenue and profitability of the business.
As outlined in the Group Finance Director's report this was offset
by a one-off contract contribution from our largest energy client
reflecting minimum volume guarantees agreed at contract outset in
recognition of the significant investment commitment made by RTC
Group. We remain both positive and hopeful that all work programmes
will see accelerated growth in 2021 and believe we are well placed
to capture opportunities that will emerge through the Government's
social housing and electric vehicle initiatives which will drive
long term demand across the sector.
Within central services, the DCC was significantly impacted by
the Government's response to COVID. Having started the year with a
full order book, revenue generation through some trading streams
was all but cancelled on multiple occasions as the Government's
strategy of initial lockdown, regional tiering system and return to
lockdown devastated the hospitality sector. Over 90% of all events,
conferences, external training programmes, weddings, and other
regional activities which the DCC successfully runs were cancelled
or in many cases deferred until 2021.
The DCC continued to provide rental accommodation to businesses
and in-house facilities to other RTC Group companies which enabled
Ganymede to continue with a number of its strategic training
initiatives of finding, training and deploying smart meter
installers for a wide selection of clients engaged in the national
roll-out programme and also for its rail industry apprentice
investment plan where Ganymede is now one of the leading providers
of blue-collar apprentices to the sector. Both of these training
initiatives have enjoyed continuity through the Group having in the
DCC its own facility and the Board believes that this uniqueness
will continue to be a source of wider value add and differentiation
for the Group.
In addition to the rental services and in-house activities being
provided by the DCC, the centre has also been supporting external
organisations through providing its hotel and meeting facilities to
key workers in need of accommodation in the East Midlands and has
also assisted other organisations supporting Government
initiatives. Although activity and revenue levels through both
closure and restrictions have been extremely disappointing the DCC
has enhanced its reputation throughout a very difficult year and
whilst 2021 remains uncertain, given its expertise in providing a
broad range of services and facilities compared to other pure hotel
and conference facilities in the East Midlands, it is well
positioned to capitalise on the significant growth in hospitality
and conferencing which will eventually return to the sector.
Finally, the whole team at the DCC have worked tirelessly to
ensure the facility has operated within the strict COVID operating
guidelines. Its team of employees and support staff, like many in
the hospitality sector, have had to endure significant periods of
furlough. We are deeply grateful to the whole team for their
efforts and commitment to both the DCC and the RTC Group.
International division
GSS, our international business, had another successful trading
year, despite growing disruption as a consequence of military site
lockdowns, travel restrictions, flight bans and border closures,
both revenue and gross profit saw only minimal decline. Whilst net
profit declined during the period, this reflected our decision to
maintain a constant overhead in readiness to support both new
contract wins delayed through COVID and existing business growth
both of which are expected to return in 2021.
Whilst the year saw a further withdrawal of American troops from
Afghanistan, resulting in their exit from the Kandahar airfield,
the remaining operational sites in Afghanistan supported by NATO
remain fully operational and GSS continues to provide a large
deployment team to support their activities. NATO troops now
outnumber American troops 3:1 in the region and whilst President
Trump had committed to a complete withdrawal of the remaining 2500
US personnel by the spring of 2021 it is unclear what strategic
direction the new Biden administration will take, with much
speculation that the incumbent troops will remain as a
counter-terrorism force.
GSS now supports clients in over 10 countries and, in addition
to the recruitment, deployment and mobilization of workers from
over 20 countries across a broad geographical landscape, including
hostile environments, GSS has established itself as a leading
provider of in-country visas which is providing an increasing
revenue opportunity.
