Interim Results
Robert Walters PLC
09 September 2003
9 September 2003
ROBERT WALTERS PLC
INTERIM RESULTS FOR SIX MONTHS ENDED
30 JUNE 2003
Robert Walters plc, the recruitment and HR outsourcing business, today announced
its interim results for the six months ended 30 June 2003.
Financial Summary
• Net fee income £25.3m (2002: £27.6m)
• Operating profit £0.7m (2002: £1.2m)*
• Profit before taxation £1.9m (2002: £1.3m)
• Cash at 30 June 2003 of £18.4m (31 December 2002: £19.2m)
• Earnings per share 1.2p (2002: 0.9p)
• Interim dividend 1.05p (2002: 1.05p)
* After £0.2m goodwill amortisation
Commenting on the results, Robert Walters, Chief Executive, said:
'We remain confident that our presence in most of the key international
recruitment centres, together with our experienced management team, leaves the
Group well placed to respond to any improvement in worldwide market conditions.'
For further information please contact:
Robert Walters plc +44 20 7379 3333
Robert Walters Chief Executive
Ian Nash Group Finance Director
Brunswick +44 20 7404 5959
Nigel Prideaux
Mark Antelme
Chairman's Statement
I am pleased to report on the Group's trading for the six months ended 30 June
2003.
In the first half of 2003, turnover was £104.6m (2002: £130.5m) producing a
gross profit ('net fee income') of £25.3m (2002: £27.6m) and an operating profit
of £0.7m (2002: £1.2m). Profit before tax was £1.9m (2002: £1.3m) including
£1.0m of foreign exchange gains arising primarily on the translation of the
Group's Australian dollar intercompany account following the strengthening of
the Australian dollar against the pound in the first half of 2003.
Trading conditions continued to be difficult. Net fee income was 8% down on the
same period in 2002 with the quarter on quarter performance in 2003 relatively
flat and also little changed from the last quarter of 2002. As explained below
the greater decline in turnover is almost entirely attributable to our Contract
business in the UK.
The continuing uncertainty in the Financial Services and IT markets is still
impacting our business and in light of this, we continue to make considerable
efforts to develop other business areas such as Commerce and Industry in our
offices around the world. Cost control has continued to be a priority. Staff
numbers have fallen from 764 to 715 over the six months to 30 June 2003 and in
line with this administrative expenses, excluding the amortisation of goodwill,
have fallen from £27.1m in the second half of 2002 to £24.4m in the first half
of 2003.
United Kingdom
Turnover in the UK was £71.0m (2002: £96.2m), net fee income £11.2m (2002:
£13.4m) and the operating loss £0.3m (2002: operating profit £0.3m). The UK
business continued to suffer from the severe weakness in the Financial Services
markets. The marked fall in turnover was due to a significant decline in our
Contract business and a reduction in the number of individuals paid through the
outsourced payroll contracts that are managed by Resource Solutions. Net fee
income has fallen 16%, largely as a result of the fall in the levels of Contract
business. The permanent recruitment business has declined only marginally.
Continental Europe
Turnover in Continental Europe was £4.4m (2002: £5.0m), net fee income £2.5m
(2002: £2.6m) and operating profit £0.1m (2002: £0.2m).
Trading conditions have continued to be difficult in Europe. Our permanent
recruitment businesses have remained relatively stable since the last quarter of
2001 if the German operation, which was closed in the second half of 2002, is
excluded from the comparison. In contrast, our interim businesses in Belgium and
Holland have experienced falling levels of net fee income.
In spite of the current trading environment, the Board is of the opinion that
these businesses have good long term growth potential.
Asia Pacific
Turnover in the Asia Pacific region was £27.1m (2002: £26.8m), net fee income
£9.9m (2002: £9.8m) and operating profit £0.9m (2002: £0.5m).
