Robert Walters Regulatory News (RWA)

26 July 2018

ROBERT WALTERS PLC

(the "Company", or the "Group")

Half-yearly financial results for the six months ended 30 June 2018

RECORD PROFITS, DIVIDEND UP 45%

Robert Walters plc (LSE: RWA), the leading international recruitment group, today announces its half-yearly financial results for the six months ended 30 June 2018.

Financial and Operational Highlights

* Constant currency is calculated by applying prior period exchange rates to local currency results for the current and prior periods.

§ Record first half performance with operating profit increasing by 28% (30%*) to £20.7m (2017: £16.2m) and profit before tax increasing by 32% (35%*) to £20.6m (2017: £15.6m).

§ 72% of the Group's net fee income derived from our international businesses (2017: 71%).

§ All regions delivered increases in both net fee income and operating profit.

§ Strong activity levels across permanent, contract, interim and recruitment process outsourcing.

§ Asia Pacific net fee income up 8% (15%*) to £73.1m (£77.3m*) (2017: £67.4m) and operating profit up 19% (28%*) to £9.2m (£9.9m*) (2017: £7.7m).

§ Strong performance across both emerging and well-established markets.

§ Japan, the Group's largest business in the region grew operating profit in excess of 25%*, whilst Indonesia and Vietnam more than doubled profits.

§ Good first half in Australia with Victoria, Queensland and South Australia delivering the highest rates of growth.

§ Resource Solutions continued to grow its client portfolio across the region.

§ UK net fee income up 9% to £52.6m (2017: £48.3m) producing an uplift in operating profit to £4.2m (2017: £4.0m).

§ Good growth across several locations and disciplines.

§ Activity levels were strongest across the technology, legal and commerce finance disciplines. Financial Services more subdued against tough year-on-year comparatives.

§ New office opened in Leeds to further grow regional UK footprint.

§ Resource Solutions continued to grow net fee income and successfully expanded its service offering across a number of key client accounts.

§ Europe net fee income up 29% (26%*) to £48.9m (£48.0m*) (2017: £38.0m) and operating profit up 62% (57%*) to £7.1m (£6.9m*) (2017: £4.4m).

§ Excellent first half performance across the whole region and permanent, contract and interim recruitment.

§ Record results delivered by seven out of eight of the region's markets with France, Germany, Spain and Switzerland producing the highest rates of growth.

§ New office opened in Hamburg, our third in Germany, to further capitalise on opportunities for growth in this high potential market.

§ Other International (North America, Brazil, the Middle East and South Africa) net fee income up 29% (40%*) to £14.0m (£15.3m*) (2017: £10.9m) producing an operating profit of £0.2m (£0.1m*) (2017: £0.1m).

§ Strong first half performance particularly across North America and the Middle East.

§ Group headcount increased by 14% to 3,996 (30 June 2017: 3,495).

§ Strong balance sheet with net cash of £24.8m as at 30 June 2018 (30 June 2017: £18.4m).

Robert Walters, Chief Executive, said:

"The Group delivered record first half profits, in line with recently increased market expectations, growing profit before tax by 32% (35%*) year-on-year. Growth was strong and broad-based across all regions and our permanent, contract, interim and recruitment process outsourcing revenue streams.

"We enter the second half of 2018 with confidence and we have increased the interim dividend by 45%. The Group's platform for growth continues to be strong, across both emerging and well-established markets and disciplines, and we are well positioned to further capitalise on market opportunities as they arise."

The Company will be holding a presentation for analysts at 10.30am today at Newgate Communications, Sky Light City Tower, 50 Basinghall Street, London EC2V 5DE.

The Company will publish an interim management statement for the third quarter ending 30 September 2018 on 9 October 2018.

Further information

About Robert Walters

Robert Walters is a market-leading international specialist professional recruitment group with over 3,900 staff spanning 28 countries. We specialise in the placement of the highest calibre professionals across the disciplines of accountancy and finance, banking, engineering, HR, IT, legal, sales, marketing, secretarial and support and supply chain and procurement. Our client base ranges from the world's leading blue-chip corporates and financial services organisations through to SMEs and start-ups. The Group's outsourcing division, Resource Solutions is a market leader in recruitment process outsourcing and managed services.

www.robertwalters.com

Forward looking statements

This announcement contains certain forward-looking statements. These statements are made by the directors in good faith based on the information available to them at the time of their approval of this announcement and such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.

