TIDMRTC
RNS Number : 1534G
RTC Group PLC
28 March 2022
28 March 2022
RTC Group Plc
("RTC", "the Company" or "the Group")
Final results for the year ended 31 December 2021
RTC Group Plc (AIM: RTC.L) is pleased to announce its audited
results for the year ended 31 December 2021.
Highlights
-- Group revenue GBP77.7m (2020: GBP81.4m).
-- Profit from operations reduced to GBP0.3m (2020: GBP1.1m).
-- Net cash outflow from operating activities GBP2.4m (2020: GBP5.1m inflow).
-- Net working capital debt GBP1.9m (2020: net cash GBP1.9m). The Group has no term debt.
-- Earnings per share (basic) 0.04p (2020: 4.66p).
-- No final dividend is proposed. Total dividend in respect of
the year to 31 December 2021: Nil (2020: Nil).
Commenting on the results Andy Pendlebury, CEO said:
"RTC Group, like many other companies, had an extremely
challenging year in 2021. The COVID pandemic continued to
significantly impact client demand across many markets and where
requirements for contract labour remained strong this was
accompanied by higher operational costs to ensure the safety and
wellbeing of our workforce; candidate reluctance to change
employers/careers given these turbulent times and workers
self-isolating increased both direct and indirect costs as
programme and project continuity was heavily disrupted. In
addition, the sudden and immediate demobilisation from Afghanistan
due to the complete withdrawal in August of all American, United
Kingdom and NATO troops curtailed a large contribution of revenue
from our international business. Further, the implementation of
changes to IR 35 in the private sector, which finally became
legislation in April 2021, heavily impacted our white-collar
contracting community.
However, despite the untimely combination and cumulative effect
of all these events, the majority of which were outside of the
control of the Group, we still managed to trade, albeit marginally,
in positive territory. Our balance sheet remains robust and free
from long term debt or the effects of dilution, a fate which befell
many shareholders of other traded recruitment businesses over the
past couple of years, who raised equity at sub-optimal values in
order to survive, and through the Board's successful share option
cancellation programme.
Although for many reasons we are all naturally very disappointed
with the way the year played out for us, and also mindful of the
fact that there are still many geo-political events and
micro-economic challenges threatening the domestic and
international landscape, we believe our positioning across a broad
range of markets, sectors and industries, give us every reason to
be optimistic about our ability to deliver long term sustainable
value to all our stakeholders."
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
Hugh Rich
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 2021
I am pleased to present the final report for the year.
Group
2021 has been a particularly challenging year with the latter
part of the year experiencing some key negative factors covered
below.
Trading in the Group continued to deliver satisfactory results
for most of the first half but the rumble of thunder, distinctly
audible in the second three months, morphed into very difficult
conditions from August onwards in certain areas of the business.
These were mainly focussed on our contract with Network Rail and in
Afghanistan in contrast, the Derby Conference Centre and some parts
of UK recruitment experienced an improving environment.
As mentioned in our interim statement, we were able to deliver a
profit in the first half and consolidated our cash position. The
expectation at that time was that the second half would produce an
improving outlook, but history told us that there was a
considerable possibility of a further waves of infections, but we
were confident that we could continue to trade profitably. The
outcome for the year as a whole has justified that confidence.
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 had a
difficult year in fragile market conditions but were able to
produce a creditable trading result. Other areas of our UK
Recruitment segment continued to prosper with slightly reduced
levels of demand in both rail and infrastructure towards the ending
of the CP5 Network Rail Contract. A successful culmination to our
negotiations has resulted in a new contract albeit in different
areas from those in CP5. 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, a
creditable result was secured.
Our international division, Global Staffing Solutions continued
in line with expectations although global travel bans impacted some
workforce mobilisation activities. As forecast in my interim
statement, the contract to supply contract labour to NATO forces in
Afghanistan came to an unexpectedly sharp conclusion but we were
able to withdraw all our personnel from the territory
successfully.
Capital investment
We continue to invest in the development of our businesses.
Dividends
In the conditions which have unfolded in 2021 it was considered
prudent to continue 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
difficult year.
Outlook
On a positive note, we remain confident that the present global
medical emergency will eventually be put behind us, but we see
limited 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. Of more importance,
the requirement from Network Rail that we change all our areas of
contract labour supply has already caused substantial changeover
expense and disruption to the smooth running of this element of our
business. This has continued into the current year and is likely to
have a material effect on our profitability in the first half of
2022. Nonetheless, we believe that we have explored these matters
fully and that we have a roadmap for successful trading in the
years to come.
