Final Results
Robert Walters PLC
25 February 2008
25 FEBRUARY 2008
ROBERT WALTERS PLC
('Robert Walters' or 'the Group')
Preliminary Results for the year ended 31 December 2007
ANOTHER YEAR OF RECORD RESULTS
FINANCIAL HIGHLIGHTS
• Net fee income (gross profit) up 19% to £128.9m (2006: £108.6m)
• Operating profit up 34% to £26.1m (2006: £19.5m)
• Profit before taxation up 26% to £24.9m (2006: £19.8m)
• Earnings per share up 23% to 23.2p (2006: 18.9p)
• Full-year dividend increased 17.5% to 4.70p per ordinary share
(2006: 4.00p)
• Share buy-back programme continued, with £12.8 million returned to
shareholders
Robert Walters, Chief Executive, commented:
'The business has never been in better shape and I am very pleased to announce a
record set of results for 2007.
'The management team has led the business through a number of economic cycles.
Although we have limited visibility, the Group is more internationally diverse
and multi-disciplined than ever before and, as such, despite the economic
uncertainty we are well placed to face the challenges of the current year.'
OPERATING HIGHLIGHTS
• Staff numbers increased to 1,474 (2006: 1,230) with 62% of the Group's
net fee income now generated outside of the UK.
• Asia Pacific is now the Group's largest region in terms of both net
fee income and operating profit, with new offices opened in Osaka and
Kowloon.
• Significant investment in our contract business in Europe and Asia
Pacific, with contract now representing 32% of the Group's recruitment net
fee income.
• Strong operating cash flow with £24.0m cash balance at year end.
• Entry into mainland China through acquisition of Talent Spotter.
ENQUIRIES:
Robert Walters plc +44 (0) 20 7379 3333
Robert Walters, Chief Executive
Alan Bannatyne, Finance Director
Pelham PR
James Henderson +44 (0) 20 7743 6673
james.henderson@pelhampr.com
Archie Berens +44 (0) 20 7743 6679
archie.berens@pelhampr.com
ABOUT ROBERT WALTERS
Robert Walters is a leading specialist professional recruitment consultancy,
which focuses on placing high calibre professionals into permanent, contract and
temporary positions at all management levels. The Group specialises in the
accounting, finance, banking, IT, management consultancy, legal, sales and
marketing, human resources, supply chain, secretarial and support fields.
Robert Walters' blue-chip client base ranges across multi-national corporations
covering all market sectors.
Established in 1985, Robert Walters has built a global presence, with 35 offices
now spanning 15 countries across five continents.
Chairman's Statement
I am pleased to report a record set of results for the Group for the year ended
31 December 2007. Revenue increased by 17% to £319.8m (2006: £274.5m) producing
a 19% increase in gross profit ('net fee income') to £128.9m (2006: £108.6m).
Operating profit increased by 34% to £26.1m (2006: £19.5m) and it was
encouraging to see the conversion rate of operating profit from net fee income
improve to 20.3% (2006: 17.9%). Profit before tax rose by 26% to £24.9m (2006:
£19.8m).
The Group continued to experience candidate shortages across all our markets and
generally activity levels remained strong. We maintained a healthy balance
between permanent and contract recruitment, with significant investment in our
contract businesses delivering impressive rates of growth in net fee income
across the globe. Contract now represents 32% (2006: 30%) of the Group's
recruitment net fee income.
During the year staff numbers increased to 1,474 (2006: 1,230) and we opened new
offices in Madrid and Osaka. In early 2008 we opened an office in Kowloon, our
second in Hong Kong, and today we announce that we have acquired a majority
interest in a specialist recruitment consultancy business with offices in
Shanghai and Suzhou, the first Robert Walters offices in mainland China. This is
a significant development for Robert Walters and opens up a key territory for
the Group.
