TIDMRTG
RNS Number : 1721D
ReThink Group (The) PLC
25 April 2013
25 April 2013
The Rethink Group plc
("Rethink" or the "Group")
Final Results
The Rethink Group plc (AIM: RTG), one of the UK's leading
recruitment, talent management and technology services companies,
announces its final results for the year ended 31 December
2012.
Financial highlights
-- EBITDA* of GBP0.2m (2011: GBP2.3m) reflecting increased
personnel costs
-- Revenue increased 15.6% to GBP91.2m (2011: GBP78.9m)
-- Loss from operations GBP0.5m** (2011: profit GBP2.1m)
-- Net Fee Income ("NFI") increased to GBP20.1m (2011:
GBP18.1m)
-- Talent Management NFI increased to GBP4.1m (2011 restated:
GBP2.6m)
-- Net borrowings*** increased to GBP11.3m (2011: GBP7.1m) due
to working capital requirements
-- Cash absorbed by operations GBP3.1m (2011: generated
GBP0.3m)
-- Adjusted basic loss per share before separately identifiable
items of 0.436 pence (2011: earnings of 1.422 pence)
-- New GBP20m banking facility agreed with Bank Leumi post the
financial year end, replacing existing arrangements
* Before separable items which include goodwill impairment of
GBP0.4m (2011: nil) and reduction of acquisition consideration of
GBP0.2m (2011:GBP0.8m)
** After deducting goodwill write down of GBP0.4m against
investment in Singapore
*** Net borrowings are cash at bank less bank borrowings under
Invoice Discounting arrangements
Operational highlights
-- Recruitment
- Growth in contractor numbers to a record 894 (2011: 837) and
permanent recruitment also at record levels
- Launched a retail specialist business to service growing retail client base
- The Berkley Group grew its contractor numbers to over 200 in 2012 (2011: 155)
-- Talent Management
- Awarded "Overall Key Supplier of the Year 2012" by a leading
UK retailer, for the second consecutive year
-- Technology Services
- Aiimi, the technology services offering, achieved record revenues of GBP3.9m (2011: GBP3.8m)
- Signed an agreement with SAP; the Group is now an official certified delivery partner
-- The Group implemented and completed a restructure of all
operations in the second half of 2012
-- Revised Group strategy developed and in the early stages of
implementation
Steve Wright, Interim CEO of Rethink plc, commented:
"These results reflect a challenging period for the Group;
however the operational progress achieved clearly demonstrates the
quality of the Rethink offering. Over expansion during the first
half of the year resulted in the Group having to quickly undertake
remedial steps to restore it to expected levels of profitability. A
revised strategy is being implemented to develop and expand the
Managed Service offerings to reflect a rapidly growing market
opportunity and better position the Group to optimise medium to
long term growth.
"The Board has now undertaken an extensive review of the Group's
operations and processes and as a result I am confident we now have
a strong platform, with an excellent and loyal client base, to
support our growth plans.
"I am pleased to report that Rethink is trading profitably in
the new financial year, with results from the first quarter in line
with management expectations."
For further information please contact:
Rethink Group plc
Steve Wright, Interim CEO 07836 226902
Shore Capital
Bidhi Bhoma/Edward Mansfield 0207 408 4090
Newgate Threadneedle
John Coles/Fiona Conroy 020 7653 9850
About the Rethink Group plc
Rethink Group (AIM: RTG) provides business transformation
services through three divisions; recruitment, talent management
and technology. These divisions work in synergy and support our
growing customer base.
The Group supports clients across the UK, Europe, Middle East,
Asia Pacific and the US.
For more information please visit our website:
www.rethinkgroupplc.com
Chairman's Statement
Despite several operational highlights during the course of the
year, our business performance and results in 2012 were
disappointing and the Board has put in place measures to address
this.
The Group embarked on aggressive expansion plans during 2011 to
early 2012. Over the course of 2012 it became clear that the plans
were over ambitious and had over-stretched the Group's management
and infrastructure. The investment in additional headcount combined
with challenging market conditions exacerbated the effects of this
on the Group's performance. Consequently, the Board undertook a
cost cutting programme during the course of the second half of 2012
in reaction to the subdued market conditions.
Subsequent to the year-end steps were taken to implement a new
and increased level of rigour and accountability which, although in
its earliest stages, is already beginning to yield positive
results. A fundamental review of the Group's strategy has been
undertaken and a more focussed approach is being put in place,
which best leverages the strengths and capabilities inherent to
Rethink that have contributed to the Group's strong growth in the
previous eight years.
The increased profitability of the Talent Management business
demonstrates the potential of this division and the power of a
partnership approach to client engagement. In 2012, revenues in our
Talent Management division contributed 31% (2011: restated 32%) of
the Group's revenues but materially increased contribution from
on-going operations to GBP2.5m (2011: restated GBP1.3m). The Board
plan to grow this significantly over the next three years.
Financial performance
Revenue for the year grew by 15.6% to GBP91.2m (2011: GBP78.9m),
driven by growth in contractor numbers and in permanent placements.
Net Fee Income ("NFI"), which is the more meaningful measure of
growth, increased to GBP20.1m (2011: GBP18.1m) and EBITDA was
GBP0.2m (2011: GBP2.3m). Losses before tax were GBP0.8m (2011:
GBP2.5m), a reflection of the substantial personnel cost increase
absorbed in the first part of the year. Furthermore a goodwill
impairment of GBP0.4m relating to the acquisition of The Berkley
Group was incurred in the year.
People
Our staff numbers increased to 258 at mid-year before the
managed reduction to 208 at year end (202 at 31 December 2011).
Rethink has a high quality base of talented and enthusiastic people
who are central to the success of Rethink, and I would like to
thank them for their continued efforts.
We continue to offer training programmes at all levels and the
Rethink Academy has proven itself to be very successful in
supplying future personnel for our growing business.