Outlook
Whilst, as we publish our accounts, the Government has no
clearly defined exit plan, we believe there are many reasons to
feel hopeful about the Group's prospects. Firstly, the country-wide
vaccination programme is well underway bringing with it the hope of
a gradual opening of the broader economy. Secondly, the Trade and
Operation Agreement between the United Kingdom and the European
Union has at last brought the clarity which many companies in the
engineering and manufacturing sectors have been seeking to allow
the return of much needed capital expenditure and investment, which
traditionally drives demand in the manufacturing, engineering and
technical sectors, which in turn drives increased demand across the
recruitment sector. Finally, we believe our strategic business
model has once again proved resilient even in the most difficult of
economic downturns and as and when our domestic economy rebounds we
are well positioned across a broad base of sectors to provide
future long term growth prospects to the Group and its
stakeholders.
Our People
It is wholly fitting to finish this review by recognising and
appreciating the enormous contributions made by the wide range of
people engaged in the Group's activities. The teamwork which has
been displayed across every aspect of our business has been
remarkable and worthy of special recognition. Our IT team who, with
very little notice and at lightning speed, secured and made
operational large numbers of additional portable hardware to enable
remote working for the majority of our organisation, with seamless
integration and minimal disruption. This ensured our business was
able to keep connected both internally across operating divisions
and within support functions. Our finance team, operating through a
combination of site shift working and remote support, enabled
hundreds of thousands of payroll transactions to be made to
contractors around the world with all payments, many paid weekly,
being received correctly and on time. Our Group human resource team
establishing flexible working models with employees across all
divisions, securing the flexibility the Group needed to continue to
operate successfully whilst at the same time recognising and
ensuring the robust implementation of policies to protect the
health, safety and wellbeing of all our direct, indirect and
contracted employees and engaged workforce. To all involved in the
above mentioned initiatives, from the Board and senior management
team, who took temporary salary reductions at the outset of the
pandemic whilst at the same time doubling efforts to deliver the
Group's results, to each and every team member involved across our
support functions alongside everybody in the trading divisions of
Ganymede, GSS, ATA and the DCC, many of whom have spent varying
lengths of time furloughed, a huge thank you.
We could not have done this without the shared sense of purpose
which bonds us all together. What we have endured over the last
year, and continue to endure as we enter 2021, has been the
toughest of challenges ever thrown at us and I am convinced we will
come through this a better, stronger more agile organisation
capable of achieving greater success once we return to a more
stable environment.
A M Pendlebury 21 February 2021
CEO
Finance Director's report
For the year ended 31 December 2020
Financial highlights
The Group is proud to have delivered revenues of GBP81.4m (2019:
GBP94.9m) and profit from operations of GBP1.1m (2019: GBP2.0m),
against the backdrop of the COVID pandemic causing reduced revenues
in UK Recruitment and Central Services.
The result achieved again demonstrates how resilient the Group
is because of its structure - built on three pillars of recruitment
- UK engineering and manufacturing; UK Rail & Infrastructure
& Energy; and, Internationally, the supply of wide-ranging
skills in hostile environments. In 2020, this deliberate
positioning on a strong and diverse base has enabled our businesses
like Ganymede, supplying labour into safety critical environments,
with continuing good demand in Rail and Infrastructure to support
other areas of the Group more heavily impacted by the pandemic.
UK Recruitment
Due to the COVID pandemic, the Group saw a year of mixed
performances in UK Recruitment.
Total revenue was GBP64.5m (2019: GBP76.5m) and gross profit was
GBP8.4m (2019: GBP11.8m). The gross margin percentage has reduced
to 13.1% (2019: 15.5%), although this figure is affected by the
accounting treatment of furlough monies received by the Group.
Within cost of sales there is GBP1.6m of cost relating to wages
paid for contractors not working for which furlough monies were
received. These furlough monies are included in other operating
income. The gross margin percentage for 2020 excluding these wages
would be 15.6%.
Overall revenue from contract placements was GBP79.2m (2019:
GBP90.3m). Contract recruitment into Rail and Infrastructure seeing
continued demand somewhat impacted by the pandemic but still good.
