Interim Results

Robert Walters PLC 03 September 2007 3 SEPTEMBER 2007 ROBERT WALTERS PLC ('Robert Walters' or 'the Group') Interim Results for 6 months ended 30 June 2007 GLOBAL POWER OF BRAND UNDERPINS RECORD RESULTS FINANCIAL HIGHLIGHTS • Net fee income (gross profit) up 17% to £61.5m (2006: £52.5m). • Operating profit up 44% to £11.5m (2006: £8.0m). • Profit before taxation up 41% to £11.4m (2006: £8.1m). • Significant improvement in conversion rate of operating profit from net fee income to 18.7% (2006: 15.3%). • Basic earnings per share up 35% to 10.4p (2006: 7.7p). • Interim dividend increased 17% to 1.35p per ordinary share (2006: 1.15p). • Share buy-back programme continued, with £7.5 million returned to shareholders. Robert Walters, Chief Executive, commented: 'Our record results are a testimony to the power of the brand, our team-based, non-commission reward structure and the strength and depth of our senior management and consultant base. The Group grew net fee income across all of our recruitment businesses and is strongly positioned to take advantage of further opportunities, particularly in Asia Pacific and Europe. 'The growth in the rate at which net fee income has been converted to earnings is particularly pleasing and we anticipate another extremely successful year for the Group.' OPERATING HIGHLIGHTS • 61% of Group's net fee income generated outside the UK. • Net fee income grew across every recruitment business worldwide. • Continued investment in headcount: 1,382 people employed worldwide (2006: 1,176) • Significant growth achieved across all Asia Pacific operations. Operating profit across the region up 44% to £6.9m (2006: £4.8m). • UK business increased operating profit by 51% to £2.4m (2006: £1.6m). - Legal and HR businesses commanding increased market presence. - Resource Solutions secured new client wins and further penetrated existing client base. • All European operations performed well; Belgium and Luxembourg significantly increased profits. Operating profit across the region up 34% to £2.1m (2006: £1.6m). OUTLOOK • Continued shortage of professional candidates across the globe. • Group well positioned for additional growth out of existing offices and for further expansion both in Asia Pacific and Europe. • Current trading remains strong. We anticipate another extremely successful year for the Group. 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 ROBERT WALTERS - A SNAPSHOT Robert Walters is a leading specialist professional recruitment consultancy, which focuses on placing high calibre professionals into permanent, contract and temporary positions at all levels of seniority. The Group specialises in the accounting, finance, banking, IT, management consultancy, legal, sales and marketing, human resources, 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 28 offices now spanning 15 countries across 5 continents. Robert Walters plc Interim Results for the six months ended 30 June 2007 Chairman's and Chief Executive Officer's Statement We are pleased to report another set of record results for the Group for the six months ended 30 June 2007. Revenue increased by 17% to £150.8m (2006: £129.4m) generating a 17% increase in gross profit ('net fee income') to £61.5m (2006: £52.5m). Operating profit increased by 44% to £11.5m (2006: £8.0m) whilst profit before tax rose by 41% to £11.4m (2006: £8.1m). Our results are a reflection of the ever-growing power of the Robert Walters brand, our team-based, non-commission reward structure and the strength and depth of our senior management and consultant base. Over the last 12 months, the Group has continued to invest in our people, increasing headcount to 1,382 (2006: 1,176) and is well positioned for further growth. The recruitment market for professional staff remained buoyant across all of our territories. With high calibre candidates remaining in short supply, the Robert Walters global footprint and our innovative sourcing techniques continue to provide us with a distinct competitive advantage in delivering this scarce resource to our clients. The Group increased net fee income across every recruitment business worldwide and we are delighted to see the conversion rate of operating profit from net fee income improve significantly to 18.7% (2006: 15.3%). United Kingdom Revenue in the UK was £73.2m (2006: £64.5m) and net fee income increased by 15% to £24.1m (2006: £20.9m). Operating profit increased by 51% to £2.4m (2006: £1.6m). Our Finance and Accounting business grew strongly and we further developed our Legal and HR businesses which now command positions of strength in their respective markets. Profitability within our IT and Sales & Marketing operations also increased in the first half of 2007. Resource Solutions, our recruitment outsourcing business, achieved a number of new client wins and further service penetration into its existing client base. Europe Revenue was £19.9m (2006: £16.6m) and net fee income increased by 22% to £12.0m (2006: £9.9m). Operating profit increased by 34% to £2.1m (2006: £1.6m). All of our European operations produced growth in net fee income, with our businesses in Belgium and Luxembourg delivering substantial increases in operating profit. Our Walters Interim brand in Belgium and France continued to expand rapidly, increasing both net fee income and profitability. Asia Pacific Revenue was £56.2m (2006: £46.0m) and net fee income increased by 22% to £23.9m (2006: £19.6m). Operating profit increased by 44% to £6.9m (2006: £4.8m). All of our Asia Pacific operations produced significant growth in both net fee income and operating profit with Australia, Hong Kong and Japan performing especially well. Our office in Kuala Lumpur which opened in 2006 achieved break-even in the first half of 2007. 