27th Feb 2006 07:02
Robert Walters PLC27 February 2006 27 FEBRUARY 2006 ROBERT WALTERS PLC ("Robert Walters" or "the Group") Preliminary Results for the year ended 31 December 2005 ROBERT WALTERS CONTINUES GLOBAL GROWTH Robert Walters, the global recruitment specialist, announces excellent financialresults for the 12 months to 31 December 2005. All regions traded strongly, withContinental Europe and Asia Pacific in particular showing substantial growth andoutstanding opportunities for future expansion. Robert Walters, Chief Executive, commented that: "Our performance during 2005 continued to be strong with net fee income (grossprofit) increasing 31% year on year, driving a 57% increase in pre-tax profits. We expanded our business in every location and see great opportunities forgrowth in Asia Pacific and Continental Europe in particular. In Asia Pacific,where we already have a leading presence, we will be opening a new office inKuala Lumpur this year and are exploring the possibility of an office opening inChina. In Continental Europe, we are in the early stages of rolling out contractfinance businesses in Amsterdam, Brussels and Paris which offer excellentpotential for further growth. The Group remains very well placed to continue to deliver further profitablegrowth." FINANCIAL HIGHLIGHTS• Net fee income (gross profit) up 31% to £88.1m (2004: £67.0m)• Operating profit up 63% to £13.0m (2004: £8.0m)• Profit before taxation up 57% to £12.7m (2004: £8.1m)• Earnings per share up 66% to 10.6p (2004: 6.4p)• Full-year dividend increased to 3.40p per ordinary share (2004: 3.15p)• Share buy-back programme commenced OPERATING HIGHLIGHTS • Continued business confidence and shortage of qualified professionalsresults in buoyant recruitment market conditions. • Our ability to use our global network of 23 offices in 13 countries toservice clients and source professionals has proven a key driver in growingpermanent and contract net fee income levels. • Asia Pacific is the Group's most profitable region. 44% of ourrecruitment consultants are now based in this region. • Strong performance in Continental Europe, particularly in France wherenet fee income has doubled and Robert Walters is now one of the leading seniorfinancial recruitment companies. • Newly established contract finance businesses offer excellent potentialfor further growth in Continental Europe. • New offices opened in Birmingham and Rotterdam. OUTLOOK FOR 2006 • The Group will open an office in Kuala Lumpur in 2006 and is exploringopportunities in China. • We are also assessing the opportunities presented by India as both anew recruitment marketplace and a sourcing location for candidates. • The market continues to be strong and net fee income for the firstquarter of 2006 is set to exceed that of the same period in 2005. • Robert Walters remains very well placed to grow existing operations,develop new markets and continue to deliver profitable growth. ENQUIRIES: Robert Walters plc +44 (0) 20 7379 3333Robert Walters, Chief ExecutiveIan Nash, Finance Director Pelham PRJames Henderson [email protected] +44 (0) 20 7743 6673 Polly Fergusson [email protected] +44 (0) 20 7743 6362 Notes for editors: Robert Walters is a leading global recruitment consultancy, specialising inplacing high calibre professionals into permanent, contract and temporarypositions at all management levels. The Group specialises in the accounting,finance, banking, IT, management consultancy, legal, sales and marketing, humanresources, call centre and support fields. Robert Walters' blue-chip clientbase ranges across multi-national corporations covering all market sectors. Established in 1985, Robert Walters has built a global presence with 23 officesspanning five continents. It employs over 1000 staff worldwide. In 1997, Robert Walters established its recruitment process outsourcingdivision. At the forefront of recruitment outsourcing, Resource Solutionscurrently operates contracts throughout Europe, Australasia, Asia and the US. Chairman and Chief Executive Officer's Statement We are pleased to report another year of significant growth for the Group in theyear to 31 December 2005. Revenue for the year was £234.5m (2004: £188.2m) producing a 31% increase ingross profit ('net fee income') to £88.1m (2004: £67.0m). Operating profitincreased by 63% to £13.0m (2004: £8.0m) while profit before tax rose by 57% to£12.7m (2004: £8.1m). Today, we have 23 offices spanning 13 countries. Our ability to utilise thisglobal