In technical engineering recruitment both permanent and contract
placements were significantly impacted by the pandemic with
revenues from permanent placements halved at GBP1.4m (2019:
GBP2.8m). Demand from Energy clients slowed during the initial
lockdown but picked up to more usual levels towards the end of the
year. Revenues were boosted somewhat by a one-off settlement of
GBP590,000 that was agreed with one customer in respect of a
guaranteed volume commitment that was not achieved in the
period.
The UK division has utilised the Coronavirus Job Retention
Scheme for both its employees and to support its PAYE contractors
impacted by the pandemic and put on furlough.
International
The International division was somewhat impacted by the COVID
pandemic but continued to deliver against its core contracts and
support other clients. During the year its key client exited
Kandahar Airfield in Afghanistan resulting in revenues for the
Company being slightly lower than the prior year at GBP16.1m (2019:
GBP16.6m). Profit from operations was correspondingly reduced to
GBP0.9m (2019: GBP1.1m).
The International division has not utilised any Government
financial support relating to the pandemic.
Central Services
Within Central Services, i n accordance with the initial
lockdown instructions, the hotel and conference centre were closed
from March-July 2020 and tier restrictions were in place from
July-December 2020 reducing demand and meaning no events could take
place, although some permitted activities have conrinued. As a
result, revenue for 2020 decreased to GBP0.7m (2019: GBP1.9m) and,
despite taking advantage of financial help offered by the
government through the furlough scheme, taking a rates holiday and
the local government business support grant, gross profit was
significantly reduced at GBP0.1m (2019: GBP0.9m). T he gross margin
percentage has reduced to 20.5% (2019: 45.8%) as a result of the
presentation of furlough monies received by the Group. Within cost
of sales, there is GBP0.2m of cost relating to wages paid for staff
not working for which furlough monies were received. These furlough
monies are included in other operating income. The gross margin
percentage for 2020 excluding these wages would be 45.9%. Given the
impact on trading in 2020 caused by the COVID pandemic, an
impairment review of the Derby Conference Centre was triggered
under IAS 36. The Board concluded that no impairment was
required.
Government financial support relating to the COVID pandemic
The Group has taken advantage of government support to enable it
to retain resources and support its businesses through the
pandemic. The Group has received support under the Coronavirus Job
Retention Scheme and a small local government business support
grant. It has also deferred a VAT payment from March 2020 of
GBP1.5m.
Interest cover
Interest cover decreased to 5.8 (2019: 9.7) largely due to the
reduction in profit from operations because of reduced
revenues.
Taxation
The tax charge for the year was GBP0.2m (2019: GBP0.4m). The
variance between this and the expected charge if a 19% corporation
tax rate was applied to the profit for the year is explained in
note 3.
Dividends
Total dividend payments of Nil (2019: GBP563,152) which equate
to Nil per share (2019: 3.95p) were made during the year. No final
dividend for the year ended 31 December 2020 has been proposed
(2019: GBP363,418). This represents a payment of Nil (2019: 2.55p)
per share.
Own shares held
The cost of the Group's own shares purchased through the
Employee Benefit Trust is shown as a deduction from equity. 40,000
options were exercised during the year and own shares held in the
EBT were used to satisfy this demand. The balance of GBP235,918
(2019: GBP263,919) on the own shares held reserve within equity
reflects 337,027 (2019: 377,027) shares remaining in the EBT that
will be used to satisfy future exercises.
Statement of financial position and cash flows
The Group's statement of financial position has strengthened
compared to the same point last year with net working capital
increasing to GBP5.1m (2019: GBP4.0m). The ratio of current assets
to current liabilities has improved at 1.5 (2019: 1.3).
The Group's gearing ratio, which is calculated as total
borrowings over net assets, was significantly improved at 0.1
(2019: 0.6) as a result of the sales in the year being heavily
weighted in favour of clients with shorter payment terms. This can
be seen in the cash flow which shows a GBP2.8m reduction in invoice
discounting facility funds in use.
