Interim Results
Robert Walters PLC
04 September 2006
4 SEPTEMBER 2006
ROBERT WALTERS PLC
('Robert Walters' or 'the Group')
Interim Results for the six months ended 30 June 2006
ROBERT WALTERS DELIVERS 66% PROFIT GROWTH
Robert Walters, the global recruitment specialist, announces excellent financial
results for the six months ended 30 June 2006. All regions traded strongly, with
Asia Pacific and Continental Europe in particular showing substantial growth and
outstanding opportunities for further expansion.
Robert Walters, Chief Executive, commented that:
'We have achieved record results in the first half of the year. All of our
regions have produced excellent performances. Particularly impressive has been
the Asia Pacific region, where we have established a powerful position from
which to drive further growth. Our Continental European business continues to
grow and we believe offers excellent scope for future development. The UK
business has also grown strongly and we are already seeing a return on our
earlier investment in our UK operations.
'We are very encouraged by the performance to date. The Group is well
positioned to deliver record operating profits for the full year.'
HALF YEAR SUMMARY
• Excellent trading performance:
- Strong net fee income and profit increase across all regions.
- Growth in both permanent (+41%) and contract (+17%) recruitment
fees.
• Four new offices opened.
• Further investment in headcount to 1,176 (2005: 1,050).
• Conversion rate increased to 15.3% (2005: 12.4%).
FINANCIAL HIGHLIGHTS
• Net fee income (gross profit) up 28% to £52.5m (2005: £41.0m).
• Operating profit up 58% to £8.0m (2005: £5.1m).
• Profit before taxation up 66% to £8.1m (2005: £4.9m).
• Earnings per share increased by 103% to 7.7p (2005: 3.8p).
• Interim dividend increased to 1.15p per ordinary share (2005: 1.05p).
• Share buy-back programme continued. Group purchased 2,180,776 of the
Company's own shares during the period at an average price of £2.40
totalling £5.2m.
OPERATING HIGHLIGHTS
UK
• UK business performed well, with 82% increase in operating profit to £1.6m
(2005: £0.9m).
• Core discipline of Finance and Accounting grew strongly and is benefiting
from the acute shortage of professionals.
• Smaller HR and Legal businesses delivered excellent net fee income growth.
CONTINENTAL EUROPE
• Operating profit increased by 60% to £1.4m (2005: £0.9m).
• Particularly strong performance in France.
• New offices opened in Eindhoven and Lyon.
ASIA PACIFIC
• Most profitable region for Robert Walters: operating profit increased by
40% to £4.8m (2005: £3.4m).
• Record net fee income and profits in Australasian business.
• Exceptional results in Hong Kong and continued strong performance from our
Singapore and Tokyo operations.
• New offices opened in Kuala Lumpur and Wellington.
OTHER INTERNATIONAL - IRELAND, SOUTH AFRICA AND USA
• All offices grew net fee income and profitability.
ENQUIRIES:
Robert Walters plc
Robert Walters, Chief Executive Tel. +44 (0) 20 7509 8850
Ian Nash, Finance Director Tel. +44 (0) 20 7509 8737
Pelham PR
James Henderson Tel. +44 (0) 20 7743 6673
james.henderson@pelhampr.com
Archie Berens Tel. +44 (0) 20 7743 6679
archie.berens@pelhampr.com
Notes for editors:
Robert Walters is a leading global recruitment consultancy, specialising in
placing high calibre professionals into permanent, contract and temporary
positions at all management levels. The Group specialises in the accounting,
finance, banking, IT, human resources, legal, sales and marketing, supply chain
and engineering, support and administration 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 27 offices
spanning five continents. It employs over 1100 staff worldwide.
Robert Walters PLC
Interim Results for the six months ended 30 June 2006
Chairman's and Chief Executive Officer's Statement
We are pleased to report another set of excellent results for the Group for the
six months ended 30 June 2006. In the first half, revenue was £129.4m (2005:
£106.5m) producing a 28% increase in gross profit ('net fee income') to £52.5m
(2005: £41.0m). Operating profit increased by 58% to £8.0m (2005: £5.1m) whilst
profit before tax rose by 66% to £8.1m (2005: £4.9m). Earnings per share has
increased by 103% to 7.7p (2005: 3.8p).
