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RNS Announcements

Final Results

The ReThink Group plc

("ReThink Group" or "the Group")

Final results for the year ended 31 December 2008

The Board of The ReThink Group plc, one of the UK's fastest growing recruitment and technology services businesses, is pleased to announce its final results for the year ended 31st December 2008.

Financial Highlights

Operating Highlights

CHAIRMAN AND MANAGING DIRECTOR'S STATEMENT

On behalf of the Board of The ReThink Group, we are pleased to report the Company's first full year results since we became a public company. The Group listed on the AIM market in June 2008, a move which, we believe, supports our strategy in relation to organic growth and future acquisitions. In our first year as a listed business we are delighted to report that the Group has made good progress. We achieved strong organic growth in our core businesses and the acquisition of KeyPower Consultants Limited ("KPC") which was completed in December 2007 was successfully integrated into the Group during the early part of 2008. However, we have not been immune from the severe economic climate, which started to impact on the business in the second half of the year. 

The development of our construction business, ReBuild, required significant investment during the first half of 2008. Due to the rapidly changing nature of the construction sector we have had to focus our efforts on areas within this market that have been less affected by slowing demand. In doing so, we have had to reduce headcount in this division and realign the skills of the team that continues to service this market. In line with our expectations of deteriorating market conditions in the second half of 2008, we have taken swift action to reduce the cost base and focus on cash management of this division. Nevertheless, the results of this division had a significant negative impact on the overall results of the Group for the year.

We have continued to focus on our core markets and strengths, whilst introducing additional revenue streams both organically and through acquisitions.

The Group rebranded ReThink Professional Services Limited as Aiimi Ltd, and a new company called ReThink Professional Services Limited ("RPS") was formed with the intention of providing Recruitment Process Outsourcing ("RPO") and Managed Services for clients. We have secured a large, long term programme of work for RPS with one of the UK's leading retailers, a contract that was awarded in 2008 for three years.

Market Overview

The uncertain macro-economic environment has resulted in more challenging trading conditions across the UK recruitment market during 2008. Demand for permanent recruitment services has slowed and because of the current economic uncertainty, good candidates are not moving onto new positions so readily. The Group is experiencing healthy demand for contractors and as a result our contract numbers have grown.

Strategy

The Group has a committed strategy of organic and acquisitional growth across the whole business. 

We will continue to consider expansion into other high value recruitment niches and IT consulting.  Research is under way to identify new markets. We have two small teams in place covering the Human Resource markets from our office in London and a small team has been established in Bristol covering senior grade Finance professionals.

Financial Highlights

Despite extremely challenging conditions the Group continued to invest and grow in 2008. We achieved strong revenue growth, up 54% from 2007, to £43.4 million and strong Gross Profit growth to £12.1m from £7.9m in 2007, an increase of 52.6%. Profit from operations before exceptional listing costs was down by £0.39m, a decrease of 29.9%. Exceptional costs of £414k relate to the Group's AIM flotation in June 2008. Net assets have increased to £2.07m from £1.16m in the previous year and net cash at the year end was £515k.

The Company has renewed its main borrowing facility for a further twelve months at increased levels to cover its predicted working capital requirements.

Review of operations

Recruitment

The Recruitment business includes ReThink Recruitment Solutions Ltd, KeyPower Consultants Ltd, ReBuild Recruitment Services Ltd and Integritas Ltd. Together these recruitment businesses have built a strong national presence in Manchester, London, Bristol, Birmingham, Southend, Leeds and Exeter.

2008 saw growth across all the regions. However, across all business, permanent revenues in the latter part of the year reduced. Our exposure to more sensitive markets, such as banking, remained minimal and we continue to see penetration into public sector markets. The Group's business is spread across a variety of sectors, thereby reducing exposure to individual sector pressures.

Aiimi Limited

Our business and consulting division, Aiimi Limited (previously known as ReThink Professional Services Limited), performed well in 2008 and continues to contribute highly profitable revenue to the Group. Aiimi has expanded its reach into its principal long term clients and has successfully added new blue chip companies to its growing customer base, although the second successful major contract is now expected to end in 2009. During the year Aiimi expanded its consulting operation through the development of a Business Transformation practice offering business consulting, change management and education services. 

Aiimi's technical consulting practice has established technology partnerships with industry leading software companies including Callidus Software, Merced Systems & Xactly Corporation in Sales Performance Management and IBM (Cognos), Microsoft & Microstrategy in Business Intelligence. Aiimi is now leveraging the synergies between The ReThink Group's recruitment businesses and its technology and consulting business and is seeing a strong growth in sales pipeline whereby existing customers seek cost savings on technology implementations traditionally delivered by higher cost Tier1 System Integrators and Consulting organisations.

Acquisitions

During the year the Group integrated KPC. KPC is now equipped to offer a greater range of services and has benefited by expanding into the permanent recruitment sector. The acquisition of Proveya MEA FZCO, a company in the Middle East, was completed after the year end for consideration of up to £230k, in line with our strategic objective of international expansion. This will enable the business to venture further into Middle East markets and we now have consultants billing across the Gulf Region. The development of this region has been given to Simon Church, Group Development Director.

Dividend

No dividend is to be proposed for 2008. The dividend policy remains to pay a progressive sustainable dividend at a level that is prudent in light of the cash resources needed by the Group, and when market conditions improve.

Earnings per share

Basic earnings per share declined to 0.09p (2007: 1.1p).

Our Clients

We pride ourselves on our strong client relationships and have continued to see strong client retention and growth across the Group. Whilst some of our major accounts have experienced reduced activity, we continue to invest in maintaining these relationships and the strength of our client base will position us well for when economic conditions improve.

Our People

The continued progress shown by the Group in 2008 is a function of the efforts from all of the staff throughout the Group. We would like to take this opportunity to thank the fellow members of the Board and all our colleagues for their hard work and commitment throughout 2008. Our key asset is our people; their hard work, expertise and dedication in a challenging environment has been integral to success of the business over the past year.

Outlook

We anticipate 2009 will be a difficult year across most industry sectors and our exposure to both recruitment and IT consulting makes it difficult to forecast in the medium term. We remain committed to delivering profitable results whilst also ensuring that we are well positioned to take full advantage when the market recovers. We will maintain tight cost controls without compromising on our high quality service and remain committed to focusing on specialist markets and will continue to follow our strategy of organic growth and adding acquisitions of complementary businesses.

To view the full RNS announcement, please click the following link:

http://www.londonstockexchange.com/LSECWS/IFSPages/MarketNewsPopup.aspx?id=2144418&source=RNS

28 April 2009

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