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27 March 2023
UK-based engineering and technical recruitment firm RTC Group plc (RTC:LSE) reported revenue of £71.9 million for the full year ending 31 December 2022, a decrease of 7.5% over the previous year.
RTC Group said the early part of the year continued to be impacted by the effects of Covid-19. The difficult trading conditions experienced in the rail business in 2021 continued through 2022, exacerbated by ongoing industrial action, although the year ended with most of the challenges being addressed, the company added.
Andy Pendlebury, CEO said, “2022 was a year of two very contrasting halves for RTC Group. Like many other companies, the early part of the year continued to be impacted by the effects of Covid-19. Additionally, the new maintenance and renewals contract with Network Rail which saw Ganymede Rail successfully awarded another long-term programme of work, was heavily biased towards upfront cost and investment activities. While the combined effect of these two events impacted our first half profitability, the fundamental capabilities underpinning all our trading entities remained robust. The second half of the year saw much improved trading across the group. With the exception of Ganymede Rail, all of our businesses enjoyed second half run rates last seen prior to the onset of Covid-19 in 2020.”
| (£ thousands) | FY 2022 | FY 2021 | Change |
| Revenue | 71,907 | 77,715 | -7.5% |
| Gross Profit | 11,775 | 11,787 | -0.1% |
| Gross Margin | 16.4% | 15.2% | – |
| Loss/profit from operations | -243 | 274 | – |
| Profit Before Tax | -455 | 114 | – |
| Total Profit for the period attributable to owners of the Parent | -351 | 5 | – |
EBITDA stood at £0.6 million, down from £1.1 million in 2021.
The loss from operations reflects a mixed year that saw a strong performance across all areas of the group other than rail which experienced a ‘perfect storm’ of increased costs to supply and lower than anticipated volumes.
The group’s business is split into three operating segments: UK Recruitment, International and Central Services.
Through its Ganymede and ATA Recruitment brands, the group provides a wide range of recruitment services in the UK. The group’s international division includes the GSS brand.
| (£ thousands) | FY 2022 | FY 2021 | Change |
| UK Recruitment | 64,764 | 66,842 | -3.1% |
| UK Central Services | 1,979 | 1,279 | 54.7% |
| International Recruitment | 5,164 | 9,594 | -46.2% |
UK Recruitment reported reduced revenues, which were converted to profit from operations of £1.5 million (2021: £2.7 million). The reduction in profit from operations reflecting strike action and the increased cost of supply, particularly fuel prices in the Rail division and increased administrative expenses largely due to higher commissions on very strong performances in energy and recruitment.
Within Central Services, the Derby Conference Centre has seen good levels of activity relating to conferences, events and bedroom sales for the majority of 2022 with a particularly strong finish on festive activities. Gross profit reported an increase.
In International Recruitment, while revenue reduced significantly following the withdrawal of NATO from Afghanistan, gross profit reduced slightly to £0.8 million (2021: £0.9 million) with gross margin increasing to 15% (2021: 10%) as much of the revenue relating to Afghanistan related to services (e.g., contractor travel) that were provided at cost.
The group added that its International Recruitment division has been successful in securing work under new framework agreements in addition to existing arrangements delivering profit from operations of £0.5 million (2021: £0.5m) on par with 2021 despite the withdrawal from Afghanistan.
Looking ahead, Pendlebury said, “Following a vastly improved performance in the second half of the year and early signs of a continuation of this trajectory into the early part of this year, I remain cautiously optimistic about our future revenue and profit generation.”
“Our overall financial position sees the group with no long-term debt, a working capital facility with significant headroom for growth, and strong cash and treasury management supporting predominately blue chip and government backed clients,” Pendlebury added. “RTC Group has a strong balance sheet which hasn’t necessitated any form of recapitalisation which befell many larger players in the sector and a very strong and lengthy order book with many leading clients across a number of our sectors. I believe we are well positioned to capitalise on growth opportunities as they emerge.”
RTC Group shares last traded at £18.50, no change on the day and 23.33% above the 52 week low of £15.00 set on 16 January 2023. The company has a market cap of £2.71 million.
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