Board Changes
Jon Butterfield, the Group's CEO, left the Group on 16 January
2013 following the Board's decision to review its future strategy
on how best to embark on its next stage of growth. We would like to
thank Jon for his contribution over the last eight years and we
wish him very well in his future endeavours. Jon retains a
significant shareholding and has been retained on a twelve month
consulting contract.
Stephen Wright who joined the Board as our Chief Financial
Officer in March 2012 has been appointed to the role of Interim CEO
with Andrew Lord, Managing Director of the Recruitment Division,
being appointed Chief Operating Officer.
Dividend
In view of the financial performance during the year, the Board
has decided that it is not in the best interests of shareholders to
recommend a dividend.
John Sadiq
Chairman
Interim Chief Executive's Statement
Introduction
Despite the disappointing return from the investment programme,
Group revenues increased to GBP91.2m in 2012 (2011: GBP78.9m),
representing growth of 15.6%, and NFI also grew from GBP18.1m to
GBP20.1m. We are pleased that it is the eighth successive year of
revenue and NFI growth since the Group was formed. The Group
navigated a very challenging period, having quickly taken remedial
steps and I am pleased that positive results and greater clarity of
purpose are now evident in trading in the new financial year.
The management team is now more clearly focussed on driving
performance and accountability throughout the Group, and is
confident that this will be reflected in the operating results.
This approach will enable the Group to resume a path of steady
growth that had previously been achieved consistently since
2005.
The Group's three divisions are Recruitment, Talent Management
and Technology Services, offering complementary products and
services.
Recruitment
Recruitment is represented by the subsidiaries: Rethink
Recruitment Solutions Limited, Otravida Search Limited (formerly
known as Integritas Recruitment Limited), Rethink Group Inc,
Rethink MEA FZCO, Berkley Recruitment (Group) Limited and Berkley
Recruitment Group (Asia) Pte. Limited, with all subsidiaries
involved in both permanent and contract recruitment. Permanent
recruitment involves the placing of candidates in permanent
employment roles. Contract recruitment involves the placing of
candidates in fixed term roles.
Our Recruitment division provides contract, interim, permanent
and executive search solutions to a wide range of clients globally,
including SAB Miller, Ericsson and Google.
Revenues for our recruitment business were GBP58.7m representing
64% of the Group's total in 2012. NFI increased to GBP14.1m in the
year (2011 restated: GBP12.7m) and contribution from on-going
operations was GBP0.7m (2011: restated GBP4.0m).
Talent Management
Talent Management is currently represented by Rethink
Professional Services Limited and parts of Rethink Recruitment
Solutions Limited and is also involved in both permanent and
contract recruitment as part of a wider managed services offering
to larger corporates. As highlighted in 2011, this division
continues to increase in importance. In the current and previous
financial year we have more accurately reflected the allocation
between Talent Management and Recruitment to ensure the Talent
Management segment more fully reflects its associated income and
costs.
Our Talent Management business is underpinned by long term
contracts and provides our clients with a range of consulting and
managed services in the Business, Technology, Life Sciences and
Pharmaceutical sectors, which are showing growth in our non-UK
markets.
With long term relationships in place with prestigious
organisations, high street retailers and other large corporations,
we are building a track record that is opening up further
opportunities for the Group. The highlight for this division was
the award from a leading UK retailer of 'Overall Key Supplier of
the Year 2012'; the second year in succession that our services
have been so highly acclaimed.
The adoption of the Group's Talent Management solutions is
providing clients with measurable on-going benefits such as
improved quality, efficiency and effectiveness, whilst providing a
better return on investment. These are key qualities in today's
demanding business environment and are crucial to the Group's
success.
Revenues for our Talent Management division were GBP28.6m,
representing 31% of the Group's total in 2012. NFI increased to
GBP4.1m (2011: GBP2.6m), and contribution from on-going operations
increased significantly to GBP2.5m (2011: GBP1.3m). This division
is a key part of our strategy moving forward.
Technology Services
Technology Services is represented by Aiimi Limited ("Aiimi").
The segment is involved in providing technical consulting,
software, Software as a Service ("SaaS"), support and project
management.
Aiimi continues to grow and we are currently reviewing this
division's strategy in order to take its development to the next
stage.
The division specialises in providing integrated solutions that
enable clients to manage and analyse information stored across
their enterprises. Our Technology Service division focuses on
Enterprise Information Management (EIM) and Business Intelligence
(BI) through offerings that comprise consulting, software
distribution, support and SaaS deployment. This division has
partnerships with some of the leading technology and services
companies in the market, including Microsoft, SAP and OpenText
NFI decreased to GBP1.9m (2011: GBP2.9m). The division has
developed a more sophisticated cost allocation model, and costs
previously classified as administrative are now reflected within
the gross margin. The model was not available to management for the
prior year and so the comparative has not been restated.
Contribution from on-going operations was GBP0.02m compared to
GBP0.23m in 2011 as the division has continued to invest in the
range of offerings and in-house skill capacity.
Clients
Our client base is a source of great pride. We believe that the
growth in our Talent Management business demonstrates the power of
a partnership approach to client engagement. Rethink works closely
to support clients in meeting their challenges; a key
differentiator and strength of the Group.
We will continue to deepen our relationships through our Talent
Management Services, becoming increasingly valuable partners to our
clients in the years to come.
Outlook
Our experience of over-expansion combined with a continuing
challenging economic environment in 2012 has served as a reminder
that we must remain cautious in our expansion plans, and that
investment success requires stringent, careful management. The
Board has reviewed and refined the Group's operations and processes
and as a result, we believe it is now has a strong position and an
excellent client base from which to grow. I am pleased to report
that Rethink is trading profitably in the new financial year, with
results from the first quarter in line with management
expectations.