Our Australian and New Zealand businesses produced strong profit growth. In
Japan we maintained our levels of profitability whilst continuing to add
consultants in what we believe will prove to be a market of great future
potential. Conversely, difficult trading conditions in Hong Kong were further
aggravated by the SARS epidemic which resulted in an increased loss. Our fears
that this would also adversely affect our Singapore businesses were unfounded
and we have grown both the net fee income and operating profit.
Other International
Other International comprises our New York, Dublin and Johannesburg offices.
Turnover for these businesses was £2.1m (2002: £2.5m), net fee income £1.7m
(2002: £1.8m) and operating profit £0.1m (2002: £0.2m).
Their performance was broadly in line with that achieved in 2002.
Resource Solutions
Resource Solutions, our outsourcing brand which manages the recruitment
processes for a number of major clients, has continued to feel the effects of
the depressed Financial Services markets on both recruitment levels and the
pricing structure.
Cash Flow
The Group ended the period with £18.4m net cash (2002: £19.2m). Operating
activities generated £1.9m with significant outflows being £1.7m for the final
dividend, £1.4m on the purchase of our own shares for internal share schemes and
£0.5m on capital expenditure.
Dividend
The Board has decided to maintain the interim dividend at 1.05p per share as the
cash position of the Group remains strong. The interim dividend will be paid on
31 October 2003 to those shareholders on the Company's register on 19 September
2003.
Current Trading and Prospects
Trading conditions remain difficult. We continue to experience year on year
falls in quarterly net fee income and currently see no evidence that this trend
will change. In spite of this, we remain confident that our presence in most of
the key international recruitment centres, together with our experienced
management team, leaves the Group well placed to respond to any improvement in
worldwide market conditions.
TIMOTHY BARKER
Chairman
8 September 2003
Consolidated profit and loss account
2003 2002 2002 - 12 mths to 31 December
Before Exceptional
6 mths to 6 mths to Exceptional Items
30 June 30 June Items (note 5) Total
Unaudited Unaudited Audited Audited Audited
Notes £'000 £'000 £'000 £'000 £'000
________________________________________________________________________________________________________________
Turnover 3 104,616 130,495 260,321 - 260,321
Cost of sales (79,301) (102,867) (204,699) - (204,699)
________________________________________________________________________________________________________________
Gross profit 3 25,315 27,628 55,622 - (55,622)
________________________________________________________________________________________________________________
Goodwill (200) (233) (1,026) - (1,026)
Other administrative expenses (24,425) (26,217) (53,349) (654) (54,003)
________________________________________________________________________________________________________________
Administrative expenses (24,625) (26,450) (54,375) (654) (55,029)
________________________________________________________________________________________________________________
Operating profit 3 690 1,178 1,247 (654) 593
Finance income (net) 4 1,181 116 264 - 264
________________________________________________________________________________________________________________
Profit on ordinary activities before
taxation 1,871 1,294 1,511 (654) 857
Tax on profit on ordinary activities 6 (869) (542) (1,232) 63 (1,169)
________________________________________________________________________________________________________________
Profit (loss) on ordinary activities after
taxation 1,002 752 279 (591) (312)
Dividends 7 (889) (889) (2,667) - (2,667)
________________________________________________________________________________________________________________
Retained profit (loss) for the period 113 (137) (2,388) (591) (2,979)
________________________________________________________________________________________________________________
Earnings (loss) per share (pence) 8
Basic 1.2 0.9 0.3 (0.7) (0.4)
Diluted 1.2 0.9 0.3 (0.7) (0.4)
________________________________________________________________________________________________________________
Consolidated statement of total recognised gains and losses
2003 2002 2002
6 mths to 6 mths to 12 mths to
30 June 30 June 31 December
Unaudited Unaudited Audited
£'000 £'000 £'000
_______________________________________________________________________________________
Retained profit (loss) for the period 1,002 752 (312)
Foreign currency translation 110 31 (202)
________________________________________________________________________________________
Total recognised gains (losses) for the period 1,112 783 (514)
________________________________________________________________________________________
Consolidated balance sheet
2003 2002 2002
30 June 30 June 31 December
Unaudited Unaudited Audited
£'000 £'000 £'000
__________________________________________________________________________________________________________
Fixed assets
Goodwill 7,045 8,037 7,243
Tangible fixed assets 4,114 5,271 4,394
Investments - 103 -
Own shares held 4,256 2,425 2,832
__________________________________________________________________________________________________________
15,415 15,836 14,469
__________________________________________________________________________________________________________
Current assets
Debtors 22,570 29,165 22,551
