2019
Connecting
business and
career ambitions
Annual Report
for the year ended 31 December 2019
Stock code: RTC
www.rtcgroupplc.co.uk
Welcome to the RTC Group Annual Report 2019
RTC Group Plc is an AIM listed engineering and technical recruitment business that provides
temporary and permanent labour to a broad range of industries and customers in both domestic and
international markets.
Highlights
Group revenue
£94.9m
(2018:£87.8m)
Learn more
Profit from operations
£2.0m
(2018:£2.0m)
Basic EPS
9.60p
(2018:10.2p)
RTC maintains a corporate website at www.rtcgroupplc.co.uk containing a wide range of information
of interest including:
• Latest news and press releases
• Company reports
Contents
Overview
Group at a glance ..................................................................................................................... 4
Chairman’s statement .............................................................................................................. 5
Strategic report
Chief Executive’s operational and strategic review ................................................................................ 6
Business model ..................................................................................................................................... 10
Key performance indicators .................................................................................................................. 11
Risk Management ................................................................................................................................. 12
Finance Director’s report ...................................................................................................................... 14
Governance
Section 172 statement .......................................................................................................................... 16
Directors’ report ................................................................................................................................... 17
Corporate governance statement ......................................................................................................... 21
Audit committee report ........................................................................................................................ 24
Remuneration report ............................................................................................................................ 26
Financial reports
RTC Group
Independent auditor’s report to the members of RTC Group Plc ........................................................ 28
Consolidated statement of comprehensive income ............................................................................. 33
Consolidated statement of changes in equity ...................................................................................... 34
Consolidated statement of financial position ....................................................................................... 36
Consolidated statement of cash flows .................................................................................................. 37
Notes to the Group financial statements ............................................................................................. 38
RTC Company
Company statutory financial statements .............................................................................................. 66
Company statement of financial position ............................................................................................. 67
Company statement of changes in equity ............................................................................................ 68
Notes to the Company financial statements ........................................................................................ 69
Shareholder information
Directors and advisers........................................................................................................................... 78
Overview
Group at a glance
Group at a glance
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.
Ganymede tailors its solutions to suit its clients needs. Whether it’s recruiting permanent and temporary
technical, engineering and safety-critical roles or providing fully managed workforce solutions of recruitment,
training, account management, contingent labour and fleet provision, Ganymede works closely with its clients
to understand their requirements, keeping their goals in mind every step of the way.
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
Internationally, through our GSS brand we work with customers across the globe that are focused on
delivering projects in a variety of 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.
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RTC Group Plc Annual Report 2019 | Stock code: RTC
Overview
Chairman’s statement
Chairman’s statement
For the year ended 31 December 2019
Group
The performance across both our UK and International divisions has been extremely pleasing. Overall, 2019
has seen further growth in Group revenues to £94.9m (2018: £87.8m).
UK division
Within the UK, our ATA brand navigated fragile market conditions to produce a very creditable trading result.
Ganymede continued to prosper with further increases in demand in both the rail industry and 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. Within Central Services revenues from the Derby Conference
Centre increased and the facility continued to provide a first-class headquarters and value add for our clients
as explained in the Chief Executive’s statement.
International division
Internationally our GSS brand had an exceptional year’s performance beating its highest ever contribution to
the Group.
Dividends
In pursuance of our policy, an interim dividend of 1.4p (2018: 1.3p) has been paid. Your directors are now
proposing a final dividend for the 2019 year of 2.76p (2018: 2.55p) per share, subject to approval at the Annual
General Meeting.
Outlook
Although there remain uncertainties for the UK economy in 2020 which are likely to remain until our future
trading arrangements with the European Community are resolved, we enter 2020 following a healthy
performance in 2019 with optimism. ATA Recruitment is continuing to perform at satisfactory levels, and
Ganymede is substantially insulated from any volatility in the general UK markets by the contracts it has within
both the Rail and Energy industries. The Derby Conference Centre is experiencing improving demand for its
services.
Internationally, GSS has continuing flows of demand from its longstanding client in Afghanistan and continues
to develop business in the Middle East.
The establishment of strong and stable Government and the passing at long last of our exit from the European
Union give us cause to anticipate more predictable and promising trading conditions although the progress to
a final trade agreement with the EU may cause 2020 to be a bumpy year. Recent clear indications of strong
increases in infrastructure spending and investment culminating in the announcement of an urgent drive to
construct and complete our major expansion in High Speed Rail transport are expected to offer many
opportunities for the Group.
We view the future with confidence.
Staff
I should like to thank our staff at all levels for their loyalty, hard work and enthusiasm.
W J C Douie
Chairman
23 February 2020
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RTC Group Plc Annual Report 2019 | Stock code: RTC
Strategic report
Chief Executive’s report
Chief Executive’s operational and strategic review
For the year ended 31 December 2019
Overview
2019 was another extremely positive year for the Group. Our business continued to grow despite severe
economic and geo-political uncertainty which impacted the wider global and UK economies. Group revenue,
gross profit, cash generation and shareholder dividends all increased in line with market expectations. The
Group’s long-term investment programme in apprentice training and workforce upskilling remained at a
constant, and in certain cases enhanced level. These costs have to be recognised fully in the year incurred and
cannot be spread over the expected revenue recovery timeline. Therefore, whilst we could, like many
organisations have in the current climate, deferred this investment to achieve both higher profit and
associated earnings per share, the Board did not see this as a necessary nor sensible strategy to deploy.
Furthermore, whilst the Board is cognisant of the importance of meeting, and wherever possible exceeding
annual profit targets, this will not be done at any cost as creating long-term sustainable profit and cash flow
growth is our key priority to support our goal of growing dividends every year - not an easy commitment to
make or deliver - as being essential in attracting and retaining a supportive shareholder community. We are
proud that we have consistently delivered on our dividend commitment to our shareholders and our dividend
yield is one of the best in the sector.
I am delighted that our results, when compared alongside the performance of many of our publicly traded
peers, especially the small cap contingent, fair extremely well, and across a broad range of measures vindicate
the strategic direction being followed by the Board. They provide confidence that the range of strategic
imperatives outlined for shareholders in both our 2014 and 2017 business reviews are being implemented by
strong management teams deployed across each of our businesses and within the corporate centre of the
Group. Given that many of the current macro-economic challenges were neither present, nor indeed
envisaged when we redefined the vision and strategic direction of the Group we believe our business model
remains robust and once the economy regains accelerated momentum, capable of generating additional
organic led growth opportunities for us to further grow shareholder value. I appreciate that there is no
guarantee that 2020 will deliver a vastly different landscape than 2019 but by growing and using our balance
sheet wisely, as we continue to do, we will be well prepared for any eventuality encountered by the Group.
With regards to our financial prudence and treasury management I would like to provide some clarity around
our debt position as this has been a source of difficulty facing a number of companies in our sector over the
past 12-18 months. I believe it is worth outlining for our shareholders, our relative position and attitude to the
use of debt and its potential impact on shareholder wealth. Typically, debt in our sector is raised for two
predominant reasons. Firstly, to finance business expansion through acquisition activity. Our sector has seen
profit multiples of target companies (the multiple of net earnings before interest, tax, depreciation and
amortisation) rise to significantly high, and in our opinion unrealistic valuations, and whilst this may provide
short-term gains for shareholders, overly ambitious synergy savings are rarely achieved with the consequences
of overpaying for targets providing unmanageable debt burdens. The impact on shareholder wealth through
overburdened balance sheets is extremely damaging and in certain circumstances can be terminal. We will not
do this to our shareholders and will concentrate on investing in and building on organic growth opportunities
with existing and new clients. Funding this aspect of growth is where our industry derives its second key source
of debt from in the form CID (Confidential Invoice Discounting). Through its banking facility, the Group acts as
a secondary source lender to clients through recruiting and payrolling workers for them thereby bolstering
their working capital capabilities. For doing this the Group charges clients a fee (our margin) to recover both its
direct and indirect costs and a contribution to profit for reinvestment and dividends to shareholders. The
primary risk to our shareholders is clients defaulting on their “working capital loans” or as it is referred to bad
debts, and this is mitigated for our shareholders by the quality of due diligence in client selection and through
our credit control and treasury management. Over the past 5 years the Group has cumulatively provided
around £300m of these “working capital loans” to clients with a less than 0.02% default rate. We therefore
believe that our debt position is extremely solid, and I hope this provides clarity and context to the debt
position held on the Group’s balance sheet.
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RTC Group Plc Annual Report 2019 | Stock code: RTC
Strategic report
Divisional business review
Chief Executive’s report
UK division
Operational integration of ATA and Ganymede
For many years Ganymede and ATA have successfully competed in their respective UK markets. Both
businesses have enjoyed significant growth and have established reputations for delivering first class
recruitment solutions to a range of clients in the rail, infrastructure, built environment and manufacturing
sectors. As CEO of the Group I am extremely proud of everybody across both businesses for all the hard work
that has gone into achieving this success.
However, as eluded to in my 2017 SWOT analysis both the competitive landscape and dynamics of the markets
we serve are changing and our clients are demanding a broader solution from a streamlined supply chain. In
order to compete and stay ahead of our competition we needed to change and adapt our business model and
structure to fit the new paradigm. In our current format we have to approach clients multiple times through
both businesses, set up individual trading arrangements under both companies and submit two sets of invoices
for payments. This, when clients are looking to streamline supplier relationships, reduce administration and
transaction costs and award bigger contracts with fewer suppliers, is both counter intuitive and potentially
damaging to the Group.
With this in mind, we integrated the ATA Projects business with Ganymede creating a highly focused white-
and-blue collar business. Our ATA branch network will continue to operate and grow in their current locations
and compete in their indigenous manufacturing, engineering and industrial markets under the ATA
Recruitment brand. Our commitment to grow all our branches remains a key priority for the Group.
I believe having done this we will create a very focused and enlarged people solutions business capable of
competing with and beating much larger competitors who currently dominate the infrastructure and
transportation marketplace. I also believe it will create opportunities for individuals across both businesses to
accelerate their career and personal growth plans and help us become a more effective and efficient business
by redefining our cost structure to focus on sales and account management to harness growth. Clearly there
will be a number of challenges to overcome in ensuring a smooth integration but I believe the collective
capability of the two businesses will achieve better growth and market positioning and I believe all concerned
will see this as a new beginning and launch pad for everybody in the business and I have full confidence that
the team led by Managing Director Paul Crompton have an exciting and prosperous future ahead of them.
Ganymede
Ganymede had another outstanding year with both its Rail and Energy divisions delivering record levels of
growth. The Rail business has continued to build on its reputation, presence and positioning in the Rail sector.
Its solid performance as a lead supplier to Network Rail culminated in Network Rail exercising its option to
extend its framework agreement until 31 March 2021 a significant and stellar performance by the whole team.
Ganymede is now widely recognised as a leading exponent of safety critical working in the UK Rail sector. The
Businesses reputation was significantly enhanced following the collapse of Carillion where Ganymede worked
tirelessly alongside Network Rail to ensure minimal disruption on a range of unfinished and vitally important
rail projects. In addition to strengthening its position with Network Rail, Ganymede has been selected as a
preferred supplier to a number of Tier 1 rail suppliers broadening its footprint and involvement in other key
rail infrastructure projects. By merging Ganymede with ATA who are also heavily involved in supplying white
collar personnel to a broad range of rail focused suppliers the business can now offer full ‘cradle to grave’ and
through life solutions to the sector which clients are increasingly demanding.
Ganymede’s Energy business is now beginning to show the shoots of growth in its smart meter roll out
programme following a number of years of slower than expected activity due to industry wide technology and
compatibility issues. Our strategic contract with SSE has seen a significant increase in demand during the last
quarter of 2019, which is extremely encouraging, and we believe the next 3-5 years will see a steady and
consistent increase in headcount deployed on this type of activity. The Energy division is also involved in
discussions with a number of energy companies engaged in medium to long-term roll out programmes for
charging technology for smart cars. Like domestic smart meter forecasts, growth in this sector is set to rise
significantly over the next 5-10 years and we believe given our experience and existing relationships with key
OEM’s we are favourably placed to establish a number of strategic partnerships. This is because this large-scale
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Strategic report
Chief Executive’s report
national rollout programme would have similarities to the safety critical work we currently perform for both
Network Rail and SSE.
Ganymede has continued with its long-term investment in training across both the sectors through its
apprentice and operative upskilling programme. The investment commitment is not insignificant and as
previously alluded to, is costed as incurred with revenue lagging investment in training. Whilst this has a short
impact on profits, the business is committed to generating revenue over longer term as this provides a more
consistent and steadier stream of revenues.
During 2019 Ganymede invested in a number of safety initiatives and campaigns which have improved
communications and engagement with its workforce, and this has driven significant improvements in safety
performance which is a key priority for both the Rail and Energy sectors. These initiatives are seen by the
Board as long-term investment priorities and are further examples of the Group’s attitude to business
investment even during this difficult economic climate as we believe it will benefit the shareholder in the long-
term.
Finally, Ganymede invested in two new sub-divisions during 2019 again incurring upfront investment costs and
both are showing early signs of promise. Firstly the newly formed trades and labour division was formed to
compliment the supply of rail engineering personnel with various non-rail tradesmen as many projects now
demand a complete end-to-end workforce capability and secondly a small works business has been
established to perform small packages of work where Ganymede take wider control and responsibility for both
Network Rail and other Tier 1 suppliers. We believe by having a holistic capability, including the ATA white
collar project business, it places Ganymede in a more favourable position to secure a new and enhanced long-
term relationship with Network Rail and its key Tier 1 partners.
ATA
The challenging headwinds experienced by ATA in the first half of 2019 did not abate and like much of its
competition ATA had to weather further and, in some cases, worsening conditions. The impact was felt equally
by both the projects business where a number of new civil engineering projects were either held or in certain
cases shelved pending the outcome of Brexit and the turbulent domestic political landscape. The ATA branch
network which supports the UK manufacturing, engineering and industrial sectors was impacted as falling
confidence dampened enthusiasm for capital investment initiatives and headcount led growth.
We believe the decision to combine ATA projects with Ganymede will have a positive impact during 2020 as it
broadens its exposure to bigger and more established projects as part of the Ganymede offering. In terms of
the branch network, ATA has always been firmly aligned to the direction of the wider economy and this has
never been more evident than during the uncertainties created by Brexit. It has been a couple of extremely
frustrating years for ATA branches and the generalist recruitment sector per se. However, ATA and its senior
executive team, along with members of the Board, have endured many cycles of muted business confidence in
the UK and history shows that these periods of stagnant or declining growth are normally followed by longer
periods of growth as operational headcount cuts, usually deeper than needed, are reversed and depleted
stock levels are replenished.
Furthermore, it is likely that a post-Brexit UK will be challenging for many companies as the war for talent will
intensify as businesses find it harder to recruit from overseas. In this regard we believe that the ATA branch
network will be able to source candidates through its sister company GSS who has access to a broad range of
international recruitment partners. This could provide a valuable source of competitive advantage as many
companies try to navigate through the EU settlement scheme, updated visa requirements and the evolving
immigration reform landscape.
Central Services
Our Conference centre (the DCC), a part of Central Services, continues to provide first class headquarters for
our Group financial directorate, human resources and technology departments. It is also headquarters to our
Ganymede and ATA businesses and the Board. At the same time the DCC provides conferencing, events and
commercial office facilities and is widely recognised as one of the most unique and respected venues across
the East Midlands. In addition to the direct value add it generates for the Group, the DCC has played a
significant role in helping our prime revenue generators through offering a range of bolt on services to clients
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Strategic report
Chief Executive’s report
not offered by many of our competitors. Additionally, the DCC has generated various and in certain
circumstances significant leads to our recruitment businesses and this attitude of cooperation and inter-
divisional business development is encouraged across all Group operations.
International division
Our International business GSS is a clear market leader in the deployment and management of large volume
multi-nationality workers with a broad range of skills into hostile environments for NATO partner suppliers. It
is unrivalled in the UK and has a range of unique skills and differentiators built up over the ten years since it
was established by the Group.
I am delighted to report that the business had another hugely successful year culminating in its highest ever
contribution to the Group. This achievement is even more remarkable as during 2018 the business had over
£0.7m of non-recurring permanent fees from one client in the USA for a specific recruitment project in
Afghanistan. To fill this gap the business recruited additional personnel for deployment in Afghanistan and
other international locations for existing clients. The business now has around 1,000 workers deployed on blue
chip international Government/NATO projects across a range of locations including Afghanistan, Iraq, Bahrain,
Oman and UAE. The business is also currently in discussions with a range of USA and other international
contractors to expand both its service offering.
Outlook and future growth strategy
Any attempt at forecasting the outlook in the present economic climate is not without difficulty and anybody
purporting to do so accurately without clearly identifying the accompanying and imminent risks runs the risk
themselves of misleading shareholders. That is not our style and I would like to outline the key risks and
uncertainties I see in delivering growth for our shareholders. Firstly, we cannot avoid the continuing macro-
economic and geo-political fallout and continued threat from both the US/China trade war and the risk of a
disorderly exit from the European Union. Both have the potential to further dampen the appetite for business
investment, especially in the UK, and under these circumstances it is not uncommon for candidates to defer
career moves thereby reducing supply capability. However, this is not untypical of recruitment supply/demand
cycles and once confidence returns sentiment tends to reverse. To mitigate the potential of this threat and to
counter the ebbs and flows of traditional recruitment activity, we embarked on a strategic change of direction
when I joined the Group as CEO. Through building a diversified portfolio of businesses supporting long-term
indigenous infrastructure programmes and projects with high value order book revenue. This, complimented
by long-term international defence related contracts, has enabled the Board to build a solid foundation to
mitigate the impact of exposure the UK economy which historically represented 100% of Group revenue.
The second predominant risk causing sleepless nights for CEO’s is IR35. The IR35 cloud has been firmly on the
horizon for twenty years as the initial legislation was first passed in the 2000 Finance Bill. Whilst the
implementation date has been postponed on many occasions, HMRC is adamant it is not going to kick the can
down the road anymore and the government is firmly committed to implementing its policy in April 2020. It is
worth outlining that the legislation designed to combat tax avoidance by workers supplying services to clients
through intermediaries is highly complex and with employment law relying on caselaw to determine the legal
status of individuals, the complexity of the issue will be challenging for all concerned for the foreseeable
future. Presently a significant contingent of workers deployed by the Group across its client base have been
determined as residing outside the scope of the legislation as they are employed by the Government through
Network Rail and the Government is responsible for determining the status of all workers engaged under their
auspices. The status of workers engaged by Group within the private sector are subject to review by our
various clients and we are working closely with all our clients to establish the most appropriate route to
keeping the individuals engaged on their work programmes from April 2020.
Whilst I am acutely aware that the concerns highlighted above could be received negatively, that is not my
intention. Far from it as I am extremely excited about our prospects as the work we have done to position
ourselves as a lead player in the Infrastructure, Rail, Energy and International sectors has yet to be fully
exploited by the Group. Rather I believe it is my responsibility to outline for our shareholders an honest and
frank assessment of the challenges we face along with a clear message as to what we are doing to protect their
interests. I believe this candour is what our shareholders want from us.
A M Pendlebury
CEO
23 February 2020
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Strategic report
Business model
Key performance indicators
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Strategic report
Key performance indicators
Key performance indicators
For the year ended 31 December 2019
Refer to note 26 for the impact of the adoption of IFRS 16 on the financial statements.