As the recruitment market for professional staff continued its momentum, the
Group increased net fee income quarter on quarter with particularly strong
growth in permanent recruitment (+41%) reflecting an increased level of client
confidence in permanent solutions to their recruitment needs. Temporary
recruitment also grew but at a more moderate rate (+17%). It is particularly
encouraging to report that all regions across the world significantly increased
their profitability during the period.
The Group continues to invest in our business and our people. During the first
half of the year, staff numbers rose to 1,176 (2005: 1,050) and new offices were
opened in Eindhoven, Kuala Lumpur, Lyon and Wellington. We believe that the
Group is well positioned for further growth within existing locations and we
have committed to research new markets such as China, India and Southern Europe.
Despite this continuing investment it is encouraging to see further improvement
in productivity and a 23% increase in our ability to turn net fee income into
operating profit over the same period last year.
United Kingdom
Revenue in the UK was £64.5m (2005: £57.0m) and net fee income increased by 15%
to £20.9m (2005: £18.2m). Operating profit increased by 82% to £1.6m (2005:
£0.9m).
The investments made in 2005 have had a positive effect, contributing to an
increased operating profit. Our core discipline, Finance and Accounting, grew
strongly and is benefiting from the acute shortage of professionals. Our ability
to use our global footprint to source and deliver candidates to our clients has
provided us with a distinct competitive advantage.
Among our smaller businesses, HR and Legal performed well and grew net fee
income strongly whilst IT remained flat. Resource Solutions, our profitable
recruitment outsourcing business, continued to broaden its client base outside
financial services.
Continental Europe
Revenue was £14.6m (2005: £9.6m) and net fee income increased by 57% to £8.7m
(2005: £5.5m). Operating profit increased by 60% to £1.4m (2005: £0.9m).
All our Continental European operations produced strong growth in net fee
income, with an excellent performance from our business in France. Walters
Interim, our clerical recruitment brand established recently in France and
Belgium, continued to increase both net fee income and profitability and offers
excellent scope for future development.
To capitalise on the opportunities we believe this region presents, we have
increased our investment with two new offices and a 35% increase in headcount.
Asia Pacific
Revenue was £46.0m (2005: £36.9m) and net fee income increased by 33% to £19.6m
(2005: £14.7m). Operating profit increased by 40% to £4.8m (2005: £3.4m).
This diverse region continues to be the Group's most profitable and offers huge
potential for the future. Our Australasian business, our largest in the region,
achieved record net fee income and profit. We saw very strong performances in
Japan and Singapore and an exceptional result from our operation in Hong Kong,
in part reflecting the continued growth of the Chinese economy.
Our office in Kuala Lumpur opened in April and we expect this business to be
profitable by the end of 2007.
Other International
Other International comprises Ireland, South Africa and the USA. Revenue was
£4.2m (2005: £3.0m) with net fee income increasing by 32% to £3.3m (2005: £2.5m)
resulting in an operating profit of £0.2m (2005: £0.1m loss).
These businesses showed significant progress with all offices growing net fee
income and profitability.
Cash flow
The Group ended the period with £2.2m of net cash (30 June 2005: £5.9m, 31
December 2005: £13.6m).
Operating activities generated £0.4m (2005: £2.0m) after funding a £9.1m
increase in working capital reflecting increased activity. The Company expended
£5.2m on the purchase of its own shares and other significant cash outflows
were: £2.5m tax; £1.7m dividend; £1.0m repayment of bank loan; and £0.9m capital
expenditure.
Dividend and share buy-back
The Board has decided to increase the interim dividend to 1.15p per share (2005:
1.05p). Additionally, as a way of returning cash to shareholders, the Group
purchased 2,180,776 of the Company's own shares during the period at an average
price of £2.40 totalling £5.2m.
The interim dividend will be paid on 27 October 2006 to shareholders on the
Company's register on 15 September 2006.
Current trading and prospects
Following the excellent performance in the first half of 2006, second half
trading remains strong. We see good potential in the markets in which we operate
and this leaves the Group well positioned to deliver record operating profits
for the full year.