Following the Group's record trading performance, the Board is recommending an
increase in the final dividend to 3.35p per share (2006: 2.85p). Together with
the interim dividend of 1.35p (2006: 1.15p) this represents a 17.5% increase in
the total dividend per share to 4.70p (2006: 4.00p). Additionally, the company
delivered value to shareholders through its share buy-back programme, acquiring
3.9m shares for £12.8m. We will be seeking shareholder consent for the renewal
of the authority to repurchase up to 10% of the issued shared capital at the
Annual General Meeting on 8 May 2008.
I would like to take this opportunity to formally welcome to the Board our new
Non-executive Directors, Lady Judge and Andy Kemp and express our thanks to my
predecessor, Tim Barker, for his valuable contribution to the Group over the
last seven years. In this my first year as Chairman, it has been a pleasure to
witness first hand the energy and commitment of our staff across the world.
The global strength of the Robert Walters brand is a testament to the depth of
our senior management team and our consultants' ability to deliver value added
and innovative recruitment solutions to clients and candidates.
Notwithstanding the current uncertainties in global financial markets, we
believe that the Group is well positioned to take advantage of opportunities for
long term growth in both existing and new markets, particularly within
Continental Europe and Asia Pacific.
Philip Aiken
Chairman
Chief Executive's Statement
2007 was another strong year for the Group. Operating profit increased 34% to a
record £26.1m (2006: £19.5m) with net fee income growth during the second half
of the year accelerating on a like-for-like basis. This increase in operating
profit is particularly pleasing given headcount growth of 20% and the fact that
a significant number of new hires are still well below their ultimate
productivity levels. We have also expanded our office network from 28 to 35.
Europe and Asia Pacific achieved the highest rates of net fee income growth with
Asia Pacific now our largest region in terms of both net fee income and
profitability. The significant investment in our contract business in these
regions provides a greater platform for long term growth in these exciting
markets.
Candidates remained in short supply with the Robert Walters global footprint, a
key source of competitive advantage, continuing to provide clients with
increased opportunity to source the highest calibre professionals.
United Kingdom
Revenue in the UK was £148.7m (2006: £138.4m) and net fee income increased by
10% to £48.6m (2006: £44.1m). Operating profit increased by 56% to £5.0m (2006:
£3.2m).
All disciplines grew net fee income, with our core Finance and Accounting
business delivering a sharp increase in contractor numbers and an improvement in
the underlying margin.
Our HR, Legal, Sales & Marketing and IT divisions continued to evolve, with our
IT business showing particularly strong operating profit growth during the
second half of the year.
There appears to be the beginnings of a polarisation in the professional
recruitment sector between the larger international players and boutiques. We
have seen a steady move, driven by clients, towards the use of recruitment firms
as a one-stop-shop for a variety of professional roles. This has left the
landscape unusually bereft of medium sized competitors - a very different story
from twenty or even ten years ago.
Candidates also appear to be focussing on registering with those firms offering
a wide breadth of career opportunities rather than registration with a large
number of smaller recruitment firms.
It is our responsibility to capitalise on these trends and continue to capture
market share whilst preserving our quality of service.
This trend is further accentuated by the requirement from certain larger
corporates and financial institutions for a managed service solution to their
recruitment needs. Our outsourcing business, Resource Solutions, is ideally
placed to benefit from this development in the market. As pioneers of this
service offering, Resource Solutions has an enviable client list, many of whom
are requesting more and more auxiliary services, including payrolling and agency
management.
Resource Solutions continued to win client engagements and broaden its sector
coverage during the year and whilst operating profit decreased marginally, this
was as a consequence of implementation costs for a number of significant long
term client projects on which we expect to see a return on investment during
2008.
Europe
Revenue was £44.4m (2006: £33.0m) and net fee income increased by 33% to £25.8m
(2006: £19.4m). Operating profit increased by 34% to £5.1m (2006: £3.8m). This
is our fastest growing region and represents 20% of the Group's net fee income.