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Directors’ report
Risk Management
For the year ended 31 December 2019
The Corporate Governance section describes how the Group manages its risk via its Board and Board sub-
committees. Key business risks and how the Group mitigates these are detailed below:
The economic cycle and economic conditions
The Board takes account of on-going economic conditions and cycles. Whilst there remains much
uncertainty and mixed opinion about short and medium-term prospects for the UK economy, influenced
by the on-going Brexit trade deal negotiations, we believe that the sectors and customers we have built
relationships with have fundamental long-term growth trends. Further, the deliberate positioning of our
businesses in rail infrastructure, domestic energy and overseas activities that are not subject to short-term
fluctuations in the UK economy enables the Group to capitalise on prevailing market conditions both in the
UK and internationally. The Group’s cost base is carefully managed to align with business activity. The
Group remains focused on cash generation and keeping net debt at prudent levels. This risk is further
mitigated by contracts within Ganymede which are not cyclical. The Group also maintains a regular
dialogue with its bank to ensure that we have their backing.
Loss of key customers
Loss of a key customer or large contract continues to be a significant risk. To minimise this risk, our
strategy is to retain existing customers and actively pursue new customers and longer-term contracts and
to identify new market opportunities to spread the risk. We also take very seriously our commitment to
providing excellent service and building and maintaining customer relationships.
Competition
The recruitment market continues to be very competitive placing pressure on margins. Our internal
approval process ensures that new and existing business is conducted only at appropriate and sustainable
margins. The Group Board signs off terms for significant framework agreements and contracts. Further
our engagement with customers is based upon the premise that we are specialists in our chosen markets
and have in-depth knowledge of the areas that we focus on. We differentiate ourselves from the
competition and attract customers through our service offering with solutions tailored to specific client
needs.
Shortage of skilled candidates
An ongoing shortage of skilled candidates in both permanent and temporary recruitment and thus
increased competition can lead to lower margins, and counter offers from existing employers are
commonplace. Our consultants are experts in their area of recruitment and build strong relationships with
customers and candidates and actively manage the recruitment and offer process throughout ensuring
that client and candidate needs are met.
Credit risk
The inability of a key customer to pay amounts owing to us due to financial difficulties is an inherent risk.
To minimise this risk, we employ pro-active credit control techniques. Often in conjunction with our bank,
we credit check new customers, subscribe to a monitoring service and monitor payment patterns and debt
levels against credit limits. In addition, the Board is regularly appraised of debt levels and ageing.
Attracting and retaining key personnel
The Group is reliant on its ability to recruit, train and retain its staff to deliver its growth plans. We
continue to ensure that overall packages are competitive and include performance related incentives for
staff. Succession plans are regularly reviewed.
Compliance risks
Increased employment law and regulations specific to certain business sectors and for temporary workers
necessitate pre-employment checks and ongoing management of compliance. To mitigate these risks, all
staff receive relevant training on the operating standards and regulations applicable to their role. Within
each Group business independent teams check compliance. Compliance processes are tailored to
specialisms, for example, ensuring the health and safety of temporary labour supplied into the rail
industry and eligibility to work.
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Directors’ report
Legislative risks
Constantly changing employment and tax legislation around intermediary staff presents an area of
uncertainty and therefore risk, heightened at this point by the changes to IR35 legislation for the private
sector. To mitigate this risk, in conjunction with our clients and professional advisers, we monitor all
changes in legislation, for example, we have been working closely with key clients regarding the
implementation of the updated IR35 legislation for the private sector that comes into effect in April 2020,
and keep our documentation and procedures under review. The Group works closely with its clients,
financial and legal advisers and accredited recruitment bodies to ensure that the business is up to date on
these issues.
Reliance on technology
Failure of our IT systems continues to be a risk that would cause significant disruption to the business. The
Group’s technology systems are housed in various data centres and the Group has the capacity to cope
with a data centre’s loss through the operation of disaster recovery sites based in separate locations to
ongoing operations. The Group is committed to having an IT infrastructure that is robust, future proof, fit
for purpose and cost effective and as such ensures it receives the appropriate strategic and technical
advice to do this.
Cyber security and general data protection
The Group holds certain data observing strict compliance obligations although a successful cyber-attack
could interrupt the business, threaten confidentiality and lead to loss of client and candidate confidence.
The Group continues to respond to this threat in a number of ways including system security measures
and raising awareness with and training our staff to be vigilant. The Group has responsibilities to protect
data under the General Data Protection Regulation and continually works to ensure full compliance. The
Group has ISO27001 accreditation for both the Ganymede and ATA Recruitment processes.
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Strategic report
Finance Director’s report
For the year ended 31 December 2019
Directors’ report
Financial highlights
The Group delivered profit from operations of £2.0m (2018: £2.0m).
UK
The Group saw a mixed performance across its UK businesses, Ganymede and ATA Recruitment, with areas
such as technical engineering recruitment, both permanent and contract, impacted by clients showing
caution pending a conclusion to Brexit negotiations. Whilst in areas such as contract recruitment for rail
clients and permanent recruitment for energy clients demand was strong. As a result, revenue from
permanent placements in the UK was maintained at £2.8m (2018: £2.8m) and contract revenue was up
£7.8m to £90.3m (2018: £82.5m). Overall, the UK recruitment activities delivered profit from operations of
£3.7m (2018: £3.6m) an increase of 3% on the previous year. Within Central Services, the Derby
Conference Centre contributed £0.9m (2018: £0.9m) gross profit.
International
The Group’s international division delivered its most profitable year since inception with revenues up
£1.8m to £16.6m (2018: 14.8m) and profit from operations breaking the £1m barrier at £1.1m (2018:
£0.9m) despite the absence of £0.7m of permanent fees delivered in 2018 as that contract ended early in
2019.
Taxation
The tax charge for the year was £0.4m (2018: £0.4m). 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 9.
Dividends
During the year, the Company paid a final dividend in respect of the previous year’s results of £363,418
(2018: £326,984) which represents a payment of 2.55p (2018: 2.3p) per share and an interim dividend of
£199,734 (2018: £184,817) to its equity shareholders. This represents a payment of 1.4p (2018: 1.3p) per
share. Total dividend payments of £563,152 (2018: £511,801) which equate to 3.95p per share (2018:
3.6p) were made during the year (refer to note 11).
A final dividend for the year ended 31 December 2019 of £393,760 (2018: £362,780) has been proposed
but has not been accrued within these financial statements. This represents a payment of 2.76p (2018:
2.55p) per share.
Operational integration of ATA and Ganymede
To provide a simplified company structure and streamlined back office procedures to underpin the
operational integration of Ganymede and ATA Recruitment (as set out in the Chief Executive’s strategic
report), the trade and assets of ATA Recruitment Limited were hived-up into Ganymede Solutions Limited
on 31 December 2019. The assets were transferred at book value and there was no impact on the Group
financial statements.
Adoption of new accounting standards
During the year IFRS 16 Leases (effective 1 January 2019) was adopted which has resulted in the Group
recognising right of use assets and lease liabilities for all qualifying contracts that are, or contain, a lease
in the statement of financial position. The Group has applied the modified retrospective transition
method and as such comparatives have not been restated. The impact on profit before tax for the Group
for the year was not material and there was no impact on opening equity at 1 January 2019 (refer to
note 26 for details). The Group also adopted IFRIC 23 which provides guidance on the accounting for
current and deferred tax liabilities and assets in circumstances in which there is uncertainty over income
tax treatments; this had no material impact on the financial statements.
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 £263,919 on the own shares held reserve within equity reflects 377,027
shares remaining in the EBT that will be used to satisfy future exercises.
________________________________________________________________________________
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RTC Group Plc Annual Report 2019 | Stock code: RTC
Strategic report
Directors’ report
Statement of financial position
The Group’s statement of financial position has further strengthened compared to the same point last year
with net working capital increasing to £4.0m (2018: £3.1m). The ratio of current assets to current liabilities
was improved at 1.3 (2018: 1.2). The Group’s gearing ratio, which is calculated as total borrowings over
net assets was significantly improved at 0.6 (2018: 1.2) largely as a result of change in mix of sales in
favour of clients with shorter payment terms. The Group has no term debt and is financed using its invoice
discounting and overdraft facilities with HSBC. Interest cover decreased to 9.7 (2018: 16.4) as during the
year there were higher interest charges due to IFRS 16.
Cash flows
The Group generated a net cash inflow from operating activities of £2.9m (2018: £1.0m) largely due to
strict control over the level of trade debtors year on year. Whilst revenues have increased during the
year, the mix of those sales has been more towards clients with shorter payment terms which is also
reflected in the movement in invoice discounting facility which shows a £1.8m reduction in funds in use.
Cash generated from operations was applied to dividends £0.6m (2018: £0.5m) and the purchase of
property plant and equipment £0.3m (2018: £0.5m). Payments of £0.2m (2018: £Nil) in respect of lease
liabilities are also being shown within the cash flows from financing activities following the adoption of
IFRS 16. These were previously within the profit from operations (refer to note 26).
Prior period restatements
As explained in note 27, the 2018 consolidated statement of financial position has been restated to present
overdrafts of £1,454,000, which were previously included in cash and cash equivalents, within liabilities due
within 1 year. This restatement has not impacted the previously reported profits, net current assets or net
assets. In addition the consolidated cash flow statement has been restated to present certain overdrafts,
amounting to £827,000 within financing activities rather than cash and cash equivalents.
Financing
The Group’s current bank facilities include a net overdraft facility across the Group of £50,000 and an
invoice discounting facility of up to £9.0m with HSBC at a margin of 1.5% above base. An increase in the
facility up to £11m has also been approved by HSBC but not yet invoked as the Group is operating within
its current facility. 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.
The strategic report was approved by the Board on 23 February 2020 and signed on its behalf by:
S L Dye
Group Finance Director
23 February 2020
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RTC Group Plc Annual Report 2019 | Stock code: RTC
Governance
Section 172 statement
Directors’ report
The directors set out their statement of compliance with s172 (1) of the Companies Act 2006 which should
be read in conjunction with the rest of the annual report.
The directors preside over the Group for the benefit of all stakeholders. Decisions taken by the Board are
always cognisant of the impact on each stakeholder group. Fundamentally the goal is the long-term
sustainable growth of the business which will see returns to shareholders increasing, enable employees to
realise their ambitions and support customers in achieving their goals.
Stakeholders and stakeholder communication
The directors consider the key stakeholders of the Group fall into two categories: its employees and its
shareholders, customers, suppliers and other business-related parties.
Employees as stakeholders
The directors are committed to providing a working environment that promotes employee’s wellbeing
whilst facilitating their performance. The ways in which the directors communicate with and support our
employees are set out in the Directors’ report under the headings Equality, Diversity and Inclusion,
Employee Engagement and Involvement. During the year the Group refurbished the Derby office for its UK
division to foster closer working relationships between its two UK recruitment brands.
Shareholders as stakeholders
The directors provide information for the shareholders through the annual report, the interim report and
public announcements made through RNS https://www.londonstockexchange.com/exchange/prices-and-
markets/stocks/summary/company-summary/GB0002920121GBGBXASX1.html. Shareholders are invited to
contact the Chairman at any time and the directors make themselves available for face to face discussion
with shareholders at the AGM. The directors are cognisant of their commitment to return profits to
shareholders and reflect that in their progressive dividend policy.
Customers and other stakeholders
The directors ensure that stakeholder management plans are in place for key customers and that
appropriate levels of management time is afforded to meet with customers and understand their needs.
Directors provide mentoring to management and the Group invests in personal development for its
managers to enable them to fulfil their roles in shaping the business, for example, all senior managers have
attended mini MBA courses.
Impact on the community and the environment
The directors take very seriously their corporate social responsibility. In 2019 the Group launched its
corporate social responsibility strategy and has employed a corporate social responsibility manager to
implement that strategy. The key strands of the strategy are set out in the Director’s report.
Maintaining a reputation for high standards of business conduct
The directors ensure that recruitment industry standards of best practice are maintained through
membership of the relevant professional bodies, for example the Recruitment and Employment
Confederation. Internally the Group has ethical standards and code of conduct policies which all staff sign
up to.
W J C Douie
Chairman
23 February 2020
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RTC Group Plc Annual Report 2019 | Stock code: RTC
Governance
Directors’ report
Directors’ report
For the year ended 31 December 2019
The directors submit their report and the audited financial statements of the Group and of the Company for
the year ended 31 December 2019.
Principal activity
The Group’s principal activity is the provision of recruitment services. The Company’s principal activity is
that of a holding company.
Results and review of the business
Group revenue for the year was £94.9m (2018: £87.8m). The Group recorded a profit from operations for
the year of £2.0m (2018: £2.0m).
A review of the Group’s business and developments during the year and its strategic aims are set out in the
overview and strategic report sections of this report.
During the year, the Company paid an interim dividend of £199,734 (2018: £184,817) to its equity
shareholders. This represents a payment of 1.4p (2018: 1.3p) per share. The directors have proposed a final
dividend of £393,760 (2.76p per share) (2018: £362,780, 2.55p per share) to be paid on 1 June 2020 to
shareholders registered on 7 May 2020. This has not been accrued within these financial statements as it
was not formally approved before the year end.
Share capital
Details of share capital are shown in note 20.
Directors
The directors who served during the year and up to the date of approval of this report were as follows:
W J C Douie
A M Pendlebury
S L Dye
B W May
Significant shareholders
Interests exceeding 3% of the issued ordinary share capital of the Company that had been notified at 1
February 2020 were as follows:
W J C Douie
G A Mason
A Chapman
Chelverton Asset Management
A M Pendlebury
G J Chivers
J Kent
Number of shares
2,409,113
% issued share capital
16.45%
1,178,735
1,155,340
1,000,000
696,871
525,809
454,500
8.05%
7.89%
6.83%
4.76%
3.39%
3.10%
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RTC Group Plc Annual Report 2019 | Stock code: RTC
Governance
Directors’ report
The share interests of the directors who served during the year, in the ordinary shares of the Company at
the start and end of the year, were as follows:
W J C Douie
A M Pendlebury
S L Dye
B W May
2019
2,409,113
2018
2,409,113
696,871
696,871
43,000
30,000
43,000
30,000
Directors’ interests in share options are set out in note 7. S L Dye retires by rotation and offers herself for
re-election.
The market price of the Company’s shares on 31 December 2019 was 60p and the highest and the lowest
share prices during the year were 71p and 50p respectively.
Employees’ shareholdings
The directors consider that it is in the interest of the Group and its shareholders that employees should
have the opportunity to acquire shares in the Company, thus benefiting from the Group’s future progress.
To achieve this objective, under its EMI scheme, the Group has previously granted options over its shares to
some employees.
Equality diversity and inclusion (EDI)
Our commitment to providing a supportive, inclusive workplace free from discrimination where everyone is
treated equally continues. We embrace equality, diversity and inclusion and seek to promote their benefits
throughout all of our business activities which ensures that all employees are aware of the Group’s
commitment to EDI, our relevant policies and procedures, the benefits of a diverse workforce and the legal
rights and obligations of employees. The Board’s commitment to EDI continues through top down
engagement with directors and senior managers championing EDI across the Group.
Employment of disabled persons
The Group’s policy of recruiting and promoting staff based on aptitude and ability without discrimination
demonstrates our commitment to EDI, as such we pay attention to the training and promotion of disabled
employees to ensure that their career development is not unfairly restricted by their disability, or
perceptions of it.
We give full and fair consideration to applications or promotions of disabled persons. Where an employee
becomes disabled whilst employed by the Group, the HR procedures also require that reasonable effort is
made to ensure they have the opportunity for continued employment within the Group. Retraining of
employees who become disabled whilst employed by the Group is offered where appropriate.
Employee engagement and involvement
Employee engagement and involvement continues to be an essential element of the Group’s success, we
see two-way communication between management and employees as vital. A quarterly newsletter was
introduced during the year which is distributed across the Group. The newsletter includes messages from
senior management, company news and updates from all the business areas.
Periodically we undertake employee engagement surveys, the previous survey produced positive results
and identified a few changes to working practices which have been implemented. We plan to continue with
periodic employee engagement surveys across the Group to give our employees a voice and to understand
how we can continually improve working life.
We continue to maintain our intranet site that provides employees with information relating to their
employment along with any Group news or matters of concern. Employees are encouraged to give
feedback through this medium along with other lines of communication.
We regularly send out communications to employees about employee benefits and wellbeing initiatives.
Mental Health first aid training has been rolled out across the Group and we now have a team of mental
________________________________________________________________________________
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RTC Group Plc Annual Report 2019 | Stock code: RTC
Governance
Directors’ report
health first aiders which gives employees another line of communication to discuss any issues that may be
affecting their mental health.
All staff are invited to attend the Group’s annual awards dinner at which both individual and divisional
successes are celebrated, and staff are apprised of the Group’s overall performance by the Chief Executive.
Modern Slavery
The Group understands that combating the risk of modern slavery requires ongoing efforts and as such
we regularly review our processes and procedures and introduce new ways of working to help prevent
slavery and human trafficking occurring in any of our corporate activities. The Group’s current Modern
Slavery Act Statement can be found on our website www.rtcgroupplc.co.uk.
Corporate social responsibility
Our Corporate Social Responsibility (CSR) strategy has been developed to help us to achieve our aim of
remaining a socially responsible business in the field of recruitment and contingent labour. By focusing our
attention on issues where we can use our expertise, we believe we can create many opportunities that
benefit the communities we work within.
To help us further develop and implement our CSR strategy and in turn help our clients to achieve theirs,
we have recruited a full-time CSR manager. This person will ensure our CSR strategy is delivered and will
further develop the key initiatives we have in place to meet our CSR and environmental objectives,
which includes:
•
•
reducing our carbon emissions and environmental impact;
having a positive impact on the communities we work in by supporting employment for
excluded groups and worklessness;
supporting charities – in 2019 we introduced a payroll giving scheme across the Group;
creating partnerships with local colleges/training providers to deliver apprenticeship
programmes;
supporting local schools with talks on rail safety, STEM subjects and career paths within the
infrastructure sector;
working with industry bodies and the supply chain to encourage and promote diversity across
the sectors we operate in;
a review of our recruitment and selection process to create and sustain an equal and diverse
workforce; and
initiatives to promote the health and wellbeing of our employees.
•
•
•
•
•
•
Directors’ indemnities
The Company has qualifying third party indemnity provisions for the benefit of its directors which remains
in force at the date of this report.
Post balance sheet events
There have been no significant events to report since the date of the balance sheet.
Provision of information to auditor
Each of the persons who are a director at the date when this report was approved has confirmed:
•
•
so far as the director is aware, there is no relevant audit information of which the Company’s auditor
is unaware: and
that they have taken all the steps they ought to have taken to make themselves aware of any relevant
audit information and to establish that the auditor is aware of that information.
Going concern
The Group has made a pre-tax profit of £1,758,000 from continuing operations and the directors have taken
this into account when assessing the going concern basis of preparation. The directors are satisfied that
taking account of the Group’s net assets of £6,236,000, its invoice finance facility, which is its core funding
line and which is classed as evergreen in that it will continue to run indefinitely, and the Group’s forecasts
for the next 15 months, that the going concern basis of preparation is appropriate and the directors have a
reasonable expectation that the Group will continue in operational existence for the foreseeable future.
