Robert Walters profits up 80%
Financial and Operational Highlights
% change (constant currency*)
Gross profit (net fee income)
Profit before taxation
Basic earnings per share
*Constant currency is calculated by applying prior year exchange rates to local currency results for the current and prior years.
Other highlights include:
· Strong net fee income growth in constant currency across all of the Group’s regions driving an 80% increase in profit before taxation, to £18.2m.
· Excellent performance in the UK with net fee income increasing by 24%.
o Growth across both London and the regions.
o Increased activity in permanent financial services recruitment in London.
· Asia Pacific net fee income up 8% in constant currency.
o Emerging market strategy has proven successful with our newer operations in Malaysia, Thailand, and Vietnam, in particular, delivering excellent growth in net fee income.
o Strong growth also delivered across more established markets such as Japan, Singapore and Hong Kong.
o Australia returned to growth during the fourth quarter. Record performance in New Zealand.
· Europe net fee income up 10% in constant currency.
o Excellent contract growth in France and Benelux.
o Permanent recruitment grew strongly in Belgium and Ireland. Spain delivered record net fee income.
· Other International net fee income up 35% in constant currency.
o Middle East business more than doubled net fee income year-on-year.
o US had a record year across both New York and San Francisco.
· Resource Solutions, the Group’s recruitment process outsourcing business continued to deliver significant net fee income growth in the UK and Asia across both new and existing clients.
· Final dividend per share increased 13% to 4.35p (2013: 3.86p).
· Group headcount increased to 2,631 (2013: 2,307).
· 1.3m shares were purchased at an average price of £3.11 for £4.0m, in line with the Group’s share buyback programme.
· Strong balance sheet with net cash of £14.3m as at 31 December 2014 (2013: £18.6m).
Robert Walters, chief executive, said, “We delivered an excellent performance in 2014, increasing profit before taxation by 80%. This is testament to the strength, depth and diversity that the Group now has in terms of both geography and discipline.
“Early trading in 2015 has been in line with expectations. Whilst we are mindful of continued Eurozone uncertainty, we believe we are very well positioned to capitalise on both current and future growth opportunities.”
The Company will be holding a presentation for analysts at 10am today at Newgate Communications, Sky Light City Tower, 50 Basinghall Street, London EC2V 5DE.
The Group will publish an Interim Management Statement for the first quarter ended 31 March 2015 on 8 April 2015.
Leslie Van de Walle, chairman, stated, "I am very pleased to report that the Group delivered an exceptionally strong performance in 2014, increasing profit before taxation by 80% (91%*). Our strategy of long-term investment in the business across both our established businesses and high-growth potential, emerging recruitment markets has enabled us to leverage the Group’s operational gearing to deliver an excellent result for the year.
"Revenue was up 14% (19%*) to £679.6m (2013: £597.7m) and gross profit (net fee income) increased by 8% (14%*) to £215.3m (2013: £199.2m). Operating profit was up 68% (78%*) to £18.2m (2013: £10.8m) and earnings per share increased by 82% to 15.3p per share (2013: 8.4p per share). The Group has a strong balance sheet with net cash of £14.3m as at 31 December 2014 (31 December 2013: £18.6m). Permanent recruitment represents 69% (2013: 69%) of recruitment net fee income.
"In line with our strategy, we have grown staff numbers in emerging markets and in mature markets where activity levels are increasing and additionally we have won a number of new Resource Solutions clients in the UK and Asia. Headcount at the end of the year increased by 14% to 2,631 (2013: 2,307).
"The Board will be recommending a 13% increase in the final dividend to 4.35p per share which combined with the interim dividend of 1.65p per share will result in a total dividend of 6.0p per share (2013: 5.4p). In 2014, 1.3m shares were purchased at an average price of £3.11 for £4.0m through the Group’s long-term share buy-back programme. The Board is authorised to re-purchase up to 10% of the Group’s issued share capital and will be seeking approval for the renewal of this authority at the Annual General Meeting on 3 June 2015.
"Finally, I would like to thank everyone in the Group for their hard work, drive, commitment and loyalty."
Review of Operations
Robert Walters, CEO, said, "The excellent performance in 2014 served to further highlight the strength, depth and diversity that the Group now has in terms of both geography and discipline. We have been able to leverage this strength to deliver an 80% (91%*) increase in profit before taxation, a result that was particularly impressive given that market conditions in two of the Group’s largest markets, Australia and France, remained challenging for much of last year.
