4th Sep 2006 07:01
Robert Walters PLC04 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 financialresults for the six months ended 30 June 2006. All regions traded strongly, withAsia Pacific and Continental Europe in particular showing substantial growth andoutstanding opportunities for further expansion. Robert Walters, Chief Executive, commented that: "We have achieved record results in the first half of the year. All of ourregions have produced excellent performances. Particularly impressive has beenthe Asia Pacific region, where we have established a powerful position fromwhich to drive further growth. Our Continental European business continues togrow and we believe offers excellent scope for future development. The UKbusiness has also grown strongly and we are already seeing a return on ourearlier investment in our UK operations. "We are very encouraged by the performance to date. The Group is wellpositioned 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 plcRobert Walters, Chief Executive Tel. +44 (0) 20 7509 8850Ian Nash, Finance Director Tel. +44 (0) 20 7509 8737 Pelham PRJames Henderson Tel. +44 (0) 20 7743 6673 [email protected] Berens Tel. +44 (0) 20 7743 6679 [email protected] 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, human resources, legal, sales and marketing, supply chainand engineering, support and administration fields. Robert Walters' blue-chipclient base ranges across multi-national corporations covering all marketsectors. Established in 1985, Robert Walters has built a global presence with 27 officesspanning 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 thesix 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) whilstprofit before tax rose by 66% to £8.1m (2005: £4.9m). Earnings per share hasincreased by 103% to 7.7p (2005: 3.8p). As the recruitment market for professional staff continued its momentum, theGroup increased net fee income quarter on quarter with particularly stronggrowth in permanent recruitment (+41%) reflecting an increased level of clientconfidence in permanent solutions to their recruitment needs. Temporaryrecruitment also grew but at a more moderate rate (+17%). It is particularlyencouraging to report that all regions across the world significantly increasedtheir profitability during the period. The Group continues to invest in our business and our people. During the firsthalf of the year, staff numbers rose to 1,176 (2005: 1,050) and new offices wereopened in Eindhoven, Kuala Lumpur, Lyon and Wellington. We believe that theGroup is well positioned for further growth within existing locations and wehave committed to research new markets such as China, India and Southern Europe. Despite this continuing investment it is encouraging to see further improvementin productivity and a 23% increase in our ability to turn net fee income intooperating 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 anincreased operating profit. Our core discipline, Finance and Accounting, grewstrongly and is benefiting from the acute shortage of professionals. Our abilityto use our global footprint to source and deliver candidates to our clients hasprovided us with a distinct competitive advantage. Among our smaller businesses, HR and Legal performed well and grew net feeincome strongly whilst IT remained flat. Resource Solutions, our profitablerecruitment outsourcing business, continued to broaden its client base outsidefinancial 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 feeincome, with an excellent performance from our business in France. WaltersInterim, our clerical recruitment brand established recently in France andBelgium, continued to increase both net fee income and profitability and offersexcellent scope for future development. To capitalise on the opportunities we believe this region presents, we haveincreased 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 hugepotential for the future. Our Australasian business, our largest in the region,achieved record net fee income and profit. We saw very strong performances inJapan 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 beprofitable 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 feeincome and profitability. Cash flow The Group ended the period with £2.2m of net cash (30 June 2005: £5.9m, 31December 2005: £13.6m). Operating activities generated £0.4m (2005: £2.0m) after funding a £9.1mincrease in working capital reflecting increased activity. The Company expended£5.2m on the purchase of its own shares and other significant cash outflowswere: £2.5m tax; £1.7m dividend; £1.0m repayment of bank loan; and £0.9m capitalexpenditure. 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 Grouppurchased 2,180,776 of the Company's own shares during the period at an averageprice of £2.40 totalling £5.2m. The interim dividend will be paid on 27 October 2006 to shareholders on theCompany's register on 15 September 2006. Current trading and prospects Following the excellent performance in the first half of 2006, second halftrading remains strong. We see good potential in the markets in which we operateand this leaves the Group well positioned to deliver record operating profitsfor the full year. Timothy BarkerChairman Robert WaltersChief Executive 1 September 2006 ROBERT WALTERS plcINTERIM RESULTS 2006consolidated 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 £'000Revenue 129,379 106,481 234,550Cost of sales (76,906) (65,499) (146,428)Gross profit 52,473 40,982 88,122Administrative expenses (44,463) (35,917) (75,110)Operating profit 8,010 5,065 13,012Interest paid (net) (68) (14) (122)Gain (loss) on foreign exchange 164 (174) (197)Profit on ordinary activities before taxation 8,106 4,877 12,693Tax on profit on ordinary activities (2,393) (1,952) (4,564)Profit on ordinary activities after taxation 5,713 2,925 8,129Dividends (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 10.6Diluted 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 £'000Profit for the period 5,713 2,925 8,129Foreign currency translation differences (949) 333 764Total recognised income and expense for the period 4,764 3,258 8,893 ROBERT WALTERS plcINTERIM RESULTS 2006consolidated balance sheet 2006 2005 2005 30 June 30 June 31 December Unaudited Unaudited Audited £'000 £'000 £'000Non-current assetsIntangible assets 7,683 6,847 7,697Property, plant and equipment 4,011 4,783 4,057Deferred tax asset 2,276 756 1,558 13,970 12,386 13,312 Current assetsTrade and other receivables 57,025 43,004 44,280Corporation tax receivables 1,126 1,037 588Cash and cash equivalents 2,155 9,044 13,612 60,306 53,085 58,480Total assets 74,276 65,471 71,792 Current liabilitiesTrade 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 liabilitiesBank 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 EquityShare capital 17,011 16,946 16,946Share premium 57,946 77,846 77,846Other 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) 283Retained earnings 47,103 22,801 27,673Total equity 34,657 35,179 35,696 Following an application to the Court, the share premium account of the Companywas reduced by £20,000,000 on 30 June 2006. Accordingly, the distributablereserves of the Company increased by a corresponding amount. ROBERT WALTERS plcINTERIM RESULTS 2006consolidated 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 £'000Cash 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 activitiesInterest 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 activitiesEquity dividends paid (1,714) (1,662) (2,433)Proceeds on issue of shares 165 41 41Proceeds from bank loan - - 5,000Repayment 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) 3,564equivalents Cash and cash equivalents at beginning of the period 13,612 9,712 9,712Effect of foreign exchange rate changes (661) 159 336 2,155 5,873 13,612 Cash and cash equivalents at end of the periodBank balances and cash 12,583 9,044 13,612Bank overdrafts (10,428) (3,171) - 2,155 5,873 13,612 ROBERT WALTERS plcINTERIM RESULTS 2006movement 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 £'000Profit for the period 5,713 2,925 8,129Foreign currency translation differences (949) 333 764Total recognised income and expense for the period 4,764 3,258 8,893Dividend (1,714) (1,628) (2,403)Own shares purchased (5,231) - (4,786)Credit in respect of share schemes 977 432 875New shares issued 165 41 41Net (reduction) increase to equity (1,039) 2,103 2,620Opening equity 35,696 33,076 33,076Closing 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 historiccost convention and also with the recognition and measurement criteria of theInternational Financial Reporting Standards, including International AccountingStandards 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 forthe year ended 31 December 2005. 2. Financial information The financial information on pages 3 to 9 was formally approved by the Board ofDirectors on 1 September 2006. The financial information set out in thisdocument does not constitute statutory accounts within the meaning of Section240 of the Companies Act 1985. Statutory accounts prepared under IFRS for theyear ended 31 December 2005 for Robert Walters plc have been delivered to theRegistrar of Companies. The auditors' report on these accounts was not qualifiedand did not contain statements under Section 237(2) or (3) of the Companies Act1985. The financial information in respect of the period ended 30 June 2006 isunaudited but has been reviewed by the Company's auditors. Their report isattached on page 10. The financial information in respect of the period ended30 June 2005 is also unaudited. ROBERT WALTERS plcINTERIM 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 £'000i) 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 ison this basis that the primary segmental information has been prepared. ROBERT WALTERS plcINTERIM 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 lowerthan 30% due to a tax credit arising on the distribution of shares to employeesin accordance with Group share incentive schemes. The overall tax rate overseasis higher than the UK standard rate of 30% due to a majority of the profitsbeing subject to higher taxation and a proportion of expenditure beingdisallowable 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 2005due to the 9.5% increase in value per share, the issue of 324,756 new shares inaccordance with Company obligations in respect of the Executive Share OptionScheme 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 andhas not been included as a liability at 30 June 2006. ROBERT WALTERS plcINTERIM 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 plcINTERIM RESULTS 2006 Independent Review Report to Robert Walters plc Introduction We have been instructed by the Company to review the financial information forthe six months ended 30 June 2006 which comprise the consolidated incomestatement, the consolidated balance sheet, the consolidated cash flow statementand related notes 1 to 9. We have read the other information contained in theinterim report and considered whether it contains any apparent misstatements ormaterial inconsistencies with the financial information. This report is made solely to the Company in accordance with Bulletin 1999/4issued by the Auditing Practices Board. Our work has been undertaken so that wemight state to the Company those matters we are required to state to them in anindependent review report and for no other purpose. To the fullest extentpermitted by law, we do not accept or assume responsibility to anyone other thanthe Company, for our review work, for this report, or for the conclusions wehave formed. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the Directors. The Directorsare responsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority which require that the accountingpolicies and presentation applied to the interim figures are consistent withthose applied in preparing the preceding annual accounts except where anychanges, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with the guidance contained in Bulletin1999/4 issued by the Auditing Practices Board for use in the United Kingdom. Areview consists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with International Standards on Auditing (UK andIreland) 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 thatshould be made to the financial information as presented for the six monthsended 30 June 2006. Deloitte & Touche LLPChartered AccountantsLondon 1 September 2006 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Robert Walters