Group Strategy
Our focus on long term client relationships is a key
differentiator for Rethink and our strategy is to continue to
develop and expand the Talent Management offering. This will
produce much longer term annuity revenues and profits for the
Group.
Our objective is to work towards a greater involvement with our
clients in long term relationships. The Board believes that
Rethink's business model must continue to transition from a group
delivering transactional recruitment services to an increasingly
trusted and strategic partner to our clients. To this end, we will
engage with our clients to provide them with a full service Talent
Management solution that addresses their needs and requirements in
the Business and Technology transformation sector, as well as Life
Sciences and Pharmaceuticals, through the Berkley brand. The Talent
Management landscape is ever evolving; this is a challenge for our
clients which Rethink is ideally positioned to help them
address.
We will continue to work closely with clients and partners to
identify key talent issues, ranging from employer branding, talent
pooling, assessment and selection. Rethink will increasingly
support the hiring, on-boarding and development of all talent, so
that the Group is ideally positioned to support clients' future
success. We will increasingly offer end-to-end recruitment
outsourcing services to ensure all talent requirements for our
clients are delivered in the most efficient and cost effective
way.
The Board believes that through this strategy of deeper and more
sustainable client engagement, the Group will become a stronger
business, resulting in more sustainable recurring revenue
streams.
Stephen Wright
Interim CEO
Financial Review
Income Statement
Earnings before Interest, Tax, Depreciation and Amortisation
('EBITDA')
The Group's preferred measure of profitability is EBITDA, since
this is the measure which most appropriately provides a guide to
the underlying cash generative capability of the Group.
For 2012, EBITDA before separable items fell to GBP0.2m (2011:
GBP2.3m).
Loss before Tax
Loss before tax amounted to GBP0.8m, (2011: profit GBP2.5m).
This was after an impairment charge of GBP0.4m (2011: nil) and
separable finance income of GBP0.2m (2011: GBP0.8m).
Earnings per Share
In the current year, the basic loss per share was 0.678 pence
per share (2011: earnings of 2.219p).
EBITDA per Share
EBITDA per share for the year was 0.175p (2011: 2.383p).
Cash Flow
During the year, cash absorbed by operations amounted to GBP3.1m
(2011: cash generated GBP0.3m), which after payment of corporation
tax of GBP0.4m (2011: GBP0.3m) led to a net absorption from
operating activities of GBP3.5m (2011: cash generated
GBP0.05m).
Net cash absorbed by investment activities amounted to GBP0.3m
(2011: GBP1.4m).
Financing through invoice discounting amounted to GBP4.4m (2011:
GBP1.5m), together with GBP0.3m (2011: GBP0.2m) of share proceeds,
which was offset by the payment of interest of GBP0.4m (2011:
GBP0.3m), repayment of borrowings and leases of GBP0.1m (2011:
GBP0.1m) and a dividend payment of GBP0.3m (2011: GBP0.2m).
In overall terms, cash and cash equivalents increased by GBP0.2m
during the year (2011: GBP0.4m decrease).
Balance Sheet
Net Assets
Net assets fell to GBP5.2m (2011: GBP5.9m), of which GBP4.6m
(2011: GBP5.1m) related to non-current assets, the largest single
item being goodwill of GBP4.0m (2011: GBP4.7m). The Board
determined it was appropriate to make a single impairment charge in
the year of GBP0.4m against the carrying value of goodwill relating
to its investment in Singapore following a review of future
profitability.
Net current assets have decreased to GBP0.7m (2011:
GBP1.0m).
Working Capital
Trade and other receivables amounted to GBP22.9m (2011:
GBP20.2m).
The Group's average debtor days amounted to 40 days (2011: 36
days).
Cash and Debt
Cash at the year-end was GBP1.1m (2011: GBP0.9m), and bank
borrowings under invoice discounting arrangements were GBP12.4m
(2011: GBP8.0m).
Banking Facilities
Following the year end, the consolidated banking facilities
available to the Group amounted to GBP19.3m.
Following the financial year end the Group entered into an
agreement with Bank Leumi to replace its existing banking
facilities with a new facility of GBP20.0m. The terms of this
agreement are sufficient to cover the future foreseeable working
capital requirements of the Group. Preference shares of GBP0.6m
(2011: GBP0.2m) are redeemable in 2013.
Acquisition and Goodwill
During the financial year, the deferred consideration following
the acquisition of the Berkley Group crystallised at a reduction of
GBP0.13m. This has been recognised in the Statement of
Comprehensive Income. Goodwill was assessed for impairment and the
Directors have concluded, following a review of future cashflows
projections that an impairment charge of GBP0.42m was required
against the investment in operations in Singapore. Translation of
goodwill at the year end led to a forex movement of GBP0.31m. The
Board considered the carrying value of goodwill in the Balance
Sheet of GBP4.0m (2011: GBP4.7m) to require no further impairment
charge.
Patrick Dundon
Interim Director of Finance
Consolidated statement of comprehensive income
For the year ended 31 December 2012
Before Separately Before Separately
separately identifiable separately identifiable
identifiable items Total identifiable items Total
items (note 8) 2012 items (note 8) 2011
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
================= ====== ============== =============== ======== ============== =============== ===============
Revenue 91,201 - 91,201 78,898 - 78,898
Cost of sales (71,083) - (71,083) (60,760) - (60,760)
========================= ============== =============== ======== ============== =============== ===============
Gross profit 20,118 - 20,118 18,138 - 18,138
Administrative expenses (20,208) (422) (20,630) (16,085) - (16,085)
========================= ============== =============== ======== ============== =============== ===============
Earnings before interest,
tax, depreciation and
amortisation 193 - 193 2,313 - 2,313
Amortisation,
depreciation and
impairment (283) (422) (705) (260) - (260)
========================= ============== =============== ======== ============== =============== ===============
(Loss)/profit from
operations (90) (422) (512) 2,053 - 2,053
Finance expense (399) - (399) (301) - (301)
Finance income 1 155 156 3 774 777
========================= ============== =============== ======== ============== =============== ===============
(Loss)/profit before
taxation (488) (267) (755) 1,755 774 2,529
Tax credit/(expense) 7 - 7 (375) - (375)
========================= ============== =============== ======== ============== =============== ===============
(Loss)/profit for the
year (481) (267) (748) 1,380 774 2,154
Other
comprehensive
expense
Foreign currency exchange
differences on
translation of foreign
operations (307) - (307) (34) - (34)
========================= ============== =============== ======== ============== =============== ===============
Total comprehensive
(expense)/income for the
year (788) (267) (1,055) 1,346 774 2,120
========================= ============== =============== ======== ============== =============== ===============
All the loss and comprehensive expense for the year is
attributable to equity holders of the parent.