The Group generated a net cash inflow from operating activities
of GBP5.1m (2019: GBP2.9m). The increase is due to two main
factors; a reduction in working capital tied up in debtors as a
result of the 2020 revenue mix being heavily weighted towards
customers with more favourable credit terms together with an
improved aged position compared with 2019, and the deferral of one
quarter's VAT payment of GBP1.5m as allowed by the government as
part of their COVID financial support initiatives.
The Group has no term debt and is financed using its invoice
discounting and overdraft facilities with HSBC. At 31 December 2020
the Group's had available funds to draw down of GBP8.8m.
Financing and going concern
The Group's current bank facilities include a net overdraft
facility across the Group of GBP50,000 and an invoice discounting
facility of up to GBP12.0m with HSBC at a margin of 1.5% above
base. The Board closely monitors the level of facility utilisation
and availability to ensure there is enough headroom to manage
current operations and support the growth of the business. The
Group continues to be focused on cash generation and building a
robust statement of financial position to support the growth of the
business.
This year, given the COVID pandemic, in addition to the
established budgeting and forecasting processes, a reverse stress
test has been undertaken which shows that the Group has sufficient
cash and facilities available to withstand a 50% reduction against
the 2020 revenues without any significant restructuring or other
cost reduction measures and, on this basis, the Board have
concluded that the going concern basis of preparation remains
appropriate.
S L Dye 21 February 2021
Group Finance Director
Consolidated statement of comprehensive income
For the year ended 31 December 2020
2020 2019
Notes GBP'000 GBP'000
--------------------------------------- ------- ---------- ----------
Revenue 2 81,356 94,949
Cost of sales (71,117) (80,475)
--------------------------------------- ------- ---------- ----------
Gross profit 10,239 14,474
Other operating income 2 2,477 -
Administrative expenses (11,663) (12,513)
--------------------------------------- ------- ---------- ----------
Profit from operations 1,053 1,961
Finance expense (183) (203)
--------------------------------------- ------- ---------- ----------
Profit before tax 870 1,758
Tax expense 3 (204) (390)
--------------------------------------- ------- ---------- ----------
Total profit and other comprehensive
income for the period attributable
to owners of the Parent 666 1,368
--------------------------------------- ------- ---------- ----------
Earnings per ordinary share
Basic 4 4.66p 9.60p
--------------------------------------- ------- ---------- ----------
Fully diluted 4 4.13p 8.59p
--------------------------------------- ------- ---------- ----------
Consolidated statement of changes in equity
For the year ended 31 December 2020
Share Share Own Capital Share Retained Total
capital premium shares redemption based earnings equity
held reserve payment
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------- ---------- --------- ------------- ---------- ----------- ---------
Balance at
1 January
2020 146 120 (264) 50 557 5,627 6,236
---------------------- ---------- ---------- --------- ------------- ---------- ----------- ---------
Total comprehensive
income for
the year - - - - - 666 666
---------------------- ---------- ---------- --------- ------------- ---------- ----------- ---------
Transactions
with owners:
Share options
exercised - - 28 - (4) (15) 9
Share based
payment charge - - - - 165 - 165
---------------------- ---------- ---------- --------- ------------- ---------- ----------- ---------
Total transactions
with owners - - 28 - 161 (15) 174
---------------------- ---------- ---------- --------- ------------- ---------- ----------- ---------
At 31 December
2020 146 120 (236) 50 718 6,278 7,076
---------------------- ---------- ---------- --------- ------------- ---------- ----------- ---------
The information for the prior reporting period is as
follows:
Share Share Own Capital Share Retained Total
capital premium shares redemption based earnings equity
held reserve payment
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------- ---------- --------- ------------- ---------- ----------- ---------
Balance at
1 January
2019 146 120 (292) 50 379 4,833 5,236
---------------------- ---------- ---------- --------- ------------- ---------- ----------- ---------