All of our European operations produced strong growth in permanent net fee
income, whilst our contract business in France delivered an exceptional
performance.
The offices we opened in Eindhoven and Lyon during 2006 made a positive
contribution during the current year. In 2007 we opened an office in Madrid and
look forward to its continued expansion in the forthcoming year.
One of our major initiatives in France and Belgium over the past two years has
been the expansion of Walters Interim, our junior professional recruitment
business. We now have three offices in France servicing this market and are
planning further offices in Belgium over the next few years. We believe that
this business still has a great deal of potential and as in other areas of the
world, we see the security and resilience of contract net fee income as a strong
complement to the more cyclical permanent recruitment sector.
Asia Pacific
Revenue was £124.1m (2006: £99.0m) and net fee income increased by 27% to £52.1m
(2006: £41.2m). Operating profit increased by 33% to £15.9m (2006: £12.0m). This
region is now our largest, representing 40% of the Group's net fee income.
All offices significantly increased both net fee income and operating profit
with exceptional performances delivered by Japan and Australia.
The demographic landscape of Japan, market deregulation and the continuing
decline of the 'salaryman' lifetime employment mentality have presented the
Group with an exceptional opportunity in this market. During the year, we opened
a new office in Osaka and secured additional office space in Tokyo for our
rapidly growing contract business which we anticipate will lead to a
multi-office network throughout Japan in due course.
In February this year we entered the mainland China market, acquiring two new
offices in Shanghai and Suzhou. This acquisition demonstrates commitment to our
strategy for growth and opens up another exciting market for the Group.
During the year we took additional office space in Adelaide, Kuala Lumpur and
Singapore, whilst a new office opened in Kowloon in early January 2008. We
continue to explore additional opportunities across the region.
Other International
Other International comprises South Africa and the USA, with Ireland now
reported under Europe following a re-alignment of the Group's internal reporting
structure. This region now represents less than 2% of the Group's net fee
income.
Revenue was £2.5m (2006: £4.1m) with net fee income decreasing by 38% to £2.4m
(2006: £3.9m) resulting in an operating profit of £0.1m (2006: £0.5m). South
Africa is a profitable and growing operation whilst our New York office
underperformed.
General overview
The Group is now more internationally diverse and multi-disciplined than ever
before. As such, despite the economic uncertainty we are well placed to face the
challenges of the current year.
Robert Walters
Chief Executive
Consolidated Income Statement
FOR THE YEAR ENDED 31 DECEMBER 2007
2007 2006
£'000 £'000
Revenue
Continuing operations 319,795 274,462
Cost of sales (190,865) (165,857)
Gross profit 128,930 108,605
Administrative expenses (102,815) (89,115)
Operating profit 26,115 19,490
Interest received 332 58
Interest paid (831) (506)
(Loss) gain on foreign exchange (675) 805
Profit before taxation 24,941 19,847
Taxation (7,518) (5,754)
Profit after taxation 17,423 14,093
Dividends (3,139) (2,585)
Retained profit for the year 14,284 11,508
Earnings per share (pence):
Basic 23.2 18.9
Diluted 21.8 17.1
Consolidated Statement of Recognised Income and Expense
FOR THE YEAR ENDED 31 DECEMBER 2007
2007 2006
£'000 £'000
Profit for the year 17,423 14,093
Foreign currency translation differences 1,916 (1,761)
Total recognised income and expense for the year 19,339 12,332
Consolidated Balance Sheet
AS AT 31 DECEMBER 2007
2007 2006
£'000 £'000
Non-current assets
Intangible assets 7,822 7,747
Property, plant and equipment 4,745 4,210
Deferred tax asset 3,749 5,555
16,316 17,512
Current assets
Trade and other trade receivables 69,742 61,219
