Final Results
Robert Walters PLC
26 February 2007
26 FEBRUARY 2007
ROBERT WALTERS PLC
('Robert Walters' or 'the Group')
Preliminary Results for the year ended 31 December 2006
STRONG WORLDWIDE GROWTH FUELS RECORD FINANCIAL RESULTS
FINANCIAL HIGHLIGHTS
• Net fee income (gross profit) up 23% to £108.6m (2005: £88.1m)
• Operating profit up 50% to £19.5m (2005: £13.0m)
• Profit before taxation up 56% to £19.8m (2005: £12.7m)
• Earnings per share up 78% to 18.9p (2005: 10.6p)
• Full-year dividend increased 18% to 4.0p per ordinary share (2005: 3.4p)
• Share buy-back programme continued, with £10.0 million returned to shareholders
Robert Walters, Chief Executive, commented:
'Our performance is the result of a steady programme of investment in our global
network.
We have opened offices in key regions at an early stage of professional
recruitment market development, giving the Group today a strong foothold across
Continental Europe and Asia Pacific. This has not only delivered sustained
growth in fee income and earnings, but also provides us with a significant
competitive advantage through our ability to source candidates from across the
globe.
'Current market conditions remain favourable. We are still at the early stages
of our international development, with huge scope to exploit opportunities in
new regions and disciplines. We therefore remain confident of further growth.'
OPERATING HIGHLIGHTS
• Business continues to expand into other disciplines from original core
finance and accounting base.
• Strong growth in Legal, HR and Sales & Marketing disciplines.
• UK business performed well delivering an 89% uplift in operating profit to
£3.2m (2005: £1.7m).
• 59% of Group's net fee income now generated outside the UK.
• Existing operations in Belgium, France, Luxembourg and the Netherlands all
grew both permanent and contract net fee income, with France and Luxembourg
delivering significant growth.
• Australasian business achieved record net fee income and operating profit.
• Our businesses in Hong Kong, Japan and Singapore produced strong growth in
net fee income and record operating profits, further underpinning the
Group's position as a major recruitment brand in the region.
• Four new offices opened: in Eindhoven, Lyon, Kuala Lumpur and Wellington.
REGIONAL BREAKDOWN
Net Fee Income % increase Operating Profit % increase
2006 2005 2006 2005
UK £44.1m £38.1m 16% £3.2m £1.7m 89%
Continental Europe £17.0m £12.0m 42% £3.4m £2.2m 55%
Asia Pacific £41.2m £32.7m 26% £12.0m £8.8m 36%
Other International £6.3m £5.4m 16% £0.9m £0.3m 257%
OUTLOOK FOR 2007
o Shortage of professionals shows no sign of abating as professional
roles become more specialised.
o Scope for further strong growth in Continental Europe: new office in
Madrid already opened in January 2007.
o We will continue to invest in our existing markets and evaluate the
numerous opportunities that exist for further Group expansion.
ENQUIRIES:
Robert Walters plc +44 (0) 20 7379 3333
Robert Walters, Chief Executive
Ian Nash, 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 management levels. 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.
Over the last four years, Robert Walters has achieved consistent growth in net
fee income and profits.
2003 2004 2005 2006
Net fee income £52.0m £67.0m £88.1m £108.6m
Profit before tax £3.8m £8.1m £12.7m £19.8m
Headcount 736 915 1,071 1,230
Chairman's Statement
I am very pleased to report a record year for the Group in the year ended 31
December 2006.
Revenue for the year was £274.5m (2005: £234.5m) producing a 23% increase in
gross profit ('net fee income') to £108.6m (2005: £88.1m). Profit before tax
rose 56% to £19.8m (2005: £12.7m). Net fee income from permanent recruitment
grew more rapidly than temporary recruitment as clients continued to display
confidence in permanent solutions to their recruitment challenges.
All regions increased both net fee income and operating profits, with our Asia
Pacific and Continental European businesses producing particularly strong growth
in fee income. Our strategy of early expansion into growing international
markets has proved successful with 59% of the Group's net fee income now
generated outside the UK.
