TIDMRWA
RNS Number : 4813Z
Robert Walters PLC
15 March 2017
15 March 2017
ROBERT WALTERS PLC
(the "Company", or the "Group")
Results for the year ended 31 December 2016
RECORD RESULTS
Robert Walters plc (LSE: RWA), the leading international
recruitment group, today announces its results for the year ended
31 December 2016.
Financial and Operational Highlights
2016 2015 % change % change (constant currency*)
------------------------------- ---------- --------- --------- -----------------------------
Revenue GBP998.5m GBP812.7m 23% 15%
------------------------------- ---------- --------- --------- -----------------------------
Gross profit (net fee income) GBP278.3m GBP234.4m 19% 8%
------------------------------- ---------- --------- --------- -----------------------------
Operating profit GBP26.2m GBP23.1m 14% 4%
------------------------------- ---------- --------- --------- -----------------------------
Profit before taxation GBP28.1m GBP22.4m 26% 16%
------------------------------- ---------- --------- --------- -----------------------------
Basic earnings per share 27.7p 20.6p 34% n/a
------------------------------- ---------- --------- --------- -----------------------------
* Constant currency is calculated by applying prior period
exchange rates to local currency results for the current and prior
periods.
-- Record performance with profit before taxation increasing by
26% (16%*) year-on-year. Net fee income grew across all of the
Group's regions and 15 countries delivered record performances.
-- Opened in four new countries - Canada, India, the Philippines
and Portugal. Three new offices also opened in existing markets -
Antwerp, Penang and Toulouse.
-- 69% of Group net fee income generated outside of the UK.
-- Asia Pacific net fee income up 22% (6%*) to GBP117.6m
(GBP101.8m*) (2015: GBP96.3m) and operating profit up 13% (0%*) to
GBP14.7m (GBP12.9m*) (2015: GBP12.9m).
-- Japan, our largest business in the region, delivered a record
performance with bilingual professionals in high demand and short
supply.
-- Australia delivered solid net fee income growth and New
Zealand produced a record result.
-- Market conditions in Greater China remained challenging.
-- Thailand, Indonesia and Taiwan delivered particularly strong
performances.
-- UK net fee income up 8% to GBP86.7m (2015: GBP80.4m) and
operating profit up 4% to GBP6.4m (2015: GBP6.2m).
-- Candidate and client confidence impacted by EU referendum
however activity levels remained positive across commerce finance
and the UK regions.
-- Resource Solutions produced strong net fee income growth
benefiting from the significant investment made during the first
half of the year.
-- Europe net fee income up 30% (15%*) to GBP60.1m (GBP53.2m*)
(2015: GBP46.3m) and operating profit up 27% (19%*) to GBP4.2m
(GBP3.9m*) (2015: GBP3.3m).
-- France, the region's largest business, the Netherlands and
Belgium all had record years with contract and interim recruitment
delivering particularly strong results.
-- Spain, Switzerland and Germany produced the strongest growth
rates, all increasing net fee income in excess of 40%.
-- Other International (North America, Brazil, the Middle East
and South Africa) net fee income up 22% (3%*) to GBP14.0m
(GBP11.8m*) (2015: GBP11.5m) and operating profit up 36% (16%*) to
GBP1.0m (GBP0.8m*) (2015: GBP0.7m).
-- Group headcount of 3,229 (2015: 2,916).
-- Final dividend increased by 21% to 6.2p per share (2015:
5.13p).
-- 7.3m shares purchased in 2016 for GBP22.6m at an average
price of GBP3.10. Since 31 December 2016, a further 2.1m shares
have been purchased and cancelled at an average price of GBP3.79
for GBP8.0m.
-- Strong cash generation with net cash of GBP22.5m as at 31
December 2016 (31 December 2015: GBP17.8m).
Robert Walters, Chief Executive, said:
"I am very pleased to report a record set of results for the
Group with profit before tax increasing by 26% to GBP28.1m. We grew
net fee income across all of the Group's regions and opened offices
in four new countries; Canada, India, the Philippines and
Portugal.
"Looking ahead, we remain mindful of the unpredictable
geopolitical environment, however, the Group's global footprint
coupled with the range of recruitment services we provide positions
us well to maximise opportunities for growth 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
first quarter ending 31 March 2017 on 11 April 2017.
Further information
Robert Walters plc
Robert Walters, Chief
Executive
Alan Bannatyne, Chief
Financial Officer +44 (0) 20 7379 3333
Newgate Communications
Steffan Williams
Charlotte Coulson +44 (0) 20 7680 6550
About Robert Walters
Robert Walters is a market-leading international specialist
professional recruitment group with over 3,200 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
Results for the year ended 31 December 2016
Chairman's Statement
The Group performed strongly in 2016 with profit before taxation
increasing by 26% (16%*) to GBP28.1m (2015: GBP22.4m). Net fee
income and operating profit grew across all of the Group's regions
despite a backdrop of political and economic uncertainty across a
number of markets.
The strength of the Group lies in the blend of both the breadth
of solutions we provide to clients and in our geographic spread.