W J C Douie 27 March 2022
Chairman
Chief Executive's operational and strategic review
For the year ended 31 December 2021
Overview
RTC Group, like many other companies, had an extremely
challenging year in 2021. The COVID pandemic continued to
significantly impact client demand across many markets and where
requirements for contract labour remained strong this was
accompanied by higher operational costs to ensure the safety and
wellbeing of our workforce which was and remains our highest
priority. Candidate reluctance to change employers/careers given
these turbulent times and workers self-isolating as a consequence
of either directly contracting COVID or being contacted through NHS
notification also impacted revenue especially in our energy and
rail businesses where workers operate in large teams or in close
proximity with consumers, and this in turn increased both direct
and indirect costs as programme and project continuity was heavily
disrupted.
In addition, the sudden and immediate demobilisation from
Afghanistan due to the complete withdrawal in August of all
American, United Kingdom and NATO troops curtailed a large
contribution of revenue from our international business whilst
simultaneously presenting additional non recoverable costs as we
battled, like everybody else involved in the exercise, to extract
our people in incredibly difficult and volatile circumstances to
ensure a safe passage home for all concerned. This, along with
protecting all our direct and indirect colleagues from COVID, was
our highest priority and I am proud to say that despite the huge
logistical challenge faced by the business we were able to return
all our international contractors to their original countries of
origin and I firmly believe our market reputation both with our
clients and workers was enhanced significantly through our handling
of this very difficult situation which was observed world over. I
am extremely proud of all the hard work carried out by our
international team during this most stressful and difficult of
times.
The implementation of changes to IR 35 in the private sector,
which finally became legislation in April 2021, heavily impacted
our white-collar contracting community and this in turn had a
commensurate impact on our contract revenue as many high value
white collar professional workers either transferred to direct
contracts of employment with clients or changed their working
methodology to reflect the implications of the HMRC ruling on their
contracting status.
Finally, our conference centre which, like many in the
hospitality sector, had endured extreme hardship over the past 18
months, began to see some much-welcomed demand for social events,
conferencing and accommodation from mid-year, leading up to a full
order book for December, typically the best profit month of the
year. However, the outbreak of the Omicron variant of COVID
dissipated any hopes of this as the majority of bookings were
cancelled in the wake of uncertainty resulting from Government
guidance and its impact on consumers appetite to attend hospitality
events. This was another significant blow to both the Group and the
conference centre at a time when sector confidence was just
beginning to re-emerge and upfront investments had commenced in
order to attract and train new employees, as many had left the
sector due to the lack of viable employment. Other additional
unrecoverable costs had also been invested to ensure both
operational capability and health and safety systems had been
enhanced ahead of the opportunity to recover much needed revenue
and profit for the business. However, despite these headwinds the
conference centre made a profit in 2021 and is going in the right
direction in 2022.
However, despite the untimely combination and cumulative effect
of all these events, the majority of which were outside of the
control of the Group, we still managed to trade, albeit marginally,
in positive territory. Our balance sheet remains robust and free
from long term debt or the effects of dilution, a fate which befell
many shareholders of other traded recruitment businesses over the
past couple of years, who raised equity at sub-optimal values in
order to survive, and through the Board's successful share option
cancellation programme.
Business review
UK Division
Our UK recruitment business enjoyed periods of both solid growth
and new contract success during 2021 whilst simultaneously having
to suffer further pockets of discontinuity of activity driven by
the continued impact of COVID. This in turn impacted both
productivity and profitability as client and candidate appetite,
especially in the first half of the year, to either invest in new
hires or to seek out new career moves was subdued. However,
activity, especially in our permanent business and smart meter
roll-out programme, began to gather traction mid-year only to be
halted again towards the end of the year as the Omicron variant
fast became a major concern for the sector.
Furthermore, the business continued to experience significant
upward pressure on costs across all field-based projects in our
rail and energy divisions where working practices continued to
centre around the safety and well-being of our contract workforce,
our clients and in many cases the consumer, where engineers working
on our smart meter roll-out programme and domestic boiler repair
contracts had direct engagement. Whilst our heightened safety
initiatives have impacted the profitability of a range of
contracts, they were extremely well received by all concerned with
Ganymede gaining significant praise thereby enhancing its
reputation across all impacted stakeholders. The impact of COVID in
the early part of the year and the accelerated spread of the
Omicron variant towards the latter end of the year saw a
significant rise in lost revenue days as we experienced a rapid
spread of infection across our rail and energy engineers. In total
we lost an estimated 5,000 days of billable activity. Naturally,
whilst this was disappointing from a revenue generation, cost
recovery and profit perspective, the Group encouraged and supported
all direct and indirect workers to operate a zero-risk policy on
this matter.
