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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Rethink Grp | LSE:RTG | London | Ordinary Share | GB00B39QB067 | ORD 0.1P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.875 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
TIDMRTG
RNS Number : 2726E
ReThink Group (The) PLC
08 April 2014
8 April 2014
The Rethink Group plc
("Rethink" or the "Group")
Final Results
Rethink Group (AIM:RTG), one of the UK's leading talent management and recruitment services companies, is pleased to today announce its final results for the year ended 31 December 2013.
Financial highlights
-- Record Group revenue achieved, increasing 28.0% to GBP111.7m (2012: GBP87.3m) from continuing operations
-- Net Fee Income* ("NFI") from continuing operations increased 7.6% to GBP19.6m (2012: GBP18.2m) with Talent Management NFI increasing 28.1% to GBP5.3m (2012 restated: GBP4.1m)
-- Group EBITDA before separately identifiable items increased to GBP2.2m (2012: GBP0.07m)
-- Profit from operations increased to GBP1.4m** (2012: loss of GBP0.5m)
-- Cash at the year-end was GBP1.6m (2012: GBP1.1m)
-- Net borrowings increased to GBP11.7m*** (2012: GBP11.3m) due to working capital requirements
-- Cash generated by operations GBP0.8m (2012: absorbed GBP3.1m)
-- Adjusted basic earnings per share before separately identifiable items 0.742p (2012: loss of 0.678p)
* Net Fee Income (NFI) represents gross revenue less direct cost of sales
** After deducting separable items which include restructuring costs of GBP0.6m (2012: goodwill impairment of GBP0.4m and reduction of acquisition consideration of GBP0.2m)
*** Net borrowings are cash at bank less bank borrowings under the Group's Invoice Discounting arrangements
Operational highlights
-- Talent Management
- Won three year Talent Management agreement with Admin Re
- Signed a three year extension for a Talent Management agreement with a leading UK high street retailer
-- Recruitment
- Growth in contractor numbers to a record 987 (2012: 894)
-- Revised Group strategy developed and implementation progressing well
- Talent Management strategic focus instigated - Successful divestment of non-core technology services division to management
Steve Wright, Rethink CEO, commented: "Rethink has made strong progress in 2013, both financially and operationally. During the year the Group added several prestigious clients to its already impressive roster and achieved record levels of contractor numbers and permanent recruitment placements. These achievements led to an increase in revenues, profits and cash for the Group. The refreshed Group strategy, although still in its early stage of implementation, is being executed successfully and delivering results. We look forward to 2014 with increasing confidence."
For further information please contact:
Rethink Group plc Steve Wright, CEO 07836 226902 Shore Capital (Nominated Adviser and Broker) Bidhi Bhoma/Edward Mansfield 0207 408 4090 Newgate Threadneedle John Coles/Fiona Conroy 020 7653 9850
About Rethink Group plc
Rethink Group (AIM: RTG) provides business transformation services through talent management and recruitment services. These mutually supported activities work in synergy and support our growing customer base.
The Group supports clients across the UK, Europe, US, Middle East and Asia Pacific.
For more information please visit our website: www.rethinkgroupplc.com
Chairman's Statement
The results for the year to 31 December 2013 reflect the progress we have made in refocusing the Group towards the Talent Management division supported by the Recruitment division, whilst restoring profitability. We are encouraged by the 7.6% improvement in group Net Fee Income ("NFI")driven by a 28.1% improvement in NFI within the Talent Management division. The overall financial improvement has allowed the Group to recommence investment in continuing operations.
This growth demonstrates the rationale and initial success of the Group's re-focussed strategy. As we continue to implement and execute against the new strategy we are confident of achieving a more sustainable earnings stream that will build over time and enhance the quality and predictability of future earnings.
Financial performance
Revenue for the year grew by 28.0% to GBP111.7m (2012: GBP87.3m), driven by growth in contractor numbers. NFI, which is a more meaningful measure of growth, increased to GBP19.6m (2012: GBP18.2m), and EBITDA increased to GBP1.6m (2012: GBP0.07m) after accounting for one off separately identifiable restructuring costs of GBP0.6m (2012: separable items of GBP0.4 related to a one-off impairment to goodwill for Berkley Singapore in the period) . Profits from operations were GBP1.4m (2012: losses GBP0.5m).
People
Our staff numbers increased to 196 by the year end (2012: 182). Rethink has a high quality base of talented and enthusiastic people who are central to the success of Group and I would like to thank them for their continued efforts.
Board Changes
During the year the Group has significantly strengthened the executive team.
Jon Butterfield, the Group's CEO, and John Sadiq, the Group's Non-Executive Chairman, left the Group during 2013. They were replaced by Stephen Wright and John O'Sullivan respectively.
Stephen, who had joined the Board as our Chief Financial Officer in March 2012, was appointed to the role of interim CEO in January 2013. The appointment was made permanent with effect from 25 June 2013. John O'Sullivan, a non-executive director with significant experience in the Talent Management and Recruitment sectors was appointed interim Non-Executive Chairman on the departure of John Sadiq. His appointment was made permanent with effect from 7 April 2014.
In addition, Andrew Lord, Managing Director of the Recruitment Division, was appointed Chief Operating Officer in January 2013.
On 11 November 2013, the Group successfully divested of Aiimi Limited ("Aiimi"), a non-core technology services division, to management. Accordingly, Stephen Salvin, Executive Director of Rethink and Managing Director of Aiimi resigned from the Board on the same day.
Post period, on 7 April 2014, Rethink was delighted to welcome Ben Felton to the Board as Chief Financial Officer. Ben is a Chartered Accountant and prior to joining Rethink was CFO of Norman Broadbent plc, an AIM listed human capital consulting group.
Dividend
The Board is not recommending a dividend until the Group's cash resources are further strengthened.
Outlook
2013 was a year of change which we successfully navigated. Though there is much work to do to deliver our revised strategy, the progress made so far is promising. NFI for both contract and permanent recruitment, together with profitability, is in line with management expectations following the investment in both the Talent Management and Recruitment divisions. With a firmer financial footing, Rethink is now building momentum towards realising its growth objectives.
The impact of technology on all markets is well understood and highly skilled and motivated people are a vital ingredient in our client's ability to execute against their own business plans.
Rethink will continue to work closely with clients by not only sourcing the best qualified candidates in a timely and flexible manner, but also by providing added value services that maximise their investments in talent. This approach will enable the achievement of our strategic goals.
In addition, the improved economic backdrop in the territories in which Rethink operates is encouraging and it is expected that the 'war for talent' will now start to accelerate as client organisations resume investment to compete in their markets.
John O'Sullivan
Non-executive Chairman
Chief Executive's Statement
Introduction
The year to 31 December 2013 has brought a number of significant changes to Rethink. We have embarked on a journey to redefine the Group's strategy and develop opportunities to build deeper client relationships in the provision of talent solutions to our key vertical markets of Business and Technology, and Life Sciences and Pharmaceuticals.
In line with the new focused strategy, in November 2013 the Group divested of Aiimi, a technology consulting operation, which was concluded to be non-core. The sale recognised a net gain on disposal of GBP0.2m.
Overall Group revenues from continuing operations increased to GBP111.7m in 2013 (2012: GBP87.3m), representing growth of 28.0% and NFI also grew from GBP18.2m to GBP19.6m. With a clear focus now in place and momentum building, we have a platform on which to develop a more sustainable business that should reward all stakeholders in the future.
The Group's two reportable divisions are Talent Management and Recruitment.
