Final Results
Robert Walters PLC
27 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 financial
results for the 12 months to 31 December 2005. All regions traded strongly, with
Continental Europe and Asia Pacific in particular showing substantial growth and
outstanding opportunities for future expansion.
Robert Walters, Chief Executive, commented that:
'Our performance during 2005 continued to be strong with net fee income (gross
profit) increasing 31% year on year, driving a 57% increase in pre-tax profits.
We expanded our business in every location and see great opportunities for
growth 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 in
Kuala Lumpur this year and are exploring the possibility of an office opening in
China. In Continental Europe, we are in the early stages of rolling out contract
finance businesses in Amsterdam, Brussels and Paris which offer excellent
potential for further growth.
The Group remains very well placed to continue to deliver further profitable
growth.'
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 professionals
results in buoyant recruitment market conditions.
• Our ability to use our global network of 23 offices in 13 countries to
service clients and source professionals has proven a key driver in growing
permanent and contract net fee income levels.
• Asia Pacific is the Group's most profitable region. 44% of our
recruitment consultants are now based in this region.
• Strong performance in Continental Europe, particularly in France where
net fee income has doubled and Robert Walters is now one of the leading senior
financial recruitment companies.
• Newly established contract finance businesses offer excellent potential
for 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 exploring
opportunities in China.
• We are also assessing the opportunities presented by India as both a
new recruitment marketplace and a sourcing location for candidates.
• The market continues to be strong and net fee income for the first
quarter 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 3333
Robert Walters, Chief Executive
Ian Nash, Finance Director
Pelham PR
James Henderson james.henderson@pelhampr.com +44 (0) 20 7743 6673
Polly Fergusson polly.fergusson@pelhampr.com +44 (0) 20 7743 6362
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, management consultancy, legal, sales and marketing, human
resources, call centre 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 23 offices
spanning five continents. It employs over 1000 staff worldwide.
In 1997, Robert Walters established its recruitment process outsourcing
division. At the forefront of recruitment outsourcing, Resource Solutions
currently 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 the
year to 31 December 2005.
Revenue for the year was £234.5m (2004: £188.2m) producing a 31% increase in
gross profit ('net fee income') to £88.1m (2004: £67.0m). Operating profit
increased 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 this
global presence to service clients and source professionals has proven
invaluable in growing both permanent and contract net fee income levels.
All regions traded strongly, with Continental Europe and Asia Pacific in
particular showing substantial growth, reflecting the investment we have made in
the past. We believe that both these regions offer outstanding opportunities for
future expansion. In Continental Europe, we are in the early stages of rolling
out contract finance businesses, whilst in Asia Pacific, we will be opening an
office in Kuala Lumpur and are also exploring the opportunities presented by
China and India. During the year, we expanded our office network through the
opening of new offices in Birmingham and Rotterdam
We have invested in our headcount across the Group to meet the increased demand
for our services, ending the year at 1,071 (2004: 915) with 44% of our
recruitment consultants now based in the Asia Pacific region. Despite the growth
in headcount we have continued to raise productivity.
Given the strong trading performance of the Group, the Board is recommending an
increase in the final dividend to 2.35p (2004: 2.10p) making a total of 3.40p
per share (2004: 3.15p). In future, the Board will recommend the appropriate
level of dividend based on the Group's earnings and prospects. In September
2005, as another means of delivering value to shareholders, the Company launched
a 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 continue
this policy.
On a personal note, it was with great sadness in December that we announced the
death of Graham Luff, a Non-executive Director. From his appointment in
September 2001, Graham made a valuable contribution to the Board and his counsel
will be sorely missed. The Group is in the process of identifying a new
Non-executive Director.
The market continues to be strong and we believe that net fee income for the
first quarter of 2006 is set to exceed that of the same period in 2005. The
Group remains very well placed to continue to deliver further profitable growth.
TIMOTHY BARKER
Chairman
ROBERT WALTERS
Chief Executive
Chief Operating Officer's Statement
Overview
Continued business confidence and a shortage of qualified professionals resulted
in buoyant market conditions for the recruitment industry. The Group experienced
an increased demand for our services which enabled us to expand our business in
every location.
Against this positive economic environment, the Group delivered another year of
strong 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 Resource
Solutions, the Group's recruitment process outsourcing business. Within the
recruitment business, we brought on stream new offices in Birmingham and
Edinburgh and successfully completed the implementation of a new front office
recruitment system. Within Resource Solutions, we restructured both the
management team and IT systems. The total cost of these initiatives was in
excess of £1m and the business is now well placed to take advantage of market
opportunities.
Our recruitment business grew both net fee income and operating profit. Our core
discipline, Finance and Accounting, continued to develop with further expansion
into the insurance and consumer banking markets.
Our smaller UK recruitment businesses operating within the IT, HR and Legal
disciplines grew in 2005. The on-going development of these disciplines will
enable the Group to broaden its business base.