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RTC Group Plc Annual Report 2019 | Stock code: RTC
Governance
Directors’ report
Financial risk management objectives and policies
Treasury activities take place under procedures and policies approved and monitored by the Board. They
are designed to minimise the financial risks faced by the Group which arise primarily from interest rate and
liquidity risk. The Group’s policy throughout the period has been to ensure the continuity of funding by use
of an overdraft and an invoice discounting facility.
The Group does not actively use financial instruments as part of its financial risk management. It is exposed
to the usual credit risk and cash flow risk associated with selling on credit and manages this through credit
control procedures. The Group’s approach to financial risks is set out in note 22.
Directors’ responsibilities
The directors are responsible for preparing the director’s report and the financial statements in accordance
with applicable law and regulations. Company law requires the directors to prepare financial statements
for each financial year. Under that law the directors have elected to prepare the Group financial
statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the
European Union, and the Company financial statements in accordance with United Kingdom Generally
Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company
law the directors must not approve the financial statements unless they are satisfied that they give a true
and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group for that
period. The directors are also required to prepare the financial statements in accordance with the rules of
the London Stock Exchange for companies trading securities on the Alternative Investment Market.
select suitable accounting policies and then apply them consistently;
In preparing these financial statements, the directors are required to:
•
• make judgements and accounting estimates that are reasonable and prudent;
•
state whether the Group accounts have been prepared in accordance with IFRSs as adopted by the
European Union, and the Parent Company accounts have been prepared under UK GAAP, subject to
any material departures disclosed and explained in the financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume
that the Company will continue in business.
•
The directors are responsible for keeping adequate accounting records that are sufficient to show and
explain the Company’s transactions and disclose with reasonable accuracy at any time the financial
position of the Group and the Company and enable them to ensure that the financial statements comply
with the requirements of the Companies Act 2006. They are also responsible for safeguarding the assets
of the Group and the Company and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
Website publication
The directors are responsible for ensuring the annual report and the financial statements are made
available on a website. Financial statements are published on the Company's website in accordance with
legislation in the United Kingdom governing the preparation and dissemination of financial statements,
which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company's
website is the responsibility of the directors. The directors' responsibility also extends to the ongoing
integrity of the financial statements contained therein.
By order of the Board
23 February 2020
S L Dye
Secretary
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RTC Group Plc Annual Report 2019 | Stock code: RTC
Governance
Corporate governance statement
Corporate governance statement
For the year ended 31 December 2019
Statement by the Chairman on Corporate Governance
As a Company listed on the AIM market of the London Stock Exchange, RTC Group Plc has chosen to comply
with the Quoted Companies Alliance Corporate Governance Code “the Code”. This report describes how the
Group has complied with the Code and explains any departures from the ten principles within the Code.
The strategy and business model of the Group are set out in the Strategic Report. A description of the Board
and its committees, together with the Group’s systems of internal financial control is set out below.
The Board
The Board comprises a Chairman, the Chief Executive, the Group Finance Director and one independent
non-executive Director. It is intended that the Board will evolve as the Group grows to include at least two
independent non-executive directors.
The Board meets 12 times a year. In 2019 each Board member attended the following number of Board
meetings: W J C Douie [12], A M Pendlebury [12], S L Dye [12] and B W May [11]. The Executive Chairman
spends an average of 7 days per month occupied with Company matters and is available as required. The
Chief Executive and the Group Finance Director are engaged full-time and the senior independent non-
executive Director is required to spend two days per month considering Company matters and attending
the monthly Board meeting.
The Group believes that in its Board it has at its disposal an appropriate range of skills and experience to
ensure the interests of all stakeholders in the Group are fully accommodated, as demonstrated by the
following biographies. The Board keep their skill sets up to date through a combination of professional body
membership and the associated continuing professional development that must be undertaken to maintain
that; membership of relevant bodies such as the QCA and the REC; executive development training and
extensive reading on economic and business matters. The relevant experience of each Board member is
detailed below:
W J C Douie, Chairman
After two years in export sales, commencing in 1962, with British Oxygen, Bill moved into banking with
Midland Bank and qualified as an associate of the Institute of Bankers. In 1969 he moved into Merchant
Banking, joining Keyser Ullmann Limited and spent 11 years in investment management, corporate finance
and instalment credit joining the Bank Board in 1975. In 1981, following the merger of Keyser Ullmann and
Charterhouse Japhet, he left to buy out, and become Chairman of, the Group’s Instalment Credit subsidiary,
Broadcastle Plc, and to become Chairman of British Benzol Limited, a fully listed Company in the solid fuel
industry. Following the acquisition by Broadcastle of Harton Securities Limited (a bank authorised by the
Bank of England), he oversaw the merger of Broadcastle Plc and ATA Selection Plc, a USM listed recruitment
Company, before becoming Chairman of the Group in 1990. He joined with Clive Chapman in 1992 to
purchase the ailing ATA Selection business and remains Executive Chairman.
A M Pendlebury, Chief Executive
Andy held several senior management positions during his long career with British Aerospace Plc. In 1992
he joined the board of Wynnwith Engineering and was appointed Managing Director in 1995 establishing
the business as one of the United Kingdom’s fastest growing recruitment businesses. In 2002 Andy joined
GKN Plc as interim Managing Director of the Company's in-house recruitment business Engage and guided it
through the board's divestment strategy. From 2004 to 2007, as Chief Executive, he engineered a trading
turnaround and subsequent sale to the Morson Group of White & Nunn Holdings. He joined the Board of
RTC Group Plc as a Non-Executive in July 2007, becoming Group Chief Executive in October 2007.
S L Dye, Group Finance Director
Sarah is a Chartered Accountant who has worked in both the public and private sectors in the UK and
overseas. Sarah qualified with BDO before moving to The Post Office Plc and then The Boots Company Plc
gaining experience in risk management, internal audit and commercial finance. In 1998, Sarah joined Allied
Domecq Plc as Finance and Planning Manager for Europe. In 2004 Sarah joined Nottingham Trent University
where she held several senior finance positions. Sarah spent 5 years in New Zealand with the Office of the
Auditor-General, working with central and local government entities and the tertiary sector. In 2011 Sarah
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RTC Group Plc Annual Report 2019 | Stock code: RTC
Governance
Corporate governance statement
joined Staffline Group Plc as Group Financial Controller. Sarah was appointed Group Finance Director of RTC
Group in February 2013.
B W May, Senior Independent Non-Executive Director
Brian is a Chartered Civil Engineer and progressed his career in Tarmac Construction Ltd, subsequently
holding several senior positions in Mowlem Plc over the course of 15 years. In 2000, Brian became Chief
Executive of Laing Construction Plc, followed by HBG Construction Ltd in 2001. Brian held the position of
Chief Executive Officer of Renew Holdings for 11 years until his retirement in 2016. Brian was appointed
senior independent non-executive in 2015. Brian is independent in that he has no related party interest in
the business and does not receive profit share.
Board matters
The Board has a schedule of matters specifically reserved for its decision. It is responsible for formulating
the Group’s corporate strategy, monitoring financial performance, acquisitions, approval of major capital
expenditure, treasury and risk management policies.
Board papers are sent out to all directors in advance of each Board meeting including management
accounts and accompanying reports from the executive directors. Annual budgets are approved by the
Board. Operational control is delegated by the Board to the executive directors.
The Company Secretary acts as the conduit for all governance related matters and shareholder enquiries
and passes them on the Chairman to respond.
Corporate culture
The Board is responsible for ensuring that the corporate culture is consistent with the Company’s
objectives, strategy and business model as set out in the strategic report. The Board achieves this by
ensuring that appropriate policies on behavior and ethics are in place and signed up to by all employees.
Performance is appraised considering not just the achievement of objectives, but the behaviors
demonstrated to do so. All managers and the Board lead by example in their behavior and ethical values
demonstrated. The managing directors of each subsidiary present to the Board at least annually on their
subsidiary’s performance and cultural matters. Periodically employee satisfaction surveys are undertaken to
help inform management of the environment employees perceive they are working in.
Board performance
The performance of the Board is measured by the earnings per share (EPS) achieved and progress in this
measure is passed on to shareholders through the Company’s progressive dividend policy. This measure is
externally reported twice yearly on the publication of the interim statement and the annual report. The
Executive Director’s performance is also measured in relation to the achievement of specific operational
and strategic objectives that support the key performance indicators including EPS which are presented in
the annual report and the level of profit delivered. A significant proportion of Executive Director awards are
in the form of profit related pay and performance related options.
Succession planning
The Board believes it is healthy to periodically refresh Board membership and that responsibilities within
the Board should change from time to time. The Board has a succession plan in place which include the
identification, training and mentoring of existing Board members to take on new responsibilities and for
potential future Board members to step up. The Board also seeks the input of the independent non-
executive Director.
Company secretary
All directors have access to the advice of the Company Secretary and the Senior Independent Director and
can take external independent advice on certain matters, if necessary, at the Company’s expense.
Board Committees
The Board has established two specialist committees (the remuneration committee and the audit
committee (refer to the separate audit committee report).
The remuneration committee is responsible for determining the contract terms, remuneration and other
benefits for executive directors, including performance-related bonus schemes. The committee comprises
W J C Douie and B W May. It is chaired by W J C Douie and meets as required but a minimum of once a
year. Both committee members attended the meetings held in 2019. No members of the remuneration
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RTC Group Plc Annual Report 2019 | Stock code: RTC
Governance
Corporate governance statement
committee are involved in determining their own remuneration. There are plans to evolve the Company’s
governance structure so that the remuneration committee has an independent chair.
The whole Board considers matters of nomination and succession and thus there is no requirement for a
nomination committee currently.
Engagement with shareholders
The Board values the views of its shareholders. The directors hold a material interest in the Group which
aligns their interests to shareholders. The split of shareholdings at the date of this report was:
Type of shareholder
Directors
Employee Benefit Trust
Institutional Investors
Brokers, individuals and other
% of total issued share capital
21.7%
2.6%
6.8%
68.9%
The Annual General Meeting is used to communicate with all investors, and they are encouraged to
participate. The directors are available to answer questions. Separate resolutions are proposed on each
issue so that they can be given proper consideration and there is a formal resolution to approve the Annual
Report. Shareholders can also contact the Company Secretary or the Chairman via the Company’s website.
The Board takes full cognisance of the results of any poll or feedback from shareholders and the Chairman
will respond as appropriate whether by email of by offering a chance to meet with the shareholder to
explain the Board’s position.
W J C Douie
Chairman
23 February 2020
________________________________________________________________________________
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RTC Group Plc Annual Report 2019 | Stock code: RTC
Governance
Audit committee report
Audit committee report
For the year ended 31 December 2019
Audit committee responsibilities
The audit committee’s primary responsibilities are to review the financial statements and any changes in
accounting policies; to have assurance that there are suitable internal controls and risk management
systems in place; to consider the appointment of the external auditors and their independence; and to
review the audit effectiveness.
Audit committee membership
The audit committee comprises W J C Douie and B W May. It is chaired by W J C Douie and meets twice a
year. Both committee members attended each meeting in 2019.
The audit committee meets as necessary to monitor the Group’s internal control systems and major
accounting and audit related issues.
There are plans to evolve the Company’s governance structure so that the audit committee has an
independent chair.
Risk and internal control
Major risks to the business are explained within the strategic report along with steps taken to mitigate
these risks.
The Group operates internal control systems which are designed to meet its needs and address the risks to
which it is exposed, by their nature such systems can provide reasonable but not absolute assurance against
material misstatement or loss.
The key procedures which the directors have established with a view to providing effective internal financial
control are as follows: -
• Management structure
The Board has overall responsibility for the Group and there is a schedule of matters specifically
•
•
reserved for decision by the Board;
Quality and integrity of personnel
The integrity and competence of personnel is ensured through high recruitment standards and
subsequent training courses. High quality personnel are an essential part of the control environment;
Identification of business risks
The Board is responsible for identifying the major business risks faced by the Group and for
determining the appropriate courses of action to manage those risks. The boards of our Group
businesses also actively identify risks and ensure mitigating controls are in place;
•
Budgetary process
Each year the Board approves the annual budget. Key risk areas are identified, performance is
monitored, and relevant action taken throughout the year through the monthly reporting to the Board
of variances from the budget and preparation of updated forecasts for the year together with
information on the key risk areas; and
•
Authorisation procedures
Capital and revenue expenditure is regulated by a budgetary process and authority limits for approval
of expenditure are in place. For expenditure beyond specified levels, detailed written proposals are
submitted to and approved by the Board. Once authorised, such expenditure is reviewed and
monitored by the Board.
The Group does not have an internal audit function. The audit committee is focused on key risk areas and
may request reviews to be carried out either by external specialists who are independent of the Group’s
management team or it may request that particular control areas are reviewed by management.
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RTC Group Plc Annual Report 2019 | Stock code: RTC
Governance
Audit committee report
External audit
The audit committee has primary responsibility for the relationship between the Group and its external
auditor. During the year the audit committee resolved to reappoint BDO as the Group’s statutory auditor.
Representatives from BDO are invited to attend audit committee meetings and the Chairman of the
committee is available to meet independently with the audit partner as necessary. The independence of the
auditor is kept under review and is reported twice a year as part of the audit planning and audit findings
reports presented to the committee by the auditor.
To safeguard the objectivity and independence of the external auditor, the audit committee monitors the
external auditor’s proposed scope of work and the value of fees paid. In the year to 31 December 2019,
audit fees for the Group totalled £65,000 (2018: £56,500), with additional non-audit fees of £18,233 (2018:
£22,400). The audit committee can confirm that they are satisfied that BDO continues to be independent.
This report was approved by the Audit Committee and the Board on 23 February 2020 and signed on its
behalf by:
W J C Douie
Chairman of the Audit Committee
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RTC Group Plc Annual Report 2019 | Stock code: RTC
Governance
Remuneration report
Remuneration report
For the year ended 31 December 2019
Policy on executive directors’ remuneration
The executive directors’ remuneration packages are designed to attract, motivate and retain high quality
executives capable of achieving the Group’s objectives. The Group’s policy is to provide remuneration
packages for executive directors recognising market levels for comparable jobs in the sector. The
remuneration committee considers the provisions set out in the Quoted Companies Alliance Corporate
Governance Code.
Executive directors’ remuneration
The remuneration package for executive directors comprises:
•
•
•
•
•
basic salary;
pension;
other benefits,
a performance related bonus; and
share-based incentives.
The individual components of the remuneration package are discussed below.
Basic salary
Salary and benefits are reviewed annually by the remuneration committee. The Committee takes account
of independent research on comparable companies and general market conditions.
Pensions
For the year ended 31 December 2019, the Company contributed £6,000 to the pension of S L Dye.
Other benefits
Other benefits include a Company car, private medical insurance, critical illness and life cover.
Performance related bonuses
Bonuses are paid at the discretion of the directors as an incentive and to reward performance during the
financial year. Details are set out below and in note 7.
Share based incentives
Share options
The Group has formulated a policy for the granting of share options to executive directors and full-time
employees under the Group’s EMI share scheme, details of which are set out in note 7.
The Group also has a share scheme for executive directors, the details of which are set out below. No
awards were made in the year.
RTC Group long-term incentive plan (LTIP)
In May 2015, the Board approved the introduction of an LTIP for executive directors. The Remuneration
Committee has responsibility for supervising the scheme and making awards under its terms. The maximum
value of shares that could be awarded is 100% of basic salary. The current policy is to review the final
results of the Company prior to agreeing if awards are to be made.
Awards under the LTIP
In 2019, no awards under the LTIP were made to executive directors.
Vesting of the awards is subject to the achievement of the performance criteria of the LTIP. Awards will vest
and may be exercised on the third anniversary of the date of grant to the extent that the performance
conditions detailed below are met:
________________________________________________________________________________
Page | 26
RTC Group Plc Annual Report 2019 | Stock code: RTC
Governance
Remuneration report
Annual growth in fully diluted EPS above RPI
Less than 3%
3%
Between 3% and 10%
10% or more
Proportion of award vesting
Nil
25%
Between 25% and 100% on a straight-line
basis
100%
The achievement of the performance target and the timing of the vesting of the award will be determined
by the Remuneration Committee. They may adjust the performance target where it is considered
appropriate to do so. Further details are set out in note 7.
Service contracts
All executive directors have service agreements with the Company which are terminable upon 12 months’
notice in writing by either party. Details of directors’ remuneration can be found in note 7.
Non-executive directors’ remuneration and terms of service
Non-executive directors serve under the terms of a Letter of Appointment “Letter”. The Letter sets out the
time commitment and duties expected of the individual. The Group’s policy is to pay non-executive
directors at a rate which is competitive with similar companies and reflects their experience and time
commitment. As non-executive directors are not employees, they do not receive benefits or pension
contributions and they are not entitled to participate in any of the Group’s short-term bonus or long-term
incentive plans. Non-executive director’s letters of appointment are terminable on one month’s notice in
writing from either party. Details of non-executive directors’ remuneration can be found in note 7.
This report was approved by the Remuneration Committee and the Board on 23 February 2020 and signed
on its behalf by:
W J C Douie
Chairman
23 February 2020
________________________________________________________________________________
Page | 27
RTC Group Plc Annual Report 2019 | Stock code: RTC
Financial reports
Independent auditor’s report
Independent auditor’s report to the members of RTC Group Plc
Opinion
We have audited the financial statements of RTC Group plc (the ‘Parent Company’) and its subsidiaries (the
‘Group’) for the year ended 31 December 2019 which comprise the consolidated statement of
comprehensive income, the consolidated and company statements of financial position, the consolidated and
company statements of changes in equity, the consolidated statement of cash flows and the notes to the
financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in the preparation of the Group financial statements
is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.
The financial reporting framework that has been applied in the preparation of the Parent Company financial
statements is applicable law and United Kingdom Accounting Standards, including Financial Reporting
Standard 101 Reduced Disclosure Framework (United Kingdom Generally Accepted Accounting Practice).
In our opinion:
•
the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s
affairs as at 31 December 2019 and of the Group’s profit for the year then ended;
the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the
European Union;
the Parent Company financial statements have been properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice; and
the financial statements have been prepared in accordance with the requirements of the Companies Act
2006.
•
•
•
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the auditor’s
responsibilities for the audit of the financial statements section of our report. We are independent of the
Group and the Parent Company in accordance with the ethical requirements that are relevant to our audit of
financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to
report to you where:
•
•
the directors’ use of the going concern basis of accounting in the preparation of the financial
statements is not appropriate; or
the directors have not disclosed in the financial statements any identified material uncertainties that
may cast significant doubt about the Group’s or the Parent Company’s ability to continue to adopt
the going concern basis of accounting for a period of at least twelve months from the date when the
financial statements are authorised for issue.
________________________________________________________________________________
Page | 28
RTC Group Plc Annual Report 2019 | Stock code: RTC
Financial reports
Independent auditor’s report
Independent auditor’s report to the members of RTC Group Plc
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial statements of the current period and include the most significant assessed risks of
material misstatement (whether or not due to fraud) we identified, including those which had the greatest
effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the
engagement team. These matters were addressed in the context of our audit of the financial statements as a
whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
Revenue and profit recognition – temporary
placements
The Group generates revenue from the provision
of recruitment activities, which consists of
revenue from temporary and permanent
placements. The accounting policy is described in
note 3.1 on page 40, with further analysis of the
Group’s revenue included in note 5 on page 47.