presence to service clients and source professionals has proveninvaluable in growing both permanent and contract net fee income levels. All regions traded strongly, with Continental Europe and Asia Pacific inparticular showing substantial growth, reflecting the investment we have made inthe past. We believe that both these regions offer outstanding opportunities forfuture expansion. In Continental Europe, we are in the early stages of rollingout contract finance businesses, whilst in Asia Pacific, we will be opening anoffice in Kuala Lumpur and are also exploring the opportunities presented byChina and India. During the year, we expanded our office network through theopening of new offices in Birmingham and Rotterdam We have invested in our headcount across the Group to meet the increased demandfor our services, ending the year at 1,071 (2004: 915) with 44% of ourrecruitment consultants now based in the Asia Pacific region. Despite the growthin headcount we have continued to raise productivity. Given the strong trading performance of the Group, the Board is recommending anincrease in the final dividend to 2.35p (2004: 2.10p) making a total of 3.40pper share (2004: 3.15p). In future, the Board will recommend the appropriatelevel of dividend based on the Group's earnings and prospects. In September2005, as another means of delivering value to shareholders, the Company launcheda share buy-back programme. To date, we have purchased 3.6m shares at a cost of£4.8m and an average price of 1.33p per share. The Group intends to continuethis policy. On a personal note, it was with great sadness in December that we announced thedeath of Graham Luff, a Non-executive Director. From his appointment inSeptember 2001, Graham made a valuable contribution to the Board and his counselwill be sorely missed. The Group is in the process of identifying a newNon-executive Director. The market continues to be strong and we believe that net fee income for thefirst quarter of 2006 is set to exceed that of the same period in 2005. TheGroup remains very well placed to continue to deliver further profitable growth. TIMOTHY BARKERChairman ROBERT WALTERSChief Executive Chief Operating Officer's Statement Overview Continued business confidence and a shortage of qualified professionals resultedin buoyant market conditions for the recruitment industry. The Group experiencedan increased demand for our services which enabled us to expand our business inevery location. Against this positive economic environment, the Group delivered another year ofstrong growth in fees and profitability. United Kingdom Turnover in the UK was £122.1m (2004: £102.3m), net fee income increased by 21%to £38.1m (2004: £31.5m) and operating profit was £1.7m (2004: £2.2m). We have invested across both our UK recruitment operation and ResourceSolutions, the Group's recruitment process outsourcing business. Within therecruitment business, we brought on stream new offices in Birmingham andEdinburgh and successfully completed the implementation of a new front officerecruitment system. Within Resource Solutions, we restructured both themanagement team and IT systems. The total cost of these initiatives was inexcess of £1m and the business is now well placed to take advantage of marketopportunities. Our recruitment business grew both net fee income and operating profit. Our corediscipline, Finance and Accounting, continued to develop with further expansioninto the insurance and consumer banking markets. Our smaller UK recruitment businesses operating within the IT, HR and Legaldisciplines grew in 2005. The on-going development of these disciplines willenable the Group to broaden its business base. The continued shortage of suitably qualified professionals ensured high levelsof demand in permanent recruitment. The inability of clients to fulfil theirrequirements solely through the permanent recruitment channel resulted in anincreased demand for temporary contractors. The intelligent use of the Group'sglobal network to find creative solutions to these problems delivered stronggrowth within both of these areas of our UK business. Continental Europe Turnover was £21.4m (2004: £11.9m), net fee income increased 82% to £12.0m(2004: £6.6m) resulting in a substantially increased operating profit of £2.2m(2004: £0.4m). There was strong growth in net fee income from the Netherlands, Belgium, andFrance, with the latter more than doubling net fee income. Robert Walters Francehas now become one of the leading