(Loss)/earnings per share Pence Pence Pence Pence
========================== ======= ======= ======= =====
Basic 3(0.436) (0.678) 1.422 2.219
Diluted 3(0.436) (0.678) 1.369 2.137
========================== ======= ======= ======= =====
Consolidated statement of changes in equity
For the year ended 31 December 2012
Share Retained Shares Translation
Capital Earnings Share Premium to be Issued Merger Reserve Reserve Total
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
================ ======== ================ ============= ============= ============== ================ ========
At 1 January
2011 93 1,174 1,520 33 218 (15) 3,023
Changes in
equity for the
year ended 31
December 2011
Profit for the
year - 2,154 - - - - 2,154
Other
comprehensive
expense for the
year - - - - - (34) (34)
---------------- -------- ---------------- ------------- ------------- -------------- ---------------- --------
Total
comprehensive
income for the
year - 2,154 - - - (34) 2,120
Contributions by
and
distributions to
owners
Recognition of
share-based
payment expense - 4 - - - - 4
Issue of shares 8 - 860 - - - 868
Share options
exercised 3 - 148 - - - 151
Dividends paid - (227) - - - - (227)
---------------- -------- ---------------- ------------- ------------- -------------- ---------------- --------
Total
contributions
by and
distributions
to owners 11 (223) 1,008 - - - 796
At 31 December
2011 104 3,105 2,528 33 218 (49) 5,939
Changes in
equity for the
year ended 31
December 2012
Loss for the
year - (748) - - - - (748)
Other
comprehensive
expense for the
year - - - - - (307) (307)
================ ======== ================ ============= ============= ============== ================ ========
Total
comprehensive
expense for the
year - (748) - - - (307) (1,055)
Contributions by
and
distributions to
owners
Recognition of
share-based
payment expense - 5 - - - - 5
Issue of shares 4 - 317 (33) - - 288
Share options
exercised 6 - 300 - - - 306
Dividends paid - (254) - - - - (254)
---------------- -------- ---------------- ------------- ------------- -------------- ---------------- --------
Total
contributions
by and
distributions
to owners 10 (249) 617 (33) - - 345
At 31 December
2012 114 2,108 3,145 - 218 (356) 5,229
================ ======== ================ ============= ============= ============== ================ ========
Consolidated statement of financial position
As at 31 December 2012
2012 2011
Notes GBP'000 GBP'000
================================================================== ===== ======== =========
Assets
Non-current assets
Goodwill 5 3,966 4,703
Investment 5 -
Property, plant and equipment 6 530 322
Intangible assets 7 80 80
Deferred tax asset 24 17
================================================================== ===== ======== =========
Total non-current assets 4,605 5,122
================================================================== ===== ======== =========
Current assets
Trade and other receivables 8 22,859 20,154
Cash and cash equivalents 1,121 892
Corporation tax asset 4 -
================================================================== ===== ======== =========
Total current assets 23,984 21,046
================================================================== ===== ======== =========
Total assets 28,589 26,168
================================================================== ===== ======== =========
Liabilities
Current liabilities
Trade and other payables 9 (10,195) (10,480)
Loans and borrowings 10 (13,114) (8,005)
Deferred consideration 11 - (1,151)
Corporation tax liability - (364)
================================================================== ===== ======== =========
Total current liabilities (23,309) (20,000)
================================================================== ===== ======== =========
Net current assets 675 1,046
================================================================== ===== ======== =========
Non-current liabilities
Loans and borrowings 10 (40) (223)
Deferred tax liability (11) (6)
================================================================== ===== ======== =========
Total non-current liabilities (51) (229)
================================================================== ===== ======== =========
Net assets 5,229 5,939
================================================================== ===== ======== =========
Equity
Share capital 114 104
Share premium account 3,145 2,528
Merger reserve 218 218
Translation reserve (356) (49)
Shares to be issued - 33
Retained earnings 2,108 3,105
================================================================== ===== ======== =========
Total equity attributable to equity holders of the parent company 5,229 5,939
================================================================== ===== ======== =========
Consolidated statement of cash flows
For the year ended 31 December 2012
2012 2011
Notes GBP'000 GBP'000
================================================ ===== ============== ========
Cash flows from operating activities
(Loss)/profit before tax (755) 2,529
Adjustments for:
Share-based payment expense 5 4
Depreciation charges 6 199 175
Amortisation 7 84 85
Impairment of goodwill 422 -
Finance expense 399 301
Finance income (156) (777)
================================================ ===== ============== ========
198 2,317
Increase in trade and other receivables (2,705) (3,832)
Decrease in inventories - 85
(Decrease)/increase in trade and other payables (578) 1,734
================================================ ===== ============== ========
Cash (absorbed by)/generated from operations (3,085) 304
Corporation tax paid (363) (251)
================================================ ===== ============== ========
Net cash (absorbed by)/generated from operating
activities (3,448) 53
================================================ ===== ============== ========
Cash flows from investing activities
Purchase of property, plant and equipment (242) (163)
Purchase of intangible assets 7 (84) (46)
Purchase of investment (5) -
Purchase of subsidiary undertaking net of cash
acquired 11 - (1,202)
Finance income 1 3
================================================ ===== ============== ========
Net cash absorbed by investing activities (330) (1,408)
================================================ ===== ============== ========
Cash flows from financing activities
Finance costs paid (399) (301)
Net change in advances on invoice discounting
facility 4,435 1,477
Repayment of long-term borrowings - (34)
Repayment of finance leases (80) (80)
Proceeds from issue of share capital net of
issue costs 305 151
Payment of dividend (254) (227)
================================================ ===== ============== ========
Net cash generated from financing activities 4,007 986
================================================ ===== ============== ========
Net change in cash and cash equivalents 229 (369)
Cash and cash equivalents at start of year 892 1,261
================================================ ===== ============== ========
Cash and cash equivalents at end of year 1,121 892
================================================ ===== ============== ========
Notes to the financial statements
For the year ended 31 December 2012
1. Basis of preparation
The Group's full financial statements, on which this financial
information is based, have been prepared in accordance with
International Financial Reporting Standards ('IFRS') as issued by
the International Accounting Standards Board ('IASB'),
International Financial Reporting Interpretations Committee
('IFRIC') interpretations and Standing Interpretations Committee
('SIC') interpretations as adopted and endorsed by the European
Union ('EU') and with those parts of the Companies Act 2006
applicable to companies reporting under IFRS.