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. Following this change, the region represented 2% of the Group's net fee income. Revenue was £1.5m (2006: £2.2m) with net fee income decreasing by £0.6m to £1.5m (2006: £2.1m) as a result of a refocusing of our Resource Solutions business in the USA. This resulted in an operating profit of £0.1m (2006: £0.1m). Cash flow The Group ended the period with £13.4m of net cash (30 June 2006: £2.2m, 31 December 2006: £19.6m). Operating activities generated £9.2m (2006: £0.4m) reflecting strong control over working capital during the period. £7.5m was used to purchase the Group's own shares, £3.5m tax; £2.1m dividend; £2.4m repayment of bank loan; and £0.6m capital expenditure. Dividend The Board has decided to increase the interim dividend to 1.35p per share (2006: 1.15p). During the period, as an additional way of returning value to shareholders, the Group purchased 2,116,667 of the Group's own shares at an average price of £3.55, totalling £7.5m. Looking forward, the Group will continue to consider opportunities to return further value to shareholders. The interim dividend will be paid on 26 October 2007 to those shareholders on the Company's register on 14 September 2007. Current trading and prospects We believe that our greater depth of management and the current strength of trading leaves the Group well positioned for additional growth out of existing offices and for further expansion in both Europe and Asia Pacific. We therefore anticipate another extremely successful year for the Group. Philip Aiken Chairman Robert Walters Chief Executive 31 August 2007 ROBERT WALTERS plc INTERIM RESULTS 2007 consolidated income statement 2007 2006 2006 6 mths to 6 mths to 12 mths to 30 June 30 June 31 December Unaudited Unaudited Audited £'000 £'000 £'000 Revenue 150,799 129,379 274,462 Cost of sales (89,312) (76,906) (165,857) Gross profit 61,487 52,473 108,605 Administrative expenses (49,972) (44,463) (89,115) Operating profit 11,515 8,010 19,490 Interest income 118 49 58 Interest payable (311) (117) (506) Gain on foreign exchange 111 164 805 Profit before taxation 11,433 8,106 19,847 Taxation (3,659) (2,393) (5,754) Profit after taxation 7,774 5,713 14,093 Dividends (2,114) (1,714) (2,585) Retained profit for the period 5,660 3,999 11,508 Earnings per share (pence): Basic 10.4 7.7 18.9 Diluted 9.6 7.2 17.1 consolidated statement of recognised income and expense 2007 2006 2006 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 7,774 5,713 14,093 Foreign currency translation differences 152 (949) (1,761) Total recognised income and expense for the period 7,926 4,764 12,332 ROBERT WALTERS plc INTERIM RESULTS 2007 consolidated balance sheet 2007 2006 2006 30 June 30 June 31 December Unaudited Unaudited Audited £'000 £'000 £'000 Non-current assets Intangible assets 7,581 7,683 7,747 Property, plant and equipment 4,060 4,011 4,210 Deferred tax asset 3,264 2,276 5,555 14,905 13,970 17,512 Current assets Trade and other receivables 70,716 57,025 61,219 Corporation tax receivables 298 1,126 189 Cash and cash equivalents 13,435 2,155 19,584 84,449 60,306 80,992 Total assets 99,354 74,276 98,504 Current liabilities Trade and other payables (44,377) (31,450) (39,325) Corporation tax liabilities (3,568) (3,138) (3,431) Bank loan (4,605) (1,631) (4,617) (52,550) (36,219) (47,373) Net current assets 31,899 24,087 33,619 Non-current liabilities Bank loan (5,571) (1,958) (8,011) Deferred tax liabilities (1,251) (1,442) (1,143) (6,822) (3,400) (9,154) Total liabilities (59,372) (39,619) (56,527) Net assets 39,982 34,657 41,977 Equity Share capital 17,210 17,011 17,019 Share premium 58,624 57,946 57,968 Other reserves (73,854) (74,034) (74,034) Own shares held (1,073) (2,686) (2,686) Treasury shares held (19,065) (10,017) (14,773) Foreign exchange reserves (1,326) (666) (1,478) Retained earnings 59,466 47,103 59,961 Total equity 39,982 34,657 41,977 ROBERT WALTERS plc INTERIM RESULTS 2007 consolidated cash flow statement 2007 2006 2006 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 9,208 366 18,190 Income taxes paid (3,522) (2,499) (4,137) Net cash from operating activities 5,686 (2,133) 14,053 Investing activities Interest paid (193) (68) (444) Purchases of computer software (144) (239) (526) Purchases of property, plant and equipment (491) (616) (1,522) Net cash used in investing activities (828) (923) (2,492) Financing activities Equity dividends paid (2,114) (1,714) (2,585) Proceeds on issue of shares 955 165 195 Proceeds from bank loan - - 10,000 Repayment of bank loan (2,361) (960) (1,921) Purchase of own shares (7,543) (5,231) (9,987) Net cash used in financing activities (11,063) (7,740) (4,298) Net (decrease) increase in cash and cash equivalents (6,205) (10,796) 7,263 Cash and cash equivalents at beginning of the period 19,584 13,612 13,612 Effect of foreign