Total comprehensive
income for
the year - - - - - 1,368 1,368
---------------------- ---------- ---------- --------- ------------- ---------- ----------- ---------
Transactions
with owners:
Dividends - - - - - (563) (563)
Share options
exercised - - 28 - (15) (11) 2
Share based
payment charge - - - - 193 - 193
---------------------- ---------- ---------- --------- ------------- ---------- ----------- ---------
Total transactions
with owners - - 28 - 178 (574) (368)
---------------------- ---------- ---------- --------- ------------- ---------- ----------- ---------
At 31 December
2019 146 120 (264) 50 557 5,627 6,236
---------------------- ---------- ---------- --------- ------------- ---------- ----------- ---------
Consolidated statement of financial position
As at 31 December 2020
2020 2019
GBP'000 GBP'000
-------------------------------- ---------- ----------
Assets
Non-current
Goodwill 132 132
Other intangible assets 149 234
Property, plant and equipment 1,648 1,680
Right of use assets 2,993 3,044
Deferred tax asset 149 95
--------------------------------- ---------- ----------
5,071 5,185
Current
Inventories 7 10
Trade and other receivables 13,404 15,809
Cash and cash equivalents 2,827 798
--------------------------------- ---------- ----------
16,238 16,617
Total assets 21,309 21,802
--------------------------------- ---------- ----------
Liabilities
Current
Trade and other payables (9,706) (8,493)
Lease liabilities (276) (282)
Corporation tax (218) (296)
Current borrowings (967) (3,570)
(11,167) (12,641)
Non-current liabilities
Lease liabilities (2,944) (2,855)
Deferred tax liabilities (122) (70)
--------------------------------- ---------- ----------
Net assets 7,076 6,236
--------------------------------- ---------- ----------
Equity
Share capital 146 146
Share premium 120 120
Own shares held (236) (264)
Capital redemption reserve 50 50
Share based payment reserve 718 557
Retained earnings 6,278 5,627
Total equity 7,076 6,236
--------------------------------- ---------- ----------
Consolidated statement of cash flows
For the year ended 31 December 2020
2020 2019
Note GBP'000 GBP'000
Cash flows from operating activities
Profit before tax 870 1,758
Adjustments for:
Depreciation, loss on disposal and
amortisation 763 693
Finance expense 183 203
Employee equity settled share options
charge 165 194
Change in inventories 3 (2)
Change in trade and other receivables 2,405 (18)
Change in trade and other payables 1,213 629
--------------------------------------------- ------ --------- ---------
Cash inflow from operations 5,602 3,457
Income tax paid (284) (378)
Interest paid (183) (203)
Net cash inflow from operating activities 5,135 2,876
--------------------------------------------- ------ --------- ---------
Cash flows from investing activities
Purchase of property, plant and equipment
and intangibles (293) (314)
Proceeds from asset disposals - 20
Net cash outflow from investing activities (293) (294)
Cash flows from financing activities
Movement on invoice discounting facility (2,818) (1,821)
Movement on perpetual bank overdrafts 215 (75)
Dividends paid - (563)
Payment of lease liabilities (219) (246)
Proceeds from exercise of share options 9 2
Net cash outflow from financing activities (2,813) (2,703)
--------------------------------------------- ------ --------- ---------
Net increase/(decrease) in cash and
cash equivalents 21 2,029 (121)
--------------------------------------------- ------ --------- ---------
Cash and cash equivalents at beginning
of period 798 919
--------------------------------------------- ------ --------- ---------
Cash and cash equivalents at end of
period 21 2,827 798
--------------------------------------------- ------ --------- ---------
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 2020 was authorised for issue in accordance with a
resolution of the directors on 21 February 2021.
The financial information included in this announcement has been
compiled in accordance with International Accounting Standards in
conformity with the requirements of the Companies Act 2006 and with
those parts of the Companies Act 2006 applicable to companies
reporting under IFRS. 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 2019. There have been no significant changes in the basis
upon which estimates have been determined, compared to those
applied at 31 December 2019 and no change in estimate has had a
material effect on the current period.
