Interim Results for the Six Months to 30 June 2024

This announcement contains inside information as stipulated under The Market Abuse Regulation (EU No. 596/2014).

24 July 2024

RTC Group Plc

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

Interim Results for the Six Months Ended 30 June 2024

RTC Group Plc (AIM: RTC.L), the engineering and technical recruitment Group, is pleased to announce its unaudited results for the six months ended 30 June 2024.

Summary:

·           Group revenue from continuing operations increased to £49.0m (2023: £45.6m);

·           Contract revenues increased to £46.7m (2023: £43.0m);

·           EBITDA increased to £1.9m (2023: £1.6m);

·           Profit before tax increased to £1.2m (2023: £1.0m);

·           Net assets grew to £8.7m (2023: £6.9m);

·           Net cash inflow from operating activities £0.3m (2023 £2.1m);

·           No term debt, and no borrowings other than lease liabilities; and

·           Basic earnings per share 6.0p (2023: 5.20p) with little dilution.

The final dividend in respect of the year ended 31 December 2023 of 4.5p per share (2023: Nil) was approved at the AGM on 5 June 2024 and paid to shareholders on 8 July 2024. The Directors propose an interim dividend of 1.10p per share (2023: 1.0p per share). The interim dividend will be paid on 1 October 2024 to shareholders on the register on 6 September 2024. 

Commenting on the results, Andy Pendlebury, Chairman and Chief Executive, said:

"I am delighted to announce that the first half of 2024 saw a further enhancement in performance for the Group, building upon the success achieved in 2023.

Throughout the first half of 2024, we have continued to make investments in training our people, increasing our headcount, and developing our systems and technology solutions to drive productivity, elevate our client offerings, and secure future business opportunities.

Our balance sheet remains in a very healthy position with no term debt and no borrowings other than lease liabilities.

Whilst we are in the early days of a new Government, which inevitably brings some uncertainty regarding long-term strategy, we are encouraged by the proposed 10-year infrastructure plan outlined in Labour's manifesto, which includes significant investment in the sectors where we are focused. Combined with anticipated improvements in the UK's macro-economic conditions, such as lower inflation and subsequently decreasing interest rates, we are optimistic that this will create an environment where our business can continue to grow.

Despite the ongoing uncertainties facing the recruitment sector, we remain encouraged and optimistic about our short, medium, and long-term prospects."

The interim report is available on the Company's website www.rtcgroupplc.co.uk.

ENDS

Enquiries:

About RTC

RTC Group Plc is an AIM listed 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 technical and engineering talent and providing complete workforce solutions to help build and maintain infrastructure and transportation for a wide range of 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 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 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. 

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.

UK Central Services

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.

Chairman and Chief Executive's statement

Six months ended 30 June 2024

Overview

I am delighted to announce that the first half of 2024 saw a further enhancement in performance for the Group, building upon the success achieved in 2023.

Revenue for the period increased to £49.0m up 7.5% compared to the same period in 2023, with gross profit increasing by 10% to £8.9m.

Our balance sheet remains in a very healthy position with no term debt and no borrowings other than lease liabilities. We have generated cash inflows from operating activities and ended the period with net assets of £8.7m (up from £7.9m at the start of the period) representing a healthy and fully diluted net asset per share of 59.4p.

Considering these promising half-year results, delivering a pre-tax profit of £1.2m for the period (up from £1.0m in 2023), combined with the strength of the Group's balance sheet, the Directors propose an interim dividend of 1.10p per share (2023: 1.0p per share). The interim dividend will be paid on 1 October 2024 to shareholders on the register on 6 September 2024. 

UK Division

Ganymede Rail delivered a strong first half of the year with a 14% increase in revenue in comparison to the same period last year. Ganymede Rail remains well placed to capitalise on the next five-year investment plan (Control Period 7), which started in April 2024 and includes an expected programme of investment of approximately £43bn over the period.

Ganymede Energy continued supporting the Government's smart meter programme alongside the major energy suppliers, delivering a further improvement in profitability from H1 2023.

Despite the persistent challenges in the permanent recruitment market, characterised by a slowdown in vacancy numbers and decreased confidence among both clients and candidates, Ganymede and ATA's white-collar permanent recruitment teams delivered a robust performance, maintaining fee levels comparable to H1 2023. While challenges in permanent recruitment persisted, it presented opportunities in the temporary market where our white-collar Ganymede and ATA businesses achieved 10% revenue growth on the same period last year, with clients in the infrastructure, manufacturing, and transportation sectors.

