Final Results

RNS Number : 0614I

Robert Walters PLC

04 March 2010

 



ROBERT WALTERS PLC

Preliminary Results for the year ended 31 December 2009

FINANCIAL HIGHLIGHTS

·      Results ahead of expectations.

·      Net fee income (gross profit) down 25% (31% in constant currency*) to £104.4m (2008: £138.6m).

·      68% of the Group's net fee income now generated from outside of the UK (2008: 67%).

·      Operating profit of £1.6m (£1.6m in constant currency) (2008: £18.6m).

·      Profit before taxation of £1.3m (2008: £18.2m).

·      Basic earnings per share of 0.3p (2008: 17.2p).

·      Final dividend maintained at 3.35p per share, giving a total dividend for the year of 4.75p per share (2008: 4.75p).

·      Strong cash position maintained, with £17.3m of net cash as at 31 December 2009 (31 December 2008: £22.2m).

OPERATIONAL HIGHLIGHTS

·      Grew market share as clients gravitated to Robert Walters as one of the larger recruitment brands with a global presence.

·      Group has maintained its presence in all the markets in which it operates.

·      Took advantage of lease expiry dates and consolidated two offices in Hong Kong and two offices in Tokyo into single office locations.

·      Emerged from 2009 as a stronger, leaner business.

FOCUS FOR 2010

·      Entry into Latin American recruitment market, with new office opening in Sao Paulo.

·      Building on our established position in Asia Pacific:

-    Office opening in Beijing.

-    Actively assessing opportunities in other cities in mainland China and the Asia Pacific region.

·      Continued investment to grow our Walters Interim business across Continental Europe.

·      Strategic hiring activity across all regions.

Robert Walters, Chief Executive, commented:

"During the year, we controlled our costs and managed our cash in the face of a global downturn that was unprecedented. In June we took the decision not to reduce headcount any further, nor to withdraw from any of our markets. This enabled us to maintain our strong international presence and we are now well positioned to take advantage of any improvements in trading conditions.

"We have emerged from last year as a stronger business. We are selectively hiring, we are investing in those regions where growth prospects are most evident and we are actively assessing opportunities to grow our coverage in existing markets."

* Constant currency is calculated by applying 2008 exchange rates to local currency results for the current and prior years.

ENQUIRIES:

Robert Walters plc	[phone]
Robert Walters, Chief Executive
Alan Bannatyne, Group Finance Director
Pelham Bell Pottinger
James Henderson	[phone]
	[e-mail]
Archie Berens	[phone]
	[e-mail]

Robert Walters plc

Preliminary results for the year ended 31 December 2009

Chairman's Statement

Despite the challenging economic environment that prevailed across the globe during 2009, the Group delivered a creditable performance and I would like to take this opportunity, on behalf of the Board, to thank all Robert Walters staff for their hard work, continued commitment and loyalty.

Results

Revenue decreased by 11% to £300.4m (2008: £337.3m) and gross profit ('net fee income') by 25% (31% in constant currency) to £104.4m (2008: £138.6m). Operating profit decreased to £1.6m (£1.6m in constant currency) (2008: £18.6m) whilst profit before taxation fell to £1.3m (2008: £18.2m).  The Group maintained a strong cash position with net cash of £17.3m as at 31 December 2009 (2008: £22.2m). 

In response to some of the toughest trading conditions experienced in the Group's history, action was taken to manage the cost base, principally by reducing headcount by 19% to 1,269 (2008: 1,571). As expected, our contract business proved more resilient than our permanent business and at the year-end had generated 40% of the Group's recruitment net fee income (2008: 35%).

The first half of the year was marked by a significant decline in hiring activity right across the globe. 

Signs of market stabilisation did, however, emerge early in the second half of the year, driven by increases in permanent hiring activity, particularly in the financial services sector and Asia Pacific. As a result, we began selectively hiring to take advantage of these opportunities.

The Group now generates 68% (2008: 67%) of its net fee income from outside of the UK and has 37 offices in 17 countries.

The Board is recommending maintaining the final dividend at 3.35p per share (2008: 3.35p), which together with the interim dividend of 1.40p per share represents a total dividend of 4.75p per share (2008: 4.75p).  The Board will be seeking shareholder approval for the renewal of the authority to repurchase shares of up to 10% of the Group's issued share capital at the Annual General Meeting on 21 May 2010.