For temporary placements, revenue is recognised
over time as the service is provided and requires
judgement in estimating the time worked by
contractors but not approved by customers at
the statement of financial position date. This
involves estimating the amount of costs accruing
to these contractors which then determines the
corresponding revenue which should be
recognised.
How we addressed the matter in our audit
We have critically assessed the appropriateness
of the revenue and cost recognition policies and
considered whether they are in accordance with
relevant Accounting Standards.
We performed substantive audit procedures that
included inspecting a sample of timesheets,
placement contracts, customer approvals and
contractor costs to check that the costs and
associated revenue had been recognised in the
correct period and were reflective of the timing
of the services provided.
We also performed testing, on a sample basis, of
the timesheets and customer approvals received
subsequent to the year end, comparing these to
the amounts accrued in order to identify any
material errors or omissions in the costs and
associated revenue recorded at year end.
In view of the judgments involved and the
significance of these matters to the
determination of the completeness of Group
revenue, we consider this to be an area giving
rise to a significant risk of material
misstatements in the financial statements.
We tested the subsequent collection of trade
receivables and the amounts invoiced in respect
of contract assets recognised at 31 December
2019, on a sample basis, to identify any matters
which might be indicative of issues with the
existence of revenue.
We also agreed a sample of manual journals
posted to revenue to supporting documentation
to check they were appropriately recorded.
Key observations
Based on the work performed, we consider that
temporary placement revenue and the related
profit has been recognised appropriately.
________________________________________________________________________________
Page | 29
RTC Group Plc Annual Report 2019 | Stock code: RTC
Financial reports
Independent auditor’s report
Independent auditor’s report to the members of RTC Group Plc
Our application of materiality
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of
identified misstatements on the audit and forming our opinions.
Materiality
Materiality is assessed as the magnitude of an omission or misstatement that, individually or in the
aggregate, could reasonably be expected to influence the economic decisions of the users of the financial
statements. Misstatements below these levels will not necessarily be evaluated as immaterial as we also take
account of the nature of identified misstatements, and the particular circumstances of their occurrence,
when evaluating their effect on the financial statements as a whole. Materiality provides a basis for
determining the nature and extent of our audit procedures.
We determined materiality for the Group to be £90,000 (2018 - £95,000), which was based on 5% of profit
before tax. Profit before tax is considered an appropriate benchmark as it is the key performance measure
used by stakeholders to assess the Group’s performance.
Materiality for the Parent Company was set at £86,000 (2018 – £90,000) using a benchmark of 2% of total
assets, capped by reference to group materiality. Total assets is considered an appropriate benchmark as the
main purpose of the Parent Company is to hold the investments in subsidiaries.
Performance materiality
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality,
we use a lower materiality level, performance materiality, to determine the extent of testing needed.
Performance materiality was originally set at 75% (2018 – 75%) of Group and Parent Company materiality,
being £67,500 (2018 - £71,250) and £64,500 (2018 - £ 67,500) respectively. These levels continued to be
applied in determining the testing approach and sample sizes.
Reporting threshold.
This is the amount below which identified misstatements are considered to be clearly trivial.
We agreed with the Audit Committee that we would report to them all uncorrected audit differences in
excess of £4,500 (2018 - £4,750), which was set at 5% of Group materiality, as well as differences below that
threshold that, in our view, warranted reporting on qualitative grounds.
Component materiality
Our audit work on each of the significant component audits were executed at levels of materiality applicable
to each individual entity, which were lower than Group materiality. Component materiality ranged from
£34,000 to £86,000 ranging between 38% and 95% of Group materiality. Performance materiality of 75%
(2018 – 75%) of component materiality has been applied at each component level.
We evaluated any uncorrected misstatements against both quantitative measures of materiality discussed
above and in light of other relevant qualitative considerations when forming our opinion.
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the
Group’s system of internal control and assessing the risks of material misstatement in the financial
statements. We also addressed the risk of management override of internal controls, including assessing
whether there was evidence of bias by the directors that may have represented a risk of material
misstatement due to fraud.
The Group manages its operations from the Derby Conference Centre with regional offices at various
locations throughout the UK and overseas to support its day to day operations. At the statement of financial
position date, the Group consists of the Parent Company, four trading subsidiaries in the UK, one trading
subsidiary in Dubai and two dormant subsidiaries.
________________________________________________________________________________
Page | 30
RTC Group Plc Annual Report 2019 | Stock code: RTC
Financial reports
Independent auditor’s report
Independent auditor’s report to the members of RTC Group Plc
The Group engagement team carried out statutory audits for all of the UK trading companies in the Group, of
which three were considered to be significant components. The dormant companies and the overseas trading
subsidiary were not assessed as significant components. Therefore, the audit procedures we performed were
limited to analytical review and discussions with Group management.
Other information
The directors are responsible for the other information. The other information comprises the information
included in the Annual Report, other than the financial statements and our auditor’s report thereon. Our
opinion on the financial statements does not cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material misstatements, we are required to determine
whether there is a material misstatement in the financial statements or a material misstatement of the other
information. If, based on the work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact. We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the strategic report and the directors’ report for the financial year for which
the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the Parent Company and its environment
obtained in the course of the audit, we have not identified material misstatements in the strategic report or
the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
•
•
adequate accounting records have not been kept, or returns adequate for our audit have not been
received from branches not visited by us; or
the Parent Company financial statements are not in agreement with the accounting records and
returns; or
•
certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, within the Directors’ report set out on
page 20, the directors are responsible for the preparation of the financial statements and for being satisfied
that they give a true and fair view, and for such internal control as the directors determine is necessary to
enable the preparation of financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the Parent
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless the directors either intend to
________________________________________________________________________________
Page | 31
RTC Group Plc Annual Report 2019 | Stock code: RTC
Financial reports
Independent auditor’s report
Independent auditor’s report to the members of RTC Group Plc
liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do
so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted
in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis
of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website: www.frc.org.uk/auditorsresponsibilities. This description forms part of
our auditor’s report.
Use of our report
This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3 of Part
16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Parent
Company’s members those matters we are required to state to them in an auditor’s report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other
than the Parent Company and the Parent Company’s members as a body, for our audit work, for this report,
or for the opinions we have formed.
Andrew Mair (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
Nottingham
United Kingdom
23 February 2020
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
________________________________________________________________________________
Page | 32
RTC Group Plc Annual Report 2019 | Stock code: RTC
Financial reports Consolidated statement of comprehensive income
Consolidated statement of comprehensive income
For the year ended 31 December 2019
Revenue
Cost of sales
Gross profit
Administrative expenses
Profit from operations
Finance expense
Profit before tax
Tax expense
Total profit and other comprehensive income for the
period attributable to owners of the Parent
Earnings per ordinary share
Basic
Fully diluted
Notes
3.1,4,5
6
8
9
10
10
2019
£'000
94,949
(80,475)
14,474
(12,513)
1,961
(203)
1,758
(390)
1,368
9.60p
8.59p
2018
£'000
87,806
(73,908)
13,898
(11,918)
1,980
(121)
1,859
(419)
1,440
10.20p
9.36p
The following notes 1 to 27 form an integral part of these financial statements
________________________________________________________________________________
Page | 33
RTC Group Plc Annual Report 2019 | Stock code: RTC
Financial reports Consolidated statement of changes in equity
Consolidated statement of changes in equity
For the year ended 31 December 2019
Share
capital
Share
premium
Own
shares
held
Capital
redemption
reserve
£'000
£’000
£’000
£'000
Share
based
payment
reserve
£'000
Retained
earnings
Total
equity
£'000
£'000
146
120
(292)
50
379
4,833
5,236
-
-
-
-
-
-
-
-
-
-
-
-
28
-
28
-
-
-
-
-
-
1,368
1,368
-
(563)
(563)
(15)
193
(11)
2
-
193
178
(574)
(368)
146
120
(264)
50
557
5,627
6,236
Balance at 1
January 2019
Total
comprehensive
income for the
year
Transactions with
owners:
Dividends (note
11)
Share options
exercised
Share based
payment charge
Total
transactions with
owners
At 31 December
2019
Share capital is the nominal value of share capital subscribed for.
Share premium account represents the amount subscribed for share capital over and above the nominal
value of the shares.
Capital redemption reserve is an amount of money that a company in the UK must keep when it buys back
shares, and which it cannot pay to shareholders as dividends.
Own shares held are the cost of company's own shares held through the Employee Benefit Trust and shown
as a deduction from equity.
Share based payment reserve is the cumulative share option charge under IFRS 2 less the value of any share
options that have been exercised or have lapsed.
Retained earnings are all net gains and losses and transactions with owners (e.g. dividends) not recognised
elsewhere.
The following notes 1 to 27 form an integral part of these financial statements
________________________________________________________________________________
Page | 34
RTC Group Plc Annual Report 2019 | Stock code: RTC
Financial reports Consolidated statement of changes in equity
The consolidated statement of changes in equity for the prior period was as follows:
Share
capital
Share
premium
Own
shares
held
Capital
redemption
reserve
£'000
£’000
£’000
£'000
Share
based
payment
reserve
£'000
Retained
earnings
Total
equity
£'000
£'000
146
120
(473)
50
215
3,993
4,051
-
-
-
-
-
-
-
-
-
-
-
-
181
-
181
-
-
-
-
-
-
-
(76)
240
1,440
1,440
(512)
(88)
-
(512)
17
240
164
(600)
(255)
146
120
(292)
50
379
4,833
5,236
Balance at 1
January 2018
Total
comprehensive
income for the year
Transactions with
owners:
Dividends (note 11)
Share options
exercised
Share based
payment charge
Total transactions
with owners
At 31 December
2018
Share capital is the nominal value of share capital subscribed for.
Share premium account represents the amount subscribed for share capital over and above the nominal
value of the shares.
Capital redemption reserve is an amount of money that a company in the UK must keep when it buys back
shares, and which it cannot pay to shareholders as dividends.
Own shares held are the cost of company's own shares held through the Employee Benefit Trust and shown
as a deduction from equity.
Share based payment reserve is the cumulative share option charge under IFRS 2 less the value of any share
options that have been exercised or have lapsed.
Retained earnings are all net gains and losses and transactions with owners (e.g. dividends) not recognised
elsewhere.
The following notes 1 to 27 form an integral part of these financial statements
________________________________________________________________________________
Page | 35
RTC Group Plc Annual Report 2019 | Stock code: RTC
Financial reports Consolidated statement of changes in equity
Consolidated statement of financial position
As at 31 December 2019
Assets
Non-current
Goodwill
Other intangible assets
Property, plant and equipment
Right of use assets
Deferred tax asset
Current
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets
Liabilities
Current
Trade and other payables
Lease liabilities
Corporation tax
Current borrowings
Non-current liabilities
Lease liabilities
Deferred tax liabilities
Net assets
Equity
Share capital
Share premium
Own shares held
Capital redemption reserve
Share based payment reserve
Retained earnings
Total equity
Note
12
13
14
23
15
16
17
18
23
18
23
19
20
2018
Restated
(refer to
note 27)
£'000
132
306
1,648
-
66
2,152
8
15,811
1,546
17,365
19,517
2019
£'000
132
234
1,680
3,044
95
5,185
10
15,809
798
16,617
21,802
(8,493)
(7,863)
(282)
(296)
(3,570)
-
(261)
(6,093)
(12,641)
(14,217)
(2,855)
(70)
6,236
146
120
(264)
50
557
5,627
6,236
-
(64)
5,236
146
120
(292)
50
379
4,833
5,236
The financial statements were approved and authorised for issue by the Board and were signed on its behalf
on 23 February 2020 by:
A M Pendlebury
Director
S L Dye
Director
The following notes 1 to 27 form an integral part of these financial statements
________________________________________________________________________________
Page | 36
RTC Group Plc Annual Report 2019 | Stock code: RTC
Financial reports Consolidated statement of changes in equity
Consolidated statement of cash flows
For the year ended 31 December 2019
Cash flows from operating activities
Profit before tax
Adjustments for:
Depreciation, loss on disposal and amortisation
Finance expense
Employee equity settled share options charge
Change in inventories
Change in trade and other receivables
Change in trade and other payables
Cash inflow from operations
Income tax paid
Interest paid
Net cash inflow from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment and intangibles
Proceeds from asset disposals
Net cash used in investing activities
Cash flows from financing activities
Movement on invoice discounting facility
Movement on perpetual bank overdrafts
Dividends paid
Payment of lease liabilities
Proceeds from exercise of share options
Net cash (outflow)/inflow from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
21
2018
(restated
refer to note
27)
£'000
Note
2019
£'000
1,758
1,859
693
203
194
(2)
(18)
629
3,457
(378)
(203)
2,876
(314)
20
(294)
(1,821)
(75)
(563)
(246)
2
(2,703)
(121)
919
798
412
121
240
(2)
(2,739)
1,553
1,444
(320)
(121)
1,003
(504)
-
(504)
(73)
195
(512)
-
17
(373)
126
793
919
The following notes 1 to 27 form an integral part of these financial statements
________________________________________________________________________________
Page | 37
RTC Group Plc Annual Report 2019 | Stock code: RTC
Financial reports
Company financial statements
Notes to the Group financial statements
For the year ended 31 December 2019
1.
Basis of preparation
The principal accounting policies applied in the preparation of the Group and Company financial statements
are set out in note 3. These policies have been applied consistently to all the years presented, unless
otherwise stated.
The financial statements are presented in sterling and all values are rounded to the nearest thousand pounds
(£’000) except where otherwise indicated.
The financial statements have 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 International
Financial Reporting Standards (IFRS) and IFRC Interpretations as adopted by the European Union and with
those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
The preparation of financial statements in conformity with IFRS requires management to exercise its
judgment in the process of applying the Group’s accounting policies. The areas involving a higher degree of
judgment or complexity, or areas where assumptions and estimates are significant to the consolidated
financial statements are set out in note 2.
The Group has made a pre-tax profit of £1,758,000 (2018: £1,859,000) from continuing operations and the
directors have taken this into account when assessing the going concern basis of preparation. The directors
are satisfied that, taking account of the Group’s net assets of £6,236,000 (2018: £5,236,000), its invoice
finance facility, which is its core funding line and which is classed as evergreen in that it will continue to run
indefinitely, and the Group’s trading and cash forecasts for the next 15 months, that the going concern basis
of preparation is appropriate.
Adoption of standards
New accounting standards and interpretations
The Group has adopted the following new standards and interpretations (effective 1 January 2019) in these
financial statements:
IFRS 16 Leases sets out the principles for recognition, measurement and presentation of leases and replaces
IAS 17 Leases. Adoption of IFRS 16 has resulted in the Group recognising right of use assets and lease
liabilities for all qualifying contracts that are, or contain, a lease. Instead of recognising an operating expense
for its operating lease payments, the Group has recognised interest on its lease liabilities and amortisation on
its right of use assets, impacting profit from operations and the finance expense. The standard contains
several options and exemptions which are available at initial adoption. The Group has applied the modified
retrospective transition method and adopted certain practical expedients, such that the right of use asset
recognised at the 1 January 2019 was £3.3m, together with a corresponding lease obligation of £3.3m. The
impact on profit before tax for the Group for the year ended 31 December 2019 was not material and there
was no impact on opening equity at 1 January 2019 (refer note 26).
IFRIC 23 Uncertainty over Income Tax Treatments. IFRIC 23 provides guidance on the accounting for current
and deferred tax liabilities and assets in circumstances in which there is uncertainty over income tax
treatments. The Board has reviewed the implications of IFRIC 23 and determines that there is no material
impact on the Group as the Group does not have any current or deferred income tax assets or liabilities
where the tax treatment is uncertain.
Amendments to IFRS 9 Prepayment Features with Negative Compensation. The IASB has issued these
amendments to IFRS 9 Financial Instruments to aid implementation. The amendment allows companies to
measure particular prepayable financial assets with so-called negative compensation at amortised cost or at
fair value through other comprehensive income if a specified condition is met – instead of at fair value
through profit and loss. The Board has reviewed this amendment and determined that the Group has no such
financial instruments, thus there is no impact on the Group of this amendment.
________________________________________________________________________________
Page | 38
RTC Group Plc Annual Report 2019 | Stock code: RTC
Financial reports
Company financial statements
Amendments to IAS 12 Income Taxes – Annual Improvements to IFRSs (2015-2017). The amendment clarifies
that the income tax consequences of any dividends must be recognised at the same time as the liability to
pay those dividends; and in profit or loss, other comprehensive income or the statement of changes in equity
according to where the entity originally recognised the past transactions that generated the distributable
profits. The Board has reviewed the implications of this amendment and determined that it should have no
material impact on the Group.
The Board does not expect any other standards issued by the IASB, but not yet effective, to have a material
impact on the Group.
2.
Critical accounting estimates and judgements
The Group makes certain judgements, estimates and assumptions regarding the future. Estimates and
judgements are continually evaluated based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances. In the future,
actual experience may differ from these estimates and assumptions. The estimates and assumptions that
have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within
the next financial year are discussed below.
Estimates and assumptions
Equity settled share-based payment liabilities
The estimation of the probability of the vesting conditions attached to share options granted to employees
being met is used to calculate the quantum of the employee equity settled share options charge. There is an
element of judgement included in this calculation, with the Group also considering historical experience and
future expectations.
Temporary placements
Revenue from temporary placements is calculated by reference to hours worked and pay rates and is based
on weekly timesheets submitted by operatives and there can be delays in the submission and approval of
timesheets. An estimate is therefore made of the value of the liabilities in respect of timesheets that are yet
to complete the submission and approval process and the associated revenue earned at 31 December 2019.
Further details of the related contract assets are included in note 5.
Estimates and judgements
Lease liability and right of use assets
The weighted average incremental borrowing rate used to measure the lease liability at initial application was
3.35% (land and buildings) and 5% (motor vehicles). These rates have been used as being representative of
current open market borrowing rates for each type of asset respectively. A +/-1 % change in the weighted
average incremental borrowing rate used to measure the initial lease liability would have an impact of +/-
£200,000 on the total right of use asset value.
The Group sometimes negotiates break clauses in its property leases. At 31 December 2019 the carrying
amounts of lease liabilities are not reduced by the amount of payments that would be avoided from
exercising break clauses because it is considered reasonably certain that the Group will not exercise its right
to break any lease and there are no material break clauses.
Contracts with customers
The Group has one contract whereby there is a guaranteed minimum revenue over the life of the contract
rather than for any one financial year. It is the view of the Group that the minimum amount will be reached
through services provided over the life of the contract and, as such, there is no additional variable revenue
requiring recognition at 31 December. Please refer to the revenue recognition policy in 3.1 and as further
explained in note 5.
3.
Accounting policies
The principal accounting policies, which reflect the adoption of the new accounting standards set out in 1
above, are listed below:
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Financial reports
Company financial statements
3.1
Revenue
Revenue is measured at the fair value of the consideration received or receivable as performance obligations
are satisfied and represents amounts receivable for services provided in the normal course of business, net of
discounts, VAT and other sales-related taxes. The Group as principal controls the specified service that is
promised to the customer before it is transferred to them therefore revenue is recognised on a gross basis
which corresponds to the consideration to which the entity expects to be entitled.