Timothy Barker
Chairman
Robert Walters
Chief Executive
1 September 2006
ROBERT WALTERS plc
INTERIM RESULTS 2006
consolidated income statement
2006 2005 2005
6 mths to 6 mths to 12 mths to
30 June 30 June 31 December
Unaudited Unaudited Audited
£'000 £'000 £'000
Revenue 129,379 106,481 234,550
Cost of sales (76,906) (65,499) (146,428)
Gross profit 52,473 40,982 88,122
Administrative expenses (44,463) (35,917) (75,110)
Operating profit 8,010 5,065 13,012
Interest paid (net) (68) (14) (122)
Gain (loss) on foreign exchange 164 (174) (197)
Profit on ordinary activities before taxation 8,106 4,877 12,693
Tax on profit on ordinary activities (2,393) (1,952) (4,564)
Profit on ordinary activities after taxation 5,713 2,925 8,129
Dividends (1,714) (1,628) (2,403)
Retained profit for the period 3,999 1,297 5,726
Earnings per share (pence):
Basic 7.7 3.8 10.6
Diluted 7.2 3.5 10.0
consolidated statement of recognised income and expense
2006 2005 2005
6 mths to 6 mths to 12 mths to
30 June 30 June 31 December
Unaudited Unaudited Audited
£'000 £'000 £'000
Profit for the period 5,713 2,925 8,129
Foreign currency translation differences (949) 333 764
Total recognised income and expense for the period 4,764 3,258 8,893
ROBERT WALTERS plc
INTERIM RESULTS 2006
consolidated balance sheet
2006 2005 2005
30 June 30 June 31 December
Unaudited Unaudited Audited
£'000 £'000 £'000
Non-current assets
Intangible assets 7,683 6,847 7,697
Property, plant and equipment 4,011 4,783 4,057
Deferred tax asset 2,276 756 1,558
13,970 12,386 13,312
Current assets
Trade and other receivables 57,025 43,004 44,280
Corporation tax receivables 1,126 1,037 588
Cash and cash equivalents 2,155 9,044 13,612
60,306 53,085 58,480
Total assets 74,276 65,471 71,792
Current liabilities
Trade and other payables (31,450) (24,361) (27,745)
Corporation tax liabilities (3,138) (2,093) (2,516)
Bank loan (1,631) (3,171) (1,641)
(36,219) (29,625) (31,902)
Net current assets 24,087 23,460 26,578
Non-current liabilities
Bank loan (1,958) - (2,908)
Deferred tax liabilities (1,442) (667) (1,286)
Total liabilities (39,619) (30,292) (36,096)
Net assets 34,657 35,179 35,696
Equity
Share capital 17,011 16,946 16,946
Share premium 57,946 77,846 77,846
Other reserves (74,034) (74,034) (74,034)
Own shares held (2,686) (8,232) (8,232)
Treasury shares held (10,017) - (4,786)
Foreign exchange reserves (666) (148) 283
Retained earnings 47,103 22,801 27,673
Total equity 34,657 35,179 35,696
Following an application to the Court, the share premium account of the Company
was reduced by £20,000,000 on 30 June 2006. Accordingly, the distributable
reserves of the Company increased by a corresponding amount.