2. Segment analysis
The business is split into three operating segments, with
recruitment being split by geographical area. This reflects the
integrated approach to the Group's recruitment business in the UK
and independent delivery of overseas business. Three operating
segments have therefore been agreed, based on the geography of the
business unit: United Kingdom and International and Central
Services.
This is consistent with the reporting for management purposes,
with the Group organised into two reportable segments, Recruitment
and Central Services, which are strategic business units that offer
different products and services. They are managed separately
because each segment has a different purpose within the Group and
requires different technologies and marketing strategies.
Segment operating profit is the profit earned by each operating
segment defined above and is the measure reported to the Group's
Board, the Group's Chief Operating Decision Maker (CODM), for
performance management and resource allocation purposes. The Group
manages the trading performance of each segment by monitoring
operating contribution and centrally manages working capital,
financing, and equity.
Revenues within the recruitment operating segment have similar
economic characteristics and share a majority of the aggregation
criteria set out in IFRS 8:12 in particular the nature of the
products and services, the type or class of customers, the country
in which the service is delivered and the processes utilised to
deliver the services and the regulatory environment for the
services.
The purpose of the Central Services segment is to provide all
central services for the Group including the Group's head office
facilities in Derby. It also generates income from excess space at
the Derby site including rental and conferencing facilities.
Revenue, gross profit and operating profit delivery by
geography:
2020 2019
UK UK Inter-national Total UK UK Inter-national Total
Recruitment Central Recruitment Group Recruitment Central Recruitment Group
Services Services
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------- ------------- ---------- ---------------- ---------- ------------- ---------- ---------------- ----------
Revenue 64,521 713 16,122 81,356 76,526 1,864 16,559 94,949
Cost of
sales (56,129) (567) (14,421) (71,117) (64,680) (1,010) (14,785) (80,475)
----------------- ------------- ---------- ---------------- ---------- ------------- ---------- ---------------- ----------
Gross
profit 8,392 146 1,701 10,239 11,846 854 1,774 14,474
Other
operating
income 2,168 309 - 2,477 - - - -
Administrative
expenses (6,883) (3,211) (809) (10,903) (7,852) (3,269) (701) (11,822)
Amortisation
of intangibles (85) - - (85) (85) - - (85)
Depreciation
of right
of use
assets (123) (230) - (353) (125) (214) - (339)
Depreciation (143) (174) (5) (322) (93) (170) (4) (267)
----------------- ------------- ---------- ---------------- ---------- ------------- ---------- ---------------- ----------
Total
administrative
expenses (5,066) (3,306) (814) (9,186) (8,155) (3,653) (705) (12,513)
----------------- ------------- ---------- ---------------- ---------- ------------- ---------- ---------------- ----------
Profit
from
operations 3,326 (3,160) 887 1,053 3,691 (2,799) 1,069 1,961
----------------- ------------- ---------- ---------------- ---------- ------------- ---------- ---------------- ----------
*Other operating income represents Government Grants in respect
of the Coronavirus Job Retention Scheme and a Local Government
Business Support Grant (none of which are required to be paid
back).
2020
GBP'000
----------------------------------------- ---------
Coronavirus Job Retention Scheme
Grant relating to:
* Contractors paid under PAYE 1,623
* Own staff 851
------------------------------------------ ---------
2,474
Local Government Business Support
Grant 3
2,477
----------------------------------------- ---------
The wages costs associated with the Coronavirus Job Retention
Scheme Grant are included in the financial statements as
follows:
2020
GBP'000
---------------------------- -----------
Cost of sales 1,804
Administrative expenses 670
----------------------------- -----------
2,474
---------------------------- -----------
The revenue reported above is generated from continuing
operations with external customers. There were no sales between
segments in the year (2019: Nil). For segment reporting purposes
revenue is analysed by the geographical location in which the
services are delivered.
The accounting policies of the operating segments are the same
as the Group's accounting policies. Segment profit represents the
profit earned by each segment without allocation of Group
administration costs or finance costs.