Strategy

Our strategy has been to streamline our business through sensible cost reductions and strong cash management. We have also taken steps to ensure that we retain the best talent. Most significantly though, the Group has successfully maintained its global presence and has not withdrawn from any markets in which it operates. As one of the leading global recruiters, with an internationally recognised brand, this has enabled the Group to grow its market share. We are now well placed to capitalise further as the global economy recovers.

The Group will continue to invest in areas where it sees the most opportunity. We have identified Latin America as a key new market and will be opening an office in Sao Paulo. We will also be building on our established positions in Asia and Europe.

Philip Aiken

Chairman

3 March 2010

Chief Executive Officer's Statement

Introduction

During the year, we controlled our costs and managed our cash in the face of a global downturn that was unprecedented. In June we took the decision not to reduce headcount any further, nor to withdraw from any of our markets. This has enabled us to maintain a strong international presence and we are now well positioned to take advantage of any improvements in trading conditions.

Clients have continued to gravitate towards large, international recruitment brands, such as Robert Walters, with the ability to provide specialist recruitment solutions on both a global and local scale. The ability of the Group to also provide a full spectrum of complementary offerings such as recruitment process outsourcing, payroll, candidate assessments and reference checking has also been a significant competitive advantage.

Review of Operations

Asia Pacific (41% of net fee income)

Revenue was £122.5m (2008: £137.1m) and net fee income decreased by 26% (36% in constant currency) to £43.0m (2008: £58.1m) producing an operating profit of £3.3m (£3.2m in constant currency) (2008: £12.3m).

Whilst trading conditions across the region were particularly difficult during the first half, markets stabilised and recovered towards the end of the year. All of our operations increased net fee income and profitability during the second half, with particularly strong performances delivered in Australia, Singapore, Malaysia and mainland China.  The dates of the expiry of lease agreements in Tokyo and Hong Kong enabled the Group to consolidate its operations in both cities into single office locations.

The Group is widely recognised as one of the leading specialist professional recruitment businesses in Asia. With the region expected to continue to lead the world's markets out of recession, the Group will invest in developing both existing and new markets and is well positioned to grow both net fee income and profitability.

UK (32% of net fee income)

Revenue was £116.5m (2008: £133.2m) and net fee income decreased by 26% to £33.8m (2008: £45.4m) producing an operating loss of £0.8m (2008: profit of £1.9m).

Despite an increase in hiring activity in the financial services sector during the second half, market conditions remained generally weak across all sectors and disciplines. Resource Solutions, our recruitment process outsourcing business, proved the exception, successfully growing the scope of services delivered to existing clients and securing a number of new accounts. 

Our contract divisions continued to provide some hedge against the decline in permanent hiring and our regional UK offices showed a degree of resilience with a relatively modest decline in net fee income.

With visibility limited, the outlook for the UK market remains uncertain.

Europe (25% of net fee income)

Revenue was £59.4m (2008: £64.9m) and net fee income decreased by 22% (31% in constant currency) to £25.6m (2008: £33.0m) producing an operating loss of £0.7m (£0.6m in constant currency) (2008: profit of £4.5m).

Net fee income levels across the region stabilised in the second half of the year, after a decline during the first half. France was the region's strongest performer, benefiting from the investment made in the Walters Interim business over the last four years.  We continued to invest in Walters Interim, opening a second office in Belgium during the first half. The Group also opened an office in Zurich, our first in Switzerland.

Whilst some markets in Europe have stabilised, the timing of a sustained recovery across the region is difficult to predict.

USA and South Africa (2% of net fee income)

Revenue was £2.0m (2008: £2.1m) and net fee income decreased by 8% (22% in constant currency) to £2.0m (2008: £2.1m) producing an operating loss of £0.2m (£0.2m in constant currency) (2008: £0.1m).

Our office in Johannesburg benefited from a market shortage of high calibre candidates and delivered an increase in both net fee income and operating profit. Our New York office increased net fee income during the second half of the year as the local market began to stabilise, but still returned a small loss for the year.

Current Trading & Outlook

Net fee income for January and February is ahead of the equivalent period in 2009.

The Group's balance sheet remains strong and we have emerged from last year as a stronger, leaner business. We are selectively hiring, we are investing in those regions where growth prospects are most evident and we are actively assessing opportunities to grow our coverage in existing markets.

