Rtc Share Discussion Threads

[glennborthwick] 23/1/2014 15:45

interesting 50k trade is a delayed OK trade

[11023154] 23/1/2014 10:22

Mick, more research needed, t/u highlights increased margins, out a few days ago. H1 2013 was also highlighted as expected break-even given implementation of new management. They stated that margins would improve last year in 2012 results. Have a look through their reports to get a better idea.

Glenn, am still reading through allenby report, thanks for that, v much appreciated. I'm hoping that the 2014 can see a proper drive in ATAI, as they seems to be real progress there for others in the sector.

Cheers
Ben

[mickharkins1] 23/1/2014 09:15

I've been doing some research on this one and looks cheap.

A question for glennborthwick - per your post 21 you mention "The key to me is the receivables; Trade and other receivables 9,092 6,471 8,059 over 9 million versus 6.4 million for the traditional quieter first half and even higher than the 8 million at the end of the full year. That suggests to me margins are on the up. Turnover of over 40 million. so a couple of percent margin improvement is transformational."

I may be slow today but how do you deduce that margins are on the up - the reverse is actually the case if you compare first half 2013 versus 2012, gross margin fell from 12.6% to 10.5%?

Also, to me it is a major negative that receivables have grown from 115 days revenue in 2012 to 142 days in 2013 - this has caused them to borrow more to finance the business and implies that they are not managing cashflow very well. I don't know how they compare versus their competitors but taking close to 5 months to collect payment seems very long.

Cheers,

Mick

[glennborthwick] 23/1/2014 00:24

2012 was the first complete year of trading under the group's new reorganised
structure and we take some comfort from the progress achieved during that period.

As illustrated in Exhibit 11, revenue increased substantially, rising by 40% to £43.0m
(£30.7m) and encouragingly, EBITDA for the year as a whole moved from a
breakeven position of £69,000 in 2011 to a profit of £741,000. Earnings, after a tax
credit of £101,000 were £575,000 or 4.26p per share and on a zero tax charge, were
£474,000 or 3.51p per share. The group has tax losses available to offset against UK
generated profits that should result in a zero effective rate in 2013 and 2014.

me now;
allenby are saying 50 million turnover for this year. I think they will be just under that but margins up. If they can add 2% to margins next year that should pretty much go to bottom line or add a million so we could be hitting 1.5 million next year and on a pE of 8 we are talking a market cap of 12 million or rough share price of 100p.

Negative points to note some tasty employee rights at 9p. kick in 2015

[glennborthwick] 23/1/2014 00:13

try this link

[glennborthwick] 23/1/2014 00:13

im going on the basis of the house broker forecast whoa re clearly on the inside. they are forecasting ebitda of 723k and trading statement suggests they will beat that.

This isnt really comparable to rtc of pre2010/11. The type of client they ar e placing and the contracts they are signing are very different. se epage 6;


Exhibit 4 above illustrates the group's revenue and profit record from its Recruitment
division, but as this business has changed its structure significantly over the past two
years, results prior to 2010 are not strictly comparable to the business as it is now
constituted. In particular, we would highlight that RTC has significantly improved the
key performance indicators from its recruitment activities, four examples of which are
identified in Exhibit 5 below:


Exhibit 5: Improvements in KPIs
NFI split:
was 80% permanent/20% contract – is now 30% permanent/70% contract.

Client type:
was 70% SMEs/30% Large Corporates – is now 30% SMEs/70% Large Corporates.

Geographic split by revenue:
was 100% UK – is now 68% UK/32% overseas.

Order book:
was 10% booked/90% spot – is now 60% booked/40% spot.
Source: Allenby Capital

[11023154] 23/1/2014 00:04

Over last 5 years I think 200k profit is highest figure for an H2? Even back in 07/08. I can't find any broker forecasts for RTC. I can't get through to that link either....

[glennborthwick] 22/1/2014 23:57

year out of date but a useful summary of sector

[glennborthwick] 22/1/2014 23:43

In six weeks time we should see 800k of retained profit as well.

[glennborthwick] 22/1/2014 23:40

The key to me is the receivables;
Trade and other receivables 9,092 6,471 8,059

over 9 million versus 6.4 million for the traditional quieter first half and even higher than the 8 million at the end of the full year. That suggests to me margins are on the up.

