Robert Walters Seeing Positive Signs
Robert Walters Seeing Positive Signs
Robert Walters, the leading international recruitment consultancy, today announces its half-yearly financial results for the six months ended 30 June 2013.
§ Revenue up 5% to £288.8m (2012: £275.0m).
§ Net fee income (gross profit) up 6% (6%*) to £97.8m (2012: £92.4m).
§ Operating profit up 10% (16%*) to £3.8m (2012: £3.4m).
§ Profit before taxation up 19% to £3.7m (2012: £3.1m).
§ Basic earnings per share of 3.3p (2012: 2.9p).
§ Interim dividend increased by 5% to 1.54p per share (2012: 1.47p).
§ Net cash of £6.9m as at 30 June 2013 (30 June 2012: £4.6m).
§ Solid performance in line with expectations.
§ Net fee income increased across all regions:
§ Asia Pacific up 1% (3%*) to £46.5m (2012: £45.9m).
§ UK up 12% to £26.7m (2012: £23.9m).
§ Europe up 5% (2%*) to £20.9m (2012: £19.9m).
§ Other International up 40% (44%*) to £3.7m (2012: £2.7m).
§ The Group has opened 17 offices over the last three years and is focused on maximising the return from this investment and increasing productivity from these businesses. No further offices will be opened this year.
§ Healthy balance of permanent and contract recruitment net fee income: 70%:30% (2012: 69%:31%).
§ Group headcount stands at 2,212 (2012: 2,159) with the increase due to another strong performance from our Resource Solutions business.
* Constant currency is calculated by applying prior year exchange rates to local currency results for the current and prior years.
Robert Walters, Chief Executive, said: "We have delivered a solid first half performance, achieving increased net fee income and market share across all of the Group's regions. The first half results are encouraging and we are focused on generating increased productivity from our existing businesses across the globe whilst continuing to carefully manage the Group's cost base.
"Global market conditions are mixed and visibility is limited, however we are seeing positive signs across some markets. The Group's market-leading international brand, diverse and robust blend of revenue streams and strong balance sheet means that the Group is exceptionally well positioned to benefit from a sustained recovery."
The Company will hold a presentation for analysts at 11.00am on Thursday 1 August at 11 Slingsby Place, St Martin's Courtyard, London WC2E 9AB.
The Company will publish an interim management statement for the third quarter ending 30 September 2013 on 8 October 2013.
Interim Management Report
The Group has delivered a solid and encouraging performance during the first half of the year with net fee income growing across all of the Group's regions. The Group's long-term strategy of geographic expansion and discipline diversification has created competitive strength and enabled us to grow market share.
Revenue was up 5% to £288.8m (2012: £275.0m) and gross profit (net fee income) increased by 6% (6% in constant currency) to £97.8m (2012: £92.4m). Operating profit increased by 10% (16% in constant currency) to £3.8m (2012: £3.4m) delivering a profit before taxation increase of 19% to £3.7m (2012: £3.1m). The Group maintained a strong balance sheet and improved its net cash position to £6.9m as at 30 June 2013 (30 June 2012: £4.6m).
Two new offices, Dubai and Ghent, were opened during the first quarter. However, as noted within the Group's first quarter interim management statement, no further offices will be opened this year. Having opened 17 offices over the past three years, the Group is focused on maximising the return from this investment and increasing productivity within these new and exciting businesses.
Permanent recruitment now represents 70% (2012: 69%) of the Group's recruitment net fee income. The Group has a strong blend of permanent, contract and interim recruitment income streams and a market-leading recruitment process outsourcing business in Resource Solutions. Clients are increasingly wishing to work with a partner with global recruitment capabilities and the Group's ability to provide an end-to-end solution creates a significant competitive advantage.
Resource Solutions continues to deliver positive returns. Net fee income grew strongly during the first half underpinned by 11 new client wins across the UK and Asia.
Group headcount stands at 2,212 (2012: 2,159) with growth of the Resource Solutions business driving the increase.