Robert Walters

Chief Executive

3 March 2010

Consolidated Income Statement

FOR THE YEAR ENDED 31 DECEMBER 2009

	2009	2008
	£'000	£'000
Revenue
Continuing operations	300,442	337,311
Cost of sales	(196,079)	(198,726)
Gross profit	104,363	138,585
Administrative expenses	(102,785)	(119,943)
Operating profit	1,578	18,642
Finance income	241	530
Finance costs	(388)	(821)
Loss on foreign exchange	(118)	(169)
Profit before taxation	1,313	18,182
Taxation	(1,073)	(5,967)
Profit for the year	240	12,215
Attributable to:
Equity holders of the parent	240	12,242
Minority interest	-	(27)
	240	12,215
Earnings per share (pence):
Basic	0.3	17.2
Diluted	0.3	16.6

Consolidated Statement of Recognised Income and Expense

FOR THE YEAR ENDED 31 DECEMBER 2009

	2009	2008
	£'000	£'000
Profit for the year	240	12,215
Exchange differences on translation of overseas operations	(363)	8,480
Total recognised income and expense for the year	(123)	20,695
Attributable to:
Equity holders of the parent	(123)	20,722
Minority interest	-	(27)
	(123)	20,695

Consolidated Balance Sheet

AS AT 31 DECEMBER 2009

	2009	2008
	£'000	£'000
Non-current assets
Intangible assets	8,913	9,638
Property, plant and equipment	4,271	6,228
Deferred tax assets	3,930	2,771
	17,114	18,637
Current assets
Trade and other receivables	66,744	68,419
Corporation tax receivables	2,247	579
Cash and cash equivalents	19,812	28,525
	88,803	97,523
Total assets	105,917	116,160
Current liabilities
Trade and other payables	(48,592)	(47,618)
Corporation tax liabilities	(692)	(2,031)
Bank loans	(2,100)	(4,822)
	(51,384)	(54,471)
Net current assets	37,419	43,052
Non-current liabilities
Bank loans	(441)	(1,532)
Deferred tax liabilities	(758)	(502)
	(1,199)	(2,034)
Total liabilities	(52,583)	(56,505)
Net assets	53,334	59,655
Equity
Called-up share capital	17,034	17,034
Share premium account	20,586	20,586
Other reserves	(73,410)	(73,410)
Own shares held	(12,763)	(9,834)
Treasury shares held	(18,865)	(18,865)
Foreign exchange reserves	8,555	8,918
Retained earnings	112,197	115,226
Equity attributable to equity holders of the parent	53,334	59,655
Total equity	53,334	59,655

Consolidated Cash Flow Statement

FOR THE YEAR ENDED 31 DECEMBER 2009

	2009	2008
	£'000	£'000
Cash generated from operating activities	7,952	29,549
Income taxes paid	(4,005)	(9,102)
Net cash from operating activities	3,947	20,447
Investing activities
Acquisition of subsidiary (net of cash acquired)	(445)	(237)
Proceeds on disposal of investments	20	-
Interest paid	(147)	(348)
Purchases of computer software	(403)	(1,677)
Purchases of property, plant and equipment	(874)	(2,438)
Proceeds on disposal of property, plant and equipment	5	132
Net cash used in investing activities	(1,844)	(4,568)
Financing activities
Equity dividends paid	(3,344)	(3,303)
Proceeds from issue of equity	-	41
Proceeds from bank loans	925	3,028
Repayment of bank loans	(4,288)	(6,814)
Purchase of own shares (net of proceeds from option exercises)	(3,288)	(9,658)
Shares purchased for cancellation	-	(401)
Net cash used in financing activities	(9,995)	(17,107)
Net decrease in cash and cash equivalents	(7,892)	(1,228)
Cash and cash equivalents at beginning of year	28,525	23,953
Effect of foreign exchange rate changes	(821)	5,800
Cash and cash equivalents at end of year	19,812	28,525

    Consolidated statement of changes in equity

    FOR THE YEAR ENDED 31 DECEMER 2009

	Share capital	Share premium	Other reserves	Own shares held	Treasury shares held	Foreign exchange reserves	Retained earnings	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 January 2008	17,086	40,553	(73,470)	(1,073)	(18,865)	438	85,030	49,699
Profit for the year	-	-	-	-	-	-	12,242	12,242
Foreign currency translation differences	-	-	-	-	-	8,480	-	8,480
Total recognised income and expense for the year	-	-	-	-	-	8,480	12,242	20,722
Dividends paid	-	-	-	-	-	-	(3,303)	(3,303)
Own shares purchased	-	-	-	(9,658)	-	-	-	(9,658)
Shares purchased for cancellation	(60)	-	60	-	-	-	151	151
Reduction of share premium	-	(20,000)	-	-	-	-	20,000	-
Adjustment in respect of share schemes	-	-	-	897	-	-	1,106	2,003
New shares issued	8	33	-	-	-	-	-	41
Balance at 31 December 2008	17,034	20,586	(73,410)	(9,834)	(18,865)	8,918	115,226	59,655
Profit for the year	-	-	-	-	-	-	240	240
Foreign currency translation differences	-	-	-	-	-	(363)	-	(363)
Total recognised income and expense for the year	-	-	-	-	-	(363)	240	(123)
Dividends paid	-	-	-	-	-	-	(3,344)	(3,344)
Own shares purchased	-	-	-	(3,542)	-	-	-	(3,542)
Adjustment in respect of share schemes	-	-	-	613	-	-	75	688
Balance at 31 December 2009	17,034	20,586	(73,410)	(12,763)	(18,865)	8,555	112,197	53,334