Performance obligations and timing of revenue recognition
Most of the Group’s revenue is derived from recruitment activities (permanent and temporary placements).
The Group has a number of arrangements or contracts with its customers under which services are provided.
Permanent and temporary staff are provided both under the auspices of a “preferred supplier” and under
framework agreements. Neither of these arrangements confer any minimum volume commitments, rather
individual orders are placed as resources are required with both parties working to the terms set out within
the preferred supplier or framework agreement. The Group also has contracts to supply temporary workers
whereby a contract has been signed and there is a minimum volume commitment over a period of time.
Revenue is recognised when the benefit of the service has passed to the customer. Largely, there is no
significant judgement involved in identifying the point at which the benefit is transferred, or the transaction
price as explained below:
Revenue from permanent placements
Contractual obligations may vary from client to client, however, performance obligations arising from the
placement of permanent candidates are satisfied and revenue is recognised at the time the candidate
commences full-time employment. The transaction price is agreed with the customer prior to the service
being delivered and is fixed at that point. The incidence of clawbacks of revenue related to employees leaving
employment are not significant and therefore no amounts are treated as variable consideration and deferred.
Revenue from temporary placements
Performance obligations are satisfied over time consistent with the delivery of the service with the quantum
of revenue generated only varying with the provision of the service. Customers are generally invoiced weekly
with any amounts not invoiced at the end of the period recognised within contract assets, with the
corresponding amounts due to contractors being included within accruals. The Group invoices customers
based on the hours worked derived from approved timesheets. The transaction price is calculated by
reference to hours worked and agreed pay rates for the skill level of the operative and the type of shift
worked. There are no significant terms within customer contracts which give rise to variable revenues. The
Group also considers the impact of longer-term contractual supply agreements in the determination of the
transaction price and the satisfaction of performance obligations.
Other revenue
Performance obligations are satisfied as the service is provided and represent the sales value of conferencing
facilities provided and rental income received from subletting areas of the Derby site. Rental income is
recognised on a straight-line basis over the lease term. Revenue arising from bar and restaurant sales and
from the provision of hotel accommodation and conferencing within the Group’s Derby site are recognised
when the goods or services are provided, with any amounts received in advance being included within
contract liabilities. Costs incurred in fulfilling contracts with customers are expensed as incurred.
3.2
Basis of consolidation
The Group financial statements consolidate the financial statements of RTC Group Plc and subsidiaries drawn
up to 31 December each year.
Where the Company has control over an investee, it is classified as a subsidiary. The Company controls an
investee if all three of the following elements are present: power over the investee, exposure to variable
returns from the investee, and the ability of the investor to use its power to affect those variable returns.
Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these
elements of control.
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Company financial statements
The consolidated financial statements present the results of the Company and its subsidiaries ("the Group")
as if they formed a single entity. Inter-company transactions and balances between Group companies are
therefore eliminated in full.
The results of acquired operations are included in the consolidated statement of comprehensive income from
the date on which control is obtained. Subsidiaries are deconsolidated from the date on which control ceases.
The financial statements of subsidiaries used in the preparation of the consolidated financial statements are
prepared for the same reporting year as the Parent Company and are based on consistent accounting
policies.
3.3 Goodwill
Goodwill represents the excess of the fair value of the cost of a business acquisition over the Group’s share of
the fair value of the assets and liabilities acquired at the date of acquisition. Goodwill is tested annually for
impairment and carried at cost less accumulated impairment losses.
3.4 Own shares held
The Group has an employee Benefit Trust (EBT). The EBT is considered an extension of the Group’s activities
and therefore the assets (except investments in the Group’s shares) and liabilities are included in the
consolidated accounts on a line-by-line basis. The cost of shares held by the EBT is presented as a separate
debit reserve within equity entitled ‘own shares held’ and is carried at the amount paid to acquire the shares.
3.5 Intangible assets
Assets acquired as part of a business combination
In accordance with IFRS 3 Business Combinations, an intangible asset acquired in a business combination is
deemed to have a cost to the Group based on its fair value at the acquisition date. The fair value of the
intangible asset reflects market expectations about the probability that the future economic benefits
embodied in the asset will flow to the Group. A valuation exercise is undertaken to assess the fair value of
intangible assets acquired in a business combination. Where the cost of intangible assets acquired as part of
business combinations is not separately identifiable or does not represent the fair value, the valuation is
undertaken based upon value in use which requires the use of a discount rate in order to calculate the
present value of cash flows. The use of this method requires the estimation of future cash flows and the
choice of a discount rate in order to calculate the present value of the cash flows.
The fair value is then amortised over the economic life of the asset as detailed below. Where an intangible
asset might be separable, but only together with a related tangible or intangible asset and the individual fair
values are not reliably measurable, the group of assets is recognised as a single asset separately from
goodwill. Where the individual fair values of the complementary assets can be reliably measured, the Group
recognises them as a single asset provided the individual assets have similar useful lives.
Customer lists
The fair value of acquired customer lists is capitalised and, subject to impairment reviews, amortised over the
estimated life of the customer list acquired. The amortisation is calculated to write off the fair value of the
customer lists over their estimated lives on a straight-line basis. An impairment review of customer lists is
undertaken when events or circumstances indicate the carrying amount may not be recoverable.
When acquired in 2014 the estimated life of the customers lists was five years. During the year, following a
review of the current customers, a change in the accounting estimate was made with the useful life of the
customer lists obtained through the acquisition of RIG Energy being extended a further five years effective
from 1 January 2019. The assessment was based on the ongoing and expected future strength of the
customer relationships (refer to note 13).
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Company financial statements
Software
Acquired software, inclusive of lifetime licenses, are capitalised on the basis of the costs incurred to acquire
and bring into use the specific software. Costs are amortised over the estimated useful lives of six years on a
straight-line basis from the date of commissioning.
3.6 Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any accumulated
impairment losses. Depreciation is provided on a straight-line basis in order to write off the cost, less residual
value, of each asset over its estimated useful life as follows: -
Short leasehold improvements 33.3% equally per annum or equally over the lease term
Fixtures and office equipment 10% - 33.3% per annum straight line
Motor vehicles 25% - 33.3% per annum straight line
Residual values and remaining useful economic lives are reviewed annually and adjusted if appropriate. Gains
and losses on disposal are included in the profit or loss for the period.
Capital work in progress predominantly relates to assets under construction and not yet available for use and
as such no depreciation is charged.
The accounting policy for right of use assets is set out alongside the accounting treatment for lease liabilities
in note 3.9.
3.7
Impairment of assets
Goodwill, other intangible assets and property, plant and equipment are subject to impairment testing.
For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are
separately identifiable cash flows (cash-generating units). As a result, some assets are tested individually for
impairment and some are tested at cash-generating unit level. Goodwill is allocated to those cash-generating
units that are expected to benefit from synergies of the related business combination and represent the
lowest level within the Group at which management monitors the related cash flows.
Individual intangible assets or cash generating units that include goodwill with an indefinite useful life are
tested for impairment at least annually. All other individual assets or cash-generating units are tested for
impairment whenever events or changes in circumstances indicate that the carrying amount may not be
recoverable.
The Group assesses, at each statement of financial position date, whether there is any indication that any of
its assets have been impaired. If any indication exists the asset’s recoverable amount is estimated and
compared to its carrying values.
An impairment loss is recognised for the amount by which the asset or cash-generating unit’s carrying
amount exceeds its recoverable amount. The recoverable is the higher of fair value, reflecting market
conditions less cost to sell and value in use. Impairment losses recognised for cash-generating units, to which
goodwill has been allocated, are credited initially to the carrying amount of goodwill. Any remaining
impairment loss is charged pro rata to the other assets in the cash generating unit. Except for goodwill, all
assets are subsequently reassessed for indications that an impairment loss previously recognised may no
longer exist. Impairment losses are recognised in the statement of comprehensive income for the period.
3.8
Inventories
Inventories comprise of goods for resale (bar and restaurant stocks) and are stated at the lower of cost and
net realisable value on a first-in-first-out basis.
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3.9
Leases
Revised accounting policy for leases and right of use assets adopted in 2019
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or
contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time
in exchange for consideration.
When a lease is identified in a contract the Group recognises a right of use asset and a lease liability at the
lease commencement date. The right of use asset is initially measured at cost, which comprises the initial
amount of the lease liability adjusted for any lease prepayments made at or before the commencement date,
plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or
to restore the underlying asset or the site on which it is located, less any lease incentives received. The right
of use asset is subsequently depreciated using the straight-line method from the commencement date to the
earlier of the end of the useful life of the right of use asset or the end of the lease term. The estimated useful
lives of right of use assets are determined on the same basis as those of property, plant and equipment. In
addition, the right of use asset is periodically reduced by impairment losses, if any, and adjusted for certain
re-measurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily
determined, the Group’s incremental borrowing rate. The lease liability is subsequently measured at
amortised cost using the effective interest method. It is re-measured when there is a change in future lease
payments arising from a change in an index or rate, or if the Group changes its assessment of whether it will
exercise a purchase, extension or termination option.
The Group presents right of use assets and lease liabilities separately in the statement of financial position.
The Group has elected not to recognise right of use assets and lease liabilities for short-term leases that have
a lease term of 12 months or less and leases of low-value assets, including IT equipment. The Group
recognises the lease payments associated with these leases as an expense on a straight-line basis over the
lease term.
Previous accounting policy for operating leases
Rentals payable under operating leases were charged to the profit for the period on a straight-line basis over
the term of the lease. Operating lease incentives were credited to the profit or loss over the period of the
lease term on a straight-line basis. Mid-term lease renewals were treated as new leases, with any previously
accrued or deferred incentives released where the terms of a new lease were at market rates. For renewals
which were not at market rates, the previously deferred or accrued incentives were accounted for within the
terms of the new lease.
3.10
Income taxes
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the
taxation authorities, based on tax rates and laws that have been enacted or substantively enacted by the
reporting date. Income tax is charged or credited to profit or loss for the period unless it relates to items that
are recognised in other comprehensive income, when the tax is also recognised in other comprehensive
income, or to items recognised directly to equity, when the tax is also recognised directly in equity.
Where there are transactions and calculations for which the ultimate tax determination is uncertain the
Group recognises tax, liabilities based on estimates of whether additional taxes and interest will be due.
These tax liabilities are recognised when, despite the Group's belief that its tax return positions are
supportable, the Group believes it is more likely than not that a taxation authority would not accept its filing
position. In these cases, the Group records its tax balances based on either the most likely amount or the
expected value, which weights multiple potential scenarios. The Group believes that its accruals for tax
liabilities are adequate for all open audit years based on its assessment of many factors including past
experience.
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3.11 Deferred tax
Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the
consolidated statement of financial position differs from its tax base, except for differences arising on: the
initial recognition of goodwill; and the initial recognition of an asset or liability in a transaction which is not a
business combination and at the time of the transaction affects neither accounting or taxable profit, and
investments in subsidiaries and where the Group is able to control the timing of the reversal of the difference
and it is probable that the difference will not reverse in the foreseeable future.
Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profits will
be available against which the difference can be utilised. The amount of the asset or liability is determined
using tax rates that have been enacted or substantively enacted by the reporting date and are expected to
apply when the deferred tax liabilities/(assets) are settled/(recovered).
Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current
tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax
authority on either: the same taxable Group Company, or different Group entities which intend either to
settle current tax assets and liabilities on a net basis, or to realise the assets and settle the liabilities
simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are
expected to be settled or recovered.
3.12 Retirement benefit
Contributions to money purchase pension schemes are charged to the profit or loss for the period as they
become payable in accordance with the rules of the scheme.
3.13 Share-based payments
The Group provides equity settled share-based payment schemes to certain employees. Equity settled share-
based payments are measured at fair value at the date of grant. The fair value determined at the date of the
grant of the equity settled share-based payments is expensed on a straight-line basis over the vesting period,
based on the Group’s estimates of shares that will eventually vest and adjusted for the effect of non-market
based vesting conditions. The effect of this is shown in note 7. Fair value is measured by use of a Black-
Scholes model.
3.14 Trade payables
Trade payables are initially recognised at fair value and subsequently as financial liabilities at amortised cost
under the effective interest method. However, where the effect of discounting is not significant, they are
carried at invoiced value. They are recognised on the trade date of the related transaction.
3.15 Trade receivables
Trade receivables and contract assets are recognised at amortised cost. However, where the effect of
discounting is not significant, they are carried at invoiced value. They are recognised on the trade date of the
related transactions. The Group has an invoice financing facility with full recourse. This is recognised as a
financial liability secured over the trade receivables of the Group.
Impairment provisions for trade receivables and contract assets are recognised based on the simplified
approach within IFRS 9 using a provision matrix in the determination of the lifetime expected credit losses.
During this process the probability of the non-payment of the trade receivables is assessed, having regard to
the historical losses and the current and future performance of the counterparties. This probability is then
multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit
loss for the trade receivables and contract assets.
For trade receivables and contract assets, which are reported net; such provisions are recorded in a separate
allowance account with the loss being recognised within administrative expenses in the consolidated
statement of comprehensive income. On confirmation that the trade receivable or contract asset will not be
collectable, the gross carrying value of the asset is written off against the associated provision.
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Company financial statements
3.16 Cash and cash equivalents
Cash in the statement of financial position comprises cash at bank. For the purpose of the consolidated
statement of cash flows, cash and cash equivalents comprise cash deposits with maturities of three months
or less from inception, net of qualifying overdrafts. Qualifying overdrafts are those which are an integral part
of the Group’s cash management and are therefore included as cash and cash equivalents in the consolidated
statement of cash flows. Overdrafts which represent core financing components are presented within
financing in the consolidated statement of cash flows.
3.17 Borrowings
Interest bearing borrowings are initially recognised at fair value and subsequently stated at amortised cost
under the effective interest method. Where borrowings are due on demand, they are carried at the amount
expected to be required to settle them.
Financial liabilities
Where the Group has arrangements with financial institutions to provide advances secured on trade
receivables. The Group considers the terms of the arrangements. Where the responsibility for collection of
the receivables remains with the Group and the financial counterparty has full recourse these amounts are
presented within current borrowings.
3.18 Foreign currencies
Transactions in foreign currencies are recorded in sterling using the rate of exchange ruling at the date of the
transaction. Monetary assets and liabilities denominated in foreign currencies at the statement of financial
position date are translated into sterling using the rate of exchange ruling at that date and any gains or losses
on translation are included in the profit or loss for the period.
3.19 Share capital and dividends
Financial instruments issued by the Group are classified as equity only to the extent that they do not meet
the definition of a financial liability. The Group's ordinary shares are classified as equity instruments.
Dividends are recognised when they become legally payable. In the case of interim dividends to equity
shareholders, this is when paid. In the case of final dividends, this is when approved by the shareholders at
the AGM. Dividends on shares classified as equity are accounted for as a deduction from equity.
4. Segment reporting
Factors that management used to identify the Group’s reportable segments
As a result of the operational integration of ATA and Ganymede during 2019, as explained in the CEO’s report,
the Group has reviewed the determination of its operating segments. This has resulted in the business being
split into three operating segments, with recruitment being split by geographical area rather than by
statutory entity. 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.
The comparative segmental information has been restated to reflect the changes made in 2019.
Operating segments
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,
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RTC Group Plc Annual Report 2019 | Stock code: RTC
Financial reports
Company financial statements
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:
Year ended 31 December 2019
Year ended 31 December 2018
UK
Recruitment
UK
Central
Services
Inter-
national
Recruitment
Total
Group
UK
Recruitment
UK
Central
Services
Inter-
national
Recruitment
Total
Group
Revenue
£'000
76,526
£'000
1,864
£'000
£'000
16,559
94,949
£'000
71,305
Cost of sales
(64,680)
(1,010)
(14,785)
(80,475)
(60,108)
11,846
854
1,774
14,474
11,197
£'000
1,696
(824)
872
£'000
£'000
14,805
87,806
(12,976)
(73,908)
1,829
13,898
Gross profit
Administrative
expenses
Amortisation
of intangibles
Depreciation
of right of use
assets
Depreciation
Total
administrative
expenses
Profit from
operations
(7,852)
(3,269)
(701)
(11,822)
(7,368)
(3,222)
(917)
(11,507)
(85)
-
(125)
(214)
-
-
(85)
(182)
(339)
-
-
-
-
-
(182)
-
(93)
(170)
(4)
(267)
(79)
(146)
(4)
(229)
(8,155)
(3,653)
(705)
(12,513)
(7,629)
(3,368)
(921)
(11,918)
3,691
(2,799)
1,069
1,961
3,568
(2,496)
908
1,980
The revenue reported above is generated from continuing operations with external customers. There were
no sales between segments in the year (2018: Nil).
For segment reporting purposes in this note 4, revenue is analysed by the geographical location in which the
services are delivered. Revenue is further analysed by point of invoicing in note 5.
The accounting policies of the operating segments are the same as the Group’s accounting policies described
in notes 1 to 3 of this report. Segment profit represents the profit earned by each segment without allocation
of Group administration costs or finance costs.
During 2019, one customer in the UK segment contributed 10% or more of total revenue being £31.3m (2018:
£21.4m) and one customer in the International segment also contributed 10% or more of total revenue being
£16.5m (2018: £14.0m).
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:
Permanent placements
Contract
Other
Revenue
2019
£'000
2,819
2018
£'000
3,588
Gross profit
2018
£'000
3,588
2019
£'000
2,819
90,266
82,522
10,801
9,438
1,864
1,696
854
872
94,949
87,806
14,474
13,898
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Company financial statements
All operations are continuing. All assets and liabilities are in the UK.
5.
Revenue from contracts with customers
Disaggregation of revenue
The Group has disaggregated revenue into various categories in the following tables which is intended to:
•
depict how the nature, amount, timing and uncertainty are affected by economic factors; and
•
enable users to understand the relationship with revenue segment information provided in note 4.
Whilst services in the International segment are delivered outside of the UK, the point of invoicing for the
major customer in this segment is the UK.
Year ended 31 December 2019
Year ended 31 December 2018
UK
Recruitment
£'000
UK
Central
Services
£'000
International
recruitment
£'000
UK
Recruitment
£'000
Total
£'000
UK Central
Services
£'000
International
Recruitment
£'000
Total
£'000
Geographic
point of
invoicing:
UK
USA
Revenue by
product type:
Permanent
placements
Temporary
placements
Other
Contract
counterparties
B2B
Timing of
transfer of
services:
Point in time
(start date for
permanent
placements)
Over time
(with invoices
raised
periodically
over the term
of the contract
placement)
Point in time
(having
provided the
service for
other revenue
streams)
76,526
1,864
16,503
94,893
71,305
1,696
14,017 87,018
-
-
56
56
-
-
788
788
76,526
1,864
16,559
94,949
71,305
1,696
14,805 87,806
2,754
73,772
-
76,526
-
-
65
2,819
2,800
16,494
90,266
68,505
-
-
788
3,588
14,017 82,522
1,864
1,864
-
16,559
1,864
94,949
-
71,305
1,696
1,696
-
1,696
14,805 87,806
76,526
1,864
16,559
94,949
71,305
1,696
14,805 87,806
2,754
73,772
-
-
65
2,819
2,628
172
788
3,588
16,494
90,266
68,505
-
14,017 82,522
-
1,864
-
1,864
-
1,696
-
1,696
76,526
1,864
16,559
94,949
71,133
1,868
14,805 87,806
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Company financial statements
Contract balances
At 1 January
Transfers in the period from contract assets
to trade receivables
Excess of revenue recognised over amounts
invoiced (or rights to cash) being recognised
during the period
Movement in amounts included in contract
liabilities that were invoiced but not
recognised as revenue during the period
Contract
assets
2019
£'000
1,706
Contract
assets
2018
£'000
1,612
Contract
liabilities
2019
£'000
(40)
Contract
liabilities
2018
£'000
(44)
(1,706)
(1,441)
2,175
1,535
-
-
-
-
(40)
-
-
4
At 31 December
2,175
1,706
(80)
(40)
Contract assets and contract liabilities are included within ‘trade and other receivables’ and ‘trade and other
payables’ respectively on the face of the statement of financial position. They primarily arise from the
Group’s recruitment division and relate to temporary placements whereby performance obligations have
been met but there is still some conditionality to be resolved. Invoices are usually raised in the week
following the date of the statement of financial position.