Robert Walters plc

Half-yearly financial results for the six months ended 30 June 2018

Half-yearly Management Report

The Group delivered a record first half performance increasing profit before taxation by 32% (35%*) to £20.6m. All of the Group's regions delivered increases in both net fee income and operating profit with fifteen countries producing record results. The second quarter was also the Group's first ever £100m net fee income quarter.

The Group continued to benefit from the diversity of both our international footprint which includes some of the world's fastest developing and growing recruitment markets and the breadth and depth of recruitment solutions we provide to clients, from permanent, contract and interim recruitment through to recruitment process outsourcing. Our dedicated Innovation team also continues to assess and deploy, where relevant, new tools, processes and technology to maximise consultant efficiency and ensure a focus on building high quality personal relationships with our clients and candidates.

Revenue was up 11% (13%*) to £625.9m (£637.4m*) (2017: £562.7m) and gross profit (net fee income) increased by 15% (17%*) to £188.6m (£193.2m*) (2017: £164.5m). Operating profit increased 28% (30%*) to £20.7m (£21.1m*) (2017: £16.2m). The Group has maintained a strong balance sheet with net cash of £24.8m as at 30 June 2018 (30 June 2017: £18.4m).

Permanent recruitment currently represents 69% (2017: 69%) of the Group's recruitment net fee income. Group headcount now stands at 3,996 (30 June 2017: 3,495) a 14% increase year-on-year with growth highest in those regions and disciplines showing the strongest potential for long-term growth.

Asia Pacific (39% of net fee income)

Revenue was £189.7m (2017: £185.3m) and net fee income increased by 8% (15%*) to £73.1m (£77.3m*) (2017: £67.4m) delivering a 19% (28%*) increase in operating profit to £9.2m (£9.9m*) (2017: £7.7m).

In Asia, where the Group has an unrivalled geographic footprint, performance was strong across both emerging and established recruitment markets. In Japan, the Group's most profitable market, we delivered a record performance with operating profit increasing by over 25%* fuelled by continued strong demand for bilingual professionals. Taiwan also grew profits in excess of 25%* whilst Indonesia and Vietnam more than doubled operating profit further highlighting the growth potential of these fast-evolving recruitment markets where professionals are in short supply and we have first mover advantage. Hong Kong delivered record results, Singapore had a more positive first half despite challenging market conditions and Resource Solutions continued to grow its client portfolio across the region.

Both Australia and New Zealand produced strong first half results delivering operating profit growth of more than 35%*. In Australia, growth was strongest across Victoria, Queensland and South Australia whilst our blend of both private and public sector revenue streams continues to provide a strong platform for growth in Auckland and Wellington.

United Kingdom (28% of net fee income)

Revenue in the UK was £306.7m (2017: £278.1m) and net fee income increased by 9% to £52.6m (2017: £48.3m) delivering a 5% increase in operating profit to £4.2m (2017: £4.0m).

In the UK, we have delivered good growth across several different disciplines and locations. We continue to see good activity levels across the UK regions particularly in technology, where we have over the last few years developed a very strong offering, and commerce finance. During the period, we invested in a new office in Leeds to further expand our regional office footprint and grew headcount across the regional business. In London, performance was strongest across legal, commerce finance and technology, however after a strong 2017, the financial services market has been relatively subdued. Resource Solutions continued to grow net fee income and successfully expanded its service offering across a number of key client accounts.

Europe (26% of net fee income)

Revenue was £114.1m (2017: £88.4m) and net fee income increased by 29% (26%*) to £48.9m (£48.0m*) (2017: £38.0m) delivering a 62% (57%*) increase in operating profit to £7.1m (£6.9m*) (2017: £4.4m).

Our business across Europe continues to go from strength to strength underpinned by the breadth of our service offering across permanent, contract and interim recruitment.

Seven of the region's eight markets delivered record performances with France, the region's largest business, Germany, Spain and Switzerland all delivering operating profit uplifts in excess of 40%*.

During the period, we opened a new office in Hamburg, our third in Germany, to further capitalise on opportunities for growth in this high potential market.