On a more positive note, 2021 saw Ganymede further secure its
position as major partner of Network Rail with the award of a new
long-term contract to provide labour support to its rail
maintenance and renewals programme. The new contract, which runs
for between 5 and 8 years is a well- deserved reward for whole team
in Ganymede for the hard work carried out throughout the previous
contractual period, which has just been completed, especially the
last two years which presented significant operational challenges
as the business battled through COVID.
The new contract provides a solid and long-term order book for
the business to build on and, along with the other opportunities
and contracts that Ganymede has with tier one contractors of
Network Rail, firmly positions the business as one of the country's
most dominant rail labour supply companies.
The new Network Rail contract sees Ganymede secure
responsibility for a number of different operating routes than
those previously supported and like all high value, long term,
labour contracts, will necessitate upfront investment as we
attract, train and mobilise highly skilled workers and provide them
with personal protective equipment and appropriate tooling.
However, unlike most other asset expenditure, these investment
costs, being people based, cannot be capitalised and will be
recoverable as revenue over the life of the contract. This will
therefore have some impact on the 2022 profit and loss account
through increased cost of sales.
Our projects business secured a number small, but mission
critical, level crossing projects from Network Rail during the year
and these were carried out on time, on cost and to the complete
satisfaction of the client. These small work programmes provide
both a vital learning opportunity for the business as it enters the
arena of fixed price programme management and also the chance to
build brand awareness, capability, reputation and attract new
clients in the rail sector. In addition, the projects business is
collaborating with our energy division to plan, manage and deliver
refurbishment projects on behalf of social housing landlords. This
includes carrying out improvements through gas and electrical
safety inspections, replacement of boilers and heating systems,
energy performance assessments, complete kitchen and bathroom
replacements and all other key domestic system replacements. The
Group see significant growth opportunities for the projects
business as both mainstream Government, through its levelling up
strategy and regional councils, through local improvement plans,
invest in wide-scale social housing improvements.
Our white-collar project recruitment business, which provides
professionals on short, medium, and long- term temporary
assignments was significantly impacted as the Government finally
implemented the IR 35 legislation. The impact of this was severe
with up to 30 percent of contractors employed through our business
either transferring to direct contracts of employment with clients
or in many cases leaving the sector completely. Whilst this has had
a short-term impact on revenue and profits, we are now working with
many clients to attract candidates into permanent roles and, given
the widescale impact that IR35 has had on the contracting industry,
there is significant opportunity to capture client demand over the
next 18-24 months. In addition, many clients have traditionally
utilised the services of recruitment businesses to supplement their
inhouse recruitment capability and given the significant growth in
demand for internal hires driven by the impact of IR35 this is
providing both partnering and recruitment outsourcing opportunities
as internal HR departments become overwhelmed with demand.
Our branch network, which services predominantly regional SME
businesses with both blue and white- collar personnel, began to
experience accelerated demand from mid-year and finished 2021 with
a very strong order book. However, candidate reluctance to change
careers, driven by continuing COVID concerns, became a limiting
factor to revenue capture. However, the business began to show
signs that demand was beginning to return to and exceed pre-COVID
demand levels which is a promising sign for the business. During
the year, following encouraging discussions with a number of
clients, we launched ATA Executive Search to compliment and build
on the mid-level management recruitment service provided by our
branch business. Early signs are showing promising results with a
number of executive appointments being successfully completed. This
promising development enables the business to offer recruitment
services from strategic c-suite appointments through to mid-level
and operational management and high- volume workforce solutions
thereby offering our clients a full life-cycle solution.
The Derby Conference Centre which sits within our central
services business had another very difficult year resulting from
COVID. The first half suffered hugely through a combination of lock
down and Government guidance discouraging any form of conferencing
activity or social gatherings. Whilst the second half, which had
begun gathering some momentum with a small but vital return to
activity, had gradually built a full and vital order book of
Christmas functions and conferencing for December which is
traditionally the businesses' highest profit month. However, once
again due to COVID, this time the spread of the more concerning
Omicron variant, the majority of business was cancelled. This
resulted in both sunk costs not being recoverable as Government
avoided legislative closure and the conference centre lost revenue
and profit margin as a consequence.
