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UK – Rethink Group reports revenue and profit growth

24 September 2013

The ReThink Group (RTG: AIM) a UK-based recruitment and consulting company, reported revenue of £56.2 million for the six months to 30 June 2013, an increase of +27.4% from revenue of £44.1 million a year ago.

Gross profit for the period remained relatively steady, year-on-year, at £10.5 million. Net income during the first half of the year was £432,000, an increase of +68% from £257,000. 

Steven Wright, CEO of ReThink, commented: “After the challenges experienced by the Group during the second half of 2012, I am delighted to report that ReThink has moved back into profit. This rise in profitability is attributable to an increase in Net Fee Income alongside the managed reduction in operating costs.”

“The Board is now focussed on progressing the implementation of the revised Group strategy of growth driven by the Talent Management division, underpinned by the Recruitment division. Trading has continued to improve over the summer months, and the Board is confident that the building blocks are in place to enable the Group to pursue its strategy through a combination of sustained organic growth and selective acquisitions,” he added.

Revenue from the company’s Recruitment division during H1 2013 was £36.6 million, an increase of +33.6% from £27.4 million a year ago. The Recruitment division contributed 65% of total Group revenue in 2013, up from 62% last year. Contract recruitment within the division accounted for revenue of £33.1 million this year, up +42% from £23.3 million a year ago. Permanent recruitment revenue during the period was £3.5 million, down -14.7% from £4.1 million during H1 2012.

The Recruitment division provides clients with a quick route through the open market to secure talent. This expanding area covers permanent and contract recruitment, as well as high level interims through one of their three brands; ReThink, Berkley, and executive search firm Otravida.

Revenue from the Group’s Talent Management division was £17.4 million, an increase of +20.8% from £14.4 million last year. The Talent Management division contributed 31% of the total Group revenue, down from 33% from last year. Contract recruitment revenue from the Talent Management division for the period was £17.1 million, up +24.8% from 13.7 million during H1 2012. Permanent recruitment revenue contributed £362,000 to Talent Management revenue, down -49.7% from £728,000 a year ago.  

The Talent Management division provides a broader offering than the Recruitment division. Key services include; managed service provision with a minimum of one year as ‘master vendor’, technology & consultancy services, and projects resourcing together with people project management.   

The remaining Group revenue was derived from the Group’s Business Transformation and Technology Services (BTTS) division. During the first half of 2013, the BTTS division reported revenue of £2.3 million, a fall of -4.4% from revenue of £2.2 million last year. The BTTS division provides technical advice, support, and project management. 

Looking forward, although the company remains cautious about the general economic backdrop in the UK, the company has been encouraged by improving market conditions for both the contract and permanent offerings.

Steven Wright added: “ReThink has undertaken a review of its strategy in the first half of the year and is now starting the implementation of that revised strategy. The Group will continue to follow this going forward to drive future growth opportunities. In particular, ReThink is investing time in evolving its Talent Management service offerings, and is confident that this strategic emphasis will lead to significant shareholder value creation in future.”

“As part of this strategy, ReThink has addressed its resources and cost base. The corporate structure will continue to be enhanced. In addition to this, acquisition opportunities should they be appropriate, will be pursued. The second half of the year has started well, as evidenced with the signing of a new Talent Management contract with a client in the financial services sector. ReThink has a solid contract pipeline and looks forward to the future with increased confidence,” he added.

In trading today, the company’s share price fell -5.6% to £0.08, an increase of +28.9% compared with a year ago. Based on its share price, the company has a current market value of £10.3 million.  

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