18th May 2006 07:00
RDF Group plc ("RDF" or the "Group") Preliminary Results for the year ended 31st March 2006 The Board of RDF Group plc, (LSE: RFG), the IT solutions company, is pleased toannounce its preliminary results for the year ended 31 March 2006.Financial highlights * Sales increased by 112 per cent. to ‚£19.7m (2005: ‚£9.3m) * Profit before tax increased by 125 per cent. to ‚£1.2m (2005: ‚£0.5m) * Fully diluted earnings per share increased to 7.56p (2005: 3.00p) * Proposed final dividend of 1.0 pence per share, making a total dividend for 2006 of 1.75 pence per share, an increase of 75 per cent on 2005. Operational highlights * The Group has further developed its Managed Services business which has grown by 50 per cent. in the past year and now employs over 100 consultants. * The Group's Resources division achieved a turnover of ‚£10.5m in its first full year of operation and now deploys 200 contractors working at client sites. * The Group's Permanent Recruitment division is showing significant growth since the previous year and is expected to continue to increase its contribution to the profitability of the business. George Kynoch, Chairman, commented:"I am pleased to report another year of excellent progress for the Group,doubling our turnover and profit and significantly widening our customer base.The Board is confident of continued progress in the coming year".Chairman's StatementIntroduction & ResultsI am pleased to report the results for the year ended 31 March 2006. Turnoverfor the period was more than doubled at ‚£19.7 million (2005: ‚£9.4 million)resulting in a profit before tax of ‚£1.16m (an increase of 125 per cent. on the2005 figure of ‚£0.52m). Earnings per share for the period are 7.75p (2005:earnings per share of 3.12p). Your Board is proposing the payment of a finaldividend of 1.00 pence per share, payable on 26 July 2006, to thoseshareholders on the register at noon on 16 June 2006. This will provide a totaldividend for the year of 1.75 pence per share (an increase of 75 per cent. on2005).Business ReviewOverviewYour directors are pleased to report excellent growth in both RDF Consulting(managed software delivery) and RDF Resources (IT contract and permanent staffrecruitment). The Group has more than doubled both income and gross marginacross these businesses. The Group continued to receive good levels of businessfrom its retained clients throughout the year as well as progressing new clientopportunities.RDF ConsultingRDF Consulting has continued to provide high quality, cost-effective softwaredelivery services, with revenues growing by 50 per cent. in the year. The Groupcontinues tight control of the cost of supply of IT resources for its softwaredelivery teams which has resulted in further improvements in margin.The Group has recently occupied additional space in its Brighton Headquartersto support this increase in business.RDF ResourcesRDF Resources has shown significant growth in revenues for both contract andpermanent IT staff recruitment throughout the year (300 per cent. on 2005). Thesales team has been expanded and client base has grown accordingly, with over50 clients invoiced during the year. Gross profit margins for contractrecruitment have been improved from 7 per cent. at the beginning of the year to11 per cent. by the end of the year. The introduction of permanent recruitmenthas contributed towards profit growth and has assisted in the Group's strategyof up-selling to its core managed software services.OutlookYour directors are looking forward to continued growth in both RDF Consultingand RDF Resources in the current year. Our existing clients are predictinglevels of business consistent with last year and the pipeline for business withnew clients is looking healthy. RDF Consulting is in discussions with severalnew clients, who we are confident will produce significant new business in thecoming year.Cost of resource supply will remain a challenge to the Group, with upwardpressure on IT staffing rates in the UK. However, the Group is confident thatit can manage these costs through its proven ability to blend retained staff,graduate recruitment and training and near-shore supply through EasternEuropean partners.To provide an enhanced service to existing and new City-based clients, theGroup will be opening a London office shortly. This office will also be thefocus for further development of the Group's management and technicalconsultancy business. Executive management is constantly reviewing other UKlocations, with a view to supporting new initiatives and sales opportunities.As part of the Group's commitment to sustained growth, we are continuing toreview our approach to targeting potential complimentary acquisitions alongsideour strategy for organic growth.I should like to take this opportunity on behalf of the Board to thank all thestaff of RDF for their unstinting efforts which have contributed towards thissignificant