International
GSS faced the most gargantuan of challenges in August when, with
very little notice, it faced an immediate demobilisation of all its
international workforce who were deployed in Afghanistan. The scale
of the operation, the timescales and numbers involved, the turmoil
which was ensuing at Kabul International airport and the logistical
challenge to evacuate all staff and then repatriate them to their
country of origin was a huge challenge facing our international
team. However, working with our client, multiple country
authorities and international carriers we successfully returned
hundreds of workers to their home countries. Whilst doing this came
with additional and unplanned costs to the business, our primary
goal was the health and well-being of our workers and reuniting
them with their families. I believe our reputation with our
clients, their clients and on the international arena in general
grew enormously through our handling of this very traumatic
situation.
Whilst the evacuation brought to an end our long-term supply of
personnel to Afghanistan, our international business still provides
a wide- ranging workforce to many other countries including, Dubai,
Bahrain, Iraq, Mogadishu and Poland. Our international team of
experts are able to identify, recruit, deploy and manage
multi-country personnel and deploy them across various
international locations, including hostile environments and have
built unique capabilities which provide a significant competitive
advantage in the international recruitment market.
Through this capability GSS has secured new contract
opportunities with its key clients thereby ensuring new and
long-term order book opportunities across a broad range of
projects.
Outlook
Although for many reasons we are all naturally very disappointed
with the way the year played out for us, and also mindful of the
fact that there are still many geo-political events and
micro-economic challenges threatening the domestic and
international landscape, we believe our positioning across a broad
range of markets, sectors and industries, give us every reason to
be optimistic about our ability to deliver long term sustainable
value to all our stakeholders through:
-- A strong undiluted balance sheet with significant headroom in our working capital facility.
-- A strong blue chip order book with a new five to eight year
contract with Network Rail and a new long-term contract with our
international partner to support their United Kingdom and
International growth plans.
-- A market leading position in the United Kingdom's smart meter
roll out programme, with long term relationships with key industry
partners.
-- Our newly formed projects business building traction across a
variety of sectors by integrating Group- wide capabilities to offer
fixed price turnkey solutions with rail, energy and infrastructure
clients.
-- A solid combination of both short and longer- term contract
revenue opportunities coupled with a long established and
well-placed permanent placement business spanning multiple
disciplines and sectors with growing optimism that demand is set to
return to and exceed pre- COVID levels as the 'great resignation'
phenomena gathers pace.
-- An experienced operational management team that has endured
significant challenges over the past two years and have shown
incredible individual and collective strength of character,
resilience and flexibility as they have had to face multiple
challenges in the most extreme circumstances.
However, this said, we cannot risk being overly confident, show
complacency, nor avoid or discard the possibility that the short to
medium term will continue to bring further uncertainties which will
challenge growth assumptions as global and domestic clients wrestle
with a precipitous and worrying growth in costs which have already
begun to question the viability of many markets, traditional
business models and Government spending plans.
Our people
Whilst 2021 provided a number of challenges and disappointments
for the Group, many of which were outside the control of its
people, the individual and team performances by our incredible
employees and contractor workforce demonstrated yet again the
resilience, resolve and collective belief in each other across the
Group.
Without the dedication, hard work, and expertise of everybody we
could not have approached the complexity of challenges we faced, in
some of the toughest of circumstances, and come through it the way
we have. The synergy displayed by our businesses is unique, cannot
be replicated and is built into the cultural DNA of every
subsidiary and its people at all levels across RTC.
On behalf of the Board of directors, a huge thank you to each
and every one of you.
A M Pendlebury
CEO 27 March 2022
Finance Director's report
For the year ended 31 December 2021
Financial highlights
The results for the year reflect a period of lag in replacing
revenue due to the slowdown of activities caused by COVID in some
areas of the business and the withdrawal of NATO troops from
Afghanistan. In addition, 2020 revenue was bolstered by a one-off
contract performance obligation settlement of GBP590,000 which was
not repeated in 2021. However, I am pleased to report that the
Group overall delivered revenues of GBP77.7m (2020: GBP81.4m) and
overall gross profit increased to GBP11.8m (2020: GBP10.2m)
reflecting the fact that most contractors were back out at work
rather than on furlough. Contractor wages are included in cost of
sales, furlough monies received from the Government that offset
those costs (refer note 2) are shown below gross profit as other
operating income and in 2020 we incurred wages costs of GBP1.8m in
cost of sales (relating to contractors on furlough) to which no
revenue generation was attached which distorted the gross profit
margin. Profit from operations of GBP0.3m (2020: GBP1.1m) reflects
the significantly reduced support from the Government in 2021 of
GBP0.3m (2020: GBP2.5m) for both contractor and own staff wages;
increased administrative costs required to mobilise the new Network
Rail Contract (see more detail in UK Recruitment below) and wage
inflation.