The continued shortage of suitably qualified professionals ensured high levels
of demand in permanent recruitment. The inability of clients to fulfil their
requirements solely through the permanent recruitment channel resulted in an
increased demand for temporary contractors. The intelligent use of the Group's
global network to find creative solutions to these problems delivered strong
growth 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, and
France, with the latter more than doubling net fee income. Robert Walters France
has now become one of the leading senior financial recruitment companies in its
market. Our niche business in Luxembourg had a good year servicing the country's
highly specialised financial services community. During the year we also
extended our office network with the opening of an office in Rotterdam.
Our core operations in Amsterdam, Brussels and Paris are in the early stages of
rolling out a contract finance business and we believe this presents an
outstanding 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, Hong
Kong, 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 well
poised to continue growing. We are now clearly established as a leading
professional recruitment firm in Tokyo and this operation continues to deliver
high levels of profitability and growth. Our business in Hong Kong performed
strongly and also benefited from increased activity from China, where we are
investigating the possibility of an office opening.
Singapore had yet another excellent year growing fees and profitability and we
will be opening an office in Kuala Lumpur to further build our presence in the
region.
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 office
performed strongly moving into profit in 2005 and we will be increasing office
space in 2006 to underpin its continued growth. Our additional investment in New
York 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 and
develop our business in both new and existing market places the Group in an
excellent position to deliver further profit growth.
GILES DAUBENEY
Chief Operating Officer
Consolidated income statement
FOR THE YEAR ENDED 31 DECEMBER 2005
2005 2004
£'000 £'000
Revenue
Continuing operations 234,550 188,235
Cost of sales (146,428) (121,212)
Gross profit 88,122 67,023
Administrative expenses (75,110) (59,022)
Operating profit 13,012 8,001
Interest received 41 281
Interest paid (163) -
Loss on foreign exchange (197) (146)
Profit on ordinary activities before taxation 12,693 8,136
Tax on profit on ordinary activities (4,564) (3,167)
Profit on ordinary activities after taxation 8,129 4,969
Dividends (2,403) (2,495)
Retained profit for the year 5,726 2,474
Earnings per share (pence):
Basic 10.6 6.4
Diluted 10.0 6.0
Consolidated statement of total recognised income and expense
FOR THE YEAR ENDED 31 DECEMBER 2005
2005 2004
£'000 £'000
Profit for the year 8,129 4,969
Foreign 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 £'000
Non-current assets
Intangible assets 7,697 6,847
Property, plant and equipment 4,057 3,460
Deferred tax asset 1,558 756
13,312 11,063
Current assets
Trade and other receivables 44,280 37,800
Corporation tax receivables 588 1,051
Cash and cash equivalents 13,612 9,712
58,480 48,563
Total assets 71,792 59,626
Current liabilities
Trade 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 liabilities
Bank loans (2,908) -
Deferred tax liabilities (1,286) (558)
(4,194) (558)
Total liabilities (37,936) (27,515)
Net assets 33,856 32,111
Equity
Called-up share capital 16,946 16,935
Share premium account 77,846 77,816
Other 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 20,107
Total equity 33,856 32,111
Consolidated cash flow statement
FOR THE YEAR ENDED 31 DECEMBER 2005
2005 2004
£'000 £'000
Cash generated from operating activities 13,425 1,067
Income taxes paid (4,072) (1,707)
Net cash from operating activities 9,353 (640)
Investing activities
Interest (paid) received (122) 281
Purchases 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 activities
Equity 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 15,915
Effect of foreign exchange rate changes 336 (331)
13,612 9,712
Cash and cash equivalents at end of year
Bank 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 prepared
in accordance with the historic cost convention and also, for the first time,
with International Financial Reporting Standards, including International
Accounting Standards and Interpretations (IFRSs) as adopted for use in the
European Union.
The principal impacts of adopting IFRS and the Group's IFRS accounting policies
were disclosed with the 30 June 2005 half year announcement published on 5
September 2005 and available on www.robertwalters.com. These accounting
policies have been applied consistently in all respects throughout the year and
the comparative figures in respect of 2004 have been restated to reflect IFRS
adjustments.
The financial information set out above does not constitute the Group's
statutory accounts for the years ended 31 December 2005 or 2004. The financial
information for the year ended 31 December 2005 has been extracted from the
statutory accounts for that year. The report of the auditors on those accounts
was 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 December
2005 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 March
2006. Copies may be obtained after this date from the Company Secretary, 55
Strand, London WC2N 5WR.
The 2005 Annual General Meeting of Robert Walters plc will be held on 5 May 2006
at 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 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.
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 and
income tax balances.
2. Segmental information (continued)
2005 2004
£'000 £'000
vi) 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 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 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 growth rate of the
Australian market. The terminal value of the cash flows is then calculated by
discounting 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 register
as at 5 May 2006.
This information is provided by RNS
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