During 2020, one customer in the UK segment contributed 10% or
more of total revenue being GBP27.3m (2019: GBP31.3m) and one
customer in the International segment also contributed 10% or more
of total revenue being GBP15.7m (2019: GBP16.5m).
Recruitment revenues are generated from permanent and temporary
recruitment and long-term contracts for labour supply. Within
Central Services revenues are generated from the rental of excess
space and facilities at the Derby site, described as Other
below.
Revenue and gross profit by service classification for
management purposes:
Revenue Gross profit
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
----------------------- --------- --------- --------- ---------
Permanent placements 1,435 2,819 1,435 2,819
Contract 79,208 90,266 8,658 10,801
Other 713 1,864 146 854
----------------------- --------- --------- --------- ---------
81,356 94,949 10,239 14,474
----------------------- --------- --------- --------- ---------
All operations are continuing. All assets and liabilities are in
the UK.
3. Tax expense
2020 2019
Continuing operations GBP'000 GBP'000
---------------------------------------------------- --------- ---------
Current tax
UK corporation tax 218 402
Adjustments in respect of previous periods (12) 11
---------------------------------------------------- --------- ---------
206 413
Deferred tax
Origination and reversal of temporary differences (2) (23)
Tax 204 390
---------------------------------------------------- --------- ---------
Factors affecting the tax expense
The tax assessed for the year is higher than (2019: higher than)
would be expected by multiplying the profit by the standard rate of
corporation tax in the UK of 19% (2019: 19%). The differences are
explained below:
2020 2019
Factors affecting tax expense GBP'000 GBP'000
----------------------------------------------- --------- ---------
Result for the year before tax 870 1,758
----------------------------------------------- --------- ---------
Profit multiplied by standard rate of tax of
19% (2019: 19%) 165 334
Non-deductible expenses 48 86
Tax credit on exercise of options (5) (5)
Effect of change in deferred tax rate 8 -
Other differences - (36)
Adjustment in respect of previous periods (12) 11
----------------------------------------------- --------- ---------
204 390
----------------------------------------------- --------- ---------
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 the fully diluted earnings per share is based
on the basic earnings per share adjusted to allow for dilutive
potential ordinary shares.
Basic Fully diluted
2020 2019 2020 2019
Earnings GBP'000 666 1,368 666 1,368
------------------------- -------------------------- ---------------- --------------------- --------------------
Basic weighted average
number of shares 14,299,995 14,254,557 14,299,995 14,254,557
Dilutive effect of
share options - - 1,840,513 1,676,094
------------------------- -------------------------- ---------------- --------------------- --------------------
Fully diluted weighted
average number of
shares - - 16,140,508 15,930,651
------------------------- -------------------------- ---------------- --------------------- --------------------
Earnings per share
(pence) 4.66p 9.60p 4.13p 8.59p
------------------------- -------------------------- ---------------- --------------------- --------------------
5. Dividends
2020 2019
GBP'000 GBP'000
----------------------------------------------- ----------- ----------
Final dividend of 0p per share (2019: 2.55p)
proposed and paid during the year relating
to the previous year's results. - 363
Interim dividend of 0p per share (2019:
1.4p). - 200
----------------------------------------------- ----------- ----------
- 563
----------------------------------------------------------- ----------
No final dividend for the year ended 31 December 2020 has been
proposed (2019: GBP363,418). This represents a payment of Nil
(2019: 2.55p) per share.
6. Report and accounts
The above financial information does not constitute the
Company's statutory accounts for the years ended 31 December 2020
or 2019 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 2019 have been filed with the Registrar of Companies.
Full audited accounts of RTC Group Plc for the year ended 31
December 2020 will be made available on the Company's website at
www.rtcgroupplc.co.uk later today and will be dispatched to
shareholders on 19 March 2021 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
21 April 2021 at the Derby Conference Centre, London Road, Derby,
DE24 8UX.
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END
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