Going concern
The Directors believe that the use of the going concern basis of
accounting is appropriate because they consider that the Group has
adequate financial resources and available facilities, together
with long-term contracts with a number of customers. As such the
Directors believe that the Group is well placed to manage its
business risks successfully. The Directors have a reasonable
expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future.
Following the year end the Group entered into an agreement with
Bank Leumi to replace its existing banking facilities with a new
three year facility. The Directors have considered the covenants
and the adequacy of the facility and believe that they are suitable
for the foreseeable future.
The Directors therefore continue to adopt the going concern
basis of accounting in preparing the financial statements.
2. Segment information
Reportable Segments
Factors that management use to identify the Group's reportable
segments
The Group's three reportable segments, being Recruitment, Talent
Management and Technology Services are sectors that offer different
products and services. They are managed separately having a
dedicated Director, and separate reporting within the internal
information provided to the management team including the
Directors.
Measurement of operating segment profit and assets
The accounting policies of the operating segments are the same
as those described in the summary of significant accounting
policies.
Recruitment, Talent Management and Technology Services are
evaluated for performance on the basis of contribution.
The Group's three reportable divisions are Recruitment, Talent
Management and Technology Services, offering complementary products
and services.
Recruitment is represented by the subsidiaries, Rethink
Recruitment Solutions Limited, Otravida Search Limited (formerly
known as Integritas Recruitment Limited), Rethink Recruitment
(Southend) Ltd, Rebuild Recruitment Services Limited, Rethink Group
Inc, Rethink MEA FZCO, Berkley Recruitment (Group) Limited and
Berkley Recruitment Group (Asia) Pte. Limited with all subsidiaries
involved in both permanent and contract recruitment. Permanent
recruitment involves the placing of candidates in permanent
employment roles. Contract recruitment involves the placing of
candidates in fixed term roles.
Talent Management is currently represented by Rethink
Professional Services Limited and parts of Rethink Recruitment
Solutions Limited and is also involved in both permanent and
contract recruitment. As highlighted in 2011, this division
continues to increase in importance. In the current and previous
financial year we have more accurately reflected the allocation
between Talent Management and Recruitment to ensure the Talent
Management segment more fully reflects its associated income and
costs.
Technology Services is represented by Aiimi Limited. The segment
is involved in providing technical consulting, software, SaaS,
support and project management.
Technology
Recruitment Talent Management Services Unallocated Total
2012 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
================================================ ============ ================= ========== =========== ========
Contract revenue 51,540 26,948 - - 78,488
Permanent revenue 7,153 1,618 - - 8,771
Technology Services - - 3,942 - 3,942
================================================= =========== ================= ========== =========== ========
Total revenue 58,693 28,566 3,942 - 91,201
================================================= =========== ================= ========== =========== ========
Gross profit 14,084 4,102 1,932 - 20,118
Administrative expenses (13,386) (1,634) (1,917) - (16,937)
================================================= =========== ================= ========== =========== ========
Contribution from ongoing operations 698 2,468 15 - 3,181
================================================= =========== ================= ========== =========== ========
Central administrative expenses (3,693) (3,693)
================================================= =========== ================= ========== =========== ========
Earnings before interest, tax, depreciation and
amortisation (229)
Amortisation and depreciation (283)
================================================= =========== ================= ========== =========== ========
Loss from operations (512)
Finance costs (399) (399)
Finance income 156 156
================================================= =========== ================= ========== =========== ========
Loss before tax (755)
================================================= =========== ================= ========== =========== ========
Statement of financial position
Reportable segment assets 21,487 5,195 1,907 - 28,589
Reportable segment liabilities (16,817) (5,176) (1,365) - (23,360)
================================================= =========== ================= ========== =========== ========
Technology
Recruitment Talent Management Services Unallocated Total
2011 (restated) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
================================================ ============ ================= ========== =========== ========
Contract revenue 43,310 24,836 - - 68,146
Permanent revenue 6,493 507 - - 7,000
Technology Services - - 3,752 - 3,752
================================================= =========== ================= ========== =========== ========
Total revenue 49,803 25,343 3,752 - 78,898
================================================= =========== ================= ========== =========== ========
Gross profit 12,666 2,612 2,860 - 18,138
Administrative expenses (8,679) (1,267) (2,626) - (12,572)
================================================= =========== ================= ========== =========== ========
Contribution from ongoing operations 3,987 1,345 234 - 5,566
================================================= =========== ================= ========== =========== ========
Central administrative expenses (3,513) (3,513)
================================================= =========== ================= ========== =========== ========
Earnings before interest, tax, depreciation and
amortisation 2,313
Amortisation and depreciation (260)
================================================= =========== ================= ========== =========== ========
Profit from operations 2,053
Finance costs (301) (301)
Finance income 777 777
================================================= =========== ================= ========== =========== ========
Profit before tax 2,529
================================================= =========== ================= ========== =========== ========
Statement of financial position
Reportable segment assets 15,144 8,234 2,790 - 26,168
Reportable segment liabilities (9,959) (8,151) (2,119) - (20,229)
================================================= =========== ================= ========== =========== ========
Segment reportable administrative expenses consist primarily of
staff, office, general expenses and depreciation.
