The ReThink Group plc Issues Its Unaudited Interim Results
The ReThink Group plc Issues Its Unaudited Interim Results
Profits double as strategy delivers continued improved performance
The Group (AIM: RTG), one of the UK's leading recruitment and consulting companies, is pleased to announce today its unaudited condensed consolidated Interim Results for the six months ended 30 June 2011.
· Profit before taxation up 100% to £423,000 (H1 2010: £211,000)
· Gross profit (net fee income) up 32% to £7.8m (H1 2010: £5.9m)
· Gross revenues up 27% to £34.4m (H1 2010: £27.0m)
o Contract and Recruitment Process Outsourcing (RPO) revenues up 26% to £30.0m (H1 2010: £23.8m)
o Permanent recruitment revenues up 24% to £2.6m (H1 2010: £2.1m)
o Business Transformation and Technology Services division (Aiimi) revenues up 80% to £1.8m (H1 2010: £1.0m)
· Interim dividend of 0.0986p per share declared (H1 2010: 0.054p)
· Strong organic growth of 17.4% in contractor numbers to 629 at 30 June 2011 (536 at 30 June 2010)
· Continued development and expansion of Aiimi, the Business Transformation and Technology Services division
· Grown client base in ReThink Professional Services, our RPO division and continued expansion within existing customers
· Increased sector and geographic penetration achieved both organically and via acquisition
· Acquisition of Berkley Recruitment (Group) Limited in June 2011
o Provides three further international offices
o Additional expansion into high-value pharmaceutical and life sciences markets
Jon Butterfield, Chief Executive Officer, commented:
"These are excellent results achieved despite very difficult market conditions. The ReThink Group has made good progress across all divisions, with every area of the business growing. Most encouraging is the organic growth the Group has achieved with net fee income increasing by 32%. The results from the majority of our quoted competitors have, on the whole, achieved little or no growth in the UK.
We are continuing to deliver on the long term strategy to expand into additional high-value markets both organically and acquisitively.
The acquisition of Berkley Recruitment Limited in June 2011 expands the Group's reach into Asia, continental Europe and Ireland and, at the same time, increases the Group's reach into new markets, such as the pharmaceutical and life sciences area."
The ReThink Group plc
Jon Butterfield, Chief Executive Officer
Patrick Dundon, Finance Director
Tel: 0161 214 7452
Merchant Securities Limited (Nominated Adviser and Joint Broker)
David Worlidge/Simon Clements
Tel: 020 7628 2200
Rivington Street Limited (Joint Broker)
Tel: 020 7562 3364
John Coles/Fiona Conroy
Tel: 020 7653 9850
About The ReThink Group plc
The ReThink Group plc is an AIM listed recruitment and consulting company. The Group operates from nine locations globally, supporting clients in the UK, Europe, the Middle East and Asia Pacific and has over 800 consultants working on client assignments.
The Group has four main operating companies: ReThink Recruitment, a supplier of business and technology staff on a permanent and contract basis Aiimi, a Business Transformation and Technology Services company that specialises in the delivery of business intelligence and enterprise content management solutions ReThink Professional Services a provider of Recruitment Process Outsourcing and Berkley, a leading global provider of permanent and contract resources to the Pharmaceutical and Life Sciences, Engineering, IT and Commercial sectors.
Chairman and Chief Executive Officer's Statement
The Board is delighted with the Group's performance during the half year. It has progressed across all divisions on a number of fronts, and continues to organically and acquisitively expand its operations geographically as well as into other high-value specialist divisions. As noted at the time of the trading update in July 2011, revenues and gross profit (net fee income) are significantly ahead of the corresponding period in 2010, achieving management expectations by being 27% and 32% up respectively.
The Group has its largest geographical coverage and breadth of service to-date, having completed the acquisition of Berkley Group in June 2011. The enlarged Group now has nine offices in Ireland, the UK, Singapore and Dubai, serving clients throughout Ireland, the UK, Switzerland, the Netherlands, France, Singapore, China, Taiwan, Malaysia, Australia, Fiji and India.
The Group continues to see increases in both contract and permanent revenues, as well as a strong pipeline in the Business Transformation and Technology Services division. In line with our growth strategy, the acquisition of Berkley has increased our geographic coverage whilst simultaneously driving expansion into other high-value recruitment markets.
Aiimi Limited - Business Transformation and Technology Services
The Aiimi division has increased revenues by 80% to £1.8m (H1 2010: £1.0m). The continued progress in Aiimi Limited is important as we believe that this division will add considerable value to the Group in the medium term. During the half year we have grown the customer base, securing projects with new clients in local government, central government agencies, energy, assurance, food & beverage and the media sectors.
Aiimi has made significant investment in cloud technology and expects its strategic focus on delivering subscription based solutions in these areas to grow significantly over the coming months. Aiimi now supports Enterprise Content Management ("ECM") (powered by OpenText) and Business Intelligence ("BI") (powered by MicroStrategy) as a Software as a Service ("SaaS") solution to a number of clients in both the public and private sectors. The Group has continued to invest in the growth of its consulting business, strengthening the ECM and BI teams with a further 10 consultants.
