RDL says the recruitment downturn in IT is over

According to IT reunion site NamesFacesPlaces, RDL, in their half-year figures, have reported that there are signs that we have seen the worst of the cycle in December 2001 and January 2002, which they believe to have been the bottom of the downturn.

Downturn Over

The recruitment agency said that the six months proved a particularly difficult time, especially in their first quarter, but that business in the most recent quarter, i.e. their second quarter, has picked up.

Sales for the first half of their year were up 33% from £21.23 million to £28.35 million. This included a contribution from their acquisition Systems International Group (SIG). The underlying profits were £636,000 stripping out the costs of reorganisation of the Group after the integration of SIG. This was compared to profits of £1.43 million for the same period last year.

Net Debt

As of March 31st, the Group had a net debt of almost £12m, compared to £4.2 million last September. The increase in debt is down to the costs of acquiring SIG and the conversion of the deferred consideration in relation to a previous acquisition M3 into loan notes. The acquisition of SIG has significantly strengthened their presence in the UK market, adding three strong London based recruitment companies: First IT People, SEC, and Computer Personnel, as well as an IT consultancy business, SIG Consulting.

Staff Cuts

Staff numbers at the group have been cut by 24% to 188 since October 2001. The SIG head office, RDL London and Adelphi Belgium offices have all been closed. The Board has instituted a wide ranging review of expenditure which has, to date, resulted in savings of in excess of £2.5m, the benefits of which will be seen in the second half of the financial year (which has already begun.

According to Chairman and Managing Director, Andy Richards, “Trading during the period was particularly challenging throughout the Group, especially during the first quarter, which saw a progressive reduction in demand. I am pleased to report that the trend has reversed in the second quarter with increased levels of new business generated by fewer sales staff”.

They have Net Current Liabilities of £5.6 million.

The share price of RDL increased by 4p to 31.5p, or almost 15%, on the news. As there are around 17m shares, this gives a market worth for the company as a whole of around £5.35 million.

NamesFacesPlaces Comment

It is good to see that the one more recruitment company has said that the downturn in the market has ended, although the recovery is not strong, as yet. Many of the IT recruitment companies took the opportunity last year and early this year to cut their costs, and when the recovery takes more shape that should see RDL and other recruitment companies recover.

The staff cuts may not have been good news for those involved in them, but it should mean that there are opportunities for RDL and others to increase profitability from a lower cost base in the future.

The NamesFacesPlaces IT Agency Index now stands at 103.6 just two weeks after its inception – an increase of 3.6% compared to the FTSE-100 index's increase of just 0.5%. Perhaps the recovery really is coming in IT recruitment.

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