Robert Walters Regulatory News (RWA)

26 Feb 2007 07:02

Robert Walters PLC26 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 globalnetwork. We have opened offices in key regions at an early stage of professionalrecruitment market development, giving the Group today a strong foothold acrossContinental Europe and Asia Pacific. This has not only delivered sustainedgrowth in fee income and earnings, but also provides us with a significantcompetitive advantage through our ability to source candidates from across theglobe. "Current market conditions remain favourable. We are still at the early stagesof our international development, with huge scope to exploit opportunities innew 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 3333Robert Walters, Chief ExecutiveIan 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 andtemporary positions at all management levels. The Group specialises in theaccounting, finance, banking, IT, management consultancy, legal, sales andmarketing, human resources, secretarial and support fields. Robert Walters'blue-chip client base ranges across multi-national corporations covering allmarket sectors. Established in 1985, Robert Walters has built a global presence, with 28 officesnow spanning 15 countries across 5 continents. Over the last four years, Robert Walters has achieved consistent growth in netfee income and profits. 2003 2004 2005 2006 Net fee income £52.0m £67.0m £88.1m £108.6mProfit before tax £3.8m £8.1m £12.7m £19.8mHeadcount 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 31December 2006. Revenue for the year was £274.5m (2005: £234.5m) producing a 23% increase ingross profit ('net fee income') to £108.6m (2005: £88.1m). Profit before taxrose 56% to £19.8m (2005: £12.7m). Net fee income from permanent recruitmentgrew more rapidly than temporary recruitment as clients continued to displayconfidence in permanent solutions to their recruitment challenges. All regions increased both net fee income and operating profits, with our AsiaPacific and Continental European businesses producing particularly strong growthin fee income. Our strategy of early expansion into growing internationalmarkets has proved successful with 59% of the Group's net fee income nowgenerated outside the UK. During the year, we continued to extend our global footprint and have opened newoffices in Eindhoven, Kuala Lumpur, Lyon and Wellington. Staff numbersincreased to 1,230 (2005: 1,071). Our ability to harness our internationalpresence of 28 offices in 15 countries to source professionals for our clientsprovides the Group with a strong competitive advantage in delivering recruitmentsolutions. Following the Group's record trading performance, the Board is recommending anincrease in the final dividend to 2.85p per share (2005: 2.35p). Together withthe interim dividend of 1.15p (2005: 1.05p), this represents an 18% increase inthe total dividend per share to 4.0p (2005: 3.4p). Additionally, the Companydelivered value to shareholders through its share buy-back programme, acquiring3.8m shares for £10.0m representing an average price of 2.65p per share. We willbe seeking shareholder consent for the renewal of the authority to repurchase upto 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 fiveyears, Ian Nash is retiring from the Board and will be leaving the Group at theend of the year; we wish him all the best for the future. Alan Bannatyne,currently Group Financial Controller, has been appointed as his successor witheffect from 1 March 2007. Alan has worked closely with Ian over the last fouryears and we are delighted he has agreed to become Group Finance Director andCompany Secretary. Martin Griffiths, the Finance Director of Stagecoach Group plc, joined the Boardas 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 Meetingand will be succeeded by Philip Aiken, currently the Senior IndependentDirector. I wish to express my thanks to my fellow Board members and all staffworldwide for their commitment during my tenure and it gives me great pleasureto be leaving the Group in a strong position. Current market conditions remain favourable and we plan to follow our strategyfor growth by progressively increasing headcount, expanding existing businessesand opening new offices. TIMOTHY BARKER CHAIRMAN Chief Executive's Statement The Group has once again delivered an excellent set of results with operatingprofit increasing by 50% to £19.5m (2005: £13.0m). The backdrop to thisperformance was a positive economic environment coupled with a continuingshortage of qualified professionals, which shows no sign of abating asprofessional 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 anddelivered strong operating profit growth. This business, in particular,benefited from the Group's capacity to use its worldwide presence to sourceoverseas 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 fourthquarter producing the highest level of net fee income achieved for two years.Our Sales and Marketing business moved into profit during the last quarter ofthe year. Resource Solutions, the Group's recruitment process outsourcing businessincreased operating