During the year, we continued to extend our global footprint and have opened new
offices in Eindhoven, Kuala Lumpur, Lyon and Wellington. Staff numbers
increased to 1,230 (2005: 1,071). Our ability to harness our international
presence of 28 offices in 15 countries to source professionals for our clients
provides the Group with a strong competitive advantage in delivering recruitment
solutions.
Following the Group's record trading performance, the Board is recommending an
increase in the final dividend to 2.85p per share (2005: 2.35p). Together with
the interim dividend of 1.15p (2005: 1.05p), this represents an 18% increase in
the total dividend per share to 4.0p (2005: 3.4p). Additionally, the Company
delivered value to shareholders through its share buy-back programme, acquiring
3.8m shares for £10.0m representing an average price of 2.65p per share. We will
be seeking shareholder consent for the renewal of the authority to repurchase up
to 10% of the issued share capital at the Annual General Meeting on 10 May 2007.
Having made a very significant contribution to the Company over the past five
years, Ian Nash is retiring from the Board and will be leaving the Group at the
end of the year; we wish him all the best for the future. Alan Bannatyne,
currently Group Financial Controller, has been appointed as his successor with
effect from 1 March 2007. Alan has worked closely with Ian over the last four
years and we are delighted he has agreed to become Group Finance Director and
Company Secretary.
Martin Griffiths, the Finance Director of Stagecoach Group plc, joined the Board
as a Non-executive Director and Chairman of the Audit Committee on 1 July 2006.
I will be standing down as Chairman at the forthcoming Annual General Meeting
and will be succeeded by Philip Aiken, currently the Senior Independent
Director. I wish to express my thanks to my fellow Board members and all staff
worldwide for their commitment during my tenure and it gives me great pleasure
to be leaving the Group in a strong position.
Current market conditions remain favourable and we plan to follow our strategy
for growth by progressively increasing headcount, expanding existing businesses
and opening new offices.
TIMOTHY BARKER
CHAIRMAN
Chief Executive's Statement
The Group has once again delivered an excellent set of results with operating
profit increasing by 50% to £19.5m (2005: £13.0m). The backdrop to this
performance was a positive economic environment coupled with a continuing
shortage of qualified professionals, which shows no sign of abating as
professional roles become ever more specialised.
United Kingdom
Revenue was £138.4m (2005: £122.1m), net fee income increased by 16% to £44.1m
(2005: £38.1m) and operating profit by 89% to £3.2m (2005: £1.7m).
Finance and Accounting grew both permanent and contract net fee income and
delivered strong operating profit growth. This business, in particular,
benefited from the Group's capacity to use its worldwide presence to source
overseas candidates to fill skills gaps in the UK.
Our HR and Legal businesses grew net fee income and operating profit strongly.
Our IT business, after a poor start to the year, recovered well with the fourth
quarter producing the highest level of net fee income achieved for two years.
Our Sales and Marketing business moved into profit during the last quarter of
the year.
Resource Solutions, the Group's recruitment process outsourcing business
increased operating profit. The business has grown the number of clients and
sectors it services and our ability to offer an end-to-end resourcing solution
through Resource Solutions and the core Robert Walters recruitment business
remains an important means of both attracting and retaining clients.
Continental Europe
Revenue was £29.2m (2005: £21.4m), net fee income increased by 42% to £17.0m
(2005: £12.0m) and operating profit by 55% to £3.4m (2005: £2.2m).
Our existing operations in Belgium, France, Luxembourg and the Netherlands all
grew both permanent and contract net fee income, with France and Luxembourg
delivering significant growth.
We believe this region offers excellent growth potential for the Group. During
the year we opened new offices in Lyon and Eindhoven which strengthened our
already well established presence in France and the Netherlands. In January
2007 we opened an office in Madrid, our first in Spain.
Asia Pacific
Revenue was £99.0m (2005: £84.3m), net fee income increased by 26% to £41.2m
(2005: £32.7m) and operating profit by 36% to £12.0m (2005: £8.8m).
We have continued to invest in the Group's most profitable region. We opened two
new offices in Kuala Lumpur and Wellington, and increased our headcount across
the region by 26%.