UK Recruitment
The Rail division confirmed its role as a long-term key
strategic supply partner to Network Rail Infrastructure Limited
("Network Rail") by entering into a new contract with them to
provide frontline labour services, including the supply of safety
critical, track, civil, electrification and plant and signalling
resources nationally. The Contract runs from the 1 October 2021 for
a minimum period of 5 years, up to a maximum period of 8 years and
includes a geographical change to primary service delivery with the
new contract being delivered in Scotland, Kent and Sussex. During
Q4 2021 the Rail division incurred costs mobilising the new
contract regions and exiting the regions serviced in the previous
contract. The cost of that transition is reflected in the increase
in administration costs versus 2020.
White collar permanent recruitment, serviced by our branch-based
ATA Recruitment brand, picked up in 2021 after being heavily
impacted by Covid-19 in 2020. However, white collar temporary
recruitment, mainly for larger clients was adversely affected by
the introduction of the IR35 legislation in April 2021, although
some increase in activity was seen towards the end of the year.
The Energy division saw growth in the second half of the year,
supporting the Government's smart meter roll out programme.
Additionally, UK Recruitment continued to grow its minor
projects capability; developing a signalling labour supply business
and delivering ongoing improvement in safety performance throughout
the year.
Overall, UK Recruitment delivered increased revenues of GBP66.8m
(2020: GBP64.5m) which were converted to profit from operations of
GBP2.7m (2020: 3.3m). The reduction in profit from operations
despite a slight increase in revenue reflecting: administration
costs to mobilise the new contract with Network Rail; the absence
of the one-off contractual payment of GBP590,000 in 2020; and wage
inflation.
International
Reduced revenues of GBP9.6m (2020: GBP16.1m) reflect a time lag
in replacing revenues lost from the withdrawal of NATO troops from
Afghanistan in Q2. Profit from operations correspondingly reduced
to GBP0.5m (2020: GBP0.9m). The International division has not been
impacted by the pandemic or utilised any Government financial
support relating to the pandemic.
Central Services
Within UK Central Services , whilst the hotel and conference
centre provided bedroom and meeting room facilities to key workers
in line with Government guidelines, overall business levels were
depressed due to Government guidance curtailing conference and
event activities for most of the first half of 2021 but picked up
in the second half. Revenue generated by the segment was GBP1.3m
(2020: GBP0.7m) and gross profit increased to GBP0.7m (2020:
GBP0.1m).
In 2020 the impact of the COVID pandemic, triggered an
impairment review of the Derby Conference Centre (DCC) under IAS
36. At the time of the review, the Board concluded that no
impairment was required. The DCC made a profit for the year in 2021
which was higher than forecast in the impairment review undertaken
in 2020 and as such there is no impairment trigger in 2021, a look
back at the 2020 impairment review has reconfirmed the conclusion
that there is no impairment.
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 small Local Government Business Support grants
which are detailed in note 2.
Taxation
The tax charge for the year was GBP0.1m (2020: GBP0.2m). 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
No dividends were paid during the year (2020: Nil). No final
dividend for the year ended 31 December 2021 has been proposed
(2020: Nil).
Own shares held
The cost of the Group's own shares purchased through the
Employee Benefit Trust (EBT) is shown as a deduction from equity.
No options were exercised during the year. The balance of
GBP235,918 (2020: GBP235,918) in the own shares held reserve within
equity reflects 337,027 (2020: 337,027) shares remaining in the EBT
that will be used to satisfy future exercises.
Cancellation of employee share options
On 24 May 2021, the Group announced an offer to all employees
with share options that had vested to cancel their options for a
one-off cash consideration of 46.5p per option share, being the
mid-market closing price on 21 May 2021, the last business day
prior to the announcement. As a result, 1,603,008 options were
cancelled, and the cash consideration was paid to the relevant
employees as remuneration through the PAYE system. The total of the
remuneration payments made was GBP745,399 with employers NI of
GBP102,865 paid in respect of this remuneration. Included within
these totals, the number of options cash cancelled in respect of
directors was 1,543,008 and the remuneration payments made to
directors was GBP717,499, with employers NI of GBP99,014.