Cash at bank and in hand 18,390 13,406 19,210
__________________________________________________________________________________________________________
40,960 42,571 41,761
Creditors: amounts falling due within (18,448) (17,483) (18,526)
one year
__________________________________________________________________________________________________________
Net current assets 22,512 25,088 23,235
__________________________________________________________________________________________________________
Total assets less current liabilities 37,927 40,924 37,704
Provision for liabilities and charges - (145) -
__________________________________________________________________________________________________________
Net assets 37,927 40,779 37,704
__________________________________________________________________________________________________________
Capital and reserves
Called-up share capital 16,931 16,931 16,931
Share premium account 82,804 82,804 82,804
Other reserves (74,034) (74,034) (74,034)
Foreign exchange reserves (557) (434) (667)
Profit and loss account 12,783 15,512 12,670
__________________________________________________________________________________________________________
Equity shareholders' funds 37,927 40,779 37,704
__________________________________________________________________________________________________________
Consolidated cash flow statement
Notes 2003 2002 2002
6 mths to 6 mths to 12 mths to
30 June 30 June 31 December
Unaudited Unaudited Audited
£'000 £'000 £'000
____________________________________________________________________________________________________________
Net cash inflow from operating activities 9 1,944 7,933 16,416
Returns on investments and servicing of finance 157 116 264
Taxation 223 (1,230) (2,552)
Capital expenditure and financial investment (1,953) (657) (1,327)
Equity dividends paid (1,729) (1,731) (2,680)
____________________________________________________________________________________________________________
Cash flow before financing (1,358) 4,431 10,121
Funds on short term deposit - (8,000) -
Financing - - -
____________________________________________________________________________________________________________
(Decrease) increase in cash for the period 9 (1,358) (3,569) 10,121
____________________________________________________________________________________________________________
Notes to the financial information
1. Accounting policies
There have been no changes to the accounting policies as set out in the 2002
annual report and accounts of Robert Walters plc.
2. Financial information
The financial information on pages 5 to 10 was formally approved by the Board of
Directors on 8 September 2003. 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 for the year ended 31
December 2002 for Robert Walters plc on which the auditors gave an unqualified
report, have been delivered to the Registrar of Companies.
The financial information in respect of the period ended 30 June 2003 is
unaudited but has been reviewed by the Company's auditors. Their report is
attached on page 11. The financial information in respect of the period ended
30 June 2002 is unaudited.
3. Segmental information
2003 2002 2002
6 mths to 6 mths to 6 mths to
30 June 30 June 31 December
Unaudited Unaudited Audited
£'000 £'000 £'000
__________________________________________________________________________________________________
i) Turnover:
UK 71,026 96,179 190,854
Continental Europe 4,387 5,025 10,124
Asia Pacific 27,055 26,825 54,834
Other 2,148 2,466 4,509
__________________________________________________________________________________________________
104,616 130,495 260,321
__________________________________________________________________________________________________
ii) Gross profit:
UK 11,232 13,424 27,138
Continental Europe 2,485 2,604 5,289
Asia Pacific 9,858 9,775 19,777
Other 1,740 1,825 3,418
__________________________________________________________________________________________________
25,315 27,628 55,622
__________________________________________________________________________________________________
iii) Profit on ordinary activities before tax;
UK (334) 330 528
Continental Europe 74 207 (111)
Asia Pacific 884 465 570
Other 66 176 260
__________________________________________________________________________________________________
Operating profit before exceptional items 690 1,178 1,247
Exceptional items - - (654)
__________________________________________________________________________________________________
Operating profit 690 1,178 593
Finance income (net) 1,181 116 264
__________________________________________________________________________________________________
Profit on ordinary activities before tax 1,871 1,294 857
__________________________________________________________________________________________________
Notes to the financial information (continued)
4. Finance income (net)
2003 2002 2002
6 mths to 6 mths to 6 mths to
30 June 30 June 31 December
Unaudited Unaudited Audited
£'000 £'000 £'000
_______________________________________________________________________________________________________
Interest received (net) 157 116 264
Foreign exchange gain 1,024 - -
_______________________________________________________________________________________________________
1,181 116 264
_______________________________________________________________________________________________________
In 2002, an immaterial foreign exchange movement was included within
administrative expenses.