senior financial recruitment companies in itsmarket. Our niche business in Luxembourg had a good year servicing the country'shighly specialised financial services community. During the year we alsoextended our office network with the opening of an office in Rotterdam. Our core operations in Amsterdam, Brussels and Paris are in the early stages ofrolling out a contract finance business and we believe this presents anoutstanding opportunity for future growth. Asia Pacific Turnover increased to £84.3m (2004: £70.0m), net fee income by 28% to 32.7m(2004: £25.5m) and operating profit by 66% to £8.8m (2004: £5.3m). The Asia Pacific region comprises our operations in Australia, New Zealand, HongKong, Japan and Singapore. This is our most profitable regional market,employing 44% of the Group's recruitment consultants. Chief Operating Officer's Statement (continued) Our Australian and New Zealand businesses had an excellent year and are wellpoised to continue growing. We are now clearly established as a leadingprofessional recruitment firm in Tokyo and this operation continues to deliverhigh levels of profitability and growth. Our business in Hong Kong performedstrongly and also benefited from increased activity from China, where we areinvestigating the possibility of an office opening. Singapore had yet another excellent year growing fees and profitability and wewill be opening an office in Kuala Lumpur to further build our presence in theregion. Other International Other International comprises the USA, Ireland and South Africa. Turnover was£6.7m (2004: £4.1m), net fee income increased by 59% to £5.4m (2004: £3.4m)resulting in an operating profit of £0.3m (2004: £0.1m). Net fee income increased in each of these operations. Our Dublin officeperformed strongly moving into profit in 2005 and we will be increasing officespace in 2006 to underpin its continued growth. Our additional investment in NewYork and the changes made in Johannesburg are beginning to deliver results. General overview Our markets remain buoyant and this, coupled with our ability to expand anddevelop our business in both new and existing market places the Group in anexcellent position to deliver further profit growth. GILES DAUBENEYChief Operating Officer Consolidated income statement FOR THE YEAR ENDED 31 DECEMBER 2005 2005 2004 £'000 £'000RevenueContinuing operations 234,550 188,235Cost of sales (146,428) (121,212)Gross profit 88,122 67,023Administrative expenses (75,110) (59,022)Operating profit 13,012 8,001Interest received 41 281Interest paid (163) -Loss on foreign exchange (197) (146)Profit on ordinary activities before taxation 12,693 8,136Tax on profit on ordinary activities (4,564) (3,167)Profit on ordinary activities after taxation 8,129 4,969Dividends (2,403) (2,495)Retained profit for the year 5,726 2,474 Earnings per share (pence):Basic 10.6 6.4Diluted 10.0 6.0 Consolidated statement of total recognised income and expense FOR THE YEAR ENDED 31 DECEMBER 2005 2005 2004 £'000 £'000Profit for the year 8,129 4,969Foreign currency translation differences 764 (407)Total recognised income and expense for the year 8,893 4,562 Consolidated balance sheet AS AT 31 DECEMBER 2005 2005 2004 £'000 £'000Non-current assetsIntangible assets 7,697 6,847Property, plant and equipment 4,057 3,460Deferred tax asset 1,558 756 13,312 11,063Current assetsTrade and other receivables 44,280 37,800Corporation tax receivables 588 1,051Cash and cash equivalents 13,612 9,712 58,480 48,563Total assets 71,792 59,626 Current liabilitiesTrade and other payables (29,585) (24,470)Corporation tax liabilities (2,516) (2,487)Bank overdrafts and loans (1,641) - (33,742) (26,957)Net current assets 24,738 21,606 Non-current liabilitiesBank loans (2,908) -Deferred tax liabilities (1,286) (558) (4,194) (558)Total liabilities (37,936) (27,515)Net assets 33,856 32,111 EquityCalled-up share capital 16,946 16,935Share premium account 77,846 77,816Other reserves (74,034) (74,034)Own shares held (8,232) (8,232)Treasury shares held (4,786) -Foreign exchange reserves 283 (481)Retained earnings 25,833 20,107Total equity 33,856 32,111 Consolidated cash flow statement FOR THE YEAR ENDED 31 DECEMBER 2005 2005 2004 £'000 £'000Cash generated from operating activities 13,425 1,067 Income taxes paid (4,072) (1,707)Net cash from operating activities 9,353 (640) Investing activitiesInterest (paid) received (122) 281Purchases of computer software (1,257) -Purchases of property, plant and equipment (1,781) (1,162)Net