Statement of Accounting Policies

FOR THE YEAR ENDED 31 DECEMBER 2009

Basis of preparation

The financial report for the year ended 31 December 2009 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.

Although in certain markets and sectors our clients and suppliers are still experiencing difficult trading conditions, the Group has considerable financial resources including £17.3m of net cash at 31 December 2009 together with a diverse range of clients and suppliers across different geographic locations and sectors. As a consequence, the Directors believe that the Group is well placed to manage its business risks successfully. After making enquiries, the Directors have formed a judgement, at the time of approving the accounts, that there is a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason the Directors continue to adopt the going concern basis in preparing the accounts.

The financial information in this announcement, which was approved by the Board of Directors on 3 March 2010, does not constitute the Company's statutory accounts for the year ended 31 December 2009 but is derived from these accounts. Statutory accounts for 2008 have been delivered to the Registrar of Companies and those for 2009 will be delivered following the Company's Annual General Meeting. The auditors have reported on these accounts; their reports were unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain statements under Section 498(2) or (3) of the Companies Act 2006.

The Annual General Meeting of Robert Walters plc will be held on 21 May 2010 at 55 Strand, London WC2N 5WR.

1.	Segmental information
		2009	2008
		£'000	£'000
i)	Revenue:
	Asia Pacific	122,495	137,092
	UK	116,578	133,213
	Europe	59,407	64,884
	USA and South Africa	1,962	2,122
		300,442	337,311
ii)	Gross profit:
	Asia Pacific	42,988	58,053
	UK	33,772	45,448
	Europe	25,651	32,969
	USA and South Africa	1,952	2,115
		104,363	138,585

1.	Segmental information (continued)
			2009		2008
			£'000		£'000
iii)	Profit before taxation:
	Asia Pacific		3,292		12,345
	UK		(830)		1,894
	Europe		(697)		4,508
	USA and South Africa		(187)		(105)
	Operating profit		1,578		18,642
	Net finance cost		(265)		(460)
	Profit before taxation		1,313		18,182
iv)	Net Assets:
	Asia Pacific	17,326		14,983
	UK	5,102		11,324
	Europe	9,492		10,781
	USA and South Africa	(584)		(421)
	Unallocated corporate assets and liabilities	21,998		22,988
		53,334		59,655

The analysis of revenue by destination is not materially different to the analysis by origin and the analyses of finance income and costs and inter-segment revenue are not significant.

The Group is divided into geographical areas for management purposes, and it is on this basis that the segmental information has been prepared.

v)	Other information - 2009	Fixed asset additions	Depreciation and amortisation	Non-current assets	Assets	Liabilities
		£'000	£'000	£'000	£'000	£'000
	Asia Pacific	466	1,230	9,865	30,143	(12,817)
	UK	574	1,785	1,920	35,970	(30,868)
	Europe	212	322	1,317	20,478	(10,986)
	USA and South Africa	25	44	82	381	(965)
	Unallocated corporate assets and liabilities	-	-	3,930	25,989	(3,991)
		1,277	3,381	17,114	112,961	(59,627)

1.	Segmental information (continued)
v)	Other information - 2008	Fixed asset additions	Depreciation and amortisation	Non-current assets	Assets	Liabilities
		£'000	£'000	£'000	£'000	£'000
	Asia Pacific	1,537	967	10,917	30,374	(15,391)
	UK	2,352	1,655	3,249	35,255	(23,930)
	Europe	248	266	1,600	24,369	(13,588)
	USA and South Africa	24	27	100	394	(815)
	Unallocated corporate assets and liabilities	-	-	2,771	31,875	(8,888)
		4,161	2,915	18,637	122,267	(62,612)

		2009	2008
		£'000	£'000
vi)	Revenue by business grouping:
	Robert Walters	265,184	312,758
	Resource Solutions (recruitment process outsourcing)	35,258	24,553
		300,442	337,311

For the purposes of segmental information, unallocated corporate assets and liabilities include cash, bank loans and corporate deferred tax balances.