Our Australasian business benefited from the buoyant financial services and
resources sectors and achieved record net fee income and operating profit. Our
businesses in Hong Kong, Japan and Singapore produced strong growth in net fee
income and record operating profits, further underpinning the Group's position
as a major recruitment brand in the region.
We continue to investigate opportunities for expansion across this exciting
region.
Chief Executive's Statement (continued)
Other International
Other International comprises Ireland, South Africa and the USA. Revenue was
£7.8m (2005: £6.7m), net fee income increased by 16% to £6.3m (2005: £5.4m)
resulting in an operating profit of £0.9m (2005: £0.3m).
General overview
I am delighted with our performance in 2006, which is a testament to the
loyalty, hard work and professionalism of all staff, and I look forward to them
developing long term careers within the Robert Walters Group. I would also like
to thank Tim Barker for his service as Chairman over the last six years.
With the current economic outlook favourable, we will continue to invest in our
existing markets and evaluate the numerous additional opportunities that exist
for further Group expansion.
ROBERT WALTERS
CHIEF EXECUTIVE
Consolidated Income Statement
FOR THE YEAR ENDED 31 DECEMBER 2006
2006 2005
£'000 £'000
Revenue
Continuing operations 274,462 234,550
Cost of sales (165,857) (146,428)
Gross profit 108,605 88,122
Administrative expenses (89,115) (75,110)
Operating profit 19,490 13,012
Interest received 58 41
Interest paid (506) (163)
Gain (loss) on foreign exchange 805 (197)
Profit on ordinary activities before taxation 19,847 12,693
Tax on profit on ordinary activities (5,754) (4,564)
Profit on ordinary activities after taxation 14,093 8,129
Dividends (2,585) (2,403)
Retained profit for the year 11,508 5,726
Earnings per share (pence):
Basic 18.9 10.6
Diluted 17.1 10.0
Consolidated Statement of Total Recognised Income and Expense
FOR THE YEAR ENDED 31 DECEMBER 2006
2006 2005
£'000 £'000
Profit for the year 14,093 8,129
Foreign currency translation differences (1,761) 764
Total recognised income and expense for the year 12,332 8,893
Consolidated Balance Sheet
AS AT 31 DECEMBER 2006
2006 2005
£'000 £'000
Non-current assets
Intangible assets 7,747 7,697
Property, plant and equipment 4,210 4,057
Deferred tax asset 5,555 1,558
17,512 13,312
Current assets
Trade and other trade receivables 61,219 44,280
Corporation tax receivables 189 588
Cash and cash equivalents 19,584 13,612
80,992 58,480
Total assets 98,504 71,792
Current liabilities
Trade and other trade payables (39,325) (27,745)
Corporation tax liabilities (3,431) (2,516)
Bank loans (4,617) (1,641)
(47,373) (31,902)
Net current assets 33,619 26,578
Non-current liabilities
Bank loans (8,011) (2,908)
Deferred tax liabilities (1,143) (1,286)
(9,154) (4,194)
Total liabilities (56,527) (36,096)
Net assets 41,977 35,696
Equity
Called-up share capital 17,019 16,946
Share premium account 57,968 77,846
Other reserves (74,034) (74,034)
Own shares held (2,686) (8,232)
Treasury shares held (14,773) (4,786)
Foreign exchange reserves (1,478) 283
Retained earnings 59,961 27,673
Total equity 41,977 35,696
Consolidated Cash Flow Statement
FOR THE YEAR ENDED 31 DECEMBER 2006
2006 2005
£'000 £'000
Cash generated from operating activities 18,190 13,425
Income taxes paid (4,137) (4,072)
Net cash from operating activities 14,053 9,353
Investing activities
Interest paid (net) (444) (122)
Purchases of computer software (526) (1,257)
Purchases of property, plant and equipment (1,522) (1,781)
Net cash used in investing activities (2,492) (3,160)
Financing activities
Equity dividends paid (2,585) (2,433)
Proceeds from issue of equity 195 41
Proceeds from bank loan 10,000 5,000
Repayment of bank loan (1,921) (451)
Own shares purchased (9,987) (4,786)
Net cash used in financing activities (4,298) (2,629)
Net increase in cash and cash equivalents 7,263 3,564
Cash and cash equivalents at beginning of year 13,612 9,712
Effect of foreign exchange rate changes (1,291) 336
19,584 13,612
Cash and cash equivalents at end of year
Bank balances and cash 19,584 13,612
19,584 13,612
Statement of Accounting Policies
FOR THE YEAR ENDED 31 DECEMBER 2006
Basis of preparation
The financial report for the year ended 31 December 2006 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 in the European Union.