Statement of financial position and cash flows
The Group's net working capital reduced slightly to GBP5.0m
(2020: GBP5.1m). The ratio of current assets to current liabilities
was maintained at 1.5 (2020: 1.5). The Group's gearing ratio, which
is calculated as total borrowings over net assets, increased to 0.4
(2020: 0.1).
The Group generated a net cash outflow from operating activities
of GBP2.4m (2020: cash inflow GBP5.1m). The cash outflow is due to:
an increase in working capital tied up in debtors as a result of
the increased revenues in the later part of 2021 compared with
2020; the absence of the deferral of GBP1.5m of VAT payment that
was allowed by the Government as part of their COVID financial
support initiatives in 2020. In 2021, not only is there no deferral
but the GBP1.5m deferred at the end of 2020 has been paid.
The Group has no term debt and is financed using its invoice
discounting and overdraft facilities with HSBC. At 31 December 2021
the Group's had available funds to draw down of GBP4.3m (2020:
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 with HSBC providing of up to GBP12.0m, based on a
percentage of good book debts, at a margin of 1.6% 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.
Given the ongoing COVID pandemic, the increases in inflation,
the cost-of-living squeeze and potential impacts on the economy of
the events in Ukraine, in addition to the established budgeting and
forecasting processes, which considers a range of plausible events
and circumstances, a reverse stress test has been undertaken. This
shows that, assuming a continuation of the current facilities, the
Group has access to sufficient cash and facilities to withstand a
30% reduction against the 2021 revenues without any significant
restructuring or other cost reduction measures.
In assessing the risks related to the continued availability of
the current facilities, the Board have taken into consideration the
existing relationship with HSBC and the strength of the security
provided, also taking into account the quality of the Group's
customer base. Based on their enquiries, the Board have concluded
that it remains appropriate to conclude that sufficient facilities
will continue to remain available to the Group.
Based on their enquiries, the Board have concluded that the
going concern basis of preparation remains appropriate and that no
material uncertainty exists.
Liquidity risk
The Group seeks to mitigate liquidity risk by effective cash
management. The Group's policy, throughout the year, has been to
ensure the continuity of funding through a net overdraft facility
of GBP50,000 and an invoicing discounting facility, providing up to
GBP12m based on a percentage of good book debts. The invoice
discounting facility revolves on an average maturity of 120 days
and is repayable on the giving of 3 months' notice by either
party.
The strategic report was approved by the Board on 27 March 2022
and signed on its behalf by:
S L Dye 27 March 2022
Consolidated statement of comprehensive income
For the year ended 31 December 2021
2021 2020
GBP'000 GBP'000
--------------------------------------- --- ---------- ----------
Revenue 2 77,715 81,356
Cost of sales (65,928) (71,117)
--------------------------------------- --- ---------- ----------
Gross profit 11,787 10,239
Other operating income 351 2,477
Administrative expenses (11,864) (11,663)
--------------------------------------- --- ---------- ----------
Profit from operations 274 1,053
Finance expense (160) (183)
--------------------------------------- --- ---------- ----------
Profit before tax 114 870
Tax expense 3 (109) (204)
--------------------------------------- --- ---------- ----------
Total profit and other comprehensive
income for the period attributable
to owners of the Parent 5 666
--------------------------------------- --- ---------- ----------
Earnings per ordinary share
Basic 4 0.04p 4.66p
--------------------------------------- --- ---------- ----------
Fully diluted 4 0.03p 4.13p
--------------------------------------- --- ---------- ----------
Consolidated statement of changes in equity
For the year ended 31 December 2021
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
2021 146 120 (236) 50 718 6,278 7,076
---------------------- ---------- ---------- --------- ------------- ---------- ----------- ---------
Total comprehensive
income for
the year - - - - - 5 5
---------------------- ---------- ---------- --------- ------------- ---------- ----------- ---------
Transactions
with owners:
Share options
cancelled - - - - (782) 37 (745)
Share based
payment charge - - - - 210 - 210
---------------------- ---------- ---------- --------- ------------- ---------- ----------- ---------
Total transactions
with owners - - - - (572) 37 (535)
---------------------- ---------- ---------- --------- ------------- ---------- ----------- ---------
At 31 December
2021 146 120 (236) 50 146 6,320 6,546
---------------------- ---------- ---------- --------- ------------- ---------- ----------- ---------
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
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
---------------------- ---------- ---------- --------- ------------- ---------- ----------- ---------
Consolidated statement of financial position