cash used in investing activities (3,160) (881) Financing activitiesEquity dividends paid (2,433) (2,467)Proceeds from issue of equity 41 -Proceeds from bank loan 4,549 -Own shares purchased (4,786) (1,884)Net cash used in financing activities (2,629) (4,351)Net increase (decrease) in cash and cash equivalents 3,564 (5,872) Cash and cash equivalents at beginning of year 9,712 15,915Effect of foreign exchange rate changes 336 (331) 13,612 9,712 Cash and cash equivalents at end of yearBank balances and cash 13,612 9,712 13,612 9,712 Statement of accounting policies FOR THE YEAR ENDED 31 DECEMBER 2005 1. Basis of preparation The financial statements for the year ended 31 December 2005 have been preparedin accordance with the historic cost convention and also, for the first time,with International Financial Reporting Standards, including InternationalAccounting Standards and Interpretations (IFRSs) as adopted for use in theEuropean Union. The principal impacts of adopting IFRS and the Group's IFRS accounting policieswere disclosed with the 30 June 2005 half year announcement published on 5September 2005 and available on www.robertwalters.com. These accountingpolicies have been applied consistently in all respects throughout the year andthe comparative figures in respect of 2004 have been restated to reflect IFRSadjustments. The financial information set out above does not constitute the Group'sstatutory accounts for the years ended 31 December 2005 or 2004. The financialinformation for the year ended 31 December 2005 has been extracted from thestatutory accounts for that year. The report of the auditors on those accountswas unqualified and did not contain a statement under section 237 (2) or 237 (3)of the Companies Act 1985. The Group accounts for the year ended 31 December2005 have not yet been delivered to the Registrar of Companies. The preliminary announcement was approved by the Directors on 25 February 2006. The 2005 Annual Report and Accounts will be posted to shareholders by 31 March2006. Copies may be obtained after this date from the Company Secretary, 55Strand, London WC2N 5WR. The 2005 Annual General Meeting of Robert Walters plc will be held on 5 May 2006at 55 Strand, London WC2N 5WR. 2. Segmental information 2005 2004 £'000 £'000 i) Revenue: UK 122,132 102,262 Continental Europe 21,408 11,942 Asia Pacific 84,278 69,975 Other 6,732 4,056 234,550 188,235 ii) Gross profit: UK 38,062 31,457 Continental Europe 11,981 6,643 Asia Pacific 32,672 25,541 Other 5,407 3,382 88,122 67,023 2. Segmental information (continued) 2005 2004 £'000 £'000 iii) Profit on ordinary activities before interest and tax: UK 1,696 2,187 Continental Europe 2,201 397 Asia Pacific 8,768 5,335 Other 347 82 Operating profit 13,012 8,001 Finance costs (net) (319) 135 Profit on ordinary activities before tax 12,693 8,136 iv) Net Assets: UK 3,395 5,898 Continental Europe 555 201 Asia Pacific 19,323 17,235 Other (1,101) 359 Cash and income tax balances 11,684 8,418 33,856 32,111 The analysis of revenue by destination is not materially different to theanalysis by origin. The Group is divided into geographical areas for managementpurposes, and it is on this basis that the primary segmental information hasbeen prepared. 2. Segmental information (continued) v) Other information - 2005: FIXED ASSET DEPRECIATION AND ASSETS LIABILITIES ADDITIONS AMORTISATION £'000 £'000 £'000 £'000 UK 1,740 523 24,372 (20,976) Continental Europe 271 387 5,029 (4,474) Asia Pacific 896 283 26,658 (7,336) Other 131 111 1,533 (2,634) Unallocated Corporate - - 14,200 (2,516) 3,038 1,304 71,792 (37,936) Other information - 2004: FIXED ASSET DEPRECIATION AND LIABILITIES ADDITIONS AMORTISATION ASSETS £'000 £'000 £'000 £'000 UK 542 696 21,629 (15,558) Continental Europe 240 84 3,436 (3,235) Asia Pacific 293 36 22,938 (5,704) Other 87 312 860 (501) Unallocated Corporate - - 10,763 (2,487) 1,162 1,128 59,626 (27,515) For the purposes of other information, assets and liabilities exclude cash andincome tax balances. 