The preliminary announcement was approved by the Directors on 23 February 2007.
The 2006 Annual Report and Accounts will be posted to shareholders by 26 March
2007. Copies may be obtained after this date from the Company Secretary, 55
Strand, London WC2N 5WR.
The Annual General Meeting of Robert Walters plc will be held on 10 May 2007 at
55 Strand, London WC2N 5WR.
1. Segmental information
2006 2005
£'000 £'000
i) Revenue:
UK 138,374 122,132
Continental Europe 29,248 21,408
Asia Pacific 98,997 84,278
Other 7,843 6,732
274,462 234,550
ii) Gross profit:
UK 44,144 38,062
Continental Europe 17,004 11,981
Asia Pacific 41,197 32,672
Other 6,260 5,407
108,605 88,122
1. Segmental information (continued)
2006 2005
£'000 £'000
iii) Profit on ordinary activities before interest and tax:
UK 3,203 1,696
Continental Europe 3,431 2,201
Asia Pacific 11,963 8,768
Other 893 347
Operating profit 19,490 13,012
Net finance credit (cost) 357 (319)
Profit on ordinary activities before tax 19,847 12,693
iv) Net Assets:
UK (5,502) 4,904
Continental Europe 7,973 626
Asia Pacific 25,652 19,534
Other (1,132) (1,052)
Cash and income tax balances 14,986 11,684
41,977 35,696
The analysis of revenue by destination is not materially different to the
analysis by origin. The Group is divided into geographical areas for management
purposes, and it is on this basis that the primary segmental information has
been prepared.
1. Segmental information (continued)
v) Other information - 2006: FIXED ASSET AND DEPRECIATION AND ASSETS LIABILITIES
COMPUTER SOFTWARE AMORTISATION
ADDITIONS
£'000 £'000 £'000 £'000
UK 875 1,069 30,065 (35,567)
Continental Europe 428 122 15,036 (7,063)
Asia Pacific 588 374 34,623 (8,971)
Other 180 57 1,244 (2,376)
Unallocated Corporate - - 19,584 (4,598)
2,071 1,622 100,552 (58,575)
Other information - 2005: FIXED ASSET AND DEPRECIATION AND ASSETS LIABILITIES
COMPUTER SOFTWARE AMORTISATION
ADDITIONS
£'000 £'000 £'000 £'000
UK 1,740 523 24,372 (19,136)
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 (36,096)
1. Segmental information (continued)
2006 2005
£'000 £'000
vi) Revenue by business grouping:
Robert Walters 265,342 224,876
Resource Solutions (recruitment process outsourcing) 9,120 9,674
274,462 234,550
vii) Carrying value of assets:
Robert Walters 64,015 50,965
Resource Solutions 16,953 6,627
80,968 57,592
For the purposes of other information, assets and
liabilities
exclude cash and income tax balances.
viii) Additions to fixed assets:
Robert Walters 1,504 2,901
Resource Solutions 36 137
1,540 3,038
2. Interest paid
2006 2005
£'000 £'000
Interest on bank overdrafts 365 150
Interest on long term loans 141 13
Total borrowing costs 506 163
3. Tax on profit on ordinary activities
2006 2005
£'000 £'000
Current tax charge
Corporation tax - UK (337) 912
Corporation tax - Overseas 5,151 3,679
Double tax relief (50) 41
Adjustments in respect of prior periods
Corporation tax - UK 58 -
Corporation tax - Overseas 148 4
4,970 4,636
Deferred tax
Deferred tax - UK 1,086 (434)
Deferred tax - Overseas 122 210
Adjustments in respect of prior periods
Deferred tax - UK (99) 152
Deferred tax - Overseas (325) -
784 (72)
Total tax charge for the year 5,754 4,564
UK corporation tax has been charged at 30% (2005: 30%).