Talent Management
Our Talent Management business is driven by clients with whom Rethink has strong, long term relationships, underpinned by fixed term agreements to provide either contract and/or permanent recruitment services. Often these agreements are augmented by a range of consulting and managed services. Rethinkoffers a range of talent management services, ranging from employer branding, employee attraction and development, through to managed recruitment services and delivery methods, including a full Recruitment Process Outsourcing service.
With long-term relationships in place with prestigious organisations, across a range of sectors, we are building a track record that is opening up further opportunities for the Group. The highlight for this division was the renewal of a significant Talent Management agreement with a major UK retailer for a further three years.
A client's adoption of Rethink's Talent Management solutions provides measurable on-going benefits such as improved quality, efficiency and better value for money. These are key qualities in today's demanding business environment and are crucial to the Group's on-going success.
Revenues for our Talent Management division increased 60.9% to GBP46.0m and now represent 41.2% of the Group's total revenue in 2013. NFI increased 28.1% to GBP5.3m (2012: GBP4.1m), and contribution from on-going operations increased significantly to GBP3.9m (2012: GBP2.5m). The further development of this division is a key part of our strategy moving forward.
Recruitment
The Recruitment division provides contract, interim, permanent and executive search solutions to a wide range of clients predominantly in the UK and Ireland, as well as an international client base through our operations in Dubai and Singapore. The division has 150 consultants across eight offices.
Revenues for the recruitment business were GBP65.7m (2012: GBP58.7m), representing 58.8% of the Group's total revenue in 2013. NFI increased marginally to GBP14.3m in the year (2012: GBP14.1m) and contribution from on-going operations was GBP2.0m (2012: GBP0.7m).
The strong turnaround in contribution from the recruitment business is a first step in positioning this division to help drive new Talent Management opportunities moving forward.
Clients
Our client base continues to grow. In 2013 we were pleased to announce that we had secured a three year Talent Management contract with Admin Re, a major organisation in the financial services sector.
Our organisation is now clearly focussed on identifying opportunities to extend and develop our recruitment client relationships into longer term contractual commitments. We believe that the growth in our Talent Management business demonstrates the power of a partnership approach to client engagement.
We have embarked on building a strong portfolio of offerings that will enable us to deliver a wider range of value added services to our clients. Consequently, by deepening our relationships through our Talent Management services, we will become increasingly valuable partners to our clients in the years to come.
Group Strategy
Rethink's strategic objective is to further develop its Talent Management services and client relationships.
There is considerable opportunity in this core market and we will focus on our strengths and experience in the Business and Technology, Retail and Pharma and Life Sciences sectors.
Our view is that the most attractive growth opportunities for the Group lie in Talent Management services where we can build deeper strategic relationships with clients, by providing a complete service including talent identification, assessment, deployment and on-going development and engagement strategies. Increasingly, we will seek out projects and managed service opportunities in order to become more embedded within our clients. While this in itself is not a change of strategy, it is an important change of emphasis which we believe will manifest itself in improved financial performance, as we are able to demonstrate the benefits to clients.
In 2013 we launched a three year strategic plan. Under our plan a key objective is to ensure that over 60% of the Group's performance is derived from Talent Management services generated through long term client relationships, with Recruitment services providing the balancing 40%.
Expansion will come through a combination of organic growth and, where appropriate, selective acquisitions that support the Group's strategic growth objectives.
Our intention is to drive organic growth in both our Talent Management and Recruitment divisions with Talent Management taking the lead.
A key part of this strategy is the continued focus on our Recruitment division, from where many of the future Talent Management opportunities will be developed.
We will continue to work closely with clients and partners to develop three key talent management capabilities:
1. Workforce Planning - which will embrace organisational design, career transition and redeployment, and software enabled planning.
2. Attraction - which covers many of the activities and capabilities that are deployed across our client base, and includes employer branding, website design and management, talent pooling, screening and assessment, face to face hiring and on-boarding.
3. Performance Management and Retention - which covers a range of services to ensure that talent, once hired, is effectively deployed. This includes performance management, team profiling, talent programmes, engagement strategies and leadership development.
The purpose of this strategy is to deliver sustainable and recurring revenue streams, which in turn will support a premium valuation for our equity stakeholders and greater career opportunities for our employees.
Stephen Wright
Chief Executive Officer
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. In the year to 31 December 2013 EBITDA, after separable items, increased to GBP1.6m (2012: GBP0.07m).
Profit/ (Loss) before Tax
Profit before tax amounted to GBP0.8m (2012: loss of GBP0.8m). This was after separately identifiable items of GBP0.6m (2012: GBP0.3m). The separately identifiable items are restructuring and reorganisations costs which are unlikely to recur in the future. These costs include compromise agreements associated with a board restructure, bank exit fees, office closure costs and termination of a software project.
Earnings per share
In the current year, the basic earnings per share after separable items were 0.742p (2012: losses of 0.678p).
Cash Flow:
During the year, cash generated by operations was GBP0.8m (2012: cash absorbed GBP3.1m) which, after net corporation tax paid of GBP0.1m (2012: payment of GBP0.4m), led to net cash generated from operating activities of GBP0.7m (2012: cash absorbed GBP3.5m).
Net cash generated by investment activities amounted to GBP0.04m (2012: cash absorbed GBP0.3m). This included GBP0.2m of cash received as part consideration for the sale of Aiimi Limited in November 2013.
Incremental financing through invoice discounting amounted to GBP0.9m (2012: GBP4.4m), together with GBP0.1m (2012: GBP0.3m) of share proceeds relating to the exercise of options. The Group also redeemed in full all outstanding preference shares, resulting in a cash outflow of GBP0.7m. Finance costs of GBP0.6m (2012: GBP0.4m) and repayments associated with finance leases of GBP0.04m (2012: GBP0.1m) were made during the year.
In the year to 31 December 2013 cash and cash equivalents increased by GBP0.5m to GBP1.6m (2012: GBP0.2m increase to GBP1.1m).
Balance Sheet:
Net Assets
Consolidated net assets increased to GBP6.1m (2012: GBP5.2m) of which GBP4.6m (2012: GBP4.6m) related to non-current assets, the largest single item being goodwill of GBP4.1m (2012: GBP4.0m).
Net current assets increased to GBP1.6m (2012: GBP0.7m).
Working Capital
Trade and other receivables at the year end amounted to GBP25.3m (2012: GBP22.9m).
The Group's average day sales outstanding reduced to 33 days (2012: 40 days).
Cash and invoice discounting facilities
Cash at the year-end was GBP1.6m (2012: GBP1.1m) and bank borrowings, consisting solely of Group invoice discounting facilities, were GBP13.3m (2012: GBP13.1m). At 31 December 2013 the total invoice discounting facility available to the Group was GBP20.0m.
Goodwill
Goodwill at the year end was assessed for impairment and the Directors have concluded, following a review of future cash flow projections, that no impairment charge was required (2012: impairment of GBP0.4m). Translation of goodwill led to a foreign exchange gain of GBP0.1m (2012: loss of GBP0.3m), with a carrying value of goodwill on the Consolidated Statement of Financial Position at the financial year end of GBP4.1m (2012: GBP4.0m).