We have a strong blend of permanent and contract recruitment net fee income, a truly global footprint of growing recruitment businesses across both established and embryonic recruitment markets plus a market-leading recruitment process outsourcing business – all of which is underpinned by a powerful international brand and a strong and experienced senior management team.
The recruitment industry continues to evolve through the advent of new resourcing strategies and technologies and we remain firmly at the forefront of these developments. The role of a high-quality specialist professional recruitment consultancy, such as Robert Walters, to filter and manage the increased volume of data and the number of communication channels available to candidates and clients has never been more important. In addition, our Resource Solutions business ensures we are extremely well placed to benefit from the trend towards an outsourced recruitment model.
Asia Pacific (42% of net fee income)
Revenue was £251.4m (2013: £260.1m) and net fee income was £90.5m (2013: £92.1m) an increase of 8% in constant currency. This delivered an operating profit increase of 45% (59%*) to £10.5m (£11.5m*) (2013: £7.2m).
In Asia we have benefited from strong growth within our larger, more mature and market-leading businesses in Japan, Singapore and Hong Kong and, very encouragingly, we are also now seeing positive returns from our more recent investments in a number of the region’s emerging recruitment markets. Our operations in Malaysia, Thailand and Vietnam in particular have delivered excellent net fee income growth and, critically, have the capacity to grow into substantial businesses.
Australia returned to growth in the fourth quarter and in New Zealand, our businesses in Auckland and Wellington both delivered record performances.
Resource Solutions in Asia won a number of new clients and also successfully extended a number of existing client deals.
UK (33% of net fee income)
Revenue was £311.9m (2013: £235.7m), net fee income increased by 24% to £71.1m (2013: £57.2m) and operating profit more than doubled to £5.2m (2013: £2.5m).
The UK had an excellent year as both client and candidate confidence continued to improve. Growth was broad-based and spread across both London and the regions, with disciplines such as commerce finance, legal and sales & marketing delivering particularly strong performances. Also of particular note, was the beginning of a recovery in the permanent financial services market in London, with recruitment levels across risk, compliance and projects particularly high.
To continue to build on this performance and further extend our regional presence, we have opened a new office in St. Albans.
Resource Solutions continued to deliver impressive results increasing net fee income significantly year-on-year.
Europe (20% of net fee income)
Revenue was £106.4m (2013: £93.9m) and net fee income increased 4% (10%*) to £43.8m (£46.1m*) (2013: £42.0m) producing a 73% increase in operating profit to £2.2m (£2.3m*) (2013: £1.3m).
Market conditions across the Eurozone were mixed. In France, our largest business in the region, the permanent recruitment market remained challenging, however our contract business continues to go from strength to strength and produced excellent growth.
Recruitment activity levels across the Benelux region were more favourable, with our business in Belgium the standout performer across both the permanent and contract markets. We continue to focus on Germany as a key growth market for the Group and are also very encouraged by the strong performance in a number of our smaller markets in the region such as Spain and Ireland.
Other International (5% of net fee income)
Revenue was £9.9m (2013: £8.0m) and net fee income increased by 25% (35%*) to £9.9m (£10.7m*) (2013: £7.9m) producing an operating profit of £0.3m (operating profit of £0.2m*) (2013: operating loss of £0.2m).
Other International comprises the US, South Africa, the Middle East and Brazil. Our business in the US had a record year with both San Francisco and New York delivering excellent growth. In New York, much like London, we have seen a recovery in the permanent financial services market with areas such as compliance particularly active, whilst the technology-driven San Francisco market remains extremely buoyant.
Client and candidate confidence in Brazil remains low, our office in Dubai more than doubled net fee income year-on-year whilst in South Africa net fee income grew strongly and we are now one of the largest international players in the market.
Current Trading and Outlook
Having entered seven new countries since 2010, the Robert Walters Group now has over 2,600 staff spanning 24 countries. We have focused on increasing the profitability and productivity of our fledging businesses and the Group as a whole, delivering an 80% uplift in profit before taxation and an increase in consultant productivity.
Early trading in 2015 has been in line with expectations. Whilst we are mindful of continued Eurozone uncertainty, we believe we are very well positioned to capitalise on both current and future growth opportunities.