2. Segmental information (continued) 2005 2004 £'000 £'000vi) Revenue by business grouping: Robert Walters 224,876 179,451 Resource Solutions 9,674 8,784 234,550 188,235 vii) Carrying value of assets: Robert Walters 50,965 40,596 Resource Solutions 6,627 8,267 57,592 48,863 viii) Additions to property, plant & equipment and computer software: Robert Walters 2,901 1,149 Resource Solutions 137 13 3,038 1,162 3. Interest paid 2005 2004 £'000 £'000 Interest on bank overdrafts 150 - Interest on long term loans 13 - Total borrowing costs 163 - 4. Tax on profit on ordinary activities 2005 2004 £'000 £'000 Current tax charge Corporation tax - UK 912 948 Corporation tax - Overseas 3,680 2,262 Double tax relief 41 - Adjustments in respect of prior periods Corporation tax - UK - (167) Corporation tax - Overseas 4 384 4,637 3,427 Deferred tax Deferred tax - UK (434) (189) Deferred tax - Overseas 210 38 Adjustments in respect of prior periods Deferred tax - UK 152 (109) Deferred tax - Overseas - - (72) (260) Total tax charge for the year 4,564 3,167 UK corporation tax has been charged at 30% (2004: 30%). Profit on ordinary activities before tax 12,693 8,136 Tax at standard UK corporation tax rate of 30% 3,808 2,441 Effects of: Relieved foreign losses (25) (124) Other expenses not deductible for tax purposes 619 448 Overseas earnings taxed at different rates 159 185 Adjustments to tax charges in previous periods 4 217 Total tax charge for year 4,564 3,167 5. Equity dividends 2005 2004 £'000 £'000 Amounts recognised as distributions to equity holders in the period: Interim dividend paid of 1.05p per share (2004: 1.05p) 812 811 Final dividend for 2004 of 2.1p (2003: 2.1p) 1,591 1,684 2,403 2,495 Proposed final dividend for 2005 of 2.35p (2004: 2.1p) 1,732 1,628 The proposed final dividend of £1,732,000 is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements. 6. 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. 2005 2004 £'000 £'000 Profit on ordinary activities after taxation 8,129 4,969 2005 2004 NUMBER NUMBER OF SHARES OF SHARES Weighted average number of shares: Shares in issue throughout the 84,676,927 84,676,927 year Share issued in the year 43,819 - Own shares held (8,313,505) (6,701,724) For basic earnings per share 76,407,241 77,975,203 Outstanding share options 4,718,281 4,643,560 For diluted earnings per share 81,125,522 82,618,763 7. Intangible assets GOODWILL COMPUTER TOTAL SOFTWARE £'000 £'000 £'000 Cost At 1 January 2005 6,847 1,021 7,868 Additions - 1,257 1,257 Disposals - (105) (105) Foreign currency translation differences - 3 3 At 31 December 2005 6,847 2,176 9,023 Accumulated depreciation and impairment At 1 January 2005 - 1,021 1,021 Charge for the year - 337 337 Disposals - (38) (38) Foreign currency translation differences - 6 6 At 31 December 2005 - 1,326 1,326 Carrying value At 1 January 2005 6,847 - 6,847 At 31 December 2005 6,847 850 7,697 The carrying value of goodwill relates to the historic acquisition of DunhillPty in Australia and is tested annually for impairment, or more frequently ifthere are indications that goodwill might be impaired. The recoverable amountof goodwill is based on value in use, calculated by preparing cash flowforecasts derived from the most recent financial budgets and an assumed growthrate of 3%, which does not exceed the long term average growth rate of theAustralian market. The terminal value of the cash flows is then calculated bydiscounting at a rate of 8%. 8. Movement in equity 2005 2004 £'000 £'000 Profit for the year 8,129 4,969 Foreign currency translation differences 764 (407) 8,893 4,562 Dividend (2,403) (2,495) Own shares purchased (4,786) (1,884) New shares issued 41 - Net increase in equity 1,745 183 Opening equity 32,111 31,928 Closing equity 33,856 32,111 9. Notes to the cash flow statement 2005 2004 £'000 £'000 Operating profit 13,012 8,001 Adjustments for: Depreciation and amortisation charges 1304 1,128 Loss on disposal of computer software 67 - Loss on disposal of property, plant and equipment 247 42 Movement in tax and share scheme balance 927 707 Operating cash flows before movements in working capital 15,557 9,878 Increase in receivables (6,320) (14,465) Increase in payables 4,188 5,654 Cash generated by operations 13,425 1,067 10. Analysis and reconciliation of net funds AT 1 JANUARY CASH FLOWS EXCHANGE AT 31 DECEMBER 2005 MOVEMENT ON CASH 2005 Analysis of change in net funds £'000 £'000 £'000 £'000 Cash at bank and in hand 9,712 3,564 336 13,612 Net funds 9,712 3,564 336 13,612 2005 2004 £'000 £'000 Increase (decrease) in cash in the year 3,564 (5,872) Foreign currency translation 336 (331) differences Movement in net funds 3,900 (6,203) Net funds at 1 January 9,712 15,915 Net funds at 31 December 13,612 9,712 11. Dividend The dividend will be paid on 26 May 2006 to those shareholders on the registeras at 5 May 2006. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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