Segment reportable assets consist primarily of property, plant
and equipment, intangible assets, inventories, trade and other
receivables and cash.
Segment reportable liabilities consist primarily of trade and
other payables, bank loans and finance leases and tax payable.
External revenue Non-current assets
by location of customers by location of assets
--------------------------- ------------------------
2012 2011 2012 2011
Geographical information GBP'000 GBP'000 GBP'000 GBP'000
========================= ============= ============ =========== ===========
United Kingdom 74,343 72,688 4,555 4,522
Other 16,858 6,210 50 600
91,201 78,898 4,605 5,122
========================= ============= ============ =========== ===========
Revenues from single customers do not exceed 10% or more of
total Group revenues in 2012 or 2011.
3. (Loss)/earnings per share
2012 2011
GBP'000 GBP'000
=========================================================== ======== ========
Numerator
(Loss)/profit for the year - used in basic and diluted EPS (748) 2,154
Denominator
Weighted average number of shares used in basic EPS 110,383 97,046
Effects of:
Employee share options - 3,737
Contingent on business combinations - 10
=========================================================== ======== ========
Weighted average number of shares used in diluted EPS 110,383 100,793
=========================================================== ======== ========
Loss per share of 0.678p (2011: earnings of 2.219p) is
calculated by dividing the loss (2011: profit) attributable to
equity holders of the Group by the weighted average number of
Ordinary shares in issue.
IAS 33 earnings per share defines dilution as a reduction in
earnings per share or an increase in loss per share resulting from
the assumption that convertible instruments are converted, that
options or warrants are exercised, or that ordinary shares are
issued upon the satisfaction of specified conditions. As the
conditions have not been met in the current year, the number of
shares used in the calculation of the diluted EPS calculation is
identical to the number of shares used in the basic EPS
calculation. In the previous year, the fully diluted earnings of
2.137p per share has been calculated by adjusting the weighted
average number of Ordinary shares that existed during the year by
existing share options, share incentive plans and the contingent
share consideration on business combinations, assuming dilution
through conversion of all existing options and shares held in share
plans.
An adjusted EPS figure has been provided to show the level of
(loss)/earnings per share before the impact of separately
identifiable items.
2012 2011
GBP'000 GBP'000
============================================================================= ======== ========
Numerator
(Loss)/profit for the year - used in basic and diluted EPS (748) 2,154
Adjusted:
Impairment of investment (note 26) 422 -
Reduction in deferred consideration on acquisition (note 26) (155) (774)
============================================================================= ======== ========
(Loss)/earnings used for the adjusted EPS calculation before separable items (481) 1,380
Weighted average number of shares used in basic EPS 110,383 97,046
============================================================================= ======== ========
(Loss)/earnings per share before the impact of separately identifiable items (0.436)p 1.422p
============================================================================= ======== ========
In addition, an EBITDA per share has been provided.
2012 2011
GBP'000 GBP'000
=========================================================== ======== ========
Numerator
(Loss)/profit for the year - used in basic and diluted EPS (748) 2,154
Adjusted:
Taxation (7) 375
Finance income (156) (777)
Finance expense 399 301
Impairment of investment 422 -
Amortisation and depreciation 283 260
=========================================================== ======== ========
Earnings used for the adjusted EBITDA EPS calculation 193 2,313
Weighted average number of shares used in basic EPS 110,383 97,046
=========================================================== ======== ========
EBITDA per share 0.175p 2.383p
=========================================================== ======== ========
4. Dividends
2012 2011
GBP'000 GBP'000
=========================================================================================== ======== ========
Prior year final dividend paid of 2012: 0.233 pence (2011: 0.134 pence) per Ordinary share 254 125
Current year interim dividend paid of nil pence (2011: 0.0986 pence) per Ordinary share - 102
=========================================================================================== ======== ========
254 227
=========================================================================================== ======== ========
The Directors have not recommended a final dividend (2011: 0.233
pence, totalling GBP254k).
5. Goodwill and impairment
2012 2011
Group GBP'000 GBP'000
----------------------------------------------------------- -------- --------
Net book value and cost at start of year 4,703 961
Additions:
Berkley Recruitment (Group) Limited (note 26) - 3,320
Berkley Recruitment Group (Asia) Pte. Limited (note 26) - 422
Impairments:
Berkley Recruitment Group (Asia) Pte. Limited (422) -
Foreign exchange rate movements (315) -
Net book value and cost at end of year 3,966 4,703
=========================================================== ======== ========
Details of goodwill allocated to cash-generating units (CGUs) is
as follows:
Goodwill carrying amount
-------------------------------
At
At 31 December
31 December 2012 2011
GBP'000 GBP'000
============================================== ================= ============
Rethink Recruitment (Southend) Limited 679 679
Rethink Middle East FZCO 250 250
Trusttech Limited 32 32
Berkley Recruitment (Group) Limited 3,005 3,320
Berkley Recruitment Group (Asia) Pte. Limited - 422
3,966 4,703
============================================== ================= ============
Goodwill has been allocated to internal cash-generating units
('CGUs') which has been deemed to be the applicable legal entity
acquired. Goodwill has been tested for impairment at 31 December
2012 by reference to the recoverable amount of the cash generating
unit ('CGU'). Following this test the goodwill relating to Berkley
Recruitment Group (Asia) Pte. Limited has been fully impaired.