Profit on ordinary activities before tax 19,847 12,693
Tax at standard UK corporation tax rate of 30% 5,954 3,808
Effects of:
Relieved foreign losses - (25)
Reduction in withholding tax on foreign earnings (329) -
Other expenses not deductible for tax purposes 394 618
Overseas earnings taxed at different rates (47) 159
Adjustments to tax charges in previous periods (218) 4
Total tax charge for year 5,754 4,564
4. Equity dividends
2006 2005
£'000 £'000
Amounts recognised as distributions to equity holders in the
period:
Interim dividend paid of 1.15p per share (2005: 1.05p) 871 812
Final dividend for 2005 of 2.35p (2004: 2.1p) 1,714 1,591
2,585 2,403
Proposed final dividend for 2006 of 2.85p (2005: 2.35p) 2,114 1,732
The proposed final dividend of £2,114,000 is subject to approval by shareholders at the Annual
General Meeting and has not been included as a liability in these financial statements.
5. 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.
2006 2005
£'000 £'000
Profit on ordinary activities after taxation 14,093 8,129
2006 2005
NUMBER NUMBER
OF SHARES OF SHARES
Weighted average number of shares:
Shares in issue throughout the year 84,731,927 84,676,927
Share issued in the year 243,739 43,819
Own shares held (10,245,689) (8,313,505)
For basic earnings per share 74,729,977 76,407,241
Outstanding share options 7,714,057 4,718,281
For diluted earnings per share 82,444,034 81,125,522
6. Intangible assets
GOODWILL COMPUTER SOFTWARE TOTAL
£'000 £'000 £'000
Cost
At 1 January 2006 6,847 2,176 9,023
Additions - 531 531
Disposals - (3) (3)
Foreign currency translation differences - (14) (14)
At 31 December 2006 6,847 2,690 9,537
Accumulated depreciation and impairment
At 1 January 2006 - 1,326 1,326
Charge for the year - 476 476
Disposals - (2) (2)
Foreign currency translation differences - (10) (10)
At 31 December 2006 - 1,790 1,790
Carrying value
At 1 January 2006 6,847 850 7,697
At 31 December 2006 6,847 900 7,747
The carrying value of goodwill, denominated in £ Sterling, relates to the
historic acquisition of Dunhill Pty in Australia and 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,
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 Australian market. The value of
the cash flows is then discounted at a post tax rate of 8%.
7. Movement in equity
2006 2005
£'000 £'000
Profit for the year 14,093 8,129
Foreign currency translation differences (1,761) 764
12,332 8,893
Dividend (2,585) (2,403)
Own shares purchased (9,987) (4,786)
Credit in respect of share schemes 6,326 875
New shares issued 195 41
Net increase in equity 6,281 2,620
Opening equity 35,696 33,076
Closing equity 41,977 35,696
8. Notes to the cash flow statement
2006 2005
£'000 £'000
Operating profit 19,490 13,012
Adjustments for:
Depreciation and amortisation charges 1,607 1,304
Loss on disposal of computer software 1 67
Loss on disposal of property, plant and equipment 95 247
Movement in share scheme balance 1,571 927
Operating cash flows before movements in working capital 22,764 15,557
Increase in receivables (18,428) (6,320)
Increase in payables 13,854 4,188
Cash generated by operations 18,190 13,425
9. Analysis and reconciliation of net funds
AT 1 JANUARY CASH FLOWS EXCHANGE MOVEMENT AT 31 DECEMBER
2006 ON CASH 2006
Analysis of change in net funds £'000 £'000 £'000 £'000
Cash at bank and in hand 13,612 7,263 (1,291) 19,584
Net funds 13,612 7,263 (1,291) 19,584
2006 2005
£'000 £'000
Increase in cash in the year 7,263 3,564
Foreign currency translation differences (1,291) 336
Movement in net funds 5,972 3,900
Net funds at 1 January 13,612 9,712
Net funds at 31 December 19,584 13,612
10. Dividend
The dividend will be paid on 8 June 2007 to those shareholders on the register
as at 18 May 2007.
This information is provided by RNS
The company news service from the London Stock Exchange
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