Throughout the first half of 2024, we have continued to make investments in training our people, increasing our headcount, and developing our systems and technology solutions to drive productivity, elevate our client offerings, and secure future business opportunities.

International division

Our international business delivered a solid first half performance with slightly increased revenue and gross profit. We are continuing to explore further growth opportunities with both potential and existing customers. We remain confident that our international business which is both unique in its capabilities and unrivalled in the United Kingdom recruitment space, is well placed to capture significant long-term and diversified opportunities for the Group and provide a diversified revenue stream outside of our mainstream domestic business. 

Central services

The Derby Conference Centre has had a challenging start to 2024 with reduced activity levels across all aspect of its service provision compared to the first half of 2023. However, bookings for the second half of the year look strong.

Outlook

Whilst we are in the early days of a new Government, which will inevitably bring some uncertainty across many sectors of the UK economy, we are encouraged by the proposed 10-year infrastructure plan outlined in Labour's manifesto, which includes significant investment in the sectors where we are focused. This, combined with anticipated improvements in the UK's macro-economic conditions, such as lower inflation and subsequently decreasing interest rates, gives us optimism that we can continue to grow and capture new business opportunities for our shareholders. 

Despite the broader uncertainties facing the recruitment sector, we remain encouraged and optimistic about our short, medium, and long-term prospects.

A M Pendlebury

Chairman and Chief Executive

24 July 2024

Finance Director's statement

Six months ended 30 June 2024

Highlights

For the six months ended 30 June 2024, the Group delivered revenues of £49.0m (2023: £45.6m) an increase of 7.5% on the same period in 2023. EBITDA increased to £1.9m (2023: £1.6m) and profit before tax was £1.2m (2023: £1.0m).

UK recruitment

The UK Recruitment segment delivered increased revenues of £45.4m (2023: £41.8m), driven by an increase in contract revenues to £44.0m (2023: £40.4m). Overall profit from operations increased to £2.5m (2023: £2.2m).  The rate of conversion of gross profit to profit from operations increased to 31.9% (2023: 30.9%), despite continued investment in training our people, increasing our headcount, and developing our systems and technology solutions to drive productivity, elevate our client offerings, and secure future business opportunities.

International recruitment

International recruitment delivered revenues of £2.7m (2023: £2.6m), slightly higher than the same period in 2023. Profit from operations was also higher at £247,000 (2023: £238,000).

UK Central Services

Within UK Central Services, our hotel and conference centre business experienced a quieter first half than the previous year delivering reduced revenues of £0.9m (2023: £1.2m). Correspondingly gross profit was lower at £0.5m (2023: £0.6m).

Taxation

The total tax charge for the period is estimated at £336,000 (2023: £254,000). This is higher than would be expected if the standard tax rate was applied to the result for the period, as explained in note 3.

Earnings per share

The basic earnings per share figure is 6.0p (2023: 5.20p).  The diluted earnings per share 5.99p (2023: 5.19p).

Dividends

The final dividend in respect of the year ended 31 December 2023 of 4.5p per share (2023: Nil) was approved at the AGM on 5 June 2024 and paid to shareholders on 8 July 2024. The Directors propose an interim dividend of 1.10p per share (2023: 1.0p per share). The interim dividend will be paid on 1 October 2024 to shareholders on the register on 6 September 2024. 

Statement of financial position

Net working capital has increased to £7.5m (2023: £5.4m). There has been an increase in debtors reflecting the increase in revenues versus the same period last year and an improvement in key customer aged balances.  Net assets have increased to £8.7m (2023: £6.9m). The Group has no term debt and no borrowings other than lease liabilities. It is financed using its invoice discounting and overdraft facilities with HSBC. At 30 June 2024 there were no overdrafts in use and no invoice discounting funds in use (2023: £1.5m).

Cash flow

The cash inflow from operating activities of £0.3m (2023: £2.1m) for the six-month period reflects increased revenues and the improvement noted above in key customer balances.

Financing

The Group's current bank facilities comprise an overdraft of £50,000 and a confidential invoice discounting facility of up to £12m with HSBC at a discount 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 future needs of the business. The Group continues to be focussed on cash generation and building a robust statement of financial position to protect the business.