The recoverable amount of each CGU has been determined from
value in use calculations based on cash flow projections from
formally approved budgets covering a one year period to 31 December
2013 and then extrapolated to 2017 and in perpetuity (with zero
growth rate) thereafter.
Key assumptions included in the extrapolated projections are as
follows:
2012 2011
All investments All investments
% %
========================== ================ ================
Discount rate 13.0% 10.0%
Growth rate and inflation 5.0% 5.0%
========================== ================ ================
The value in use calculations uses a pre-tax discount rate which
has been derived from a post tax discount rate of 13% based on the
Group's weighted average cost of capital. The growth rate and
inflation have been based on independent economic data and reflect
management's assessment of specific risks related to the CGUs,
specifically in the geographic regions and market sectors of the
acquisitions made in the current year.
Sensitivity to changes in assumptions
The actual recoverable amount for the appropriate CGUs exceed
their carrying values by GBP12m (2011: GBP20.5m), with positive
cash flows projected in all years.
If any of the following changes were made to the key
assumptions, the carrying amount and recoverable amount would be
equal
Berkley Recruitment (Group) Limited
============= ===================================
Discount rate Increase from 13% to 18.5%
Growth rate Reduction from 5% to (8%)
============= ===================================
There are no reasonably possible factors that would cause the
carrying value to exceed the recoverable amount for all other cash
generating units.
6. Property, plant and equipment
Improvements Fixtures and Under
to property fittings Computer equipment Construction Motor vehicles Total
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
==================== ============= ================== ================== ============= ============== ========
Cost
At 1 January 2012 142 261 530 - 12 945
Additions 4 97 241 65 - 407
Disposals - (10) (9) - - (19)
===================== ============ ================== ================== ============= ============== ========
At 31 December 2012 146 348 762 65 12 1,333
===================== ============ ================== ================== ============= ============== ========
Depreciation
At 1 January 2012 92 139 387 - 5 623
Charge for year 31 29 132 - 7 199
Disposals - (10) (9) - - (19)
===================== ============ ================== ================== ============= ============== ========
At 31 December 2012 123 158 510 - 12 803
===================== ============ ================== ================== ============= ============== ========
Net book value
At 31 December 2012 23 191 251 65 - 530
===================== ============ ================== ================== ============= ============== ========
At 31 December 2011 50 122 143 - 7 322
===================== ============ ================== ================== ============= ============== ========
Improvements Under Motor
to property Fixtures and fittings Computer equipment Construction vehicles Total
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
====================== ============= ===================== ================== ============= ========= ========
Cost
At 1 January 2011 111 230 568 - - 909
Additions 29 31 103 - - 163
Arising on acquisition 2 12 1 - 12 27
Disposals - (12) (142) - - (154)
======================= ============ ===================== ================== ============= ========= ========
142 261 530 - 12 945
At 31 December 2011
====================== ============ ===================== ================== ============= ========= ========
Depreciation
At 1 January 2011 59 129 414 - - 602
Charge for year 33 22 115 - 5 175
Disposals - (12) (142) - - (154)
======================= ============ ===================== ================== ============= ========= ========
At 31 December 2011 92 139 387 - 5 623
======================= ============ ===================== ================== ============= ========= ========
Net book value
At 31 December 2011 50 122 143 - 7 322
======================= ============ ===================== ================== ============= ========= ========
At 31 December 2010 52 101 154 - - 307
======================= ============ ===================== ================== ============= ========= ========
The net book value of tangible fixed assets for the Group
includes an amount of GBP145k (2011: GBP19k) in respect of assets
held under finance leases and hire purchase contracts. All these
assets are classified as computer equipment.
7. Intangible assets
Development
costs Software licences Total
Group GBP'000 GBP'000 GBP'000
================================= ============ ================= ========
Cost
At 1 January 2012 131 76 207
Additions - internally developed 84 - 84
At 31 December 2012 215 76 291
================================== =========== ================= ========
Amortisation
At 1 January 2012 66 61 127
Charge for year 72 12 84
================================== =========== ================= ========
At 31 December 2012 138 73 211
================================== =========== ================= ========
Net book value
At 31 December 2012 77 3 80
================================== =========== ================= ========
At 31 December 2011 65 15 80
================================== =========== ================= ========
Software licences are acquired separately and are leased to
clients. Development costs are all internally generated and in
relation to new software products.
Development
costs Software licences Total
Group GBP'000 GBP'000 GBP'000
==================================================== ============ ================= ========
Cost
At 1 January 2011 122 39 161
Reclassification from property, plant and equipment - 37 37
Additions - internally developed 9 - 9
===================================================== =========== ================= ========
At 31 December 2011 131 76 207
===================================================== =========== ================= ========
Amortisation
At 1 January 2011 28 14 42
Charge for year 38 47 85
===================================================== =========== ================= ========
At 31 December 2011 66 61 127
===================================================== =========== ================= ========
Net book value
At 31 December 2011 65 15 80
===================================================== =========== ================= ========
At 31 December 2010 94 25 119
===================================================== =========== ================= ========
Software licences are acquired separately and are leased to
clients. Development costs are all internally generated and in
relation to new software products.
8. Trade and other receivables
Group Group
2012 2011
GBP'000 GBP'000
=================================== ======== ========
Trade receivables 21,652 18,595
Amounts owed by Group undertakings - -
Other receivables 203 240
Prepayments and accrued income 1,004 1,319
=================================== ======== ========
22,859 20,154
=================================== ======== ========
The fair value of trade and other receivables is not materially
different to the carrying amount.
Included within Group trade receivables is an amount of
GBP21,308k (2011: GBP18,059k) subject to invoice discounting.
