Comment on Trading Update by Allenby Capital

RTC Group plc (RTC.L 46p; £6.2m).

Trading update indicates PBT marginally ahead of forecasts

RTC has today issued a brief trading update ahead of its final results to December 2014 which it expects to be announced on 9 March 2015.

The Board of RTC states that it expects that revenue for the year ended 31 December 2014 will be broadly in line with current market expectations and profit before tax will be marginally ahead of current market expectations.

Allenby has forecast revenue of £53m, EBITDA of £1.3m and a profit before tax and share based charges of £0.95m, which on a 22% effective tax rate would result in EPS of 4.81p. This would suggest year-on-year growth of 9% in revenue, 24% in EBITDA and 26% in EPS putting the shares on an historic PER of 9.5x 2014 earnings and just 7.5x those estimated for 2015.RTC is a totally different company to that of just four years ago when it reported regular losses. Under its new management team headed by Andy Pendlebury RTC has been transformed and the business is now well positioned to benefit from the strength of its various end markets, including the government’s £37.5bn investment programme in the UK rail industry which is expected to run until March 2019.The Chairman has commented that all Group businesses have continued to perform strongly and this gives us confidence for our 2015 forecasts and points to a very undervalued Company with plenty of upside to its share price where we currently have a fair value of 55p.