Following clarification of the definition of contract liablities the comparative figures have been represented
and an amount of £1,910,000 has been transferred to accruals at 31 December 2018 (2017 £1,470,000).
Remaining performance obligations
The majority of the Group’s contracts with customers are for the delivery of services within the next 12
months for which the practical expedient in paragraph 121(a) of IFRS 15 applies (i.e. remaining performance
obligations are not required to be disclosed). In addition, services are principally supplied under framework
or preferred supplier agreements such that the amount of future revenue cannot be quantified. However, the
Group has one contract whereby the customer has guaranteed to pay for a minimum number of shifts over
the three-year life of the contract. It is the view of the Group that the minimum amount will be reached as
actual services are provided during the contract period and as such revenue is recognised as services are
provided, consistent with the revenue recognition policy. At the 31 December 2019 the amount of revenue
that will be recognised in future periods (2020-21) relating to this contract was in the region of £8.2m (2018:
£9.8m).
The nature of the Group’s contracts with customers do not give rise to material judgements related to
variable consideration or contract modifications.
________________________________________________________________________________
Page | 48
RTC Group Plc Annual Report 2019 | Stock code: RTC
Financial reports
Company financial statements
6.
Profit on Group operations
Profit on Group operations for the year is stated after charging/(crediting):
Loss on asset disposals
Depreciation of owned property, plant and equipment
Amortisation of intangibles
Depreciation of right of use assets
Fees payable to the Company’s auditor for the audit of the Company’s
annual accounts
Fees payable to the Company’s auditor for other services:
- the audit of the Company’s subsidiaries pursuant to legislation
- tax compliance
- other non-audit services
Operating lease expense in respect of land and buildings
Expenses relating to short-term leases
Foreign exchange differences
Share based payments
Release of creditor on change of lease at the Derby site1
Customer remediation costs2
2019
£’000
2
267
85
339
26
39
8
10
-
317
(7)
194
-
-
2018
£’000
3
228
181
-
20
36
10
11
576
-
(32)
240
(418)
126
1In 2018 a new lease was entered into in respect of the Derby site and, in accordance with the accounting
policy on leases in 2018 (note 3.9), the total cost of the lease accrued because rentals were charged evenly
over the life of the lease (meant that the profit and loss charges in the early years were higher than the actual
invoiced cost as there was an initial two-year rent free period) was released.
2 Customer remediation costs represented the cost of a settlement reached with a client over the
interpretation of terms of business.
7.
Directors and employees’ remuneration
The expense recognised for employee benefits (including directors) employed by the Group during the
year is analysed below:
Wages and salaries
Social security costs
Other pension costs
2019
£'000
8,043
846
403
9,292
2018
£’000
7,655
838
320
8,813
As at 31 December 2019 there were pension contributions of £170,219 (2018: £76,570)
outstanding.
The average number of employees, including executive directors, during the year
was:
Sales and administration staff
Conference support staff
Number
2019
163
57
220
Number
2018
157
57
214
________________________________________________________________________________
Page | 49
RTC Group Plc Annual Report 2019 | Stock code: RTC
Financial reports
Company financial statements
Directors’ remuneration
The remuneration of the directors was as follows:
Salary
Bonus
Benefits in
kind
Sub-total
Pension
contributions
Total
£’000
65
£’000
51
£’000
6
260
178
30
533
320
127
-
498
13
15
-
34
£'000
122
593
320
30
1,065
£’000
-
£’000
122
-
6
-
6
593
326
30
1,071
W J C Douie
A M Pendlebury
S L Dye
B W May
Total
Employers NI of £147,798 was paid in respect of remuneration above.
The information for the prior reporting period is as follows:
Salary
Bonus
Benefits in
kind
Sub-total
Pension
contributions
£’000
65
£’000
75
260
160
30
515
207
154
-
436
£’000
6
15
14
-
35
£'000
146
482
328
30
986
£’000
-
-
24
-
24
Total
£’000
146
482
352
30
1,010
W J C Douie
A M Pendlebury*
S L Dye
B W May
Total
Employers NI of £154,008 was paid in respect of remuneration above.
Share based employee remuneration
Total share-based payment charges in the year were £194,000 (2018: £240,000) of which £181,881 (2018:
£185,442) was charged in respect of options granted to directors.
Share options and the weighted average exercise price are as follows for the reporting periods presented:
Weighted
average
exercise
price
(pence)
2019
5
-
-
4
5
Number
2,176,605
-
-
40,000
2,136,605
Weighted
average
exercise
price
(pence)
2018
6
3
-
7
5
Number
1,576,788
908,407
50,036
258,554
2,176,605
Outstanding at start of period
Granted
Lapsed
Exercised
Outstanding at end of period
The company operates two share option plans: the EMI 2001 Share Option Scheme and the Long-Term
Incentive Plan 2015 (“LTIP”).
40,000 options were exercised during the year and own shares held in the EBT were used to satisfy this
demand (2018: 258,554). No options were issued during the year.
________________________________________________________________________________
Page | 50
RTC Group Plc Annual Report 2019 | Stock code: RTC
Financial reports
Company financial statements
The directors determined the volatility for options issued in the previous financial year using computations
based on historical share prices, to be as follows:
Date of grant
Market value at date of grant
Exercise price
Expected volatility
Expected dividend yield
Risk free interest rate
23 Mar 18
6 Nov 2018
56.5p
Nil
50%
6.8%
1.4%
52.5p
52.5p
50%
7.3%
1.4%
The Group has the following outstanding share options and exercise prices:
Weighted
average
exercise
price
(pence)
Weighted
average
fair value
at date of
grant
(pence)
Weighted
average
contractual
life
months)
Weighted
average
exercise
price
(pence)
Weighted
average
fair value
at date of
grant
(pence)
Weighted
average
contractual
life
(months)
Date exercisable
(and option life)
Number
2019
2019
2019
Number
2018
2018
2018
2016 (up to 2023)
-
2017 (up to 2024)
255,000
2018 (up to 2025)
281,412
2019 (up to 2026)
407,500
2020 (up to 2027)
284,286
2021 (up to 2028)
908,407
-
29
-
-
-
3
-
6
53
60
44
44
-
10,000
51
65
75
88
99
255,000
296,412
422,500
284,286
908,407
16
29
-
-
-
3
3
6
53
59
44
44
60
63
77
87
100
111
The exercise prices of options range from nil to 25.5p, 38.0p and 52.5p. At the end of the period 943,912
options were exercisable (2018: 561,412).
Details of the options of the directors who served during the year are as follows:
At 1
January
2019
110,000
193,615
933,749
569,259
EMI Options
S L Dye
LTIP Options
W J C Douie
A M Pendlebury
S L Dye
Granted
Exercised
2019 Date of last grant
At 31
December
-
-
-
-
-
-
-
-
110,000
22 May 2015
193,615
933,749
569,259
23 Mar 2018
23 Mar 2018
23 Mar 2018
Exercise
price
Nil
Nil
Nil
Nil
The market value and number of directors’ share options vesting in the period was £241,500 (402,500 shares)
(2018: £119,000 (234,286 shares)). The aggregate gains made by directors on exercising share options was
£Nil (2018: £28,868).
The market value and number of the highest paid directors’ share options vesting in the period was £135,000
(225,000 shares) (2018: £65,571 (128,572 shares). The aggregate gains made by the highest paid director on
exercising share options was £Nil (2018: £Nil).
________________________________________________________________________________
Page | 51
RTC Group Plc Annual Report 2019 | Stock code: RTC
Financial reports
Company financial statements
Details of the options of the directors who served during the prior financial year are as follows:
At 1 January
2018 Granted
Exercised
75,000
110,000
-
-
(75,000)
-
107,143
115,044
(28,572)
473,572
460,177
286,073
283,186
-
-
At 31
December
2018
-
110,000
193,615
933,749
569,259
Date of grant
Exercise
price
27 Jan 2012
22 May 2015
23 Mar 2018
23 Mar 2018
23 Mar 2018
9p
Nil
Nil
Nil
Nil
EMI Options
W J C Douie
S L Dye
LTIP Options
W J C Douie
A M Pendlebury
S L Dye
Awards under EMI 2001 Share Option Scheme
The options currently granted under the EMI Scheme vest on a straight-line basis over a three-year period,
the ability to exercise certain options is subject to non-market related performance criteria.
Awards under the LTIP
There were no awards under the LTIP in 2019. Vesting of the awards is subject to the achievement of the
performance criteria of the LTIP. Awards will vest and may be exercised on the third anniversary of the
date of grant to the extent that the performance conditions detailed in the following table are met:
Annual growth in fully diluted EPS above RPI
Less than 3%
3%
Between 3% and 10%
10% or more
8.
Finance expense
Proportion of award vesting
Nil
25%
Between 25% and 100% on a straight-
line basis
100%
Interest charge on invoice discounting arrangements and overdrafts
Interest expense on lease liabilities
9.
Tax expense
Continuing operations
Current tax
UK corporation tax
Adjustments in respect of previous periods
Deferred tax
Origination and reversal of temporary differences
Tax
2019
£'000
101
102
203
2018
£'000
121
-
121
2019
£'000
2018
£'000
402
11
413
(23)
390
367
38
405
14
419
________________________________________________________________________________
Page | 52
RTC Group Plc Annual Report 2019 | Stock code: RTC
Financial reports
Company financial statements
Factors affecting the tax expense
The tax assessed for the year is higher than (2018: higher than) would be expected by multiplying the profit
by the standard rate of corporation tax in the UK of 19% (2018: 19%). The differences are explained below:
Factors affecting tax expense
Result for the year before tax
Profit multiplied by standard rate of tax of 19% (2018: 19%)
Non-deductible expenses
Tax credit on exercise of options
Other differences
Adjustment in respect of previous periods
2019
£'000
1,758
334
86
(5)
(36)
11
390
2018
£'000
1,859
353
87
(25)
(34)
38
419
Factors that may affect future tax charges
On 16 March 2016, the Chancellor of the Exchequer announced that legislation would be introduced in the
Finance Act 2016 to reduce the main rate of corporation tax to 17% from 1 April 2020, superseding the 19%
rate that has been effective from 1 April 2017. The provision for deferred tax in the financial statements has
been based upon the rate relevant when the timing differences are expected to reverse.
10.
Basic and fully 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.
Earnings £'000
Basic weighted average number
of shares
Dilutive effect of share options
Fully diluted weighted average
number of shares
Basic
2019
1,368
2018
1,440
Fully diluted
2019
1,368
2018
1,440
14,254,557
14,114,625
14,254,557
14,114,625
-
-
-
-
1,676,094
1,263,737
15,930,651
15,378,362
Earnings per share (pence)
9.60p
10.20p
8.59p
9.36p
Further details of share options can be found in note 7.
11.
Dividends
Final dividend of 2.55p per share (2018: 2.3p) proposed and paid
during the year relating to the previous year’s results.
Interim dividend of 1.4p per share (2018: 1.3p).
2019
£'000
363
200
563
2018
£'000
327
185
512
A final dividend of £393,760 (2018: £362,780) has been proposed but has not been accrued within these
financial statements. This represents a payment of 2.76p (2018: 2.55p) per share.
________________________________________________________________________________
Page | 53
RTC Group Plc Annual Report 2019 | Stock code: RTC
Financial reports
Company financial statements
12.
Goodwill
Gross carrying amount
At 1 January
Movement in year
At 31 December
2019
£'000
132
-
132
2018
£'000
132
-
132
Goodwill above relates to the following acquisition:
RIG Energy Limited
28 November 2014
£'000
891
Date of acquisition Original cost
The directors have considered the carrying value of the goodwill and the related cash generating unit to
which it belongs by looking at discounted future cash flows using a discount rate of 13%. This has confirmed
that no impairments are required.
13. Other intangible assets
The Group’s other intangible assets comprise:
•
•
the customer lists obtained through the acquisition of RIG Energy Limited in 2014; and
software and licences relating to new recruitment business systems.
The carrying amounts for the financial year under review can be analysed as follows:
Gross carrying amount
At 1 January 2019
External additions
At 31 December 2019
Amortisation
At 1 January 2019
Provided in year
At 31 December 2019
Net book amount at 31 December 2019
Net book amount at 31 December 2018
Customer lists
£'000
673
-
673
537
27
564
109
136
Software and
licences
£'000
310
13
323
140
58
198
125
170
Total
£'000
983
13
996
677
85
762
234
306
During the year there was a change in accounting estimate and the useful life of the customer lists obtained
through the acquisition of RIG Energy was reassessed as being five years, effective 1 January 2019, based on
the ongoing and expected future strength of those customer relationships. The amount provided under the
previous assessment would have been £130,000 (2018:130,000), the amount provided in the year under the
revised life was £27,000.
________________________________________________________________________________
Page | 54
RTC Group Plc Annual Report 2019 | Stock code: RTC
Financial reports
Company financial statements
The carrying amounts for the prior period are as follows:
Customer lists
Gross carrying amount
At 1 January 2018
External additions
At 31 December 2018
Amortisation
At 1 January 2018
Provided in year
At 31 December 2018
Net book amount at 31 December 2018
Net book amount at 31 December 2017
£'000
673
-
673
407
130
537
136
266
Software and
licences
£'000
295
15
310
89
51
140
170
206
Total
£'000
968
15
983
496
181
677
306
472
14.
Property, plant and equipment
The carrying amounts for the financial year under review can be analysed as follows:
Short
leasehold
improvements
Fixtures and
office
equipment
Motor
vehicles
Capital work-
in-progress
£'000
£'000
£'000
£’000
Cost
At 1 January 2019
Additions
Transfers
Disposals
At 31 December 2019
Depreciation
At 1 January 2019
Charge for the year
Disposals
At 31 December 2019
Net book amount
At 31 December 2019
At 31 December 2018
1,564
1,632
-
-
-
282
58
(78)
1,564
1,894
620
73
-
693
871
944
1,032
192
(76)
1,148
746
600
8
-
-
-
8
4
2
-
6
2
4
100
19
(58)
-
61
-
-
-
-
61
100
Total
£'000
3,304
301
-
(78)
3,527
1,656
267
(76)
1,847
1,680
1,648
________________________________________________________________________________
Page | 55
RTC Group Plc Annual Report 2019 | Stock code: RTC
Financial reports
Company financial statements
The carrying amounts for the prior period are as follows:
Short leasehold
improvements
Fixtures and
office
equipment
Motor
vehicles
Capital work-in-
progress
Total
£'000
£'000
£'000
£’000
£'000
Cost
At 1 January 2018
Additions
Transfers
Disposals
At 31 December 2018
Depreciation
At 1 January 2018
Charge for the year
Transfers
Disposals
At 31 December 2018
Net book amount
At 31 December 2018
At 31 December 2017
427
192
945
-
1,564
427
57
136
-
620
944
-
2,295
197
(796)
(64)
1,632
1,038
171
(136)
(41)
1,032
600
1,257
8
-
-
-
8
4
-
-
-
4
4
4
149
100
(149)
-
100
-
-
-
-
-
100
149
2,879
489
-
(64)
3,304
1,469
228
-
(41)
1,656
1,648
1,410
There is a charge over Group’s fixed assets in respect of the Group’s overdraft facility. There were no
contractual capital commitments for the acquisition of property, plant and equipment at 31 December 2019
(2018: Nil).
15. Deferred tax asset
At 1 January
Credit / (charge) to the profit for the year
At 31 December
The deferred tax asset is analysed as:
Recognised
Provision in respect of tax losses carried forward
Short-term temporary timing differences relating to share based
payments
2019
£'000
66
29
95
2019
£'000
-
95
2018
£'000
84
(18)
66
2018
£'000
1
65
The tax losses carried forward are £Nil (2018: £6,664). The losses in 2018 were fully recognised due to the
certainty over the availability of future taxable income in the related trading subsidiary against which the
asset can be utilised. Short-term temporary timing differences relating to share-based payments.
16.
Inventories
Food, drink and goods for resale
2019
£’000
10
2018
£’000
8
Stock recognised in cost of sales during the year as an expense was £215,254 (2018: £175,854).
________________________________________________________________________________
Page | 56
RTC Group Plc Annual Report 2019 | Stock code: RTC
Financial reports
Company financial statements
17.
Trade and other receivables
Trade and other receivables falling due within one year are as follows:
Gross trade receivables
Less: provision for impairment of trade receivables
Net trade receivables
Contract assets
Total financial assets other than cash and cash equivalents classified
at amortised cost
Other receivables
Prepayments
Movement in impairment allowance for trade receivables:
At 1 January
Increase during year
Receivable written off in year as uncollectable
Unused amounts reversed
At 31 December
2019
£'000
12,721
-
12,721
2,175
14,896
51
862
15,809
-
-
-
-
-
2018
£'000
13,186
-
13,186
1,706
14,892
57
862
15,811
92
-
(30)
(62)
-
No other classes of financial assets contain any impaired assets. The Group does not hold any collateral in
respect of the above balances. They relate to customers with no default history. The value of trade
receivables and contract assets which are carried at amortised cost, approximates fair value.
The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime
expected credit loss provision for trade receivables and contract assets. To measure expected credit losses on
a collective basis, trade receivables and contract assets are grouped based on similar credit risk and ageing.
The contract assets have similar risk characteristics to the trade receivables for similar types of contracts. The
expected loss rates are based on the Group’s historical credit losses experienced over the three-year period
prior to the period end. The historical loss rates are then adjusted for current and forward-looking
information affecting the Group’s customers.
At 31 December 2019 the lifetime expected credit loss provision for trade receivables and contract assets is
as follows:
£’000
Expected loss rate
Gross carrying amount, £’000
Loss provision1, £’000
14,896
3
Total
Current
Past due by 30
days or more
Past due by 60
days or more
Past due by
120 days or
more
0.016%
14,254
3
0.016%
0.016%
0.016%
334
-
104
-
204
-
At 31 December 2018 the lifetime expected credit loss provision for trade receivables and contract assets is
as follows:
Expected loss rate
Gross carrying amount
Loss provision1, £’000
Total
14,892
2
Current
0.019%
6,187
1
Past due by
30 days or
more
Past due by
60 days or
more
Past due by
120 days or
more
0.019%
4,968
1
0.019%
3,679
-
0.019%
58
-
1Loss provision considered immaterial and therefore not provided. All gross carrying amounts relate to
customers with no default history.