ROBERT WALTERS plc
INTERIM RESULTS 2006
consolidated cash flow statement
2006 2005 2005
6 mths to 6 mths to 12 mths to
30 June 30 June 31 December
Unaudited Unaudited Audited
£'000 £'000 £'000
Cash generated from operating activities 366 1,954 13,425
Income taxes paid (2,499) (2,347) (4,072)
Net cash from operating activities (2,133) (393) 9,353
Investing activities
Interest paid (68) (14) (122)
Purchases of computer software (239) - (1,257)
Purchases of property, plant and equipment (616) (1,970) (1,781)
Net cash used in investing activities (923) (1,984) (3,160)
Financing activities
Equity dividends paid (1,714) (1,662) (2,433)
Proceeds on issue of shares 165 41 41
Proceeds from bank loan - - 5,000
Repayment of bank loan (960) - (451)
Purchase of own shares (5,231) - (4,786)
Net cash used in financing activities (7,740) (1,621) (2,629)
Net (decrease) increase in cash and cash (10,796) (3,998) 3,564
equivalents
Cash and cash equivalents at beginning of the period 13,612 9,712 9,712
Effect of foreign exchange rate changes (661) 159 336
2,155 5,873 13,612
Cash and cash equivalents at end of the period
Bank balances and cash 12,583 9,044 13,612
Bank overdrafts (10,428) (3,171) -
2,155 5,873 13,612
ROBERT WALTERS plc
INTERIM RESULTS 2006
movement in equity
2006 2005 2005
6 mths to 6 mths to 12 mths to
30 June 30 June 31 December
Unaudited Unaudited Audited
£'000 £'000 £'000
Profit for the period 5,713 2,925 8,129
Foreign currency translation differences (949) 333 764
Total recognised income and expense for the period 4,764 3,258 8,893
Dividend (1,714) (1,628) (2,403)
Own shares purchased (5,231) - (4,786)
Credit in respect of share schemes 977 432 875
New shares issued 165 41 41
Net (reduction) increase to equity (1,039) 2,103 2,620
Opening equity 35,696 33,076 33,076
Closing equity 34,657 35,179 35,696
Notes to the financial information
1. Accounting policies
Basis of preparation
The interim financial report has been prepared in accordance with the historic
cost convention and also with the recognition and measurement criteria of the
International Financial Reporting Standards, including International Accounting
Standards and Interpretations (IFRSs) as adopted for use in the EU.
The policies applied by the Group are set out in detail in the annual report for
the year ended 31 December 2005.
2. Financial information
The financial information on pages 3 to 9 was formally approved by the Board of
Directors on 1 September 2006. The financial information set out in this
document does not constitute statutory accounts within the meaning of Section
240 of the Companies Act 1985. Statutory accounts prepared under IFRS for the
year ended 31 December 2005 for Robert Walters plc have been delivered to the
Registrar of Companies. The auditors' report on these accounts was not qualified
and did not contain statements under Section 237(2) or (3) of the Companies Act
1985.
The financial information in respect of the period ended 30 June 2006 is
unaudited but has been reviewed by the Company's auditors. Their report is
attached on page 10. The financial information in respect of the period ended
30 June 2005 is also unaudited.
ROBERT WALTERS plc
INTERIM RESULTS 2006
3. Segmental information
2006 2005 2005
6 mths to 6 mths to 12 mths to
30 June 30 June 31 December
Unaudited Unaudited Audited
£'000 £'000 £'000
i) Revenue:
UK 64,549 56,963 122,132
Continental Europe 14,613 9,576 21,408
Asia Pacific 46,022 36,940 84,278
Other 4,195 3,002 6,732
129,379 106,481 234,550
ii) Gross profit:
UK 20,935 18,243 38,062
Continental Europe 8,666 5,536 11,981
Asia Pacific 19,576 14,702 32,672
Other 3,296 2,501 5,407
52,473 40,982 88,122
iii) Profit on ordinary activities before interest and tax:
UK 1,602 879 1,696
Continental Europe 1,400 875 2,201
Asia Pacific 4,788 3,420 8,768
Other 220 (109) 347
Operating profit 8,010 5,065 13,012
Net finance income (expenditure) 96 (188) (319)
Profit on ordinary activities before tax 8,106 4,877 12,693
iv) Revenue by business grouping:
Robert Walters 124,962 101,830 224,876
Resource Solutions 4,417 4,651 9,674
129,379 106,481 234,550
The Group is divided into geographical areas for management purposes, and it is
on this basis that the primary segmental information has been prepared.
ROBERT WALTERS plc
INTERIM RESULTS 2006
4. Corporation tax
2006 2005 2005
6 mths to 6 mths to 12 mths to
30 June 30 June 31 December
Unaudited Unaudited Audited
£'000 £'000 £'000
UK 526 454 912
Overseas 2,057 1,448 3,683
Double tax relief - - 41
2,583 1,902 4,636
Deferred tax (190) 50 (72)
Total taxation 2,393 1,952 4,564
The charge for taxation is based on the expected annual tax rate of 29.5% (2005:
40%) on profit before tax. The UK effective rate of tax is expected to be lower
than 30% due to a tax credit arising on the distribution of shares to employees
in accordance with Group share incentive schemes. The overall tax rate overseas
is higher than the UK standard rate of 30% due to a majority of the profits
being subject to higher taxation and a proportion of expenditure being
disallowable for tax purposes.