Ben Felton
Chief Financial Officer
Consolidated statement of comprehensive income
For the year ended 31 December 2013
Separately Separately Before identifiable Before identifiable separately items separately items identifiable (note Total identifiable (note Total items 8) 2013 items 8) 2012 Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 ==================================== ===== ============ ============ ======== ============= ============= ======== Revenue 111,693 - 111,693 87,259 - 87,259 Cost of sales (92,133) - (92,133) (69,073) - (69,073) ==================================== ===== ============ ============ ======== ============= ============= ======== Gross profit 19,560 - 19,560 18,186 - 18,186 Administrative expenses (17,511) (642) (18,153) (18,291) (422) (18,713) ==================================== ===== ============ ============ ======== ============= ============= ======== Earnings before interest, tax, depreciation and amortisation 2,225 (642) 1,583 67 - 67 Amortisation, depreciation and impairment (176) - (176) (172) (422) (594) ==================================== ===== ============ ============ ======== ============= ============= ======== Profit/(loss) from operations 5 2,049 (642) 1,407 (105) (422) (527) Finance expense 4 (579) - (579) (386) - (386) Finance income 4 2 - 2 1 155 156 ==================================== ===== ============ ============ ======== ============= ============= ======== Profit/(loss) before taxation 1,472 (642) 830 (490) (267) (757) Tax expense 7 (172) - (172) (21) - (21) ==================================== ===== ============ ============ ======== ============= ============= ======== Profit/(loss) from continuing operations 1,300 (642) 658 (511) (267) (778) Profit on discontinued operations, net of tax 198 - 198 30 - 30 Profit/(loss) 1,498 (642) 856 (481) (267) (748) Other comprehensive expense Foreign currency exchange differences on translation of foreign operations 112 - 112 (307) - (307) ==================================== ===== ============ ============ ======== ============= ============= ======== Total comprehensive income/(expense) for the year 1,610 (642) 968 (788) (267) (1,055) ==================================== ===== ============ ============ ======== ============= ============= ========
All of the profit and comprehensive income for the year is attributable to equity holders of the parent.
In accordance with the International Financial Reporting Standards the prior year figures have been restated to show the prior period effect of the current year discontinued operation (see note 26).
Earnings/(loss) per share Pence Pence Pence Pence ========================== ===== ===== ======= ======= Basic 91.298 0.742 (0.436) (0.678) Diluted 91.292 0.738 (0.436) (0.678) ========================== ===== ===== ======= ======= Earnings/(loss) per share for continuing operations Pence Pence Pence Pence ========================================= ===== ===== ======= ======= Basic 91.127 0.570 (0.527) (0.802) Diluted 91.121 0.567 (0.527) (0.802) ========================================= ===== ===== ======= =======
Consolidated statement of changes in equity
For the year ended 31 December 2013
Shares Share Retained Share to be Merger Translation Capital Earnings Premium Issued Reserve Reserve Total Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 ============================ ======== ========= ======== ======== ======== =========== ======== At 1 January 2012 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) (1055) 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 Changes in equity for the year ended 31 December 2013 Profit for the year - 856 - - - - 856 Other comprehensive income for the year - - - - - 112 112 ============================ ======== ========= ======== ======== ======== =========== ======== Total comprehensive income for the year - 856 - - - 112 968 Contributions by and distributions to owners Own shares held (note 26) - (230) - - - - (230) Recognition of share-based payment expense - 5 - - - - 5 Share options exercised 3 - 93 - - - 96 ---------------------------- -------- --------- -------- -------- -------- ----------- -------- Total contributions by and distributions to owners 3 (225) 93 - - - (129) At 31 December 2013 117 2,739 3,238 - 218 (244) 6,068 ============================ ======== ========= ======== ======== ======== =========== ========
Consolidated statement of financial position
As at 31 December 2013
2013 2012 Notes GBP'000 GBP'000 ============================================ ===== ======== ========= Assets Non-current assets Goodwill 11 4,050 3,966 Investment 14 12 5 Property, plant and equipment 12 381 530 Intangible assets 13 54 80 Deferred tax asset 22 62 24 ============================================ ===== ======== ========= Total non-current assets 4,559 4,605 ============================================ ===== ======== ========= Current assets Trade and other receivables 15 25,270 22,859 Cash and cash equivalents 2 1,600 1,121 Corporation tax asset - 4 ============================================ ===== ======== ========= Total current assets 26,870 23,984 ============================================ ===== ======== ========= Total assets 31,429 28,589 ============================================ ===== ======== ========= Liabilities Current liabilities Trade and other payables 16 (11,860) (10,195) Loans and borrowings 17 (13,339) (13,114) Corporation tax liability (105) - ============================================ ===== ======== ========= Total current liabilities (25,304) (23,309) ============================================ ===== ======== ========= Net current assets 1,566 675 ============================================ ===== ======== ========= Non-current liabilities Loans and borrowings 17 (7) (40) Deferred tax liability 22 (50) (11) ============================================ ===== ======== ========= Total non-current liabilities (57) (51) ============================================ ===== ======== ========= Net assets 6,068 5,229 ============================================ ===== ======== ========= Equity Share capital 23 117 114 Share premium account 3,238 3,145 Merger reserve 218 218 Translation reserve (244) (356) Retained earnings 2,739 2,108 ============================================ ===== ======== ========= Total equity attributable to equity holders of the parent company 6,068 5,229 ============================================ ===== ======== =========
The financial statements were approved by the Board of Directors and authorised for issue on 7 April 2014.
Stephen Wright
Chief Executive Officer
Consolidated statement of cash flows
For the year ended 31 December 2013
2013 2012 Notes GBP'000 GBP'000 ==================================================== ===== ======== ======== Cash flows from operating activities Profit/(loss) before tax from continuing operations 830 (757) Adjustments for: Share-based payment expense 5 5 Depreciation charges 12 153 199 Amortisation 13 22 84 Impairment of goodwill - 422 Disposal of property, plant and equipment 150 - Disposal of intangible assets 35 - Finance expense 4 579 399 Finance income 4 (2) (156) ==================================================== ===== ======== ======== 1,772 196 Increase in trade and other receivables (2,411) (2,705) Increase/(decrease) in trade and other payables 1,417 (578) ==================================================== ===== ======== ======== Cash generated from/(absorbed by) operations 778 (3,087) Corporation tax paid (46) (363) ==================================================== ===== ======== ======== Net cash generated from/(absorbed by) operating activities 732 (3,450) ==================================================== ===== ======== ======== Cash flows from investing activities Purchase of property, plant and equipment (153) (242) Purchase of intangible assets 13 (32) (84) Purchase of investment - (5) Disposal of subsidiary undertaking net of cash disposed 220 - Finance income 4 2 1 ==================================================== ===== ======== ======== Net cash generated from/(absorbed by) investing activities 37 (330) ==================================================== ===== ======== ======== Cash flows from financing activities Finance costs paid 4 (579) (399) Net change in advances on invoice discounting facility 868 4,435 Repayment of finance leases (47) (80) Payment for redemption of preference shares (628) - Proceeds from issue of share capital net of issue costs 96 305 Payment of dividend - (254) ==================================================== ===== ======== ======== Net cash generated from financing activities (290) 4,007 ==================================================== ===== ======== ======== Net change in cash and cash equivalents 479 227 Cash and cash equivalents at start of year 2 1,121 892 ==================================================== ===== ======== ======== Cash and cash equivalents at end of year 2 1,600 1,119 ==================================================== ===== ======== ========
In accordance with the International Financial Reporting Standards the prior year figures have been restated to show the prior period effect of the current year discontinued operation (see note 26).
Notes to the financial statements
For the year ended 31 December 2013
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.
2. Notes to the cash flow statements
Cash and Cash Equivalents
The amounts disclosed in the cash flow statement in respect of cash and cash equivalents are in respect of these statements of financial position amounts:
2013 2012 Group GBP'000 GBP'000 ========================= ======== ======== Cash available on demand 1,600 1,121 ========================= ======== ========
3. Employees and Directors
2013 2012 Group GBP'000 GBP'000 ================================================ ======== ======== Wages and salaries 11,902 12,113 Social security contributions and similar taxes 1,390 1,427 Pension costs 390 547 Share-based payment expense 5 5 ================================================ ======== ======== 13,687 14,092 ================================================ ======== ========
The average number of employees during the year was as follows:
2013 2012 Group Number Number =============== ======= ======= Sales 171 209 Administrative 23 19 Directors 12 13 =============== ======= ======= 206 241 =============== ======= =======
Key management personnel compensation
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group. These are considered to be the directors of subsidiary undertakings and Company directors.