5. Exceptional Item
There were no exceptional items in the 6 month period ended 30 June 2003, or in
the comparative period ended 30 June 2002.
In the year ended 31 December 2002, an exceptional cost of £551,000 was incurred
in the closure of unprofitable offices and a further £103,000 in the write down
of the cost of an investment.
6. Taxation
The charge for taxation is based on the expected annual tax rate of 46% (2002:
35%) on profit before tax and amortisation, and primarily relates to overseas
taxation. The effective rate of tax is high due to a number of factors,
including overseas profits subject to higher rates of taxation and unrelieved
foreign losses.
7. Dividends
2003 2002 2002
6 mths to 6 mths to 6 mths to
30 June 30 June 31 December
Unaudited Unaudited Audited
£'000 £'000 £'000
________________________________________________________________________________________________________
Interim dividend of 1.05p per share (2002: 1.05p) 889 889 889
Final dividend (2002: 2.1p) - - 1,778
________________________________________________________________________________________________________
889 889 2,667
________________________________________________________________________________________________________
Notes to the financial information (continued)
8. 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.
2003 2002 2002
6 mths to 6 mths to 6 mths to
30 June 30 June 31 December
Weighted average number of shares: Unaudited Unaudited Audited
____________________________________________________________________________________________________
Shares in issue 84,656,927 84,656,927 84,656,927
Own shares held (2,149,018) (1,299,016) (1,488,292)
____________________________________________________________________________________________________
For basic earnings per share 82,507,909 83,357,911 83,168,635
Outstanding share options 200,002 1,097,471 1,819,950
____________________________________________________________________________________________________
For diluted earnings per share 82,707,911 84,455,382 84,988,585
____________________________________________________________________________________________________
9. Analysis of cash flow
2003 2002 2002
6 mths to 6 mths to 12 mths to
30 June 30 June 31 December
Unaudited Unaudited Audited
£'000 £'000 £'000
Reconciliation of operating profit to net
cash flow from operating activities
_________________________________________________________________________________________________
Operating profit 690 1,178 593
Depreciation charges 684 883 1,806
Goodwill amortisation and impairment 200 233 1,026
Loss on disposal of tangible fixed assets 222 197 362
Provision for impairment of investment - - 103
(Increase) decrease in debtors (286) 5,083 11,697
Increase in creditors 434 359 974
Decrease in provision - - (145)
_________________________________________________________________________________________________
Net cash flow from operating activities 1,944 7,933 16,416
_________________________________________________________________________________________________
(Decrease) increase in cash in the period (1,358) (3,569) 10,121
Funds on short term disposal - 8,000 -
Foreign currency translation differences 538 (60) 54
_________________________________________________________________________________________________
Movement in net funds (820) 4,371 10,175
Opening net funds 19,210 9,035 9,035
_________________________________________________________________________________________________
Closing net funds 18,390 13,406 19,210
_________________________________________________________________________________________________
10. Registered Office
The Company's registered office is at 55 Strand, London WC2N 5WR.
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 2003 which comprises the consolidated profit and
loss account, the consolidated balance sheet, the consolidated cash flow
statement, the consolidated statement of total recognised gains and losses, and
the related notes, 1 to 10. 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 conclusion 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 should be 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 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 United Kingdom Auditing Standards 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 2003.
Deloitte & Touche LLP
Chartered Accountants
London
8 September 2003
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