Turnover of over 40 million. so a couple of percent margin improvement is transformational.

[glennborthwick] 22/1/2014 23:31

5.2m of that is an invoice discount facility linked to the size of the debtor book.

Starting 2012 with net debt of £3.1m, RTC finished the year with the net debt rising to
£3.5m. There was a cash outflow of £1m being the a combination of an increase in
working capital of £0.68m, interest charges of £0.12m and capex £0.26m, offset by
cash generated from operations of £0.74m. The group paid no corporation tax in 2012
and due to available tax losses does not expect to pay tax in 2013 or 2014.

The group has an Invoice Discount Facility of £5.2m, linked to the size of the debtor
book, on which it pays interest at 2.25% over base and last year the draw down varied
between £3.5m and £4.5m.

[aishah] 22/1/2014 23:07

Net debt of £7.84m against a mkt cap of £2m according to advfn! June 2013 net debt @£4.8m
Enterprise value of £2.03m

[11023154] 22/1/2014 22:59

Cheers for that Glenn.

Yep, been doing some digging myself and RTC looks a pretty good but still slightly risky play.

It seems the directors are pretty pleased with how their new management have conducted themselves, they did forecast as well in results for 2012 that H2 2013 would be really strong. And it seems they will be proved right.

It's two things for me though - the recovering global economy is a dangerous play on its own so for that reason I wouldn't stick around for long but the key for me is the increase in the margins, that's crucial and that I believe will get the share price moving, the new management implementation could unlock growth and better margins. However it's still early days for them, which means we get the bargain price on that risk. Other than that, 2 years down the line I really can see this back at 2005 levels if we see strong global figures. I'm getting ahead of myself but nonetheless a calculated play here.


Will be looking to add anyway, 24p a share is still a bargain if you look at 2014 and beyond, well it must be.

GL, think we've got a winner here.

Ben

[glennborthwick] 22/1/2014 18:14

RTC is a recruitment agency. Market cap is just 2 million. Current share price 24p to buy. There has been volatile trading during the recession but looks well set for the recovery. This week saw a very encouraging trading update ; The final results for the financial year to 31 December 2013 are expected to show a material improvement in profit before tax against market expectations, reflecting:

· Group revenue broadly in line with market expectations;
· a marked improvement in gross margins achieved; and
· efficiencies in administrative expenses.
so what are market expectations. House broker seems to be Allenby Capital and they have a year old research document;
hxxp://www.allenbycapital.com/research/rtcgroup270313.pdf. They are expecting 4.4p. I would suggest that we are therefore n for that and a bit more hopefully 5p. Putting this on a PE of under 5. 65% of shares are held by directors so strong incentive there and not much free float so significant shares are tricky to get hold of but a grand here and there have been going through regularly. Net debt is about 3 million so not too bad. Half yearly report showed good progress with traditionally the second half showing all the profits. Crucially for me was trade receivables up to over 9 million from 6.4 million showing significant progress.

Average PE for the sector is between 8 and 10 dependent on the size of the company. I expect 5peps to be announced on March 19th when the share price should head to 40p so not long to wait then and 70p should the recovery show some strength by the interims in August.

Board look excellent and they added some key staff in the first half. All in all a great micro cap opportunity.

[11023154] 22/1/2014 13:31

Hays - which many outline as a good global view of recruitment industry highlighted 18% growth in Asia......

[glennborthwick] 22/1/2014 10:36

Yep really undervalued.

[tomboyb] 22/1/2014 10:08

Good trading update yesterday - for a company now capitalised at 1.98million - there is a lot of business here -

[glennborthwick] 21/1/2014 22:49

think its probably worth 35p average PE for sector is 8 and they should make 5p a share come march

[11023154] 21/1/2014 22:43

I'm probably going to look to add over the next few months.

[11023154] 21/1/2014 22:42

Yer I despise these wide spreads, but seems it's that way due to lack of stock.

[glennborthwick] 21/1/2014 22:02

looks good but spread quite large

[glennborthwick] 21/1/2014 21:37

yep watching this as well. If they can make 600k second half will double imo. Need some broker forecasts.