2.	Finance costs
		2009	2008
		£'000	£'000
	Interest on bank overdrafts	11	162
	Interest on long-term loans	377	360
	Other	-	299
		388	821

3.	Taxation
		2009	2008
		£'000	£'000
	Current tax charge
	Corporation tax - UK	-	19
	Corporation tax - Overseas	1,164	6,225
	Adjustments in respect of prior years
	Corporation tax - UK	330	(310)
	Corporation tax - Overseas	(105)	283
		1,389	6,217
	Deferred tax
	Deferred tax - UK	(501)	(390)
	Deferred tax - Overseas	184	347
	Adjustments in respect of prior years
	Deferred tax - Overseas	1	(207)
		(316)	(250)
	Total tax charge for the year	1,073	5,967
	Profit before taxation	1,313	18,182
	Tax at standard UK corporation tax rate of 28% (2008: 28.5%)	368	5,182
	Effects of:
	Unrelieved (relieved) losses	274	(151)
	Other expenses not deductible for tax purposes	188	759
	Overseas earnings taxed at different rates	17	411
	Adjustments to tax charges in previous years	226	(234)
	Total tax charge for the year	1,073	5,967

4.	Dividends
		2009	2008
		£'000	£'000
	Amounts recognised as distributions to equity holders in the year:
	Interim dividend paid of 1.40p per share (2008 1.40p)	990	974
	Final dividend for 2008 of 3.35p (2007: 3.35p)	2,354	2,329
		3,344	3,303
	Proposed final dividend for 2009 of 3.35p (2008: 3.35p)	2,314	2,359
	The proposed final dividend of £2,314,000 is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements.
	If approved, the dividend will be paid on 18 June 2010 to those shareholders on the register as at 28 May 2010.
5.	Earnings per share
	The calculation of earnings per share is based on the profit for the year attributable to equity holders of the parent and the weighted average number of shares of the Company.
		2009	2008
		£'000	£'000
	Profit for the year attributable to equity holders of the parent	240	12,242
		2009	2008
		Number of shares	Number of shares
	Weighted average number of shares:
	Shares in issue throughout the year	85,168,703	85,428,703
	Share issued in the year	-	19,397
	Shares buy-backs and cancellations	-	(279,644)
	Treasury and own shares held	(14,869,591)	(14,279,043)
	For basic earnings per share	70,299,112	70,889,413
	Outstanding share options	6,750,325	2,548,118
	For diluted earnings per share	77,049,437	73,437,531

6.	Intangible assets
		Goodwill	Computer software	Total
		£'000	£'000	£'000
	Cost:
	At 1 January 2008	6,847	3,390	10,237
	Additions	768	1,677	2,445
	Disposals	-	(34)	(34)
	Foreign currency translation differences	293	120	413
	At 31 December 2008	7,908	5,153	13,061
	Additions	-	403	403
	Disposals	-	(117)	(117)
	Foreign currency translation differences	(68)	(33)	(101)
	At 31 December 2009	7,840	5,406	13,246
	Accumulated depreciation and impairment:
	At 1 January 2008	-	2,415	2,415
	Charge for the year	-	992	992
	Disposals	-	(33)	(33)
	Foreign currency translation differences	-	49	49
	At 31 December 2008	-	3,423	3,423
	Charge for the year	-	994	994
	Disposals	-	(70)	(70)
	Foreign currency translation differences	-	(14)	(14)
	At 31 December 2009	-	4,333	4,333
	Carrying value:
	At 1 January 2008	6,847	975	7,822
	At 31 December 2008	7,908	1,730	9,638
	At 31 December 2009	7,840	1,073	8,913

The carrying value of goodwill relates to the acquisition of Talent Spotter (£993,000) and the historic acquisition of the Dunhill Group in Australia (£6,847,000). Goodwill 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 over the next five years, 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 long-term average potential growth rate of the respective operations.  The value of the cash flows is then discounted at a post tax rate of 7.3% (pre-tax rate of 10.1%), based on the Group's weighted average cost of capital.