9. Trade and other payables
Group Group
2012 2011
GBP'000 GBP'000
=================================== ======== ========
Trade payables 6,524 6,780
Amounts owed to Group undertakings - -
Social security and other taxes 2,349 2,245
Other payables 126 126
Accruals 1,196 1,329
=================================== ======== ========
10,195 10,480
=================================== ======== ========
Book values of trade and other payables approximate to fair
value.
10. Financial liabilities - loans and borrowings
Group Group
2012 2011
GBP'000 GBP'000
========================================= ======== =========
Current:
Finance lease 49 3
Advances on invoice discounting facility 12,437 8,002
Redeemable Preference shares 628 -
========================================= ======== =========
13,114 8,005
========================================= ======== =========
Group Group
2012 2011
GBP'000 GBP'000
============================= ======== ========
Non-current:
Redeemable Preference shares - 222
Finance lease 40 1
============================= ======== ========
40 223
============================= ======== ========
Redeemable Preference shares
Rethink Acquisitions Limited issued 496,128 (2011:250,000)
(3.6%) non-voting redeemable preference shares with a par value of
EUR1 per share in part settlement of the deferred consideration
following the acquisition of Berkley Recruitment (Group) Limited
and Berkley Recruitment Group (Asia) Pte. Limited. These shares are
redeemable on 30 June 2013.
11. Acquisitions
Prior year acquisitions
Rethink Acquisitions Limited
On 17 June 2011 the Group acquired the entire share capital of
Rethink Acquisitions Limited, a company created to hold other Group
acquisitions made in the year. On acquisition, the Company had GBP1
of Ordinary share capital which was purchased by the Group at
cost.
Berkley Recruitment (Group) Limited and Berkley Recruitment
Group (Asia) Pte. Limited (collectively 'Berkley Group')
On 17 June 2011 Rethink Acquistions Limited acquired the entire
share capital of the Berkley Group, a group engaged in recruitment
with bases in Ireland and Singapore. The following table sets out
the book values of the identifiable assets and liabilities acquired
and their values to the Group.
Book value Adjustments Fair value
GBP'000 GBP'000 GBP'000
==================================== ========== =========== ==========
Assets
Non-current assets
Property, plant and equipment 53 (26) 27
Current assets
Trade and other receivables 1,877 (248) 1,629
Cash and cash equivalents 84 - 84
==================================== ========== =========== ==========
Total assets 2,014 (274) 1,740
==================================== ========== =========== ==========
Liabilities
Trade and other payables (957) 1 (956)
Loans and borrowings (225) - (225)
==================================== ========== =========== ==========
Net assets 832 (273) 559
==================================== ========== =========== ==========
Goodwill 3,742
==================================== ========== =========== ==========
Total consideration 4,301
==================================== ========== =========== ==========
Settled by:
Cash consideration 1,286
7,946,055 Ordinary shares at 10.92p 868
250,000 EUR1 Preference shares 222
Contingent consideration 1,925
==================================== ========== =========== ==========
Total consideration 4,301
==================================== ========== =========== ==========
The reduction in trade receivables reflects the adjustment to
bring revenue recognition in line with Group policies. Acquisition
costs of GBP55k arose as a result of the transaction. These have
been recognised within administrative expenses in the consolidated
statement of comprehensive income.
Certain consideration payable was contingent on the consolidated
EBITDA of Berkley Recruitment (Group) Limited and Berkley
Recruitment Group (Asia) Pte. Limited for the period from
acquisition until the 31 December 2011. As at 31 December 2011 the
EBITDA for this period was calculated at EUR841k (subject to final
agreement with the sellers). Based upon a predefined formula within
the sale and purchase agreement the contingent consideration
payable was calculated at GBP1,151k.
GBP'000
============================================================================================= =======
Fair value of contingent consideration as calculated at 31 December 2011 1,151
============================================================================================= =======
To be settled by:
Ordinary shares 349
Preference shares 438
Cash 364
Fair value of contingent consideration at date of acquisition 1,925
Adjustment to consideration credit to consolidated statement of comprehensive income in 2011 774
============================================================================================= =======
The EBITDA for the Berkley Group, referred to above, did not
meet the forecast at the time of the acquisition. This is not
considered a measurement period adjustment. As a result the
contingent consideration as set out above is lower than that
expected on acquisition.
During 2012 the fair value of the contingent consideration was
reduced by a further GBP113k to GBP1,038k (2011: GBP1,151k). This
was settled by:
Ordinary shares 310
Preference shares 406
Cash 322
======================== =====
1,038
======================= =====
The goodwill is attributable to synergies expected to arise from
the integration of the business with that of the Group and from
access to new markets, clients and geographic regions.
12. Status of Financial Information
The financial information set out above does not comprise the
Company's statutory accounts for the periods ended 31 December 2012
or 31 December 2011. Statutory accounts for 31 December 2011 have
been delivered to the Registrar of Companies and those for 31
December 2012 will be delivered following the Company's Annual
General Meeting. The auditors have reported on those accounts;
their report was unqualified, did not include references to any
matters to which the auditors drew attention by way of emphasis of
matter without qualifying their report and did not contain
statements under section 498(2) and (3) of the Companies Act 2006
in respect of the accounts for 2012 or 2011.
13. Publication of announcement and report and accounts
A copy of this announcement will be available at the Company's
registered office (52-54 Southwark Street, London SE1 1UN) 14 days
from the date of this announcement and on its website,
www.therethinkgroupplc.com
This announcement is not being sent to shareholders. The Annual
Report will be posted to shareholders shortly and will be made
available on the Group's website.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR IIMRTMBMTBAJ
Rethink Group (LSE:RTG)
Gráfico Histórico do Ativo
De Dez 2024 até Jan 2025
Rethink Group (LSE:RTG)
Gráfico Histórico do Ativo
De Jan 2024 até Jan 2025