2013 2012 All Key Management Personnel GBP'000 GBP'000 ================================================ ======== ======== Wages and salaries 1,505 1,709 Social security contributions and similar taxes 154 167 Compensation for loss of office 311 - Pension costs 103 88 ================================================ ======== ======== 2,073 1,964 ================================================ ======== ========
Remuneration in respect of the highest paid Director:
2013 2013 GBP'000 GBP'000 =================== ======== ======== Salary and bonuses 229 232 =================== ======== ========
During 2013 there was one Director in the Group's defined contribution pension scheme (2012: one). This scheme is administered by an independent pension provider and the assets of the scheme are held separately to those of the Group.
During 2013 1,500,000 (2012: 1,750,000) share options were exercised by the Directors. Disclosure of the total gains arising from the exercise of the share options is included within note 25.
4. Finance income and expense
2013 2012 GBP'000 GBP'000 =================================================== ======== ======== Finance income: Bank interest received 2 1 Reduction in deferred consideration on acquisition - 155 =================================================== ======== ======== 2 156 =================================================== ======== ======== 2013 2012 GBP'000 GBP'000 ========================================= ======== ======== Finance expense: Bank charges and interest 30 31 Invoice discounting charges and interest 525 341 Preference share interest 24 14 ========================================= ======== ======== 579 386 ========================================= ======== ========
5. Profit/ (loss) from operations
2013 2012 This is stated after charging: GBP'000 GBP'000 ================================================= ======== ======== Staff costs (note 3) 12,891 14,092 Other operating leases - property 497 533 Depreciation of property, plant and equipment 153 161 Amortisation of intangible assets 22 11 Auditor's remuneration - audit services - parent 14 16 - UK and Ireland subsidiaries 43 32 Auditor's remuneration - non-audit services - - Foreign exchange gains and losses 50 98 ================================================= ======== ========
6. 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.
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.
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 2012, 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. During the year Aiimi was sold (see note 26) therefore this segment is deemed a discontinued operation.
Continuing operations Discontinued ================================== =============================== ============ =========== ======== Technology Recruitment Talent Management Services Unallocated Total 2013 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 ================================== ============ ================= ============ =========== ======== Contract revenue 58,872 44,768 - - 103,640 Permanent revenue 6,845 1,208 - - 8,053 Technology Services - - 3,113 - 3,113 =================================== =========== ================= ============ =========== ======== Total revenue from external customers 65,717 45,976 3,113 114,806 =================================== =========== ================= ============ =========== ======== Discontinued operations - - (3,113) - (3,113) =================================== =========== ================= ============ =========== ======== Group's revenue per consolidated statement of comprehensive income 65,717 45,976 - - 111,693 =========== ================= ============ =========== ======== Gross profit from continuing operations 14,304 5,256 - - 19,560 Gross profit from Discontinued operations - - 1,442 - 1,442 =================================== =========== ================= ============ =========== ======== Total Gross profit 14,304 5,256 1,442 - 21,002 Administrative expenses (12,262) (1,365) (1,574) - (15,201) =================================== =========== ================= ============ =========== ======== Contribution from continuing operations 2,042 3,891 - - 5,933 =================================== =========== ================= ============ =========== ======== Discontinued operations - - (132) - (132) Central administrative expenses - - - (3,884) (3,884) =========== ================= ============ =========== ======== Earnings before interest, tax, depreciation, amortisation and separately identifiable items 2,042 3,891 - (3,708) 2,225 Amortisation, depreciation and impairment - - - (176) (176) =================================== =========== ================= ============ =========== ======== Profit from continuing operations before separately identifiable items 2,042 3,891 - (3,884) 2,049 Finance costs (579) (579) Finance income - - - 2 2 Profit from continuing operations before tax and separately identifiable items 2,042 3,891 - (4,461) 1,472 Separately identifiable items (642) Profit from continuing operations before tax 830 =================================== =========== ================= ============ =========== ======== Statement of financial position Reportable segment assets 20,778 10,451 - 200 31,429 Reportable segment liabilities (14,535) (10,826) - - (25,361) =================================== =========== ================= ============ =========== ======== Continuing operations Discontinued =============================== ============================================= ============ =========== ======== 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 from external customers 58,693 28,566 3,942 - 91,201 ================================ ======= =========== ======================= ============ =========== ======== Discontinued Operations (3,942) (3,942) Group's revenue per consolidated statements of comprehensive income 58,693 28,566 - - 87,259 =========== ======================= ============ =========== ======== 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, amortisation and separately identifiable items 67 Amortisation and depreciation (172) ================================ ======= =========== ======================= ============ =========== ======== Loss from continuing operations before separately identifiable items (105) Finance costs (386) (386) Finance income 1 1 Loss from continuing operations before tax and separately identifiable items (490) Separately identifiable items (267) Loss from continuing operations before tax (757) ================================ ======= =========== ======================= ============ =========== ======== Statement of financial position Reportable segment assets 21,487 5,195 1,907 - 28,589 Reportable segment liabilities (16,819) (5,176) (1,365) - (23,360) ================================ ======= =========== ======================= ============ =========== ========
Segment reportable administrative expenses consist primarily of staff, office and general expenses.
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.
The 2012 comparative numbers have been restated to show the effect of the discontinued operations in 2013.
Non-current External revenue assets by location by location of customers of assets ------------------ ------------------ 2013 2012 2013 2012 Geographical information GBP'000 GBP'000 GBP'000 GBP'000 ========================= ======== ======== ======== ======== United Kingdom 91,700 70,581 4,429 4,555 Other 19,993 16,678 69 50 ========================= ======== ======== ======== ======== 111,693 87,259 4,498 4,605 ========================= ======== ======== ======== ========
Revenues from single customers that exceed 10% or more of total Group revenues in 2013 are GBP19,839k (2012: GBPnil).
7. Taxation
2013 2012 restated GBP'000 GBP'000 ================================================= ======== ========= Current tax expense UK corporation tax on profit/(loss) for the year 181 1 Adjustments in respect of prior years (10) 27 ================================================= ======== ========= 171 28 ================================================= ======== ========= Deferred tax (note 22) Origination and reversal of timing differences 1 8 Adjustment in respect of prior year - (15) 1 (7) ================================================= ======== ========= Total tax expense 172 21 ================================================= ======== =========
Factors affecting the tax charge
The reasons for the difference between the actual tax charge for the year and the standard rate of corporation tax in the UK applied to profits for the year are as follows:
2013 2012 GBP'000 GBP'000 =================================================== ======== ======== Profit/(loss) from continuing operations 658 (778) Total tax expense 172 21 =================================================== ======== ======== Profit/(loss) before taxation 830 (757) =================================================== ======== ======== Expected tax charge based on the standard rate of corporation tax in the UK of 23.25% (2012: 24.5%) 193 (185) Lower rates of tax on overseas earnings (68) 24 Items disallowed/(non-taxable) for tax 71 131 Other permanent differences (14) (54) Losses carried back - 88 Deferred tax - adjustment in respect of prior year - (15) Corporation tax - adjustments in respect of prior years (10) 32 =================================================== ======== ======== Total tax expense 172 21 =================================================== ======== ========
8. Separately identifiable items
2013 2012 GBP'000 GBP'000 =================================================== ======== ======== Debit included within administrative expenses: Impairment of goodwill (note 11) - 422 Restructuring and reorganisation costs 642 - --------------------------------------------------- -------- -------- 642 422 Credit included within finance income: Reduction in deferred consideration on acquisition - 155 =================================================== ======== ========
During the year the Group incurred certain restructuring and reorganisations costs which are unlikely to recur in the future. These costs include compromise agreements associated with a board restructure, bank exit fees, office closure costs and termination of a software project.