Corporation tax receivables 1,429 189
Cash and cash equivalents 23,953 19,584
95,124 80,992
Total assets 111,440 98,504
Current liabilities
Trade and other trade payables (47,763) (39,325)
Corporation tax liabilities (4,937) (3,431)
Bank loans (4,640) (4,617)
(57,340) (47,373)
Net current assets 37,784 33,619
Non-current liabilities
Bank loans (3,718) (8,011)
Deferred tax liabilities (683) (1,143)
(4,401) (9,154)
Total liabilities (61,741) (56,527)
Net assets 49,699 41,977
Equity
Called-up share capital 17,086 17,019
Share premium account 40,553 57,968
Other reserves (73,470) (74,034)
Own shares held (1,073) (2,686)
Treasury shares held (18,865) (14,773)
Foreign exchange reserves 438 (1,478)
Retained earnings 85,030 59,961
Total equity 49,699 41,977
Consolidated Cash Flow Statement
FOR THE YEAR ENDED 31 DECEMBER 2007
2007 2006
£'000 £'000
Cash generated from operating activities 30,372 18,190
Income taxes paid (6,616) (4,137)
Net cash from operating activities 23,756 14,053
Investing activities
Interest paid (net) (499) (444)
Purchases of computer software (697) (526)
Purchases of property, plant and equipment (net) (1,803) (1,522)
Net cash used in investing activities (2,999) (2,492)
Financing activities
Equity dividends paid (3,139) (2,585)
Proceeds from issue of equity 3,216 195
Proceeds from bank loan - 10,000
Repayment of bank loan (4,671) (1,921)
Treasury shares purchased (4,092) (9,987)
Shares purchased for cancellation (8,742) -
Net cash used in financing activities (17,428) (4,298)
Net increase in cash and cash equivalents 3,329 7,263
Cash and cash equivalents at beginning of year 19,584 13,612
Effect of foreign exchange rate changes 1,040 (1,291)
Cash and cash equivalents at end of year 23,953 19,584
Statement of Accounting Policies
FOR THE YEAR ENDED 31 DECEMBER 2007
Basis of preparation
The financial report for the year ended 31 December 2007 has been prepared in
accordance with the historical cost convention and with International Financial
Reporting Standards, including International Accounting Standards and
Interpretations (IFRSs) as adopted for use by the European Union, though this
announcement does not itself contain sufficient information to comply with
IFRSs.
The financial information in this announcement, which was approved by the Board
of Directors on 22 February 2008, does not constitute the Company's statutory
accounts for the years ended 31 December 2006 or 2007 but is derived from these
accounts. Statutory accounts for 2006 have been delivered to the Registrar of
Companies and those for 2007 will be delivered following the Company's Annual
General Meeting. The auditors have reported on these accounts; their reports
were unqualified and did not contain statements under section 237(2) or (3) of
the Companies Act 1985.
The 2007 Annual Report and Accounts will be posted to shareholders by 1 April
2008. Copies may be obtained after this date from the Company Secretary, 55
Strand, London WC2N 5WR.
The Annual General Meeting of Robert Walters plc will be held on 8 May 2008 at
55 Strand, London WC2N 5WR.
1. Segmental information
2007 2006
£'000 £'000
i) Revenue:
UK 148,746 138,374
Europe* 44,439 32,999
Asia Pacific 124,132 98,997
Other* 2,478 4,092
319,795 274,462
ii) Gross profit:
UK 48,594 44,144
Europe* 25,790 19,361
Asia Pacific 52,114 41,197
Other* 2,432 3,903
128,930 108,605
1. Segmental information (continued)
2007 2006
£'000 £'000
iii) Profit before interest and taxation:
UK 4,997 3,203
Europe* 5,096 3,798
Asia Pacific 15,926 11,963
Other* 96 526
Operating profit 26,115 19,490
Net finance credit (cost) (1,174) 357
Profit before taxation 24,941 19,847
iv) Net Assets:
UK 1,702 15,007
Europe* 7,262 3,791
Asia Pacific 25,902 16,815
Other* (322) (1,762)
Unallocated corporate assets and liabilities 15,155 8,126
49,699 41,977
The analysis of revenue by destination is not materially different to the
analysis by origin. The Group is divided into geographical areas for management
purposes, and it is on this basis that the primary segmental information has
been prepared.
