1st Nov 2006 07:01
RDF Group PLC01 November 2006 RDF GROUP PLC INTERIM RESULTS For the six months ended 30 September 2006 RDF Group plc, the I.T. services group, with offices in Brighton, Bristol,Edinburgh and London, today announces its interim results for the six months to30 September 2006. Key points:- •Sales increase 16% to £10.6m (2005: £9.2m) •Operating profit before exceptional items up 36% to £0.75m (2005: £0.55m) •Pre-tax profits increased 13% to £0.60m (2005:£0.53m) •Earnings per share increased 16% to 3.94p (2005: 3.40p) •Net assets per share increased 46% to 20.75p (2005: 14.2p) •Interim dividend up 33% to 1.00 pence (2005: 0.75 pence) Commenting on the results, Chief Executive David Wood, said: "We have been very pleased with the trading performance of the business duringthe first half of the year. New offices have been opened in London and Bristoland are performing ahead of expectations. The Group has a healthy pipeline ofongoing work and we are looking forward to the second half following thereorganisation of the Board in August. The new Board is actively working on acquisitions to enhance the business. I would like to take this opportunity to personally thank all of our staff,clients and suppliers for their continued commitment and support as we keepmoving the business forwards." CHAIRMAN'S STATEMENTFor the six months ended 30 September 2006 Strategic DevelopmentsRDF Group continues to develop its business across the IT services sectorthrough the three business streams of: - Managed Services, providing bespoke software development, support and maintenance; - Contract Services, offering high-value contract staff; and - Permanent Recruitment, assisting companies in hiring IT staff. In addition the Board are seeking to extend the Group's service offerings, bothorganically and through acquisitions. During the first half of the year, the Group has successfully opened two newoffices in London and Bristol and increased its capacity in both Brighton andEdinburgh. The strong level of enquiries referred to in the last full yearstatement are being converted into new business. Profitable GrowthRDF Group is pleased to report that it has continued to build on its success atthe year end with sustained growth in both turnover and profit for the sixmonths ended 30 September 2006. Turnover for the period has increased to £10.6 million from £9.2 million, anincrease of 16% on the first six months of 2005. Operating profit beforeexceptional charges has increased by 36% to £756,000 from £553,000 in the sameperiod last year. Post tax profits for the period are also up to £410,000 from£354,000 after exceptional costs. These exceptional costs arose following, the Company's suspension from having its shares traded on AIM and were the compensation payments to the previous non-executive directors and costs associated with the subsequent lifting of the AIM suspension. The Group's operating margin increased to 22.9% from 20.4% due to firm costcontrol. Undiluted earnings per share before exceptional items were 4.70 pence, anincrease of 38% on the restated 3.40 pence for the same period last year. The Group's net assets now exceed £2.15m, compared with £1.48m on 30 September2005 - equivalent to a net asset per share value of 20.75 pence, compared to17.75 pence at 31st March 2006 - a 17% increase in six months. There was a trading cash inflow of £852,000 in the first half of the year,compared with £485,000 in the first half of last year. The Group spent £221,000of this on capital expenditure on existing and new infrastructure, which whenadded to the cash outflow after tax, dividends and financing resulted in anincrease in cash balances of £335,000, compared to last year's £358,000. At theend of the period, the Group had combined cash balances of £581,000 - anincrease of 158% on the £225,000 it had at the same time last year. Dividend GrowthThe Board's policy is to increase cash returns to shareholders progressivelyover time, taking into account both underlying profitability and the cash flowrequirements of the business. In line with this policy we have declared aninterim dividend of 1.00p. This is an increase of 33% on the 0.75 pence for theperiod to 30 September 2005. The interim dividend will be paid to those shareholders on the register at close of business on 17 November 2006. The shares will be declared ex-dividend on 15 November 2006. Current TradingThe Board is confident that the second half of this financial year will seecontinued growth in demand for its services, with confirmed commitment levels onretained business being matched by an expected further growth in new business.The directors will continue to invest in strategic sales and marketingopportunities, to raise the Group's profile and further increase revenues. The directors are focused on expanding the number of Managed Service clientsthrough new sales initiatives and the up-selling of higher value services toexisting clients. The Group is actively engaged with a number of initiatives toincrease the range of IT-related services it can offer to its clients. Jim Carr Chairman 31 October 2006 GROUP PROFIT AND LOSS ACCOUNTFor the six months ended 30 September 2006 Six months ended Year Ended 30 September 31 March Notes 2006 2005 2006 £'000 £'000 £'000 (restated) (restated) (unaudited) (unaudited) Turnover 2 10,644 9,193 19,673 Cost of sales (8,207) (7,285) (15,532) ------ ----- ------ Gross profit 2,437 1,908 4,141 ------ ----- ------Operating expensesAdministrative expenses (1,681) (1,355) (2,982) ------ ----- ------Operating profit beforeexceptional items 756 553 1,159 Exceptional items 3 (113) - - ------ ----- ------Operating profit 643 553 1,159 Net interest payable (40) (20) (43) ------ ----- ------Profit on ordinary activitiesbefore taxation 603 533 1,116 Taxation on profit fromordinary activities (193) (179) (342) ------ ----- ------Profit for the financialperiod 8 410 354 774 ------ ----- ------Earnings per share (pence) 5Basic 3.94 3.40 7.44Diluted 3.88 3.32 7.26 All disclosures relate only to continuing operations. There are no recognised gains or losses other than the profit for the period. Profit before exceptional items 6Profit before tax 716 533 1,116Profit after tax 489 354 774 GROUP BALANCE SHEETAs at 30 September 2006 Six months ended Year Ended 30 September 31 March Notes 2006 2005 2006 £'000 £'000 £'000 (restated) (restated) (unaudited) (unaudited)Fixed assetsTangible assets 426 198 195 CURRENT ASSETSDebtors 3,755 3,487 4,287Cash at bank and in hand 581 255 246 ----- ----- ----- 4,336 3,742 4,533 ----- ----- -----Creditors: amounts falling duewithin one year (2,553) (2,460) (2,883) ----- ----- -----Net current assets 1,783 1,282 1,650 ----- ----- -----Total assets less currentliabilities 2,209 1,480 1,845 Creditors: amounts fallingafter more than one year (51) - - ----- ----- ----- 2,158 1,480 1,845 ----- ----- -----Capital and reservesCalled up share capital 208 208 208Share premium account 103 103 103Profit and loss account 7 1,847 1,169 1,534 ----- ----- -----Equity shareholders' funds 2,158 1,480 1,845 ----- ----- ----- CASHFLOW STATEMENTFor the six months ended 30 September 2006 Six months ended Year ended 30 September 31 March Notes 2006 2005 2006 £'000 £'000 £'000 (restated) (restated) (unaudited) (unaudited) Net cash inflow from operatingactivities 8 852 485 913 Returns on investments andservicing of financeInterest paid (40) (20) (43) TaxationUK corporation tax (132) - (267) Net capital expenditure andfinancial investment (221) (55) (94) ---- ---- ----- 459 410 509 Equity dividends paid (104) (52) (130) ---- ---- -----Net cash inflow before financing 355 358 379 FinancingPayment to cancel share options (20) - - ---- ---- -----Net cash inflow/ (outflow) fromfinancing (20) - - ---- ---- -----Increase in cash in the period 335 358 379 Net funds at 1 April 2006 246 (133) (133) ---- ---- ----NET FUNDS AT 30 SEPTEMBER 2006 581 225 246 ==== ==== ==== NOTES TO THE INTERIM STATEMENTFor the six months ended 30 September 2006 1. Basis of PreparationThe interim financial statements have been prepared on the basis of theaccounting policies set out in the Company's 2006 statutory accounts subject tothe following change:- The adoption of Financial Reporting Standard 20, Share Based Payments, whichrequires the company to reflect in its profit and loss account the effects ofshare based payments such as employee share options. The company's accountingpolicy is to charge the value of shares granted since 7 November 2002, and notvested before 1 April 2006, to the profit and loss account on a straight linebasis over the period from grant to vesting. The comparative figures for the six months ended 30 September 2005 and the yearended 31 March 2006 have been restated to reflect this change of accountingpolicy. These statements are unaudited and were approved by the Board of Directors on 31October 2006. The financial information contained in these statements does notconstitute statutory accounts as defined in Section 240 of the Companies Act1985. The financial information for the year ended 31 March 2006 has beenextracted from the statutory accounts for that year, as adjusted for the changein accounting policy referred to above. The statutory accounts for the yearended 31 March 2006, which received an unqualified audit report, have been filedwith the Registrar of Companies. 2. Turnover AnalysisSales by service type are: Six months ended Year Ended 30 September 31 March 2006 2005 2006 £'000 £'000 £'000 (restated) (restated) (unaudited) (unaudited) Managed Software Development 5,039 3,973 8,799Temporary Agency Staffing 5,279 5,061 10,496Permanent Recruitment Fees 316 159 348Software and Other Sales 10 0 30 ------ ----- ------ 10,644 9,193 19,673 ====== ===== ====== All the Group's sales are in the United Kingdom. 3. Exceptional ItemsFollowing the resignation of the non-executive directors on 8 August 2006, thecompany's nominated adviser and broker, John East and Partners, resigned.As a result the company's shares were suspended from dealing on AIM. The cost incurred in relation to the resignation of the non-executive directorsand the professional fees for assisting with the lifting of the suspensionwere £113,000. The suspension was lifted on 12 September 2006, following the appointment ofSmith & Williamson Corporate Finance Limited as the company's nominated adviser and broker. 