9. Earnings/ (Loss) per share
2013 2012 GBP'000 GBP'000 ======================================================= ======== ======== Numerator Profit/(loss) for the year - used in basic and diluted EPS 856 (748) Denominator Weighted average number of shares used in basic EPS 115,385 110,383 Effects of: Employee share options 571 - Contingent on business combinations - - ======================================================= ======== ======== Weighted average number of shares used in diluted EPS 115,956 110,383 ======================================================= ======== ========
Earnings per share of 0.742p (2012: loss per share of 0.678p) is calculated by dividing the profit (2012: loss) attributable to equity holders of the Group by the weighted average number of Ordinary shares in issue.
Earnings per share for continuing operations of 0.570p (2012: loss per share of 0.802p) is calculated by dividing the profit from continuing operations of GBP658k (2012: loss of GBP778k) 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. In the current year, the fully diluted earnings of 0.738p 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. As the conditions were not been met in the prior 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.
An adjusted EPS figure has been provided to show the level of earnings/ (loss) per share before the impact of separately identifiable items.
2013 2012 GBP'000 GBP'000 ========================================================== ======== ======== Numerator Profit/(loss) for the year - used in basic and diluted EPS 856 (748) Adjusted: Separately identifiable items 642 - Impairment of investment - 422 Reduction in deferred consideration on acquisition - (155) ========================================================== ======== ======== Earnings/(loss) used for the adjusted EPS calculation before separable items 1,498 (481) ========================================================== ======== ======== Adjusted: Profit on discontinued operations (198) (30) ========================================================== ======== ======== Earnings/(loss) used for the adjusted EPS calculation before separable item for continuing operations 1,300 (511) ========================================================== ======== ======== Weighted average number of shares used in basic EPS 115,385 110,383 ========================================================== ======== ======== Earnings/(loss) per share before the impact of separately identifiable items 1.298p (0.436)p ========================================================== ======== ======== Earnings/(loss) per share before the impact of separately identifiable items for continuing operations 1.127p (0.527)p ========================================================== ======== ========
10. Dividends
2013 2012 GBP'000 GBP'000 ======================================================== ======== ======== Prior year final dividend paid of GBPnil (2012: 0.233p) per Ordinary share - 254 ======================================================== ======== ========
The Directors have not recommended a final dividend.
11. Goodwill and impairment
2013 2012 Group GBP'000 GBP'000 ------------------------------------------------- -------- -------- Net book value and cost at start of year 3,966 4,703 Impairments: Berkley Recruitment Group (Asia) Pte. Limited - (422) Foreign exchange rate movements 84 (315) Net book value and cost at end of year 4,050 3,966 ================================================= ======== ========
Details of goodwill allocated to cash-generating units (CGUs) are as follows:
Goodwill carrying amount -------------------------- At At 31 December 31 December 2013 2012 GBP'000 GBP'000 =============================================== ============ ============ ReThink Recruitment (Southend) Limited - 679 ReThink MEA FZCO 250 250 Trusttech Limited - 32 Berkley Recruitment (Group) Limited 3,089 3,005 ReThink Recruitment Solutions Limited 711 - 4,050 3,966 =============================================== ============ ============
Goodwill has been allocated to internal CGUs which have been deemed to be the applicable legal entities acquired. Goodwill has been tested for impairment at 31 December 2013 by reference to the recoverable amount of the CGU. No impairment is deemed necessary in the current year. Following this test in the prior year, the goodwill relating to Berkley Recruitment Group (Asia) Pte. Limited was 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.
Following a group restructure, striking off applications were filed for ReThink Recruitment (Southend) Limited and Trusttech Limited within the year. The related goodwill has been reallocated to the ReThink Recruitment Solutions Limited were the trade now resides. This is now deemed to be appropriate level for review. Key assumptions included in the extrapolated projections are as follows:
2013 2012 All investments All investments % % ========================== ================ ================ Discount rate 13.0% 13.0% 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 total recoverable amounts for the appropriate CGUs exceed their carrying values by GBP11.4m (2012: GBP12.0m), with positive cash flows projected in all years.
There are no reasonably possible factors that would cause the carrying value to exceed the recoverable amount for all cash generating units except Berkley Recruitment (Group) Limited. Sensitivity analysis has been provided below for Berkley Recruitment (Group) Limited.
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 ============= =========================== Increase from 13% to Discount rate 15.8% Reduction from 5% to Growth rate minus2% ============= ===========================
12. Property, plant and equipment
Improvements Fixtures Computer Under Motor to property and fittings equipment construction vehicles Total Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 ==================== ============= ============= ========== ============= ========= ======== Cost At 1 January 2013 146 348 762 65 12 1,333 Additions 9 44 27 73 - 153 Disposals (5) (133) (205) (104) - (447) ===================== ============ ============= ========== ============= ========= ======== At 31 December 2013 150 259 584 34 12 1,039 ===================== ============ ============= ========== ============= ========= ======== Depreciation At 1 January 2013 123 158 510 - 12 803 Charge for year 19 41 93 - - 153 Disposals (5) (131) (162) - - (298) ===================== ============ ============= ========== ============= ========= ======== At 31 December 2013 137 68 441 - 12 658 ===================== ============ ============= ========== ============= ========= ======== Net book value At 31 December 2013 13 191 143 34 - 381 ===================== ============ ============= ========== ============= ========= ======== At 31 December 2012 23 190 252 65 - 530 ===================== ============ ============= ========== ============= ========= ========
The net book value of tangible fixed assets for the Group includes an amount of GBP103k (2012: GBP145k) in respect of assets held under finance leases and hire purchase contracts. All these assets are classified as computer equipment.
Improvements Fixtures Computer Under Motor to property and fittings equipment construction 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 23 190 252 65 - 530 ===================== ============ ============= ========== ============= ========= ======== At 31 December 2011 50 122 143 - 7 322 ===================== ============ ============= ========== ============= ========= ========
13. Intangible assets
Development Software costs licences Total Group GBP'000 GBP'000 GBP'000 ================================= ============ ========= ======== Cost At 1 January 2013 215 76 291 Additions - internally developed 32 - 32 Disposals (165) (40) (205) At 31 December 2013 82 36 118 ================================== =========== ========= ======== Amortisation At 1 January 2013 139 72 212 Charge for year 20 3 22 Disposals (129) (41) (170) ================================== =========== ========= ======== At 31 December 2013 30 34 64 ================================== =========== ========= ======== Net book value At 31 December 2013 52 2 54 ================================== =========== ========= ======== At 31 December 2012 77 3 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 Software costs licences Total Group GBP'000 GBP'000 GBP'000 ====================================== ============ ========= ======== Cost At 1 January 2012 131 76 207 Reclassification from property, plant and equipment - - - Additions - internally developed 84 - 84 ======================================= =========== ========= ======== 215 76 291 At 31 December 2012 ====================================== =========== ========= ======== Amortisation At 1 January 2012 66 61 127 Charge for year 72 12 84 ======================================= =========== ========= ======== 138 73 211 At 31 December 2012 ====================================== =========== ========= ======== Net book value At 31 December 2012 77 3 80 ======================================= =========== ========= ======== At 31 December 2011 65 15 80 ======================================= =========== ========= ========
14. Investments
Other investments Group GBP'000 ==================== ================= Cost At 1 January 2013 5 Revaluation 7 ==================== ================= At 31 December 2013 12 ==================== ================= Net book value At 31 December 2013 12 ==================== ================= At 31 December 2012 5
The principal subsidiaries of the Rethink Group plc, all of which have been included in the consolidated financial statements are as follows:
Proportion of ownership interest and Ordinary Country of share capital Name Nature of business incorporation held ================================= ===================== =============== ============== ReThink Professional Services Limited Talent Management England 100% ReThink Recruitment Solutions Limited Recruitment Services England 100% ReBuild Recruitment Services Limited** Recruitment Services England 100% ReThink Recruitment (Southend) Limited** Recruitment Services England 100% Aiimi Limited Technology Services England 100% Otravida Search Limited Recruitment Services England 100% Trusttech Limited** Technology Services England 100% ReThink MEA FZCO* Recruitment Services UAE 100% Berkley Recruitment (Group) Limited* Recruitment Services Ireland 100% Berkley Recruitment Group (Asia) Pte. Limited* Recruitment Services Singapore 100% Rethink Acquisitions Limited Holding Company England 100% Rethink Group Inc. Recruitment Services USA 100% ================================= ===================== =============== ==============
* The shareholding in these companies are indirect via a subsidiary undertaking.
