AIM-listed business and technology recruitment specialist ReThink Group really shone in the first half. Net fee income (gross profit) for the six months ended 30 June, was up 32% to £7.8m, headline revenue was up 27% to £34.4m, and pre-tax profits doubled to £423k. Even more impressive is all of this growth appears to be organic. Although ReThink does not break out UK and international revenue, we believe the vast majority is attributable to the UK, so even more impressive in the light of the current economic woes in the UK. ReThink has clients like Cognizant, Anglian Water, RM, BBC Worldwide, Thomas Cook, Boots, and a number of UK public sector customers. In particular, we suspect it will be rather pleased to have Cognizant as a customer given its market leading growth (see Cognizant the new number three!).
ReThink has three operating divisions, which are all performing well. ReThink Professional Services, its recruitment process outsourcing (RPO) business and largest division, grew an impressive 26% to £30m, permanent recruitment was up 24% to £2.6m, and its business technology division Aiimi, was up 80% to £1.8m. Aiimi is an interesting division, which is apparently providing Open Text enterprise content management and MicroStrategy business intelligence software on a SaaS basis for clients in the public and private sectors. It is unclear to us how Aiimi fits in with the broader recruitment business however.
RPO meanwhile fits neatly with the recruitment model, since it helps provide longer term recurring revenue for the traditionally project-based recruitment business. One of ReThink’s largest RPO clients is Boots UK, with whom it signed a three-year contract in September 2010. ReThink is now providing RPO for almost all of Boot’s IT contract and interim staff, covering recruitment advice, ordering, administration, management of information and payments. During the half it also won another ‘significant’ RPO contract with a global online fashion and beauty retailer.
ReThink’s strategy is to also expand in the Asia and Middle East markets. For instance in June 2011, it made its first acquisition of Berkley Recruitment Group, for a potential total of €6.7m. Berkley specialises in recruitment for the pharmaceutical and life sciences sectors, and gives ReThink new operations in Dublin, Cork and Singapore. Globally, ReThink now has nine offices in Ireland, the UK, Singapore and Dubai, and says it has clients dotted all around the region. This is a sensible strategy that rivals like InterQuest, SThree and Hays are also pursuing (see here). Although there are risks attached in expanding beyond the UK, if successful, it should help drive new growth opportunities for ReThink. This will be most important, if as we expect, the UK market deteriorates further over the coming months.