________________________________________________________________________________
Page | 57
RTC Group Plc Annual Report 2019 | Stock code: RTC
Financial reports
Company financial statements
18.
Liabilities
Trade and other payables
Trade payables
Contract liabilities
Other taxes and social security costs
Other payables
Accruals
2019
£'000
2,011
80
2,350
1,076
2,976
8,493
2018
£'000
1,632
40
2,424
993
2,774
7,863
At 31 December 2019 other payables included pension contributions amounting to £170,219 (2018:
77,000). The maturity of trade payables is between one and three months. The carrying value of trade
payables approximates to the fair value.
The classification of contract liablities at 31 December 2018 has been represented as explained in note 5.
Current borrowings
Bank overdrafts
Invoice discounting arrangements
2018
Restated (refer
to note 27)
£'000
1,454
4,639
6,093
2019
£'000
752
2,818
3,570
The Group’s bank overdrafts are secured by cross guarantees and debentures (fixed and floating charges over
the assets of all the Group companies). The Group’s bankers have a formal right of set-off and provides a net
overdraft facility across the Group of £50,000 (2018: £50,000).
The Group also used its invoice financing facility that is secured over the Group’s trade receivables of £12.7m.
There have been no defaults of interest payable or unauthorised breaches of financing agreement terms
during the current or prior year.
19.
Deferred tax liability
At 1 January
Charge (credit) to the profit for the year
At 31 December
The deferred tax liability consists of:
Other timing differences
Business combinations
20.
Share capital
Allotted, issued and fully paid – ordinary shares of 1p each:
As at 1 January 2019 14,643,707 shares
(2018: 14,643,707 shares)
New shares issued Nil (2018: Nil)
As at 31 December 2019 14,643,707 shares
(2018: 14,643,707 shares)
2019
£'000
64
6
70
53
17
2019
£’000
146
-
146
2018
£'000
68
(4)
64
42
22
2018
£’000
146
-
146
________________________________________________________________________________
Page | 58
RTC Group Plc Annual Report 2019 | Stock code: RTC
Financial reports
Company financial statements
Of the total issued shares of 14,643,707, there are 377,027 (2018: 417,027) own shares held in the RTC Group
Employee Benefit Trust. 40,000 options were exercised during the year and own shares held in the EBT were
used to satisfy this demand (2018: 258,554).
21.
Reconciliation of cash and cash equivalents in cash flow to cash balances in the statement of financial
position
At
1 January
2019 restated (refer
to note 27)
£’000
919
Cash Flows
£’000
(121)
At
31 December
2019
£’000
798
Cash and cash equivalents
The amounts presented as cash and cash equivilents within the consolidated statement of cash flows
comprise cash and bank balances of £798,000 (2018: £1,546,000) net of overdrafts of nil (2018: £627,000)
which are subject to formal offset arrangements and are therefore presented net. Overdrafts of £752,000
(2018: £827,000), which represent part of the core financing structure of the group, are included within
financing cash flows
22.
Risk management objectives and policies
The Group is exposed to various risks in relation to financial instruments. The Group’s risk management is
coordinated by the Group Treasury function, in close co-operation with the Board.
Treasury activities take place under procedures and policies approved and monitored by the Board.
They are designed to minimise the financial risks faced by the Group.
The Group does not actively engage in the trading of financial assets for speculative purposes or utilise any
derivative financial instruments. The most significant financial risks to which the Group is exposed are
described below.
Interest rate risk
The Group has financed its operations through a mixture of retained profits and bank borrowings and has
sourced its main borrowings through a variable rate Group overdraft facility and an invoice discounting
facility. Competitive interest rates are negotiated. The following table illustrates the sensitivity of the net
result for the year and equity to a reasonably possible change in interest rates of +/- one percentage point
with effect from the beginning of the year.
Increase /(decrease) in net result and equity
£’000
2019
£’000
+1%
62
2019
%
-1%
(62)
2018
£’000
+1%
52
2018
%
-1%
(52)
The interest rate on the invoice discounting facility is 2.25% based on the year-end balance of £2,818,000 this
gives an estimated annual interest charge for 2020 of £63,000.
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 by using a net overdraft facility of £50,000 and an invoicing
discount facility up to £9.0m as required. The invoice discounting facility revolves on an average maturity of
120 days and is repayable on demand.
Credit risk
The Group extends credit to recognised creditworthy third parties. Trade receivable balances (note 17) are
monitored to minimise the Group’s exposure to bad debts. Individual credit limits are set based on internal
or external ratings in accordance with limits set by the Board. Independent credit ratings are used if available
to set suitable credit limits. If there is no independent rating, the Board assesses the credit quality of the
customer, considering its financial position, past-experience and other factors. The utilisation of credit limits
is regularly monitored. At the year-end none of the trade receivable balances that were not past due
________________________________________________________________________________
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RTC Group Plc Annual Report 2019 | Stock code: RTC
Financial reports
Company financial statements
exceeded set credit limits and management does not expect any losses from non-performance by these
counterparties. Further, the Group applies the IFRS 9 simplified approach to measuring expected credit losses
using a lifetime expected credit loss provision for trade receivables and contract assets. To measure expected
credit losses on a collective basis, trade receivables and contract assets are grouped based on similar credit
risk and ageing.
It should be noted that there is a concentration of credit in respect of two customers whose revenues
respectively make up 40% of the UK division and 99% of the International division. Debtor balances for these
customers were £2.5m (2018: £2.1m) and £2.0m (2018: £2.2m) respectively at the end of the year. Both are
blue chip clients that have never defaulted on any debts. Further the UK division customer is Government
backed.
Foreign exchange risk
The Group is exposed to foreign exchange rate risk as it makes payments to contractors and invoices some
customers in currencies other than GBP. To mitigate the risks associated with this, where possible the same
currency is used to receive and make payments so that there is some natural hedge over translation risk.
Surplus cash balances in currencies other than GBP are kept to a minimum. Consequently, any sensitivity to
be applied to the foreign exchange rate exposure is low.
The Group has the financial assets as set out in notes 17 and 21. The Group’s financial liabilities are as
follows:
Trade payables
Accruals
Bank overdrafts
Invoice discounting
2019
£'000
2,011
2,976
752
2,818
8,557
2018
£'000
1,632
2,774
1,454
4,639
10,499
All the Group’s financial liabilities mature in less than one year. The Group’s financial assets and liabilities are
carried at amortised cost (which equates to fair value). Under the “SPPI” test these meet the requirement of
being solely payments of principal and interest. Further because of their nature they do not include a
significant financing element. In addition to meeting the SPPI test the business model is to collect the
contractual cash flows.
23.
Leases and right of use assets
Information about leases for which the Group is a lessee
The Group leases assets comprising land and buildings and motor vehicles that are shown as right of use
assets on the statement of financial position are as follows:
Net book value of right of use assets
Balance at 1 January 2019
Additions
Depreciation charge
Balance at 31 December 2019
Land and
buildings
£’000
3,272
-
(289)
2,983
Motor
vehicles
£’000
72
39
(50)
61
Total
£’000
3,344
39
(339)
3,044
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RTC Group Plc Annual Report 2019 | Stock code: RTC
Financial reports
Company financial statements
Lease liabilities
Net book value of lease liabilities
Balance at 1 January 2019
Additions
Interest expense
Lease payments
Balance at 31 December 2019
Land and
buildings
£’000
3,272
-
97
(283)
3,086
Motor
vehicles
£’000
72
39
5
(65)
51
Lease liabilities included in the statement of financial position
Current
Non-current
Total
Amounts recognised in the consolidated statement of comprehensive income
Interest on lease liabilities
Expenses relating to short-term leases
Expenses relating to leases of low value assets, excluding short-term leases of
low value assets
Total
Maturity analysis - contractual undiscounted cashflows
Within 1 year
Between 2 and 5 years
Over 5 years
Total
Amounts recognised in the consolidated statement of cash flows
Interest payments
Payment of lease liabilities
Total cash outflow for leases
Total
£’000
3,344
39
102
(348)
3,137
2019
£’000
282
2,855
3,137
2019
£’000
102
317
-
419
2019
£’000
336
1,326
2,254
3,916
2019
£’000
102
246
348
Sensitivity
It is customary for land and buildings lease contracts to be periodically uplifted to market value, although
some leases have future increases fixed at the outset. Contracts for the lease of a vehicle comprise only
fixed payments over the lease term. All land and building lease contracts held by the Group also have
fixed payments.
The following comparative amounts for 2018 represent the non-cancellable operating lease rentals under
IAS 17:
Within 1 year
Between 2 and 5 years
Over 5 years
Total
2018
£’000
393
1,060
2,696
4,149
The leasing arrangements are for the Derby Conference Centre and office space for the Group Head Office in
Derby and a network of regional offices.
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RTC Group Plc Annual Report 2019 | Stock code: RTC
Financial reports
Company financial statements
Information about leases for which the Group is the lessor
As at the balance sheet date £329,000 (2018: £431,000) is expected to be received under non-cancellable
operating sub-leases. Split as follows:
Within 1 year
Between 2 and 5 years
Total
2019
£’000
203
126
329
2018
£’000
184
247
431
The sub-lease arrangements relate to two buildings on the Derby site.
24. Related party transactions
There were no amounts owed by or to related parties at 31 December 2019 (31 December 2018: £nil).
There were no transactions with related parties during 2019 (2018: £Nil). The directors consider the key
management personnel are the Group directors as listed in note 7.
25.
Capital management
The Group’s objectives when managing capital are:
•
To safeguard the entity’s ability to continue as a going concern, so that it can continue to provide
returns to shareholders and benefits to other stakeholders, and employees and;
To provide an adequate return to shareholders by pricing products and services commensurately with
the level of risk.
•
The Group uses its overdraft and invoice discounting facilities to manage its short-term working capital
requirements. The Group manages the capital structure and ratio of debt to equity and adjusts it in the light
of changes in economic conditions.
26.
Effects of changes in accounting policies
The Group adopted IFRS 16 on 1 January 2019. The following statements summarise the impact of adopting
IFRS 16 on the Group’s consolidated statement of financial performance, its consolidated statement of
financial position and its consolidated statement of cashflows.
Revenue
Cost of sales
Gross profit
Administrative expenses
Profit from operations
Finance expense
Profit before tax
Tax expense
Total profit and other comprehensive income
attributable to owners of the Parent
Earnings per ordinary share:
Basic
Diluted
As
reported
IFRS 16
adjustments
£’000
94,949
(80,475)
14,474
(12,513)
1,961
(203)
1,758
(390)
1,368
£’000
-
-
-
(72)
(72)
102
30
(6)
24
9.60p
8.59p
0.16p
0.15p
Without
IFRS 16
adoption
£'000
94,692
(80,218)
14,474
(12,585)
1,889
(101)
1,788
(396)
1,392
9.76p
8.74p
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RTC Group Plc Annual Report 2019 | Stock code: RTC
Financial reports
Company financial statements
Goodwill
Other intangible assets
Property, plant and equipment
Right of use assets
Deferred tax asset
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets
Trade and other payables
Lease liabilities
Corporation tax
Current borrowings
Deferred tax liabilities
Total liabilities
Net assets
Share capital
Share premium
Own shares held
Capital redemption reserve
Share-based payment reserve
Retained earnings
Total equity
Gearing ratio
As
reported
IFRS 16
adjustments
Without
IFRS 16
adoption
£’000
132
234
1,680
3,044
95
10
15,809
798
21,802
(8,493)
(3,137)
(296)
(3,570)
(70)
(15,566)
6,236
146
120
(264)
50
557
5,627
6,236
0.6
£’000
-
-
-
(3,044)
-
-
-
-
(3,044)
(63)
3,137
(6)
-
£'000
132
234
1,680
-
95
10
15,809
798
18,758
(8,556)
-
(302)
(3,570)
(70)
3,068
(12,498)
24
-
-
-
-
-
24
24
-
6,260
146
120
(264)
50
557
5,651
6,260
0.6
________________________________________________________________________________
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RTC Group Plc Annual Report 2019 | Stock code: RTC
Financial reports
Company financial statements
Cash flows from operating activities
Profit before tax
Adjustments for:
Depreciation, loss on disposal and amortisation
Finance expense
Employee equity settled share options charge
Change in inventories
Change in trade and other receivables
Change in trade and other payables
Cash inflow from operations
Income tax paid
Interest paid
Net cash inflow from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment and intangibles
Proceeds from asset disposals
Net cash used in investing activities
Cash flows from financing activities
Movement on invoice discounting facility
Movement on bank overdraft
Dividends paid
Payment of lease liabilities
Proceeds from exercise of share options
Net cash outflow from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
As
reported
£'000
IFRS 16
adjustments
£'000
Without
IFRS 16
adoption
£'000
1,758
30
1,788
693
203
194
(2)
(18)
629
3,457
(378)
(203)
2,876
(314)
20
(294)
(1,821)
(75)
(563)
(246)
2
(2,703)
(121)
919
798
(339)
(102)
-
-
-
63
(348)
-
102
(246)
-
-
-
-
-
-
246
-
246
-
-
-
354
101
194
(2)
(18)
692
3,109
(378)
(101)
2,630
(314)
20
(294)
(1,821)
(75)
(563)
-
2
(2,457)
(121)
919
798
________________________________________________________________________________
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RTC Group Plc Annual Report 2019 | Stock code: RTC
Financial reports
Company financial statements
The following table presents the impact of adopting IFRS 16 on the statement of financial position as at 1
January 2019:
Assets
Property, plant and equipment
Right of use assets
Deferred tax assets
Liabilities
Loans and borrowings
31
December
2018 as
originally
presented
£’000
1,648
-
66
(4,639)
IFRS 16
adjustments
1 January
2019
£’000
-
3,344
-
-
£'000
1,648
3,344
66
(4,639)
Lease liabilities
Equity
5,626
Retained earnings
The following table reconciles the minimum lease commitments disclosed in the Group’s 31 December 2018
annual report to the amount of lease liabilities recognised on 1 January 2019:
(3,344)
5,626
-
-
(3,344)
Minimum operating lease commitments at 31 December 2018
Less: Short-term leases not recognised under IFRS 16
Less: Low value leases not recognised under IFRS 16
Undiscounted lease payments
Less: Effect of discounting using the incremental borrowing rate as at the date of initial
application
Lease liabilities for leases classified as operating type under IAS 17 as at 1 January 2019
£’000
4,149
(85)
-
4,064
(720)
3,344
27.
Prior period restatements
At 31 December 2018 cash and cash equivalents in the consolidated statement of financial position, as
originally presented, included bank overdrafts of £1,454,000. Detailed consideration of the evidence
supporting this treatment has concluded that the conditions for this net presentation were not met and the
error has been corrected within the comparatives, reclassifying the overdrafts to current liabilities. The
restated cash and cash equivalents, after this reclassification is £1,546,000.
At 1 January 2018 the restated cash and cash equivalents and overdrafts should have been £1,733,000 and
£1,572,000 respectively in the consolidated statement of financial position.
In the consolidated statement of cash flows certain overdrafts at 31 December 2018, which represents a core
element of the financing structure of the relevant subsidiary, amounting to £827,000 (2017 £632,000) have
been adjusted to include the movement within financing activities and correct the previous offset against the
cash balances.
The correction of these errors has not had any impact on previously reported profits, net current assets or
net assets.
________________________________________________________________________________
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RTC Group Plc Annual Report 2019 | Stock code: RTC
Financial reports
Company financial statements
RTC GROUP PLC
Company statutory financial statements
For the year ended 31 December 2019
(Prepared under FRS101)
Company number 02558971
________________________________________________________________________________
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RTC Group Plc Annual Report 2019 | Stock code: RTC
Financial reports
Company statement of financial position
Company statement of financial position
As at 31 December 2019
Company number: 02558971
Assets
Non-current
Right of use assets
Investments
Current
Deferred tax asset
Trade and other receivables
Cash and cash equivalents
Total assets
Liabilities
Current
Trade and other payables
Lease liabilities
Corporation tax
Inter Group treasury facility
Non-current
Lease liabilities
Net assets
Equity
Share capital
Share premium
Own shares held
Capital redemption reserve
Share based payment reserve
Retained earnings
Total equity
Notes
31
32
34
33
35
31
35
31
37
2019
£'000
2018
£'000
37
937
974
94
4,850
611
5,555
6,529
-
937
937
64
4,898
-
4,962
5,899
(1,322)
(1,009)
(13)
(15)
-
-
(81)
(626)
(1,350)
(1,716)
(17)
-
5,162
4,183
146
120
146
120
(264)
(292)
50
557
4,553
5,162
50
379
3,780
4,183
The Company has not presented its own profit and loss account as permitted by Section 408 of the
Companies Act 2006. The Company’s profit after taxation for the year amounted to £1,347,000 (2018:
£1,095,000).
The financial statements were approved and authorised for issue by the Board and were signed on its behalf
on 23 February 2020 by:
A M Pendlebury
Director
The following notes 28 to 40 form an integral part of these financial statements.
S L Dye
Director
________________________________________________________________________________
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RTC Group Plc Annual Report 2019 | Stock code: RTC
Financial reports
Notes to the Company financial statements
Company statement of changes in equity
For the year ended 31 December 2019
Share
capital
Share
premium
Own
shares
held
Capital
redemption
reserve
£'000
146
£’000
120
£’000
(292)
£'000
50
Share
based
payment
reserve
£'000
379
-
-
-
-
-
-
-
-
-
-
-
-
28
-
28
-
-
-
-
-
146
120
(264)
50
Share
capital
Share
premium
Own
shares
held
Capital
redemption
reserve
£'000
146
£’000
120
£’000
(473)
-
-
-
-
-
-
-
-
-
-
-
-
181
-
181
£'000
50
-
-
-
-
-
146
120
(292)
50
-
-
(15)
193
178
557
Share
based
payment
reserve
£'000
215
-
-
(76)
240
164
379
Retained
earnings
Total
equity
£'000
3,780
1,347
£'000
4,183
1,347
(563)
(11)
(563)
2
-
193
(574)
(368)
4,553
5,162
Retained
earnings
Total
equity
£'000
3,285
1,095
£'000
3,343
1,095
(512)
(88)
(512)
17
-
240
(600)
(255)
3,780
4,183
At 1 January 2019
Total comprehensive
income for the year
Transactions with
owners:
Dividends
Share options
exercised
Share based payment
charge
Total transactions
with owners
At 31 December 2019
At 1 January 2018
Total comprehensive
income for the year
Transactions with
owners:
Dividends
Share options
exercised
Share based payment
charge
Total transactions
with owners
At 31 December 2018
Share capital is the nominal value of share capital subscribed for.
Share premium account represents the amount subscribed for share capital over and above the nominal
value of the shares.
Capital redemption reserve is an amount of money that a company in the UK must keep when it buys back
shares, and which it cannot pay to shareholders as dividends.
Own shares held are the cost of company's own shares held through the Employee Benefit Trust and shown
as a deduction from equity.
Share based payment reserve is the cumulative share option charge under IFRS 2 less the value of any share
options that have been exercised or have lapsed.
Retained earnings are all net gains and losses and transactions with owners (e.g. dividends) not recognised
elsewhere.
The following notes 28 to 40 form an integral part of these financial statements.
________________________________________________________________________________
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RTC Group Plc Annual Report 2019 | Stock code: RTC
Financial reports
Notes to the Company financial statements
Notes to the Company financial statements
For the year ended 31 December 2019
28.