Other International (7% of net fee income)

Other International comprises North America, Brazil, the Middle East and South Africa. Revenue was £15.4m (2017: £11.0m), net fee income was up 29% (40%*) to £14.0m (£15.3m*) (2017: £10.9m) producing an operating profit of £0.2m (£0.1m*) (2017: £0.1m).

In North America, our businesses in New York and Toronto, in particular, delivered standout first half results and we continue to invest in additional headcount to support growth opportunities. The Middle East and Brazil also delivered good performances increasing net fee income by 31%* and 47%* respectively whilst our business in South Africa was flat year-on-year.

Cash flow

The Group maintained a strong net cash position of £24.8m as at 30 June 2018 (30 June 2017: £18.4m). Working capital in the period has increased by £17.8m, primarily due to an 11% increase in the number of temporary workers, resulting in £8.3m cash generated from operating activities. Notable cash outflows included a dividend of £6.6m, £4.6m of tax payments and capital expenditure of £2.8m.

Dividend

The interim dividend will be increased by 45% to 4.0p per share (2017: 2.75p) and will be paid on 19 October 2018 to those shareholders on the Company's register as at 7 September 2018.

Treasury management, currency risk and other principal risks and uncertainties affecting the business

The Group does not have material transactional exposures although is exposed to translation differences on the profits and cash flows generated in its overseas operations. Overseas currency balances that are surplus to local working capital requirements are converted on a regular basis to Pounds Sterling. The main functional currencies of the Group's operating divisions are Pounds Sterling, the Euro, the Australian Dollar and the Japanese Yen.

The other principal risks and uncertainties affecting the Group's business activities remain those detailed within the Principal Risks and Uncertainties section of the Annual Report and Accounts for the year ended 31 December 2017, namely the economic environment, business model, people management, brand and reputation, laws and regulation and technology. The Board does not foresee a material change in respect of these factors for the remainder of the year.

Outlook

We enter the second half of the year with confidence that the Group's platform for growth continues to be strong, across both emerging and well-established markets and disciplines, and that we are well positioned to further capitalise on market opportunities as they arise.

ROBERT WALTERS PLC

Half-yearly Financial Results 2018

CONDENSED CONSOLIDATED INCOME STATEMENT

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME AND EXPENSE

ROBERT WALTERS PLC

Half-yearly Financial Results 2018

CONDENSED CONSOLIDATED BALANCE SHEET

ROBERT WALTERS PLC

Half-yearly Financial Results 2018

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

ROBERT WALTERS PLC

Half-yearly Financial Results 2018

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

ROBERT WALTERS PLC

Half-yearly Financial Results 2018

NOTES TO THE CONDENSED SET OF FINANCIAL STATEMENTS

1. Statement of accounting policies 

Basis of preparation

The annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. The condensed set of financial statements has been prepared in accordance with the International Accounting Standard 34 'Interim Financial Reporting', as adopted by the European Union.

The accounting policies applied by the Group are as set out in detail in the Annual Report and Accounts for the year ended 31 December 2017.

IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers were adopted from 1 January 2018. As stated in the Annual Report and Accounts for the year ended 31 December 2017 these have not had a material impact on the financial statements.

The Group was profitable for the period and has considerable financial resources, including £24.8m of net cash at 30 June 2018, together with a diverse range of clients and suppliers across different geographic locations and sectors. As a consequence, the Directors believe the Group is well placed to manage its business risks successfully.

After making enquiries, the Directors have formed a judgement, at the time of approving the Half-yearly Financial results, that there is a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future, a period of not less than 12 months from the date of this report. For this reason, the Directors continue to adopt the going concern basis in preparing the condensed set of financial statements.

2. Financial information

The financial information on pages 5 to 13 was formally approved by the Board of Directors on 25 July 2018. The financial information set out in this document does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006.

Statutory accounts prepared under IFRSs for the year ended 31 December 2017 for Robert Walters plc have been delivered to the Registrar of Companies. The auditor's report on these accounts was not qualified, did not draw attention to any matters by way of emphasis and did not contain statements under section 498(2) or (3) of the Companies Act 2006.