7.	Property, plant and equipment
		Leasehold improvements £'000	Fixtures, fittings and office equipment £'000	Computer equipment £'000	Motor vehicles £'000	Total £'000
	Cost:
	At 1 January 2008	3,208	5,695	2,658	34	11,595
	Additions	519	812	1,101	6	2,438
	Acquisition of subsidiary	-	46	-	-	46
	Disposals	(114)	(244)	(274)	(1)	(633)
	Foreign currency translation differences	651	1,003	417	17	2,088
	At 31 December 2008	4,264	7,312	3,902	56	15,534
	Additions	267	255	342	10	874
	Disposals	(393)	(460)	(204)	-	(1,057)
	Foreign currency translation differences	(181)	129	(99)	(2)	(153)
	At 31 December 2009	3,957	7,236	3,941	64	15,198
	Accumulated depreciation and impairment:
	At 1 January 2008	1,962	2,865	2,012	11	6,850
	Charge for the year	620	661	630	12	1,923
	Disposals	(89)	(175)	(195)	-	(459)
	Foreign currency translation differences	380	391	201	20	992
	At 31 December 2008	2,873	3,742	2,648	43	9,306
	Charge for the year	732	945	699	11	2,387
	Disposals	(316)	(266)	(196)	-	(778)
	Foreign currency translation differences	(103)	180	(63)	(2)	12
	At 31 December 2009	3,186	4,601	3,088	52	10,927
	Carrying value:
	At 1 January 2008	1,246	2,830	646	23	4,745
	At 31 December 2008	1,391	3,570	1,254	13	6,228
	At 31 December 2009	771	2,635	853	12	4,271

8.	Trade and other receivables
		2009	2008
		£'000	£'000
	Receivables due within one year:
	Trade receivables	49,358	51,601
	Other receivables	2,656	2,488
	Prepayments and accrued income	14,730	14,330
		66,744	68,419

9.	Trade and other payables: amounts falling within one year
		2009	2008
		£'000	£'000
	Trade payables	2,352	4,378
	Other taxation and social security	11,986	10,667
	Other trade payables	11,242	10,717
	Accruals and deferred income	23,012	21,856
		48,592	47,618

There is no material difference between the fair value and the carrying value of the Group's trade and other payables.

10.	Bank loans
		2009	2008
		£'000	£'000
	Bank loans: current	2,100	4,822
	Bank loans: non-current	441	1,532
		2,541	6,354
	The borrowings are repayable as follows:
	Within one year	2,100	4,822
	In the second year	257	564
	In the third to fifth year inclusive	184	968
		2,541	6,354

A euro denominated bank loan was taken out on 8 November 2006 at a fixed interest rate of 5.36% per annum and thus exposed the Group to fair value interest rate risk, currency risk being addressed by the Group's European operations.  The initial value was £5.0m and the final repayment was made in June 2009.

10.	Bank loans (continued)

A pounds sterling denominated bank loan was taken out on 8 November 2006 at a fixed rate of 6.94% per annum and thus exposed the Group to a fair value interest rate risk.  The initial value was £5.0m and the final repayment was made in June 2009.

In March 2008, the Group borrowed renminbi 20m at a rate of the People Bank of China base rate plus 10% to finance the acquisition of Talent Spotter and provide working capital.  Renminbi 10m is repayable over four years and the remainder is a short-term facility.  The loan is secured against cash deposits in Hong Kong.

In May 2008, the Group entered into a trade loan facility of £12.5m at a rate of LIBOR plus 0.75%.  This facility expired in April 2009.

In August 2009, the Group entered into a committed, three-year, £10m receivables financing agreement.  At 31 December 2009, £0.9m was drawn down under this facility.

11.	Notes to the cash flow statement
		2009	2008
		£'000	£'000
	Operating profit	1,578	18,642
	Adjustments for:
	Depreciation and amortisation charges	3,381	2,915
	Loss on disposal of property, plant and equipment	321	42
	Gain on disposal of investments	(20)	-
	Movement in share scheme balance	(216)	3,566
	Operating cash flows before movements in working capital	5,044	25,165
	Decrease in receivables	1,184	10,368
	Increase (decrease) in payables	1,724	(5,984)
	Cash generated from operating activities	7,952	29,549

12.	Reconciliation of net cash flow to movement in net cash
		2009	2008
		£'000	£'000
	Decrease in cash and cash equivalents in the year	(7,892)	(1,228)
	Cash outflow from decrease in bank loans	3,363	3,786
	Foreign currency translation differences	(372)	4,019
	Movement in net cash in the year	(4,901)	6,577
	Net cash at beginning of year	22,172	15,595
	Net cash at end of year	17,271	22,172

Net cash is defined as cash and cash equivalents less bank loans.

 

END

 

 

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