ReThink Professional Services Limited - Recruitment Process Outsourcing (RPO)
In our 2010 final results, we announced that we had secured a three year RPO agreement with a major retail organisation. This agreement with Boots, the UK's leading pharmacy-led health and beauty retailer, has grown in line with our expectations. ReThink is pleased to provide an update on the exclusive three-year supplier agreement with Boots UK, which was signed in September 2010. Under the agreement, ReThink is providing full Recruitment Process Outsourcing for almost all IT contract and interim staff. A managed service team has been created on-site at Boots UK and provides a single point of contact for recruitment advice, ordering, administration, management of information and payments. ReThink has enjoyed encouraging feedback from Boots UK so far, having demonstrated top-level performance in all measured criteria.
The Contract and Recruitment Process Outsourcing (RPO) revenues have increased by 26% to £30.0m (H1 2010: £23.8m).
We are pleased to also report that during the first half of 2011 we have added another significant RPO client to our portfolio, a global online fashion and beauty retailer.
To assist with the development of our strategy within the RPO market we have made further investments in the division during the first half of 2011 to best take advantage of the opportunities currently being seen in this marketplace. The Group looks to continue this investment and expand the RPO division in the medium-term through a possible acquisition, should the right opportunity present itself.
ReThink Recruitment UK, Middle East and Asia
ReThink Recruitment has grown in both the UK and Middle East with net fee income up from £21.7m to £24.4m. The Middle East operations alone have grown by 118.9% in terms of profit before allocation of Group overheads. The first half of the year has seen continued investment in our staff with additional training and development at every grade. We have increased headcount within this division by over 32% compared to June 2010 and have established a number of new practices which we will report more fully on at the year end.
The ReThink Recruitment operations in Singapore have merged with Berkley. The Singapore operations are headed by the former CEO of Berkley, Steve Greenwood, who has responsibility for the continued expansion within this region. As Berkley has been established for over two years in Singapore and service markets across Asia, the Board took the decision not to establish a second brand in the region at this stage.
Acquisition of Berkley Recruitment (Group) Limited
The acquisition of Berkley was completed on 17 June 2011 and has integrated well into the Group. Both Fergal Brosnan and Steve Greenwood have joined the Board of Directors and play an active part in the ongoing development of the Group.
The Group has benefited from the expansion of a number of existing client relationships through Ireland into the UK and Middle East and Asia and demand for services in all three locations has continued to be strong.
In the next stage of the integration, the Group will establish the Berkley Pharmaceutical and Life Science brand within its existing UK office structure and will continue to build on the excellent track record that Berkley have built in this market in both Ireland and Asia.
As of today, the combined Group has just over 800 contractors on billing around the world and permanent revenues are growing. Aiimi is expected to have a strong second half, and the Recruitment Process Outsourcing business will continue to benefit from the existing clients with whom we have long term arrangements in place.
In view of the current demand levels, the Board believes that the Group is positioned positively to meet full year market expectations, and continues to view the future with confidence.
The acquisition of Berkley and the trading results of the Group are included from that date although any material impact will only be felt in the second half. The acquisition of the entire issued share capital was funded by a combination of cash, preference shares in the acquiring subsidiary and ordinary shares in the Group with the main terms of the agreement summarised in note 7 below. The Balance Sheet of the Group at 30 June 2011 contains an estimated calculation of Goodwill and Deferred Consideration based upon the latest information available to the Board.
The consolidated revenues of the Group for the six months ended 30 June 2011 increased 27.4% on the previous period to £34.4m (H1 2010 £27.0m). All business segments experienced growth during the period with contract recruitment and RPO revenues increasing to £30.0m (H1 2010: £23.8m). Permanent revenues experienced a 23.8% increase to £2.6m (H1 2010: £2.1m) and Business Transformation and Technology Services revenues from our Aiimi division grew 80% to £1.8m (H1 2010: £1.0m).
Gross Profit (Net Fee Income) rose to £7.8m from £5.9m in the comparative period last year and margins showed some slight improvement at 22.8% (H1 2010: 22.1%).
Administrative expenses at £7.3m are 30.4% ahead of 2010 (£5.6m) with the continued investment in staff and infrastructure across all divisions being the main factor.
During the first half of the year, the Group incurred some items of non-recurring expenditure relating to the Berkley acquisition and the associated cost of integrating the operations in Singapore into the Berkley Asia operations. The results also benefitted by the settlement of outstanding amounts for deferred consideration following the acquisition of the Proveya operation in 2009. In total, the net addition to overhead of non-recurring items of income and expenditure was £50,000.
Net debt of the business grew to £8.3m (30 June 2010: £4.5m) as the Group has increased its funding facility to cover its current and future requirements. With facilities renewed in the UK and new banking relationships added as a result of the acquisition of Berkley, the Group's funds remain adequate for both its immediate purposes and for its future commitments.
Earnings per share at 0.325p represents an increase of 108.3% (H1 2010: 0.156p).
The Board is pleased to announce that it has declared the Company's interim dividend of 0.0986p (H1 2010: 0.054p) per share, which is payable on 7 October 2011 to shareholders on the register at close of business on 21 September 2011.