performance improvement. I should also like to thank our advisorsand my Board colleagues for their continuing support and advice during such aninteresting period of development for your company.George Kynoch18 May 2006GroupProfit and Loss AccountFor the year ended 31 March 2006 Notes 2006 2005 (restated) ‚£'000 ‚£'000 GROUP TURNOVER 19,673 9,390 Cost of sales 15,532 7,126 Gross profit 4,141 2,264 Administrative Expenses 2,937 1,729 OPERATING PROFIT 1,204 535 Interest Receivable 1 1 1,205 536 Interest payable (44) (21) PROFIT ON ORDINARY ACTIVITIES BEFORE 1,161 515TAXATION Taxation 2 355 191 PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION 806 324 Dividends 3 130 52 RETAINED PROFIT FOR THE FINANCIAL YEAR 676 272 Basic earning per share (pence) 4 7.75 3.12 Diluted earnings per share (pence) 4 7.56 3.00 The operating profit for the year arises from the Group's continuing operationsGroup Balance SheetAs at 31 March 2006 Notes 2006 2005 (restated) ‚£'000 ‚£'000 FIXED ASSETS Tangible assets 195 167 CURRENT ASSETS Debtors 4,279 2,846 Cash at bank 246 51 4,525 2,897 CREDITORS Amounts falling due within one year 2,883 1,907 NET CURRENT ASSETS 1,642 990 TOTAL ASSETS LESS CURRENT LIABILITIES 1,837 1,157 PROVISIONS FOR LIABILITIES AND CHARGES Deferred taxation 15 11 1,822 1,146 CAPITAL AND RESERVES Called up equity share capital 208 208 Share premium account 103 103 Profit and loss account 1,511 835 SHAREHOLDERS' FUNDS 1,822 1,146Group Cash Flow StatementAs at 31 March 2006 Notes 2006 2005 (restated) ‚£'000 ‚£'000 Net cash flow from operating activities 913 334 Returns on investments and servicing of (43) (20)finance` Taxation (267) (18) Capital expenditure and financial investment (94) (11) 509 285 Equity dividends paid (130) (104) 379 181 Financing (184) 61 INCREASE IN CASH IN THE PERIOD 195 242 RECONCILIATION OF NET CASH FLOW MOVEMENTS TO MOVEMENT IN NET FUNDS 2006 2005 ‚£'000 ‚£'000 Increase in cash in the period 195 242 Net cash inflow from bank loans 184 (61) CHANGE IN NET FUNDS 379 181 NET DEBT AT 1 APRIL 2005 (133) (314) NET FUNDS AT 31 MARCH 2006 246 (133)Notes to the Preliminary Results1. Basis of preparationa) The financial information for the years ended 31 March 2005 and 31 March2006 above does not constitute the Company's statutory financial statements butis extracted from the audited accounts for those years. The auditors havereported on those accounts; their reports were unqualified and did not containstatements under Section 237 (2) or (3) of the Companies Act 1985. The amountsshown for the year ended 31 March 2005 are restated on adoption of FRS21, whichchanges the accounting for dividends, as outlined below.b) The audited accounts for the year ended 31 March 2005 have been delivered tothe Registrar of Companies. The Annual Report and Financial Statements for theyear ended 31 March 2006 will be delivered to the Registrar of Companiesfollowing the Annual General Meeting. Copies will be available to the public atthe Company's registered office: 2 Bartholomews, Brighton BN1 1HGc) The Group's accounting policies have been applied consistently, except forthe adoption of FRS21 Events after the balance sheet date. This results in achange of accounting policy for dividends, whereby dividends are charged in thefinancial statements in the period in which they become a legal obligation.This change in accounting policy has no impact on the group's profit after taxor cash flows, but increases retained reserves and net assets at 31st March2005 by ‚£52,000. There is no change to the Company's ability to pay dividendsor to the Company's dividend policy.2. TaxationThe Group's effective tax rate was 30.5 per cent. for 2006 (FY05: 37 percent.).3. DividendsThe Group has adopted Financial Reporting Standard 21, events after the balancesheet date, resulting in a change of accounting policy for dividends, wherebydividends are charged in the financial statement in the period in which theybecome a legal obligation.The Board of Directors are recommending a final dividend of 1.0 pence per sharefor the year, increasing the total dividend for 2006 to 1.75 pence per share.4. Earnings per shareBasic earnings per share is computed by dividing the net profit attributable toordinary shareholders by the weighted average number of ordinary shares inissue during the year, which was 10,400,000.Diluted earnings per share is computed by dividing the net profit attributableto ordinary shareholders by the weighted average number of ordinary shares inissue after adjusting for the effects of all potential dilutive ordinary sharesthat were outstanding during the year 260,902 (FY05: 409,685).5. Circulation to ShareholdersCopies of the Company's Annual Report will be sent to shareholders on 24 May2006 with further copies available from the Company Secretary, RDF Group plc, 2Bartholomews, Brighton, BN1 1HGENDRDF GROUP PLCRelated Shares:
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