This UK recruiter says firing staff is the more expensive option
Key Points
- RTC Group has told investors it will hold its base-level headcount through the rest of 2026, even as competitors across UK recruitment restructure and cut consultants.
- The company's reasoning is that experienced consultants cost too much to replace, and it wants capacity in place if hiring recovers in 2027.
- Profit from operations fell to £0.8 million from £1.3 million in the first half, a drop of 38%, on revenue of £45.2 million.
- Earnings per share fell to 4.21p from 6.62p, though the board held the interim dividend at 1.21p.
- RTC carries no term debt and ended June with £3.8 million in cash, which it cites as the reason it can afford to wait.
RTC Group has told the market it will not cut staff this year. The AIM-listed engineering and technical recruitment group, which trades through the Ganymede, ATA Recruitment and GSS brands, reported revenue of £45.2 million for the six months to 30 June 2026, down from £48.3 million a year earlier.
Profit from operations fell to £0.8 million from £1.3 million. Earnings per share dropped to 4.21p from 6.62p.
Chairman and Chief Executive Andy Pendlebury described UK business confidence as sitting at historically low levels, with employers holding back in response to economic uncertainty, higher employment costs and incoming employment legislation.
He then set out how the rest of the sector has responded – through operational restructuring and headcount reductions – and how RTC intends to respond differently.
The company points to the strength of its balance sheet and the high cost of recruiting experienced consultants, and said it will maintain base-level headcount for the remainder of 2026 so it can capitalise on any upturn in 2027.
Why firing is more expensive
A recruitment consultant with an established client list and a working candidate network takes months to replace and longer to make productive.
Cutting in a downturn converts a fixed cost into a future acquisition cost, and the firm that cuts hardest is the one bidding hardest for the same people when demand returns. RTC’s position is that it would rather carry the salary bill through a soft period than pay to rebuild.
Gross margin held almost flat at 18.3%, against 18.4% a year earlier, so the profit fall traces back to lower revenue rather than pricing collapse. Administrative costs actually fell, to £7.5 million from £7.6 million, even after absorbing government-driven employment cost increases and general price rises.
UK recruitment, the largest division, delivered revenue of £42.3 million against £45.2 million and operating profit of £2.4 million against £2.8 million, with gross margin unchanged at 17.8%.
ATA Recruitment, the group’s permanent recruitment arm, delivered revenues broadly in line with last year.
Pendlebury described a market where employers stay cautious and employees stay put, with lower confidence reducing labour mobility and fewer candidates seeking moves – the double squeeze that makes permanent recruitment revenue difficult to grow in either direction.
RTC ended the period with net assets of £8.0 million, cash of £3.8 million and no term debt or borrowings beyond lease liabilities.
Its facilities with HSBC comprise a £50,000 overdraft and an invoice discounting line of up to £12 million; at 30 June it had drawn on neither. Operating activities generated a net cash inflow of £0.9 million, down from £3.2 million, and the group paid out £0.7 million in dividends.
The board proposed a maintained interim dividend of 1.21p per share, payable on 2 October to shareholders on the register at 4 September.