** Application to strike off has been filed within the year.
During 2012 an investment was made in Port Erin Biopharma Investments Limited. The percentage holding is negligible.
15. Trade and other receivables
Group Group 2013 2012 GBP'000 GBP'000 =================================== ======== ======== Trade receivables 22,539 21,652 Amounts owed by Group undertakings - - Other receivables 396 203 Prepayments and accrued income 2,335 1,004 25,270 22,859 =================================== ======== ========
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 GBP21,843k (2012: GBP21,308k) subject to invoice discounting.
Trade receivables subject to invoice discounting are recognised as the Group retains the significant risks and benefits. Payments received from invoice discounting providers are shown as advances on invoice discounting facility (note 17).
16. Trade and other payables
Group Group 2013 2012 GBP'000 GBP'000 =================================== ======== ======== Trade payables 8,209 6,524 Amounts owed to Group undertakings - - Social security and other taxes 2,434 2,349 Other payables 182 126 Accruals 1,035 1,196 =================================== ======== ======== 11,860 10,195 =================================== ======== ========
Book values of trade and other payables approximate to fair value.
17. Financial liabilities - loans and borrowings
Group Group 2013 2012 GBP'000 GBP'000 ========================================= ======== ========= Current: Finance lease 35 49 Advances on invoice discounting facility 13,304 12,437 Redeemable Preference shares - 628 ========================================= ======== ========= 13,339 13,114 ========================================= ======== ========= Group Group 2013 2012 GBP'000 GBP'000 ============== ======== ======== Non-current: Finance lease 7 40 ============== ======== ======== 7 40 ============== ======== ========
The total minimum amount of future finance lease payments due are as follows:
2013 2012 GBP'000 GBP'000 ================================================== ======== ======== Not later than one year 35 49 Later than one year and not later than five years 7 40 ================================================== ======== ======== 42 89 ================================================== ======== ========
The difference between the total minimum amount of future finance lease payments and total liability are future interest payments. An analysis of the interest rate payable on financial liabilities and information about fair values is given in note 20.
The present value of future lease payments approximates to the book value.
Redeemable Preference shares
In the prior year Rethink Acquisitions Limited issued 496,128 (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 were redeemed on 30 June 2013.
18. Operating leasing agreements
The Group leases its properties. The terms of property leases vary from location to location, although they all tend to be tenant repairing with rent reviews every two to five years, and typically have break clauses.
The total future minimum lease payments are due as follows:
Non-cancellable operating leases -------------------- 2013 2012 Group GBP'000 GBP'000 ================================================== ========= ========= Not later than one year 257 494 Later than one year and not later than five years 247 505 ================================================== ========= ========= 504 999 ================================================== ========= =========
19. Share-based payment
The Group operates a share option scheme for employees, being an Enterprise Management Incentive scheme (EMI). The EMI options are subject to the employee being employed at the vesting qualification point. Share options were also issued outside of the EMI.
The total options vest as set out below:
31 December 2013 31 December 2012 ---------------------- ---------------------- Weighted Weighted average average exercise exercise price price GBP Number GBP Number ================================= ========= =========== ========= =========== Outstanding at beginning of year 0.093 23,125,614 0.082 30,676,500 Granted during the year 0.065 6,422,423 0.031 6,532,864 Exercised during the year 0.040 (2,375,000) 0.047 (5,446,250) Lapsed during the year 0.098 (9,211,173) 0.097 (8,637,500) --------------------------------- --------- ----------- --------- ----------- Outstanding at end of year 0.062 17,961,864 0.093 23,125,614 ================================= ========= =========== ========= ===========
Of the total number of options outstanding at the end of the year 1,545,000 (2012: 3,575,000) had vested and were exercisable at the end of the year.
The exercise price of options outstanding at the end of the year ranged between 6 pence and 6.12 pence (2012: ranged between 4 pence and 11 pence).
Options granted during 2009 vest as follows:
50% of options 36 months after grant, with any options not exercised within 10 years, to lapse.
50% of options 60 months after grant, with any options not exercised within 10 years from the original grant, to lapse.
Options granted during 2010 vest as follows:
For 7,370,000 options granted during 2010:
50% of options 36 months after grant, with any options not exercised within 10 years, to lapse.
50% of options 60 months after grant, with any options not exercised within 10 years from the original grant, to lapse.
At the year end 2,652,500 options were still outstanding.
Options granted during 2011 vest as follows:
For 7,375,000 options granted during 2011:
50% of options 36 months after grant, with any options not exercised within 10 years, to lapse.
50% of options 60 months after grant, with any options not exercised within 10 years from the original grant, to lapse.
At the year end 2,495,000 options were still outstanding.
For 4,809,000 options granted during 2011:
100% of options 36 months after grant, with any options not exercised within 10 years, to lapse.
At the year end 4,809,000 options were still outstanding.
Options granted during 2012 vest as follows:
For 4,552,864 options granted during 2012:
50% of options 36 months after grant, with any options not exercised within 10 years, to lapse.
50% of options 48 months after grant, with any options not exercised within 10 years from the original grant, to lapse.
At the year end 1,790,441 options were still outstanding.
Options granted during 2013 vest as follows:
For 2,182,423 options granted during 2013:
50% of options 36 months after grant, with any options not exercised within 10 years, to lapse.
50% of options 60 months after grant, with any options not exercised within 10 years from the original grant, to lapse.
For 300,000 options granted during 2013:
100% of options 36 months after grant, with any options not exercised within 10 years, to lapse subject to performance criteria.
For 3,250,000 options granted during 2013:
33% of options 12 months after grant, with any options not exercised within 10 years, to lapse.
33% of options 24 months after grant, with any options not exercised within 10 years, to lapse.
33% of options 36 months after grant, with any options not exercised within 10 years, to lapse.
During the year any options outstanding considered to be underwater, priced at less than 6.75pence were modified and re-priced at 6.12pence
The weighted average fair value of each option granted during the year was GBP0.119 (2012: GBP0.029).
The following information is relevant in determination of the fair value of the options granted and modified during the year.