profit. The business has grown the number of clients andsectors it services and our ability to offer an end-to-end resourcing solutionthrough Resource Solutions and the core Robert Walters recruitment businessremains 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 allgrew both permanent and contract net fee income, with France and Luxembourgdelivering significant growth. We believe this region offers excellent growth potential for the Group. Duringthe year we opened new offices in Lyon and Eindhoven which strengthened ouralready well established presence in France and the Netherlands. In January2007 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 twonew offices in Kuala Lumpur and Wellington, and increased our headcount acrossthe region by 26%. Our Australasian business benefited from the buoyant financial services andresources sectors and achieved record net fee income and operating profit. Ourbusinesses in Hong Kong, Japan and Singapore produced strong growth in net feeincome and record operating profits, further underpinning the Group's positionas a major recruitment brand in the region. We continue to investigate opportunities for expansion across this excitingregion. 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 theloyalty, hard work and professionalism of all staff, and I look forward to themdeveloping long term careers within the Robert Walters Group. I would also liketo 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 ourexisting markets and evaluate the numerous additional opportunities that existfor further Group expansion. ROBERT WALTERS CHIEF EXECUTIVE Consolidated Income Statement FOR THE YEAR ENDED 31 DECEMBER 2006 2006 2005 £'000 £'000RevenueContinuing operations 274,462 234,550Cost of sales (165,857) (146,428)Gross profit 108,605 88,122Administrative expenses (89,115) (75,110)Operating profit 19,490 13,012Interest received 58 41Interest paid (506) (163)Gain (loss) on foreign exchange 805 (197)Profit on ordinary activities before taxation 19,847 12,693Tax on profit on ordinary activities (5,754) (4,564)Profit on ordinary activities after taxation 14,093 8,129Dividends (2,585) (2,403)Retained profit for the year 11,508 5,726 Earnings per share (pence):Basic 18.9 10.6Diluted 17.1 10.0 Consolidated Statement of Total Recognised Income and Expense FOR THE YEAR ENDED 31 DECEMBER 2006 2006 2005 £'000 £'000Profit for the year 14,093 8,129Foreign currency translation differences (1,761) 764Total recognised income and expense for the year 12,332 8,893 Consolidated Balance Sheet AS AT 31 DECEMBER 2006 2006 2005 £'000 £'000Non-current assetsIntangible assets 7,747 7,697Property, plant and equipment 4,210 4,057Deferred tax asset 5,555 1,558 17,512 13,312Current assetsTrade and other trade receivables 61,219 44,280Corporation tax receivables 189 588Cash and cash equivalents 19,584 13,612 80,992 58,480Total assets 98,504 71,792 Current liabilitiesTrade 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 liabilitiesBank 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 EquityCalled-up share capital 17,019 16,946Share premium account 57,968 77,846Other reserves (74,034) (74,034)Own shares held (2,686) (8,232)Treasury shares held (14,773) (4,786)Foreign exchange reserves (1,478) 283Retained earnings 59,961 27,673Total equity 41,977 35,696 Consolidated Cash Flow Statement FOR THE YEAR ENDED 31 DECEMBER 2006 2006 2005 £'000 £'000Cash 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 activitiesInterest 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 activitiesEquity dividends paid (2,585) (2,433)Proceeds from issue of equity 195 41Proceeds from bank loan 10,000 5,000Repayment 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 9,712Effect of foreign exchange rate changes (1,291) 336 19,584 13,612 Cash and cash equivalents at end of yearBank 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 inaccordance with the historical cost convention and with International FinancialReporting Standards, including International Accounting Standards andInterpretations (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 March2007. Copies may be obtained after this date from the Company Secretary, 55Strand, London WC2N 5WR. The Annual General Meeting of Robert Walters plc will be held on 10 May 2007 at55 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 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. 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 £'000vi) 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 thehistoric acquisition of Dunhill Pty in Australia and is tested annually forimpairment, or more frequently if there are indications that goodwill might beimpaired. The recoverable amount of the goodwill is based on value in use,calculated by preparing cash flow forecasts derived from the most recentfinancial budgets and an assumed growth rate of 3%, which does not exceed thelong term average potential growth rate of the Australian market. The value ofthe 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 registeras at 18 May 2007. This information is provided by RNS The company news service from the London Stock Exchange