The financial information in respect of the period ended 30 June 2018 is unaudited but has been reviewed by the Company's auditor. Their report is attached on page 14. The financial information in respect of the period ended 30 June 2018 is also unaudited.

3. Currency conversion

The presentational currency of the Group is Pounds Sterling and the condensed set of financial statements has been prepared on this basis.

The Condensed Consolidated Income Statement for the period ended 30 June 2018 has been prepared using, among other currencies, the average exchange rate of €1.1363 to the Pound (period ended 30 June 2017: €1.1625; year ended 31 December 2017: €1.1414); ¥149.5392 to the Pound (30 June 2017: ¥141.3893; 31 December 2017: ¥144.4563) and AU$1.7836 to the Pound (30 June 2017: AU$1.6681; 31 December 2017: AU$1.6801).

The Condensed Consolidated Balance Sheet as at 30 June 2018 has been prepared using the exchange rates on that day of €1.1298 to the Pound (30 June 2017: €1.1381; 31 December 2017: €1.1262); ¥146.1260 to the Pound (30 June 2017: ¥145.7482; 31 December 2017: ¥151.9886) and AU$1.7815 to the Pound (30 June 2017: AU$1.6914; 31 December 2017: AU$1.7281).

ROBERT WALTERS PLC

Half-yearly Financial Results 2018

*For the purposes of segmental analysis, unallocated corporate assets and liabilities include cash, bank loans, corporation and deferred tax balances.

ROBERT WALTERS PLC

Half-yearly Financial Results 2018

The tax charge is based on the expected annual effective tax rate of 26.8% (2017: 28.5%) on profit before taxation. The effective tax rate is higher than the standard UK rate of 19%, primarily as a result of overseas taxation in Japan, Australia and France and the impact of adjustments to accounting profit in the tax calculation and disallowable costs.

The proposed interim dividend was approved by the Board on 25 July 2018 and has not been included as a liability at 30 June 2018.

ROBERT WALTERS PLC

Half-yearly Financial Results 2018

ROBERT WALTERS PLC

Half-yearly Financial Results 2018

9. Bank loans

The Group has a committed financing facility of £45.0m, which expires in December 2020.

At 30 June 2018, £25.4m (2017: £30.3m) was drawn down under this facility.

The Group also has a non-recourse sales invoice facility of £15.0m.

The Group has a short-term facility of Renminbi 25m (£2.9m) of which Renminbi 10m (£1.1m) was drawn down as at 30 June 2018. The loan is secured against cash deposits in Hong Kong.

10. Related party transactions

During the first six months of the year, there were related party transactions totalling £45,000 (2017: £77,000) with Tay Associates Limited, a related party through a Director of Robert Walters plc.

There were no outstanding balances as at 30 June 2018.

All transactions were undertaken on an arms-length basis.

11. Registered office

The Company's registered office is located at 11 Slingsby Place, St Martin's Courtyard, London, WC2E 9AB.

RESPONSIBILITY STATEMENT 

We confirm to the best of our knowledge:

a) the condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting';

b) the Interim Management Report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

c) the Interim Management Report and note 10 includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).

By order of the Board,

Alan Bannatyne

Chief Financial Officer

25 July 2018

ROBERT WALTERS PLC

Half-yearly Financial Results 2018

INDEPENDENT REVIEW REPORT TO ROBERT WALTERS PLC

We have been engaged by the Company to review the condensed set of financial statements in the Half-Yearly Financial Report for the six months ended 30 June 2018 which comprises the Condensed Consolidated Income Statement, the Condensed Consolidated Statement of Comprehensive Income and Expense, the Condensed Consolidated Balance Sheet, the Condensed Consolidated Cash Flow Statement, the Condensed Consolidated Statement of Changes in Equity, and related notes 1 to 11. We have read the other information contained in the Half-Yearly Financial Report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Financial Reporting Council. Our work has been undertaken so that we might state to the Company those matters we are required to state to it 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 conclusions we have formed.

Directors' responsibilities

The Half-Yearly Financial Report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the Half-Yearly Financial Report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this Half-Yearly financial report has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the Half-Yearly Financial Report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Financial Reporting Council for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the Half-Yearly Financial Report for the six months ended 30 June 2018 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Deloitte LLP

Statutory Auditor

London, United Kingdom

25 July 2018