1. Segmental information (continued)
v) Other information - 2007: Property, Plant & Depreciation and Assets Liabilities
Equipment Amortisation
£'000 £'000 £'000 £'000
UK 1,313 1,253 39,839 (38,137)
Europe* 443 194 17,941 (10,679)
Asia Pacific 927 512 39,402 (13,500)
Other 38 23 300 (622)
Unallocated corporate assets - - 29,131 (13,976)
and liabilities
2,721 1,982 126,613 (76,914)
Other information - 2006: Property, Plant & Depreciation and Assets Liabilities
Equipment Amortisation
£'000 £'000 £'000 £'000
UK 875 1,069 37,946 (22,939)
Europe* 587 149 10,997 (7,206)
Asia Pacific 588 374 25,786 (8,971)
Other* 21 30 471 (2,233)
Unallocated corporate assets - - 25,328 (17,202)
and liabilities
2,071 1,622 100,528 (58,551)
* In 2007, following a re-alignment of the Group's internal reporting structure,
Ireland is now presented in 'Europe'. As a result, the comparative figures for
both 'Europe' and 'Other' have been restated to reflect this change.
For the purposes of other information, unallocated corporate assets and
liabilities include cash, bank loans and corporate and deferred tax balances.
1. Segmental information (continued)
2007 2006
£'000 £'000
vi) Revenue by business grouping:
Robert Walters 303,431 265,342
Resource Solutions (recruitment process outsourcing) 16,364 9,120
319,795 274,462
vii) Carrying value of assets:
Robert Walters 77,985 58,247
Resource Solutions 19,498 16,953
97,483 75,200
viii) Additions to fixed assets:
Robert Walters 2,548 1,504
Resource Solutions 173 36
2,721 1,540
2. Interest paid
2007 2006
£'000 £'000
Interest on bank overdrafts 195 365
Interest on long term loans 560 141
Other 76 -
Total borrowing costs 831 506
3. Taxation
2007 2006
£'000 £'000
Current tax charge
Corporation tax - UK 1,236 1,134
Corporation tax - Overseas 6,904 5,151
Double tax relief - (50)
Adjustments in respect of prior periods
Corporation tax - UK (6) 58
Corporation tax - Overseas 71 148
8,205 6,441
Deferred tax
Deferred tax - UK 251 (385)
Deferred tax - Overseas (938) 122
Adjustments in respect of prior periods
Deferred tax - UK - (99)
Deferred tax - Overseas - (325)
(687) (687)
Total tax charge for the year 7,518 5,754
UK corporation tax has been charged at 30% (2006: 30%).
Profit before taxation 24,941 19,847
Tax at standard UK corporation tax rate of 30% 7,482 5,954
Effects of:
Reduction in withholding tax on foreign earnings (521) (329)
Other expenses not deductible for tax purposes 590 394
Overseas earnings taxed at different rates (98) (47)
Adjustments to tax charges in previous periods 65 (218)
Total tax charge for year 7,518 5,754
4. Equity dividends
2007 2006
£'000 £'000
Amounts recognised as distributions to equity holders in the
period:
Interim dividend paid of 1.35p per share (2006 1.15p) 1,025 871
Final dividend for 2006 of 2.85p (2005: 2.35p) 2,114 1,714
3,139 2,585
Proposed final dividend for 2007 of 3.35p (2006: 2.85p) 2,518 2,114
The proposed final dividend of £2,518,000 is subject to approval by shareholders at the Annual
General Meeting and has not been included as a liability in these financial statements.
5. Earnings per share
The calculation of earnings per ordinary share is based on the profit on ordinary activities
after taxation and the weighted average number of ordinary shares of Robert Walters plc.