2013 2012 Option pricing model used Black-Scholes Black-Scholes ================================================= ============== ============== Weighted average share price at grant date (GBP) 0.164 0.085 Weighted average exercise price (GBP) 0.06 0.09 Weighted average volatility 15% 15% Dividend growth 1.8% 1.8% Weighted risk free interest rate 0.5% 0.5% ================================================= ============== ==============
Volatility is based on management's best estimate having reviewed the average weekly share price of quoted comparable companies.
The Group did not enter into any share-based payment transactions with parties other than employees during 2013 or 2012.
A share-based payment has been charged to the statement of comprehensive income of GBP5k (2012: GBP5k). The weighted average contractual life of options is 8.4 years (2012: 6.3 years).
20. Financial instruments - risk exposure and management
All financial assets are held as loans and receivables. All financial liabilities are held at amortised cost.
The Group is exposed through its operations to one or more of the following financial risks that arise from its use of financial instruments.
-- Market risk -- Foreign currency risk -- Credit risk -- Liquidity risk -- Interest rate risk
Policy for managing these risks is set by the Board following recommendations from the Chief Financial Officer. Certain risks are managed centrally, while others are managed locally following guidelines communicated from the Board. The policy for each risk is described in more detail below.
Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in interest rate (interest rate risk).
Foreign currency risk
Foreign currency risk arises due to contractors and/or clients being based in countries whose functional currency is not the same as the Group's primary functional currency (sterling). Transactions involving overseas contractors and clients are exposed to currency risk giving rise to gains or losses on translation into sterling. Currencies the Group transacts in are US dollars, Singapore dollars, Euros and Arab Emirate dirhams. Risk is mitigated by ensuring wherever possible sales transactions are in the same currency as the relevant costs of sale transactions.
As the Group mitigates foreign currency risk by offsetting gains and losses on sales and cost of sales transactions, the impact on the financial statements of a 1% change in the exchange rates during the year would have been negligible (2012: negligible).
Credit risk
The Group is mainly exposed to credit risk from invoiced sales where cash is not received at the statement of financial position date. However, the Group reduces its risk through appropriate use of credit insurance, when available, with a maximum insured balance per individual claim of GBP750k, but extended to GBP2m for the Group's largest customer (2012: GBP2m).
The Group also maintains invoice discounting facilities which enable its receivables to be financed. At the statement of financial position date GBP2,886k (2012: GBP5,050k) of trade receivables was considered overdue and not impaired. Aging of the trade receivables considered overdue is as follows:
2013 2012 Days from date of invoice GBP'000 GBP'000 ============================= ======== ======== 16-30 40 73 30-60 1,826 2,355 60-90 514 1,419 90-120 242 715 >120 264 488 Individually impaired amounts - - ============================= ======== ======== 2,886 5,050 ============================= ======== ========
Of the trade receivables considered overdue GBP2,569k (2012: GBP3,437k) is subject to credit insurance.
Regular management review is made to assess the recoverability of gross receivables and provision is made accordingly. No provision has been made against trade receivables in the current and prior year.
The Group has a wide range of customers and seeks to constantly develop and broaden its relationships. Current active customer numbers exceed 700. The top 10 customers of the Group account for 49% of revenue in 2013 (2012: 42%).
Trade receivables at the statement of financial position date relating to the top 10 customers are as follows:
2013 2012 GBP'000 GBP'000 ======================= ======== ======== Balance at 31 December 7,545 6,885 ======================= ======== ========
Having considered concentrations of credit risk, the Group believes risk across trade receivables to be low (and hence the quality of debtors as high) for the following reasons:
-- The customer portfolio, whilst including a number of individually significant accounts, largely comprises of substantial 'blue chip' companies operating in a variety of sectors where the historic incidence of bad debt has been negligible.
-- Year end bad debt provisioning, after detailed review is negligible.
Additional analysis of our year end trade receivables is:
2013 2012 GBP'000 GBP'000 ===================== ======== ======== Commercial 22,185 21,473 Public sector bodies 354 179 ===================== ======== ======== 22,539 21,652 ===================== ======== ========
The Board do not consider there to be significant concentrations of commercial customers with shared characteristics, other than predominantly operating in the UK, with the only other concentration of risk potentially being the public sector where the Board believes credit risk to be low. The Group's total exposure to debt risk is trade debtors of GBP22,539k (2012: GBP21,652k).
During the course of the year, the Group has continued to develop its business in the Middle East and with it, its exposure to a market with less rigorous payment processes. The Directors ensure that these credit risk challenges are minimised by maintaining careful monitoring of these clients.
Liquidity risk
Liquidity risk arises from the Group's management of working capital and finance charges. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due.
The liquidity risk is managed centrally by the finance function. Budgets are set locally and centrally, and are agreed by the Board annually in advance, enabling the Group's cash flow requirements to be anticipated. Where facilities of Group entities need to be increased, approval of the Chief Financial Officer must be sought. When the amount of the facility is above a certain level the agreement of the Board is needed.
Interest rate risk
The Group's external borrowings at the statement of financial position date comprise a short-term overdraft and an invoice discounting facility. The Group does not seek to fix interest on this borrowing, as the Board considers the exposure to interest rate risk acceptable, due to the low levels of debt.
The interest profile of the Group's financial assets and liabilities are as follows:
Invoice discounting liabilities are payable at 2.3% (2012: 1.8%) above base rate.
There was no overdraft facility during 2013. Overdraft facilities during 2012 were payable at 2012: 2.0% above base rate.
If during the year base rates had been 0.5% higher, interest charges would have been GBP69k higher (2012: GBP55k), with a corresponding decrease in net assets.
Capital Disclosures
The Group's objectives when maintaining capital are:
-- to safeguard the entity's ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders; and
-- to provide an adequate return to shareholders commensurate with the level of risk.
The Group sets the amount of capital it requires in proportion to risk. The Group manages its capital structure and makes adjustments to it in the light of economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt.
Total capital is categorised as follows:
2013 2012 GBP'000 GBP'000 ====================== ======== ======== Share capital 117 114 Share premium account 3,238 3,145 Retained earnings 2,739 2,108 ====================== ======== ======== 6,094 ,5,367 ====================== ======== ========
To the extent financial assets and liabilities are not carried at fair value in the statements of financial position, book value approximates to fair value at 31 December 2013 and 2012.
21. Financial assets and liabilities - other disclosures
Maturity of financial liabilities
The following table illustrates the contractual maturity of the Group's financial liabilities, excluding bank borrowing and finance leases that must be settled gross, based where relevant, on interest rates and exchange rates prevailing at the statement of financial position date.
At At 31 December 31 December 2013 2012 GBP'000 GBP'000 ====================== ============ ============ In less than one year 11,860 10,823 ====================== ============ ============
The maturity of trade and other payables is as follows:
At At 31 December 31 December 2013 2012 GBP'000 GBP'000 ========================= ============ ============ Days from date of invoice 0-30 7,918 5,882 30-60 37 300 60-90 139 278 90-120 52 8 >120 63 56 ========================= ============ ============ 8,209 6,524 ========================= ============ ============
Maturity of bank balances is shown below.
Finance facilities
In May 2013 the Group entered into a three year arrangement to provide a new facility of GBP20m with Bank Leumi. This replaced the existing arrangements that the Group had in place with Lloyds Banking Group and Bank of Ireland Invoice Finance.
The Group's principal bankers are Bank Leumi, through whom there is a main invoice discounting facility of GBP20m (2012: GBP16.85m). The principal terms of this invoice discounting facility are that it is an umbrella Group facility with 90% availability against sales invoices
In 2012 the Group also has an invoice discounting facility through Bank of Ireland Invoice Finance. This facility was EUR3m with 85% availability against sales invoices.