exchange rate changes 56 (661) (1,291) 13,435 2,155 19,584 Cash and cash equivalents at end of the period Bank balances and cash 13,435 12,583 19,584 Bank overdrafts - (10,428) - 13,435 2,155 19,584 ROBERT WALTERS plc INTERIM RESULTS 2007 consolidated statement of changes in equity 2007 2006 2006 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 7,774 5,713 14,093 Foreign currency translation differences 152 (949) (1,761) Total recognised income and expense for the period 7,926 4,764 12,332 Dividends paid (2,114) (1,714) (2,585) Own shares purchased (7,543) (5,231) (9,987) Adjustment in respect of share schemes (1,291) 977 6,326 New shares issued 1,027 165 195 Net (decrease) increase in equity (1,995) (1,039) 6,281 Opening equity 41,977 35,696 35,696 Closing equity 39,982 34,657 41,977 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 (IFRS), including International Accounting Standards and Interpretations 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 2006. 2. Financial information The financial information on pages 5 to 11 was formally approved by the Board of Directors on 31 August 2007. 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 2006 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 2007 is unaudited but has been reviewed by the Company's auditors. Their report is attached on page 12. The financial information in respect of the period ended 30 June 2006 is also unaudited. ROBERT WALTERS plc INTERIM RESULTS 2007 3. Segmental information 2007 2006 2006 6 mths to 6 mths to 12 mths to 30 June 30 June 31 December Unaudited Unaudited Audited £'000 £'000 £'000 i) Revenue: UK 73,220 64,549 138,374 Europe * 19,884 16,579 32,999 Asia Pacific 56,188 46,022 98,997 Other * 1,507 2,229 4,092 150,799 129,379 274,462 ii) Gross profit: UK 24,081 20,935 44,144 Europe * 12,035 9,863 19,361 Asia Pacific 23,878 19,576 41,197 Other * 1,493 2,099 3,903 61,487 52,473 108,605 iii) Profit before taxation: UK 2,423 1,602 3,203 Europe * 2,085 1,552 3,798 Asia Pacific 6,917 4,788 11,963 Other * 90 68 526 Operating profit 11,515 8,010 19,490 Net finance (expenditure) income (82) 96 357 Profit before taxation 11,433 8,106 19,847 iv) Revenue by business grouping: Robert Walters 143,942 124,962 265,342 Resource Solutions 6,857 4,417 9,120 150,799 129,379 274,462 The Group is divided into geographical areas for management purposes, and it is on this basis that the primary segmental information has been prepared. * In 2007, following a realignment 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. ROBERT WALTERS plc INTERIM RESULTS 2007 4. Corporation tax 2007 2006 2006 6 mths to 6 mths to 12 mths to 30 June 30 June 31 December Unaudited Unaudited Audited £'000 £'000 £'000 UK 790 526 (279) Overseas 2,767 2,057 5,299 Double tax relief - - (50) 3,557 2,583 4,970 Deferred tax 102 (190) 784 Total taxation 3,659 2,393 5,754 The tax charge is based on the expected annual tax rate of 32.0% (2006: 29.5%) on profit before taxation. The overall tax rate is higher than the UK standard rate of 30% due to a proportion of expenditure being disallowable for tax purposes. 5. Dividends 2007 2006 2006 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 2006 of 2.85p (2005 : 2.35p) 2,114 1,714 1,714 Interim dividend for 2006 of 1.15p (2005: 1.05p) - - 871 2,114 1,714 2,585 Proposed interim dividend for 2007 of 1.35p (2006: 1,024 871 871 1.15p) The proposed interim dividend was approved by the Board on 31 August 2007 and has not been included as a liability at 30 June 2007. ROBERT WALTERS plc INTERIM RESULTS 2007 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. 2007 2006 2006 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 85,096,683 84,731,927 84,731,927 Share issued in the period 372,647 141,203 243,739 Share repurchases and cancellations (79,590) - - Own shares held (10,931,054) (10,774,674) (10,245,689) For basic earnings per share 74,458,686 74,098,456 74,729,977 Outstanding share options 6,901,526 5,577,824 7,714,057 For diluted earnings per share 81,360,212 79,676,280 82,444,034 7. Notes to the cash flow statement 2007 2006 2006 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 11,515 8,010 19,490 Adjustments for: Depreciation and amortisation charges 947 811 1,607 Profit on disposal of computer software - - 1 (Loss) profit on disposal of property, plant and - (19) 95 equipment Movement in share scheme balance 1,000 675 1,571 Operating cash flows before movements in working 13,462 9,477 22,764 capital Increase in receivables (9,069) (12,745) (18,428) Increase in payables 4,815 3,634 13,854 Cash generated from operations 9,208 366 18,190 8. Registered office The Company's registered office is located at 55 Strand, London, WC2N 5WR. ROBERT WALTERS plc INTERIM RESULTS 2007 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 2007 which comprise the consolidated income statement, the consolidated statement of recognised income and expense, the consolidated balance sheet, the consolidated cash flow statement, the consolidated statement of changes in equity and related notes 1 to 8. 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 2007. Deloitte & Touche LLP Chartered Accountants London 31 August 2007 This information is provided by RNS The company news service from the London Stock Exchange

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