2007 2006
£'000 £'000
Profit after taxation 17,423 14,093
2007 2006
Number Number
of Shares of Shares
Weighted average number of shares:
Shares in issue throughout the year 85,096,683 84,731,927
Share issued in the year 1,541,259 243,739
Shares cancelled in the year (964,983) -
Treasury and own shares held (10,724,113) (10,245,689)
For basic earnings per share 74,948,846 74,729,977
Outstanding share options 4,904,365 7,714,057
For diluted earnings per share 79,853,211 82,444,034
6. Intangible assets
Goodwill Computer Software Total
£'000 £'000 £'000
Cost
At 1 January 2006 6,847 2,176 9,023
Additions - 531 531
Disposals - (3) (3)
Foreign currency translation differences - (14) (14)
At 31 December 2006 6,847 2,690 9,537
Additions - 697 697
Disposals - (1) (1)
Foreign currency translation differences - 4 4
At 31 December 2007 6,847 3,390 10,237
Accumulated depreciation and impairment
At 1 January 2006 - 1,326 1,326
Charge for the year - 476 476
Disposals - (2) (2)
Foreign currency translation differences - (10) (10)
At 31 December 2006 - 1,790 1,790
Charge for the year - 621 621
Disposals - (1) (1)
Foreign currency translation differences - 5 5
At 31 December 2007 - 2,415 2,415
Carrying value
At 31 December 2006 6,847 900 7,747
At 31 December 2007 6,847 975 7,822
The carrying value of goodwill, denominated in £ Sterling, relates to the
historic acquisition of Dunhill Pty in Australia and is tested annually for
impairment, or more frequently if there are indications that goodwill might be
impaired. The recoverable amount of the goodwill is based on value in use,
calculated by preparing cash flow forecasts derived from the most recent
financial budgets and an assumed growth rate of 3%, which does not exceed the
anticipated long term average potential growth rate of the Australian market.
The value of the cash flows is then discounted at a post tax rate of 8%, based
on the Group's weighted average cost of capital.
7. Movement in equity
2007 2006
£'000 £'000
Profit for the year 17,423 14,093
Foreign currency translation differences 1,916 (1,761)
19,339 12,332
Dividends paid (3,139) (2,585)
Treasury shares purchased (4,092) (9,987)
Shares purchased for cancellation (9,351) -
Credit in respect of share schemes 1,749 6,326
New shares issued 3,216 195
Net increase in equity 7,722 6,281
Opening equity 41,977 35,696
Closing equity 49,699 41,977
8. Notes to the cash flow statement
2007 2006
£'000 £'000
Operating profit 26,115 19,490
Adjustments for:
Depreciation and amortisation charges 1,982 1,607
Loss on disposal of computer software - 1
Loss on disposal of property, plant and equipment 63 95
Movement in share scheme balance 2,287 1,571
Operating cash flows before movements in working capital 30,447 22,764
Increase in receivables (6,302) (18,428)
Increase in payables 6,227 13,854
Cash generated by operations 30,372 18,190
9. Reconciliation of net cash flow to movement in net funds 2007 2006
£'000 £'000
Increase in cash and cash equivalents in the year 3,329 7,263
Cash (outflow) inflow from decrease (increase) in bank loans 4,671 (8,079)
Foreign currency translation differences 639 (1,291)
Movement in net funds in the year 8,639 (2,107)
Net funds at beginning of year 6,956 9,063
Net funds at end of year 15,595 6,956
10. Subsequent events
Since the balance sheet date, the Group has acquired a majority interest in a
specialist recruitment business in China for a maximum consideration of Renminbi
20 million (£1.4m) payable over two years.
11. Dividend
The dividend will be paid on 6 June 2008 to those shareholders on the register
as at 16 May 2008.
This information is provided by RNS
The company news service from the London Stock Exchange
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