Going concern

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 the quality of the Group's customer base. Based on their enquiries, the Board have concluded that sufficient facilities will continue to remain available to the Group and therefore the going concern basis of preparation remains appropriate and no material uncertainty exists.  

As a result, the going concern basis continues to be appropriate in preparing the interim results.

S L Dye                                                                                                             

Group Finance Director

24 July 2024                                                     

Consolidated statement of comprehensive income:

Consolidated statement of changes in equity for the six months ended 30 June 2024:

Consolidated statement of changes in equity for the six months ended 30 June 2023:

Consolidated statement of changes in equity for the year ended 31 December 2023:

Consolidated statement of financial position:

Consolidated statement of cash flows:

Notes to the interim statement for the six months ended 30 June 2024:

1.    Accounting policies

a)    General information

             RTC Group Plc is incorporated and domiciled in England and its shares are publicly traded on AIM. The registered office address is The Derby Conference Centre, London Road, Derby, DE24 8UX.  The company's registered number is 02558971. The principal activities of the Group are described in note 2. 

             The Board consider the principal risks and uncertainties relating to the Group for the next six months to be the same as detailed in our last Annual Report and Accounts to 31 December 2023.

             b)    Basis of preparation

The unaudited interim Group financial information of RTC Group Plc is for the six months ended 30 June 2024 and does not comprise statutory accounts within the meaning of S.435 of the Companies Act 2006. The unaudited interim Group financial statements have been prepared in accordance with the AIM rules and have not been reviewed by the Group's auditors. This report should be read in conjunction with the Group's Annual Report and Accounts for the year ended 31 December 2023, which have been prepared 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.

Going concern

The Group's current bank facilities include a net overdraft facility across the Group of £50,000 and an invoice discounting facility with HSBC providing of up to £12m, 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. 

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 the quality of the Group's customer base. Based on their enquiries, the Board have concluded that sufficient facilities will continue to remain available to the Group and therefore the going concern basis of preparation remains appropriate and no material uncertainty exists. 

As a result, the going concern basis continues to be appropriate in preparing the interim results.

             These unaudited interim Group financial statements were approved for issue on 29 July 2024.  No significant events, other than those disclosed in this document, have occurred between 30 June 2024 and this date.

             c)     Comparatives

             The comparative figures for the year ended 31 December 2023 do not constitute statutory accounts within the meaning of S.435 of the Companies Act 2006, but they have been derived from the audited financial statements for that year, which have been filed with the Registrar of Companies. The report of the auditor was unqualified and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006 nor a reference to any matters which the auditor drew attention by way of emphasis of matter without qualifying their report.

d)    Accounting policies

In preparing these interim financial statements, the Board have considered the impact of new standards which will be applied in the 2024 Annual Report and Accounts and there are not expected to be any changes in the accounting policies compared to those applied at 31 December 2023.

A full description of accounting policies is contained with our 2023 Annual Report and Accounts which is available on our website.

This interim announcement has been prepared 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 as effective for periods beginning on or after 1 January 2024.

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 excess space at the Derby site including rental and hotel and conferencing facilities.

During the first half of 2024, two customers in the UK Recruitment segment contributed 10% or more of that segment's revenues being £14.7m (2023: £11.8m) and £5.9m (2023: £3.2m) respectively, and one customer in the International Recruitment sector contributed 10% or more of that segment's revenues being £1.1m (2023: £1.0m).   

Revenue, gross profit, and operating profit delivery by geography for the six-month period ended 30 June 2024:

Segment profit from operations above represents the profit earned by each segment without allocation of Group administration costs or finance costs.

       Segment information for the six months ended 30 June 2023:

Segment information for the year ended 31 December 2023:

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 hotel and conferencing at the Derby site, described as Other below.  

Revenue and gross profit by service classification for management purposes:

3.  Income tax

Factors affecting the tax expense

The tax assessed for the six-month period ended 30 June 2024 is higher than (2023: higher than) would be expected by multiplying profit by the standard rate of corporation tax in the UK of 25% (2023: 23.5%).

The differences are explained below:

4.  Borrowings

Included in current borrowings are bank overdrafts and an invoice discounting facility which is secured by a cross guarantee and debenture over all Group companies.  There have been no defaults or breaches of the terms of the facility during the current or prior period.