As at 31 December 2021
2021 2020
GBP'000 GBP'000
--------------------------------- ---------- ----------
Assets
Non-current
Goodwill 132 132
Other intangible assets 74 149
Property, plant, and equipment 1,554 1,648
Right of use assets 2,779 2,993
Deferred tax asset 40 149
---------------------------------- ---------- ----------
4,579 5,071
Current
Inventories 21 7
Trade and other receivables 13,481 13,404
Cash and cash equivalents 946 2,827
---------------------------------- ---------- ----------
14,448 16,238
Total assets 19,027 21,309
---------------------------------- ---------- ----------
Liabilities
Current
Trade and other payables (6,430) (9,706)
Lease liabilities (294) (276)
Corporation tax - (218)
Current borrowings (2,828) (967)
(9,552) (11,167)
Non-current liabilities
Lease liabilities (2,801) (2,944)
Deferred tax liabilities (128) (122)
---------------------------------- ---------- ----------
Total liabilities (12,481) (14,233)
---------------------------------- ---------- ----------
Net assets 6,546 7,076
---------------------------------- ---------- ----------
Equity
Share capital 146 146
Share premium 120 120
Own shares held (236) (236)
Capital redemption reserve 50 50
Share based payment reserve 146 718
Retained earnings 6,320 6,278
Total equity 6,546 7,076
---------------------------------- ---------- ----------
Consolidated statement of cash flows
For the year ended 31 December 2021
2021 2020
GBP'000 GBP'000
Cash flows from operating activities
Profit before tax 114 870
Adjustments for:
Depreciation, loss on disposal and
amortisation 816 763
Finance expense 160 183
Employee equity settled share options
charge 210 165
Change in inventories (14) 3
Change in trade and other receivables (77) 2,405
Change in trade and other payables (3,271) 1,213
---------------------------------------------- --------- ---------
Cash (outflow)/inflow from operations (2,062) 5,602
Income tax paid (217) (284)
Interest paid (160) (183)
Net cash (outflow)/inflow from operating
activities (2,439) 5,135
---------------------------------------------- --------- ---------
Cash flows from investing activities
Purchase of property, plant and equipment
and intangibles (279) (293)
Net cash outflow from investing activities (279) (293)
Cash flows from financing activities
Movement on invoice discounting facility 2,231 (2,818)
Movement on perpetual bank overdrafts (370) 215
Amounts paid to cancel share options (745) -
Payment of lease liabilities (279) (219)
Proceeds from exercise of share options - 9
Net cash inflow/(outflow) from financing
activities 837 (2,813)
---------------------------------------------- --------- ---------
Net (decrease)/increase in cash and
cash equivalents (1,881) 2,029
---------------------------------------------- --------- ---------
Cash and cash equivalents at beginning
of period 2,827 798
---------------------------------------------- --------- ---------
Cash and cash equivalents at end of
period 946 2,827
---------------------------------------------- --------- ---------
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 2021 was authorised for issue in accordance with a
resolution of the directors on 27 March 2022.
The financial information included in this announcement has been
prepared under the historical cost convention, as modified by
measurement of share-based payments at fair value at date of grant
, and in accordance with UK adopted international accounting
standards ("IFRS") 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 2020. There have been no significant changes in the basis
upon which estimates have been determined, compared to those
applied at 31 December 2020 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, 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, 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 the Derby site
including rental of excess space and hotel and conferencing
facilities.
Revenue, gross profit and operating profit delivery by
geography:
2021 2020
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 66,842 1,279 9,594 77,715 64,521 713 16,122 81,356
Cost of
sales (56,703) (622) (8,603) (65,928) (56,129) (567) (14,421) (71,117)
----------------- ------------- ---------- ---------------- ---------- ------------- ---------- ---------------- ----------
Gross profit 10,139 657 991 11,787 8,392 146 1,701 10,239
Other operating
income* 213 138 - 351 2,168 309 - 2,477
Administrative
expenses (7,240) (3,293) (519) (11,052) (6,883) (3,211) (809) (10,903)
Amortisation
of intangibles (100) - - (100) (85) - - (85)
Depreciation
of right
of use assets (129) (239) - (368) (123) (230) - (353)
Depreciation (175) (165) (4) (344) (143) (174) (5) (322)
----------------- ------------- ---------- ---------------- ---------- ------------- ---------- ---------------- ----------
Total
administrative
expenses (7,431) (3,559) (523) (11,513) (5,066) (3,306) (814) (9,186)
----------------- ------------- ---------- ---------------- ---------- ------------- ---------- ---------------- ----------
Profit from
operations 2,708 (2,902) 468 274 3,326 (3,160) 887 1,053
----------------- ------------- ---------- ---------------- ---------- ------------- ---------- ---------------- ----------
*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).