Borrowing facilities
The Group had undrawn committed borrowing facilities available at 31 December 2013. The borrowings are secured by fixed and floating charges in favour of the Group's bankers. All bank borrowings are on a floating rate fixed above base rate. The carrying value of assets pledged as security at 31 December 2013 is GBP31,429k (2012: GBP28,589k).
Subject to the above, the invoice discounting facility takes first security over the trade receivables. Facilities available but not utilised at statement of financial position date are as follows:
At At 31 December 31 December 2013 2012 GBP'000 GBP'000 ============================================= ============ ============ Overdraft - expiry within one year - 100 Invoice discounting - expiry within one year 6,696 6,855 ============================================= ============ ============ 6,696 6,955 ============================================= ============ ============
Invoice discounting is available within the overall limits as set out above but is further restricted by conditions including total value of sales invoices raised, percentage entitlement and specific debt exclusion.
22. Deferred tax
Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of 20% (2012: 23%).
Deferred tax assets have been recognised in respect of all tax losses and other temporary differences giving rise to deferred tax assets because the Directors believe that it is probable that these assets will be recovered.
Deferred tax liabilities have been recognised in respect of temporary differences with regard to capital allowances in advance of depreciation giving rise to deferred tax liabilities because it is probable that these amounts will become payable.
The movements in deferred tax assets and liabilities during the year are shown below.
Details of the deferred tax asset, amounts charged to the consolidated statement of comprehensive income and amounts charged to reserves are as follows:
31 December 31 December 2013 2012 Group GBP'000 GBP'000 ================================================== =========== =========== At start of year 13 11 Previously recognised deferred tax assets written off in the year 2 2 Charge for the year (3) - -------------------------------------------------- ----------- ----------- At end of year 12 13 ================================================== =========== =========== Deferred tax asset 62 24 Deferred tax liability (50) (11) ================================================== =========== =========== 12 13 ================================================== =========== ===========
23. Share capital
At 31 December At 31 December 2013 2012 -------------------- -------------------- Authorised Number GBP'000 Number GBP'000 ================================ =========== ======= =========== ======= Ordinary shares of 0.1p 145,000,000 145 145,000,000 145 ================================ =========== ======= =========== ======= At 31 December At 31 December 2013 2012 -------------------- --------------------- Issued Ordinary shares of 0.1p each Number GBP'000 Number GBP'000 ================================ ========== ======== =========== ======== At the beginning of the year 114,142,786 114 104,231,887 104 Issued during the year - - 4,464,649 5 Share options exercised 2,375,000 3 5,446,250 5 -------------------------------- ----------- ------- ----------- -------- At the end of the year 116,517,786 117 114,142,786 114 ================================ =========== ======= =========== ======== At 31 December At 31 December 2013 2012 -------------------- -------------------- Allotted, issued and fully paid Number GBP'000 Number GBP'000 -------------------------------- ----------- ------- ----------- ------- Ordinary shares of 0.1p 116,517,786 117 114,142,786 114 ================================ =========== ======= =========== =======
24. Reserves
Reserves consist of the following:
Share capital - Share capital records the nominal value of shares in issue.
Share premium account - Amounts subscribed for share capital in excess of nominal value.
Merger reserve - Amounts subscribed for share capital in excess of nominal value on acquisition of another company.
Translation reserve - Represents the gain or loss arising on the translation of the foreign subsidiary.
Shares to be issued - Shares for which consideration has been received but which are not yet issued.
Retained earnings - Represents total comprehensive income less any amounts dealt with in other reserves.
25. Related party disclosures
Details of key management's emoluments are given in note 3. Directors are considered to be the only key management personnel.
Options over shares in the Company held or granted to the Directors serving at the year end were as follows:
Gain on Options Options options at exercised exercised 31 December in the in the Option 2013 year year Grant date price GBP'000 ======================== ================= ======= ============= =========== ========== R O'Callaghan 6 February 2007 4.00p - 750,000 22 and 16 December 2010 6.12p 250,000 - - and 15 November 2011 6.12p 250,000 - - I P Blair 30 April 2007 4.00p - 250,000 8 J Butterfield (resigned 17 January 2013) 30 April 2007 4.00p - 250,000 6 M J Bennett 30 April 2007 4.00p - 250,000 8 F Brosnan 21 June 2011 11.00p 2,404,500 - - S Greenwood 21 June 2011 11.00p 2,404,500 - - S Wright 17 April 2012 6.12p 2,590,364 - - ======================== ================= ======= ============= =========== ========== 7,899,364 1,500,000 44 ========================================== ======= ============= =========== ==========
There are no trading transactions between the parent and subsidiaries other than recharges of costs incurred. Amounts outstanding at 31 December 2013 and 2012 are disclosed within notes 15 and 16.
During the year the Group incurred property lease costs of GBP68k (2012: GBP59k) from Capel Property. This business is a partnership between directors S Greenwood and F Brosnan, and is in reference to two separate office property leases in Dublin and Cork. There was no outstanding balance at 31 December 2013.
26. Discontinued operations
In November 2013, the Group sold its 100% interest in Aiimi Limited. This is the only operation presented within the Technology services segment. The post-tax gain on disposal of discontinued operations was determined as follows:
31 December 2013 GBP'000 ============================================== =========== Consideration received (and net cash inflow): Cash 220 Other* 410 ---------------------------------------------- ----------- Total consideration received 630 ============================================== =========== Net assets disposed of: Property plant and equipment 12 Intangibles 35 Trade and other receivables 894 Trade and other payables (641) ---------------------------------------------- ----------- At end of year 300 ============================================== =========== Gain on disposal of discontinued operations 330 ============================================== ===========
* Included in Other Consideration are 3,600,000 ordinary shares in the Company previously owned by the managing director of Aiimi Limited (and previously a director of the Company) that have been placed with a third party for the benefit of the Company. As the Company has all the risks and rewards of the shares they have been recognised as part consideration for the sale of Aiimi at fair value at date of sale, being the mid-market share price of 6.38 pence. The shares have been correspondingly debited to equity reflecting the fact they are in substance 'own shares held', but not legally 'treasury shares'.
The post-tax gain on disposal of discontinued operations was determined as follows:
31 December 31 December 2013 2012 Result of discontinued operation GBP'000 GBP'000 =============================================== =========== =========== Revenue 3,113 3,942 Expenses other than finance costs (3,232) (3,927) Finance costs (13) (13) Tax expense - 28 Gain from selling discontinued operation after tax 330 - ----------------------------------------------- ----------- ----------- At end of year 198 30 =============================================== =========== =========== 31 December 31 December 2013 2012 Earnings per share from discontinued operation Pence GBP'000 =============================================== =========== =========== Basic earnings per share 0.171 0.027 Diluted earnings per share 0.171 0.027 ----------------------------------------------- ----------- -----------
Statement of cash flows
The statement of cash flows includes the following amounts relating to discontinued operations:
31 December 31 December 2013 2012 GBP'000 GBP'000 ====================================== =========== =========== Operating activities 241 102 Investing activities 283 (69) Financing activities 13 - -------------------------------------- ----------- ----------- Net cash from discontinued operations 537 33 ====================================== =========== ===========
27. Ultimate controlling party
The Directors do not consider any one party to exercise ultimate control over the Group.
28. Status of Financial Information
The financial information set out above does not comprise the Company's statutory accounts for the periods ended 31 December 2013 or 31 December 2012. Statutory accounts for 31 December 2012 have been delivered to the Registrar of Companies and those for 31 December 2013 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 2013 or 2012.
29. Publication of announcement and report and accounts
A copy of this announcement will be available at the Company's registered office (The Crane Building, 22 Lavington Street, London, SE1 0NZ) 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 IRMRTMBAMBAI
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