4. Dividends A final dividend for the year ended 31 March 2006 of 1.00 pence per share (31 March 2005: 0.50 pence per share) was paid during the period in bringing the total dividend for the full year ended 31 March 2006 to 1.75 pence per share (31 March 2005: 1.00 pence per share). In respect of the current period, the directors declare that an interim dividend of 1.00 pence per share will be paid to shareholders on 1 December 2006 to those shareholders on the register at close of business on 17 November 2006.The shares will be declared ex-divided on 15 November 2006. The dividend is not included as a liability in the interim statement. 5. Earnings per ShareThe calculation of basic earnings per share of 3.94 pence (30 September 2005:3.40 pence, 31 March 2006: 7.44 pence) is based on the profit on ordinaryactivities after taxation of £410,000 (30 September 2005: £354,000, 31 March2006: £774,000) and on the weighted average number of shares in issue during theperiod and throughout the previous year of 10,400,000. The fully diluted earnings per share amounting to 3.88 pence (30 September 2005:3.32 pence, 31 March 2006: 7.26 pence) has been calculated on the basis ofadding 153,664 (30 September 2005: 273,186, 31 March 2006: 260,900) to theweighted average number of shares to take account of the dilutive effect ofoutstanding share options to give 10,553,664 (30 September 2005: 10,673,186, 31March 2006: 10,660,900) shares in issue assuming that options where the exerciseprice is lower than fair value are exercised. 6. Profit Before Exceptional ItemsProfit before exceptional items and the related earnings per share are shown asthe Board considers them to be relevant guides to the performance of the Group.The tax charge for the period is equivalent to 30.0% (30 Sept 2005 30.0%, 31March 2006 30.0%) of Profit before exceptional items. Six months ended Year Ended 30 September 31 March 2006 2005 2006 £'000 £'000 £'000 (restated) (restated) (unaudited) (unaudited) Profit for the financial period 410 354 774Taxation 193 179 342Exceptional items 113 - - ---- ---- -----Profit before exceptional items 716 533 1,116Underlying tax charge (see below) (227) (179) (342) ---- ---- ----- 489 354 774 ==== ==== ===== Earnings per share (pence) before exceptional items Basic 4.70 3.40 7.44Diluted 4.63 3.32 7.26 The underlying tax charge is calculated as follows:- Taxation on ordinary activities (193) (179) (342)Adjustments to calculateunderlying tax chargeTaxation on exceptional items (34) - - ---- ---- ----Underlying tax charge (227) (179) (342) ==== ==== ==== 7. Profit and Loss Account Six months ended Year Ended 30 September 31 March 2006 2005 2006 £'000 £'000 £'000 (restated) (restated) (unaudited) (unaudited) At 1 March 1,534 845 845Share based payments 27 22 45Compensation paid in lieu ofcancelled options (20) - -Profit for the period 410 354 774Dividends paid in the period (104) (52) (130) ----- ----- ----- 1,847 1,169 1,534 ===== ===== ===== 8. Reconciliation of Operating Profit to Net Cash Inflow From OperatingActivities Six months ended Year Ended 30 September 31 March 2006 2005 2006 £'000 £'000 £'000 (restated) (restated) (unaudited) (unaudited) Operating profit 643 553 1,159Depreciation charges 44 24 66Share based payments 27 22 45Decrease / (Increase) in debtors 530 (635) (1,433)(Decrease) / Increase in creditors (392) 521 1,076 ---- ---- -----Net cash inflow from operating activities 852 485 913 ---- ---- ----- 9. Copies of ReportThe interim statement will be posted to all shareholders and will be availableon request from the Company Secretary, RDF Group plc, 2 Bartholomews, Brighton, BN1 1HG. INDEPENDENT REVIEW REPORT BY BAKER TILLYIntroductionWe have been instructed by the company to review the financial information setout on pages 3 to 9 and we have read the other information in the interimstatement and considered whether it contains any apparent misstatements ormaterial inconsistencies with the financial information. This report, including the conclusion, has been prepared for and only for thecompany for the purpose of their interim statement and for no other purpose. Wedo not, therefore, in producing this report, accept or assume responsibility forany other purpose or to any other person to whom this report is shown or intowhose hands it may come save where expressly agreed by our prior consent inwriting. Directors' responsibilitiesThe interim statement, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The directors areresponsible for preparing the Interim Statement in accordance with the AIMMarket Rules which require that the accounting policies and presentation appliedto the interim figures must be consistent with those that will be adopted in thecompany's annual accounts. Review of work performedWe conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board as if that Bulletin applied. A reviewconsists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand based thereon assessing whether the accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with Auditing Standards and therefore provides a lowerlevel of assurance than an audit. Accordingly we do not express an audit opinionon the financial information. Review conclusionOn the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 September 2006 BAKER TILLYChartered AccountantsInternational HouseQueens RoadBrightonEast SussexBN1 3XE 31 October 2006 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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