2021 2020
GBP'000 GBP'000
----------------------------------------- --------- ---------
Coronavirus Job Retention Scheme
Grant relating to:
* Contractors paid under PAYE 192 1,623
* Own staff 131 851
------------------------------------------ --------- ---------
323 2,474
Local Government Business Support
Grant 28 3
351 2,477
----------------------------------------- --------- ---------
The wages costs associated with the Coronavirus Job Retention
Scheme Grant are included in the financial statements as
follows:
2021 2020
GBP'000 GBP'000
-------------------------- --------- ---------
Cost of sales 286 1,804
Administrative expenses 37 670
--------------------------- --------- ---------
323 2,474
-------------------------- --------- ---------
The revenue reported above is generated from continuing
operations with external customers. There were no sales between
segments in the year (2020: 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 2022, one customer in the UK segment contributed 10% or
more of total revenue being GBP28.0m (2020: GBP27.3m) and one
customer in the International segment also contributed 10% or more
of total revenue being GBP9.1m (2020: GBP15.7m).
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
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
----------------------- --------- --------- --------- ---------
Permanent placements 2,098 1,435 2,098 1,435
Temporary placements 74,338 79,208 9,032 8,658
Others 1,279 713 657 146
----------------------- --------- --------- --------- ---------
77,715 81,356 11,787 10,239
----------------------- --------- --------- --------- ---------
All operations are continuing. All assets and liabilities are in
the UK.
3. Tax expense
2021 2020
Continuing operations GBP'000 GBP'000
---------------------------------------------------- --------- ---------
Current tax
UK corporation tax (6) 218
Adjustments in respect of previous periods - (12)
---------------------------------------------------- --------- ---------
(6) 206
Deferred tax
Origination and reversal of temporary differences 115 (2)
Tax 109 204
---------------------------------------------------- --------- ---------
Factors affecting the tax expense
The tax assessed for the year is higher than (2020: higher than)
would be expected by multiplying the profit by the standard rate of
corporation tax in the UK of 19% (2020: 19%). The differences are
explained below:
2021 2020
Factors affecting tax expense GBP'000 GBP'000
----------------------------------------------- --------- ---------
Result for the year before tax 114 870
----------------------------------------------- --------- ---------
Profit multiplied by standard rate of tax of
19% (2020: 19%) 22 165
Non-deductible expenses 68 48
Tax credit on exercise of options 28 (5)
Effect of change in deferred tax rate (9) 8
Adjustment in respect of previous periods - (12)
----------------------------------------------- --------- ---------
109 204
----------------------------------------------- --------- ---------
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
2021 2020 2021 2020
Earnings GBP'000 5 666 5 666
------------------------- ------------ ------------ -------------- ------------
Basic weighted average
number of shares 14,266,680 14,299,995 14,266,680 14,299,995
Dilutive effect of
share options - - 303,537 1,840,513
------------------------- ------------ ------------ -------------- ------------
Fully diluted weighted
average number of
shares - - 14,570,217 16,140,508
------------------------- ------------ ------------ -------------- ------------
Earnings per share
(pence) 0.04p 4.66p 0.03p 4.13p
------------------------- ------------ ------------ -------------- ------------
5. Dividends
No final dividend for the year ended 31 December 2021 has been
proposed (2020: Nil). This represents a payment of Nil (2020: Nil)
per share.
6. Report and accounts
The above financial information does not constitute the
Company's statutory accounts for the years ended 31 December 2021
or 2020 but is derived from those accounts. The auditor has
reported on these accounts; their report was unqualified, did not
draw attention to 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 2020 have been filed with the Registrar of
Companies.
Full audited accounts of RTC Group Plc for the year ended 31
December 2021 will be made available on the Company's website at
www.rtcgroupplc.co.uk later today and will be dispatched to
shareholders on 28 April 2022 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 12.30pm on
1 June 2022 at the Derby Conference Centre, London Road, Derby,
DE24 8UX.
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END
FR BKOBKCBKDKNB
(END) Dow Jones Newswires
March 28, 2022 02:00 ET (06:00 GMT)
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