Accounting policies
RTC Group Plc (“the Company”) was incorporated and is domiciled in England, the United Kingdom. Its
registered office and principal place of business is The Derby Conference Centre, London Road, Derby, DE24
8UX and its registered number 02558971. The principal activity of RTC Group Plc is that of a holding
Company.
Basis of preparation
The financial statements have been prepared in accordance with Financial Reporting Standard 100
Application of Financial Reporting Requirements ("FRS 100") and Financial Reporting Standard 101 Reduced
Disclosure Framework ("FRS 101").
The principal accounting policies adopted in the preparation of the financial statements are set out below.
The policies have been consistently applied to all the years presented.
Adoption of standards
New accounting standards and interpretation
The Company has adopted the following new standards and interpretations (effective 1 January 2019) in
these financial statements:
IFRS 16 Leases sets out the principles for recognition, measurement and presentation of leases and replaces
IAS 17 Leases. Adoption of IFRS 16 has resulted in the Company recognising right of use assets and lease
liabilities for all qualifying contracts that are, or contain, a lease. Instead of recognising an operating expense
for its operating lease payments, the Company has recognised interest on its lease liabilities and amortisation
on its right of use assets, impacting profit from operations and the finance expense. The standard contains
several options and exemptions which are available at initial adoption. The Company has applied the
modified retrospective transition method and adopted certain practical expedients, such that the right of use
asset recognised at the 1 January 2019 was £17,000, together with a corresponding lease obligation of
£17,000. The impact on profit before tax for the Company for the year ended 31 December 2019 was not
material and there was no impact on opening equity at 1 January 2019 (refer note 40).
IFRIC 23 Uncertainty over Income Tax Treatments. IFRIC 23 provides guidance on the accounting for current
and deferred tax liabilities and assets in circumstances in which there is uncertainty over income tax
treatments. The Board has reviewed the implications of IFRIC 23 and determines that there is no material
impact on the Company as the Company does not have any current or deferred income tax assets or liabilities
where the tax treatment is uncertain.
Amendments to IFRS 9 Prepayment Features with Negative Compensation. The IASB has issued these
amendments to IFRS 9 Financial Instruments to aid implementation. The amendment allows companies to
measure particular prepayable financial assets with so-called negative compensation at amortised cost or at
fair value through other comprehensive income if a specified condition is met – instead of at fair value
through profit and loss. The Board has reviewed this amendment and determined that the Company has no
such financial instruments, thus there is no impact on the Company of this amendment.
Amendments to IAS 12 Income Taxes – Annual Improvements to IFRSs (2015-2017). The amendment clarifies
that the income tax consequences of any dividends as defined by IFRS9 must be recognised at the same time
as the liability to pay those dividends; and in profit or loss, other comprehensive income or the statement of
changes in equity according to where the entity originally recognised the past transactions that generated the
distributable profits. The Board has reviewed the implications this amendment and determined that it should
have no material impact on the Company.
The Board does not expect any other standards issued by the IASB, but not yet effective, to have a material
impact on the Company.
________________________________________________________________________________
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RTC Group Plc Annual Report 2019 | Stock code: RTC
Financial reports
Notes to the Company financial statements
The financial statements have been prepared on a historical cost basis as modified by measurement of share-
based payments at fair value at date of grant. The presentation currency used is sterling and amounts have
been presented in round thousands ("£000s").
Disclosure exemptions adopted:
In preparing these financial statements the Company has taken advantage of all available disclosure
exemptions conferred by FRS 101. Therefore, these financial statements do not include:
•
•
•
•
•
•
•
certain comparative information as otherwise required by EU endorsed IFRS;
certain disclosures regarding the Company's capital;
a statement of cash flows;
the effect of future accounting standards not yet adopted;
certain disclosures in respect of share-based payments; financial instruments and impairment of
assets;
the disclosure of the remuneration of key management personnel; and
disclosure of related party transactions with other wholly owned members of the RTC Group Plc group
of companies.
28.1 Accounting policies
The financial statements contain information about RTC Group Plc as an individual company and do not
contain consolidated financial information as the parent of a group.
28.2
Investments
Shares in subsidiary companies are stated at cost less provision for any impairment in value.
28.3 Taxation
Income taxes
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the
taxation authorities, based on tax rates and laws that have been enacted or substantively enacted by the
reporting date. Income tax is charged or credited to profit or loss for the period unless it relates to items that
are recognised in other comprehensive income, when the tax is also recognised in other comprehensive
income, or to items recognised directly to equity, when the tax is also recognised directly in equity.
Where there are transactions and calculations for which the ultimate tax determination is uncertain. The
Company recognises tax liabilities based on estimates of whether additional taxes and interest will be due.
These tax liabilities are recognised when, despite the Company's belief that its tax return positions are
supportable, the Company believes it is more likely than not that a taxation authority would not accept its
filing position. In these cases, the Company records its tax balances based on either the most likely amount or
the expected value, which weights multiple potential scenarios. The Company believes that its accruals for tax
liabilities are adequate for all open audit years based on its assessment of many factors including past
experience.
Deferred tax
Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the
consolidated statement of financial position differs from its tax base, except for differences arising on: the
initial recognition of goodwill; and the initial recognition of an asset or liability in a transaction which is not a
business combination and at the time of the transaction affects neither accounting or taxable profit, and
investments in subsidiaries and where the Company is able to control the timing of the reversal of the
difference and it is probable that the difference will not reverse in the foreseeable future.
Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profits will
be available against which the difference can be utilised. The amount of the asset or liability is determined
using tax rates that have been enacted or substantively enacted by the reporting date and are expected to
apply when the deferred tax liabilities/(assets) are settled/(recovered).
________________________________________________________________________________
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RTC Group Plc Annual Report 2019 | Stock code: RTC
Financial reports
Notes to the Company financial statements
Deferred tax assets and liabilities are offset when the Company has a legally enforceable right to offset
current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same
tax authority.
28.4 Pension costs
Contributions to money purchase pension schemes are charged to the profit and loss account as they become
payable in accordance with the rules of the scheme.
28.5 Trade and other payables
Trade payables are initially recognised at fair value and subsequently as financial liabilities at amortised cost
under the effective interest method. However, where the effect of discounting is not significant, they are
carried at invoiced value. They are recognised on the trade date of the related transaction.
28.6 Trade and other receivables
There are no trade receivables in 2019 (2018: Nil).
Amounts owed by Group companies are assessed for impairment based upon the current financial position
and expected future performance of the subsidiary to which they relate.
28.7 Cash and cash equivalents
Cash in the statement of financial position comprises cash at bank, cash and cash equivalents consist of cash
deposits with maturities of three months or less from inception.
28.8 Inter Group treasury facilities
Interest bearing inter Group treasury facilities are initially recognised at fair value and subsequently stated at
amortised cost under the effective interest method. Where facilities are due on demand then they are carried
at the amounts expected to be required to settle them.
28.9 Financial instruments
The only financial instruments held by the Company are Sterling financial assets and liabilities.
They have been included in the financial statements at their undiscounted respective asset or liability values.
Financial assets are stated at amortised cost.
Financial liabilities consist of trade and other payables and an inter Group treasury facility which is secured by
a cross guarantee and debenture (fixed and floating charge over all assets) over all Group companies and are
classified as financial liabilities at amortised cost.
Other than lease liabilities for motor vehicles (refer notes 28.13 and 31), all the Company’s financial liabilities
mature in less than one year and are repayable on demand.
28.10 Shared-based payments
The Company issues equity settled share-based payments to certain employees. Equity settled share- based
payments are measured at fair value at the date of grant. The fair value determined at the date of the grant
of the equity settled share-based payments is expensed on a straight-line basis over the vesting period, based
on the Company’s estimates of shares that will eventually vest and adjusted for the effect of non-market
based vesting conditions. The effect of this is shown in note 7. Fair value is measured by use of a Black-
Scholes model.
28.11 Share capital and dividends
Financial instruments issued by the Company are classified as equity only to the extent that they do not meet
the definition of a financial liability or financial asset. The Company's ordinary shares are classified as equity
instruments. Dividends are recognised when they become legally payable. In the case of interim dividends to
equity shareholders, this is when paid. In the case of final dividends, this is when approved by the
shareholders at the AGM. Dividends on shares classified as equity are accounted for as a deduction from
equity.
________________________________________________________________________________
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RTC Group Plc Annual Report 2019 | Stock code: RTC
Financial reports
Notes to the Company financial statements
28.12 Own shares held
In 2015 the Company set up an Employee Benefit Trust (EBT). The EBT is considered an extension of the
Company’s activities and therefore the assets (except for the investment in the Company’s shares) and
liabilities which are the subject of the trust are included in the accounts on a line-by-line basis. The cost of
shares held by the EBT is presented as a separate debit reserve within equity entitled ‘own shares held’.
28.13 Leases
Revised accounting policy for leases and right of use assets adopted in 2019
At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or
contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time
in exchange for consideration.
When a lease is identified the Company recognises a right of use asset and a lease liability at the lease
commencement date. The right of use asset is initially measured at cost, which comprises the initial amount
of the lease liability adjusted for any lease prepayments made at or before the commencement date, plus any
initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to
restore the underlying asset or the site on which it is located, less any lease incentives received.
The right of use asset is subsequently depreciated using the straight-line method from the commencement
date to the earlier of the end of the useful life of the right of use asset or the end of the lease term. The
estimated useful lives of right of use assets are determined on the same basis as those of property, plant and
equipment. In addition, the right of use asset is periodically reduced by impairment losses, if any, and
adjusted for certain re-measurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily
determined, the Company’s incremental borrowing rate. The lease liability is subsequently measured at
amortised cost using the effective interest method. It is re-measured when there is a change in future lease
payments arising from a change in an index or rate, or if the Company changes its assessment of whether it
will exercise a purchase, extension or termination option.
The Company presents right of use assets and lease liabilities separately in the statement of financial
position. The Company has elected not to recognise right of use assets and lease liabilities for short-term
leases that have a lease term of 12 months or less and leases of low-value assets, including IT equipment. The
Company recognises the lease payments associated with these leases as an expense on a straight-line basis
over the lease term.
Previous accounting policy for operating leases
Rentals payable under operating leases were charged to the profit for the period on a straight-line basis over
the term of the lease. Operating lease incentives were credited to the profit or loss over the period of the
lease term on a straight-line basis. Mid-term lease renewals were treated as new leases, with any previously
accrued or deferred incentives released where the terms of a new lease were at market rates. For renewals
which were not at market rates, the previously deferred or accrued incentives were accounted for within the
terms of the new lease.
28.14 Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any accumulated
impairment losses. Depreciation is provided on a straight-line basis in order to write off the cost, less residual
value, of each asset over its estimated useful life as follows: -
Motor vehicles 25% - 33.3% per annum straight line
Residual values and remaining useful economic lives are reviewed annually and adjusted if appropriate. Gains
and losses on disposal are included in the profit or loss for the period.
The accounting policy for right of use assets is set out alongside the accounting treatment for lease liabilities
in note 28.13.
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RTC Group Plc Annual Report 2019 | Stock code: RTC
Financial reports
Notes to the Company financial statements
29. Critical accounting estimates and judgements
The Company makes certain estimates and assumptions regarding the future. Estimates and judgements are
continually evaluated based on historical experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances. In the future, actual experience may
differ from these estimates and assumptions. The estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year
are discussed below.
Estimates and assumptions
Equity settled share-based payment liabilities
The estimation of the probability of the vesting conditions attached to share options granted to employees
being met is used to calculate the quantum of the employee equity settled share options charge. There is an
element of judgement included in this calculation, which considers historical experience and future
expectations.
Intercompany balances
The recoverability of intercompany balances is a key estimate. All intercompany balances are assessed as
recoverable. Intercompany balances consist predominantly of the parent company management charges
which are cleared down in each financial year as all Group companies generate surplus cash.
30. Staff costs
Wages and salaries
Social security costs
Other pension costs
2019
£'000
1,663
214
83
1,960
2018
£'000
1,658
205
85
1,948
The average number of employees, including executive directors, during the year was:
Sales and administration staff
31.
Leases and right of use assets
Number
2019
28
Number
2018
30
Information about leases for which the Group is a lessee
The Company leases motor vehicles that are presented within right of use assets and lease liabilities in the
statement of financial position.
Net book value of right of use assets
Balance at 1 January 2019
Additions
Depreciation charge
Balance at 31 December 2019
Motor
vehicles
£’000
17
39
(19)
37
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Page | 73
RTC Group Plc Annual Report 2019 | Stock code: RTC
Financial reports
Notes to the Company financial statements
Lease liabilities
Net book value of lease liabilities
Balance at 1 January 2019
Additions
Interest expense
Lease payments
Balance at 31 December 2019
Lease liabilities for motor vehicles included in the statement of financial
position
Current
Non-current
Total
32. Investments
Shares in subsidiary undertakings - Company
Cost at 1 January
Removal of cost of investments no longer held
Cost at 31 December
Provision for impairment at 31 December
Net book value at 31 December
Motor
vehicles
£’000
17
39
3
(29)
30
2019
£’000
13
17
30
2018
£'000
950
(13)
937
-
937
2019
£'000
937
-
937
-
937
At 31 December 2019, the Company held the share capital of the following subsidiary undertakings:
Subsidiaries
ATA Recruitment Limited1
The Derby Conference Centre Limited
Proportion of ordinary share
capital held
100%
100%
Nature of
business
Recruitment
Hotel,
conferencing and
provision of office
space
Recruitment
Recruitment
Recruitment
Dormant
Dormant
Ganymede Solutions Limited
ATA Global Staffing Solutions Limited
ATA Global Staffing Solutions FZE
Global Choice Recruitment Limited
ATA Selection Limited
1Following the hive up into Ganymede Solutions Limited at 31 December 2019, ATA Recruitment Limited
became dormant.
100%
100%
100%
100%
100%
Except for ATA Global Staffing Solutions FZE whose registered office is Sheik Rashid Tower, Dubai. UAE. The
registered office of all the above subsidiaries is: The Derby Conference Centre, London Road, Derby DE24 8UX
and they are incorporated in England and Wales.
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Page | 74
RTC Group Plc Annual Report 2019 | Stock code: RTC
Financial reports
Notes to the Company financial statements
33.
Trade and other receivables
Amounts falling due within one year:
Amounts owed by Group undertakings1
Prepayments
2019
£’000
4,640
210
4,850
2018
£’000
4,695
203
4,898
1Amounts owed by Group undertakings are due on demand and interest free. They relate to management
charges that are settled regularly. The Company applies the IFRS 9 simplified approach to measuring expected
credit losses using a lifetime expected credit loss provision for intercompany balances. The expected loss rates
are based on the company’s historical credit losses experienced over the three-year period prior to the period
end. There have been no credit losses incurred against intercompany balances in previous years. Further,
there are no financial liquidity issues within subsidiaries thus management considers this amount is
recoverable.
The carrying value of trade receivables approximates to the fair value.
34. Deferred tax asset
At 1 January
Charge to the profit for the year
At 31 December
The deferred tax asset is analysed as:
Recognised
Short-term temporary differences
35. Trade and other payables
Trade creditors
Amounts owed to Group undertakings
Other taxes and social security costs
Other creditors
Accruals
The carrying value of trade payables approximates to the fair value.
Inter Group treasury facility
Inter Group treasury facility
2019
£'000
64
30
94
2019
£'000
94
2019
£’000
630
5
83
76
528
1,322
2019
£'000
-
2018
£'000
37
27
64
2018
£'000
64
2018
£’000
469
-
76
68
396
1,009
2018
£'000
626
During the year, the Company has used its inter Group treasury facility which is secured by a cross guarantee
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RTC Group Plc Annual Report 2019 | Stock code: RTC
Financial reports
Notes to the Company financial statements
and debenture (fixed and floating charge over all assets) over all Group companies.
36. Contingent liabilities
The Company has a cross guarantee and debenture (fixed and floating charge over all assets) with the
Group’s bankers in respect of overdrafts of £752,000 (2018: £1,454,000) within other group companies.
The Company acts as guarantor for future lease payments of £3,483,333(2018: £3,683,333) in respect of the
lease of the Derby site by its subsidiary company, the Derby Conference Centre Limited.
37. Share capital
Allotted, issued and fully paid – ordinary shares of 1p each:
As at 1 January 14,643,707 shares
(2018: 14,643,707 shares)
As at 31 December 14,643,707 shares
(2018: 14,643,707 shares)
2019
£’000
146
146
2018
£’000
146
146
Share options
Details of share options and the share-based payment charge calculation are set out in note 7.
38.
Pension commitments
The Company operates a defined contribution pension scheme, the assets of which are held separately from
those of the Company in an independently administered fund. Included in other creditors were £18,524
(2018: £11,485) of outstanding contributions.
39. Post balance sheet events
There have been no significant events to report since the date of the balance sheet.
40.
Effects of changes in accounting policies
The Company adopted IFRS 16 on 1 January 2019. The following statements summarise the impact of
adopting IFRS 16 on the Company’s 2019 statement of financial position.
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Page | 76
RTC Group Plc Annual Report 2019 | Stock code: RTC
Financial reports
Notes to the Company financial statements
Right of use assets
Investments
Deferred tax asset
Trade and other receivables
Cash and cash equivalents
Total assets
Trade and other payables
Lease liabilities
Corporation tax
Total liabilities
Net assets
Share capital
Share premium
Own shares held
Capital redemption reserve
Share-based payment reserve
Retained earnings
Total equity
As
reported
IFRS 16
adjustments
£’000
37
937
94
4,850
611
6,529
(1,324)
(30)
(15)
(1,369)
5,160
146
120
(264)
50
557
4551
5,160
£’000
(37)
-
-
7
-
(30)
-
30
-
30
-
-
-
-
-
-
-
-
Without
IFRS 16
adoption
£'000
-
937
94
4,857
611
6,499
(1,324)
-
(15)
(1,339)
5,160
146
120
(264)
50
557
4,551
5,160
The following table presents the impact of adopting IFRS 16 on the statement of financial position as at 1
January 2019:
Assets
Investments
Right of use assets
Deferred tax assets
Liabilities
Loans and borrowings
Lease liabilities
31
December
2018 as
originally
presented
£’000
937
-
64
(626)
-
IFRS 16
adjustments
1 January
2019
£’000
£'000
-
17
-
937
17
64
-
(17)
(626)
(17)
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Page | 77
RTC Group Plc Annual Report 2019 | Stock code: RTC
Shareholder information
Directors and advisers
Directors and advisers
Registered office
The Derby Conference Centre
London Road
Derby
DE24 8UX
Solicitor
Gowling WLG (UK) LLP
4 More London Riverside
London
SE1 2AU
Broker
Whitman-Howard
Connaught House, 1-3 Mount Street
London
W1K 3NB
Registrar
Computershare Investor Services Plc
the Pavilions
Bridgwater Road
Bristol
BS13 8AE
Directors
W J C Douie
A M Pendlebury
S L Dye
B W May
Company secretary
S L Dye
Nominated adviser
Spark Advisory Partners
5 St John’s Lane
London
EC1M 4BH
Banker
HSBC Plc
1 St Peters Street
Derby
DE1 2AE
Auditor
BDO LLP
Regent House
Clinton Avenue
Nottingham
NG5 1AZ
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RTC Group Plc Annual Report 2019 | Stock code: RTC