5. Dividends
2006 2005 2005
6 mths to 6 mths to 12 mths to
30 June 30 June 31 December
Unaudited Unaudited Audited
£'000 £'000 £'000
Amounts recognised as distributions to equity holders
in the period:
Final dividend for 2005 of 2.35p (2004 : 2.1p) 1,714 1,628 1,591
Interim dividend for 2005 of 1.05p (2004: 1.05p) - - 812
1,714 1,628 2,403
Proposed interim dividend for 2006 of 1.15p (2005: 871 812 811
1.05p)
The total amount of the proposed interim dividend is higher than in June 2005
due to the 9.5% increase in value per share, the issue of 324,756 new shares in
accordance with Company obligations in respect of the Executive Share Option
Scheme and a net decrease in own shares held during the period of 1,733,390.
The proposed interim dividend was approved by the Board on 1 September 2006 and
has not been included as a liability at 30 June 2006.
ROBERT WALTERS plc
INTERIM RESULTS 2006
6. Earnings per share
The calculation of earnings per share is based on the profit on ordinary activities after taxation and the
weighted average number of ordinary shares of the Company.
2006 2005 2005
6 mths to 6 mths to 12 mths to
30 June 30 June 31 December
Unaudited Unaudited Audited
Weighted average number of shares:
Shares in issue throughout the period 84,731,927 84,676,927 84,676,927
Share issued in the period 141,203 32,389 43,819
Own shares held (10,774,674) (7,445,560) (8,313,505)
For basic earnings per share 74,098,456 77,263,756 76,407,241
Outstanding share options 5,577,824 6,552,363 4,718,281
For diluted earnings per share 79,676,280 83,816,119 81,125,522
7. Trade and other payables
In accordance with IFRS 2 'Share-based payment' the balance sheet treatment of the different schemes
depends on their terms and the intention of the Directors, with schemes expected to be cash settled shown
as liabilities whereas equity settled schemes are taken directly to equity. There has been a
reclassification from liabilities to equity as the Directors consider that the Group's PSP schemes are to
be equity settled. This reclassification has no impact on the income statement of either period.
8. Notes to the cash flow statement
2006 2005 2005
6 mths to 6 mths to 12 mths to
30 June 30 June 31 December
Unaudited Unaudited Audited
£'000 £'000 £'000
Operating profit for the period 8,010 5,065 13,012
Adjustments for:
Depreciation and amortisation charges 811 544 1,304
Loss on disposal of computer software - - 67
(Profit) loss on disposal of property, plant and (19) 103 247
equipment
Movement in share scheme balance 675 344 927
Operating cash flows before movements in working 9,477 6,056 15,557
capital
Increase in receivables (12,745) (5,190) (6,320)
Increase in payables 3,634 1,088 4,188
Cash generated from operations 366 1,954 13,425
9. Registered office
The Company's registered office is located at 55 Strand, London, WC2N 5WR.
ROBERT WALTERS plc
INTERIM RESULTS 2006
Independent Review Report to Robert Walters plc
Introduction
We have been instructed by the Company to review the financial information for
the six months ended 30 June 2006 which comprise the consolidated income
statement, the consolidated balance sheet, the consolidated cash flow statement
and related notes 1 to 9. We have read the other information contained in the
interim report and considered whether it contains any apparent misstatements or
material inconsistencies with the financial information.
This report is made solely to the Company in accordance with Bulletin 1999/4
issued by the Auditing Practices Board. Our work has been undertaken so that we
might state to the Company those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than
the Company, for our review work, for this report, or for the conclusions we
have formed.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the Directors. The Directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures are consistent with
those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with the guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A
review consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with International Standards on Auditing (UK and
Ireland) and therefore provides a lower level of assurance than an audit.
Accordingly, we do not express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2006.
Deloitte & Touche LLP
Chartered Accountants
London
1 September 2006
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