Asia Pacific (48% of net fee income)
Revenue was £133.9m (2012: £134.7m) and net fee income increased by 1% (3% in constant currency) to £46.5m (£47.3m in constant currency) (2012: £45.9m) delivering an operating profit of £3.3m (£3.5m in constant currency) (2012: £3.3m).
In Australia, despite a slowdown in our Perth and Brisbane offices, we have continued to grow our market share. This is a testament to the quality and strength of our business as a whole and the success of our recent strategy of opening offices outside traditional city centre locations to service the corporate and SME markets.
In Asia, our Japan and Malaysia businesses performed particularly well. It was also pleasing to see a number of our newer and smaller operations in Thailand, Vietnam and Indonesia producing strong net fee income growth. Our Singapore and Hong Kong businesses delivered solid first half performances whilst our recent restructure of our senior management team in China is beginning to show positive results.
Resource Solutions in Asia has started well winning five new client engagements during the period.
United Kingdom (27% of net fee income)
Revenue in the UK business was £105.1m (2012: £93.4m) and net fee income increased by 12% to £26.7m (2012: £23.9m) delivering an operating profit of £0.4m (2012: £nil).
Our UK business has performed well, with our regional offices - Guildford, Milton Keynes, Birmingham and Manchester - delivering a particularly strong performance across Commerce Finance, HR, Legal and IT.
Resource Solutions recorded another strong performance during the first half of the year, securing six new client wins across both the financial services and corporate sectors.
Europe (21% of net fee income)
Revenue was £46.1m (2012: £44.0m) and net fee income increased by 5% (2% in constant currency) to £20.9m (£20.3m in constant currency) (2012: £19.9m) delivering an operating profit of £0.2m (£0.2m in constant currency) (2012: £0.3m).
Our business in France, the Group's largest in the region, has produced a remarkably resilient performance and grown market share despite the well-publicised backdrop of economic and political uncertainty. We continue to closely manage our cost base and absorbed £0.5m redundancy costs during the period.
Germany again delivered strong net fee income growth. Market conditions in the Benelux region have improved and we opened a new Walters People office in Ghent during the first quarter. Our business in Ireland continues to perform well. However, elsewhere across the region, recruitment activity levels remain muted.
Other International (4% of net fee income)
Revenue was £3.8m (2012: £2.9m) and net fee income increased by 40% (44% in constant currency) to £3.7m (£3.8m in constant currency) (2012: £2.7m) delivering an operating loss of £0.1m (£0.1m operating loss in constant currency) (2012: operating loss of £0.2m).
Improved confidence in the US underpinned a solid performance in our New York office, whilst our new business in San Francisco continued to deliver strong net fee income growth. In Brazil, our operations in Sao Paulo and Rio de Janeiro have returned to growth. South Africa continues to be a success story with net fee income growing strongly. The Group has invested in the Middle East, opening its first office in the region in Dubai.
The Group maintained a strong net cash position of £6.9m as at 30 June 2013 (30 June 2012: £4.6m). Working capital in the period has increased by £5.7m and notable cash outflows included a dividend of £2.7m, £1.9m of tax payments and capital expenditure of £1.2m.
The interim dividend will be increased by 5% to 1.54p per share (2012: 1.47p) and will be paid on 18 October 2013 to those shareholders on the Company's register as at 6 September 2013.
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 are Pounds Sterling, the Euro, Australian Dollar and the Japanese Yen.
The other principal risks and uncertainties affecting the Group's business activities remain those detailed within the Operating and Financial Review section of the Annual Report and Accounts for the year ended
31 December 2012, namely the economic environment, 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.
The first half results are encouraging and we are focused on generating increased productivity from our existing businesses across the globe whilst continuing to carefully manage the Group's cost base.
Global market conditions are mixed and visibility is limited, however we are seeing positive signs across some markets. The Group's market-leading international brand, diverse and robust blend of revenue streams and strong balance sheet means that the Group is exceptionally well positioned to benefit from a sustained recovery.