RTC Group Maintains Robust Performance and Increases Dividend Amid Economic Headwinds

Permanent recruitment cooled – management cites a 14% like-for-like decline across the white-collar arms after a strong 2024. But RTC flexed into contract and temporary work, where revenue and gross profit grew 9% year on year. That mix shift is exactly what you want to see in a softer macro – it preserves activity and keeps clients supplied.

End market detail matters. Rail remains resilient in maintenance and renewals even as Control Period 7 (CP7 – Network Rail’s 5-year spending plan) enhancement projects start slower than hoped. In energy, Ganymede Energy continues to benefit from the long tail of smart meter installations, upgrades and replacements following the 2025 mandate, with workstreams expected to run through the decade. Water is a growing opportunity as AMP8 (the water industry’s 5-year investment cycle) kicks in, with industry-wide investment expected to exceed £100 billion. These are multi-year programmes that tend to underpin utilisation and pricing.

International division – softer year but rebuilding the run-rate

International revenue fell to £4.5m and operating profit to £0.5m, mainly because a 2024 charter-flight solution was not repeated and a contract ended early in 2025. That said, GSS still contributed positively and secured a new contract in Poland for over 70 personnel, commissioned late in the year with a full run-rate expected in 2026.

The pipeline includes support for NATO and UK/US government-linked projects across Poland, Iraq, Somalia and Diego Garcia. Governments are pushing for more for less, which can slow awards but also opens doors for outsourcing partners like GSS seeking to boost prime contractors’ competitiveness.

Margins, costs and the Derby Conference Centre

Group gross margin ticked up to 18.7% despite well-flagged cost pressures from higher Employers’ NI and the minimum wage. Central Services, including the Derby Conference Centre, saw revenue of £2.1m and gross profit of £1.0m as festive trading softened and cost inflation nibbled at margins. Management chose to absorb some cost increases to maintain client relationships – sensible for lifetime value, but it does cap near-term profit in this segment.

Why this update matters for investors

• Defensive positioning is working. Exposure to essential infrastructure in rail, energy and water is cushioning the cyclicality of permanent hiring.
• Cash and discipline. No term debt, stronger cash generation and prudent use of an invoice discounting facility make the balance sheet robust for a small-cap recruiter.
• Shareholder returns. A higher dividend and ongoing buybacks raised EPS to 14.10p and delivered a 6.9% year-end yield on the figures disclosed.
• Order book visibility. Management talks to a strong and growing order book and references over £700bn of UK multi-sector infrastructure programmes over the coming years.

Risks to keep on the radar:

• Cost headwinds. Employers’ NI, minimum wage rises and the Employment Rights Act will keep pressure on margins in 2026.
• Client concentration. Three UK customers contributed £23.4m, £10.1m and £10.7m of revenue, and one international customer £2.7m. Service reliability and contract retention are key.
• Award timing. CP7 enhancements, AMP8 frameworks and international government contracts can slip, which affects utilisation and revenue timing.
• Macro and geopolitics. The board highlights uncertainty, including tensions in the Middle East, that could affect demand, supply chains or costs.

Key dates and what to watch in 2026

• AGM: 27 May 2026.
• Final dividend timetable: ex-dividend 28 May 2026, record date 29 May 2026, payment 26 June 2026.
• Operational markers: ramp-up of the new Poland contract at GSS; flow of CP7 enhancement work; acceleration of AMP8 hiring needs; continued smart meter upgrade and replacement activity.
• Capital allocation: any further measured buybacks and the board’s stance on targeted acquisitions, with a clear promise to avoid value-destructive deals.

My take

This is a quietly confident set of numbers. Revenue eased a touch, but margins held, UK operating profit stepped up, and cash generation was excellent. In a year when sector peers struggled with cost inflation and soft hiring, RTC protected earnings, boosted EPS and lifted the dividend.

The strategy remains sensible for the cycle: stick close to blue-chip and government-backed infrastructure customers, pivot toward contract and temporary work when permanent slows, and keep the balance sheet clean. Execution through 2026 now hinges on converting that strong order book into higher run-rates as CP7 and AMP8 progress, while keeping a lid on rising employment costs. On the evidence here, RTC looks well set to navigate it.