Our blend of specialist professional recruitment and recruitment
process outsourcing solutions is a key differentiator in an
evolving recruitment industry, whilst our geographic footprint
covering 28 countries including fast-growing emerging recruitment
markets and mature well-established markets provides a
well-balanced platform for growth.
Revenue was up 23% (15%*) to GBP998.5m (2015: GBP812.7m) and
gross profit (net fee income) increased by 19% (8%*) to GBP278.3m
(2015: GBP234.4m). Operating profit was up 14% (4%*) to GBP26.2m
(2015: GBP23.1m) and earnings per share increased by 34% to 27.7p
per share (2015: 20.6p per share). The Group has further
strengthened its balance sheet with net cash of GBP22.5m as at 31
December 2016 (31 December 2015: GBP17.8m). Permanent recruitment
represents 69% (2015: 69%) of recruitment net fee income.
During the year, headcount increased by 11% to 3,229 (2015:
2,916) with the majority of the uplift within Resource Solutions,
our recruitment process outsourcing business.
The Board will be recommending a 21% increase in the final
dividend to 6.2p per share which combined with the interim dividend
of 2.3p per share would result in a total dividend of 8.5p per
share (2015: 7.08p).
I would like to take this opportunity to extend a warm welcome
to Tanith Dodge who joined the Board as a Non-Executive Director in
February 2017. Her HR expertise and experience working within
international organisations will be a valuable asset to the
Board.
In 2016, 6.3m shares were purchased at an average price of
GBP3.04 for GBP19.2m through the Group's Employee Benefit Trust.
The Group also purchased 1m shares at an average price of GBP3.44
for GBP3.4m, which were subsequently cancelled. A further 2.1m
shares have been purchased and cancelled at an average price of
GBP3.79 for GBP8.0m since 31 December 2016. 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 25 May 2017.
Finally, on behalf of the Board, I would like to thank all of
our staff across the globe for their continued hard work and
dedication. These results are a fitting testament to their efforts
in delivering a high quality service to our clients and
candidates.
Leslie Van de Walle
Chairman
14 March 2017
Chief Executive's Statement
Review of Operations
The Group's strong performance in 2016 is a testament to the
success of our strategy for growth which is founded on the two
pillars of international expansion and discipline
diversification.
During the year, we further expanded our international footprint
into four new countries, Canada, India, the Philippines and
Portugal and strengthened existing businesses with new offices in
Antwerp, Toulouse and Penang. The Group now has over 3,200 staff
spanning 28 countries including some of the world's fastest growing
and emerging recruitment markets, particularly in the Asia Pacific
region. 69% of the Group's net fee income is now generated outside
of the UK.
In discipline terms, our core specialist professional
recruitment business continues to evolve through growth in emerging
disciplines such as technology, digital, healthcare and fintech
whilst retaining our leading positions in the more traditional
disciplines of finance, banking, HR and legal. In addition, the
Group, through our market-leading Resource Solutions offering, is
at the forefront of the growth of the recruitment process
outsourcing industry which we believe to be the most influential
trend impacting today's global recruitment market.
Asia Pacific (42% of net fee income)
Revenue was GBP348.6m (2015: GBP285.1m) and net fee income
increased by 22% (6%*) to GBP117.6m (GBP101.8m*) (2015: GBP96.3m)
and operating profit increased by 13% (0%*) to GBP14.7m (GBP12.9m*)
(2015: GBP12.9m).
Japan, the Group's largest business in the region, had a record
year across both Tokyo and Osaka with bilingual professionals
remaining in strong demand and short supply. Our emerging market
strategy in Asia has continued to pay dividends with Thailand,
Indonesia and Taiwan in particular delivering excellent growth and
record performances. We have also further extended our footprint in
Asia with the opening of our first office in the Philippines. For
these emerging markets, the Group's ability to attract overseas
professionals back to their home countries is a particular source
of competitive advantage.
Market conditions in Greater China, particularly in financial
services in Hong Kong, remained challenging whilst Singapore and
Malaysia delivered robust performances.
Australia delivered solid net fee income growth with Sydney,
Brisbane and Adelaide delivering the strongest results. In New
Zealand, our business goes from strength to strength and produced a
record performance. 2017 promises to be a particularly exciting
year for our New Zealand business with the Group having renewed its
sponsorship of the British & Irish Lions who tour the country
in June and July.
Resource Solutions in Asia continued to deliver strong rates of
net fee income growth winning a number of new clients in new
territories and extending existing deals. To support this growth,
we opened a new client service centre in Hyderabad, India.
UK (31% of net fee income)
Revenue was GBP480.6m (2015: GBP403.4m), net fee income
increased by 8% to GBP86.7m (2015: GBP80.4m) and operating profit
increased by 4% to GBP6.4m (2015: GBP6.2m).
2016 was a year dominated by the run-up to and fall-out from the
EU referendum. Candidate and client confidence levels were
negatively impacted and activity levels, particularly in financial
services in London, declined. However, despite this general
backdrop there were areas of notable activity with commerce finance
across the UK performing well and our regional recruitment
businesses in Manchester, Milton Keynes and St. Albans benefiting
from their focus on SMEs to deliver record performances.
Resource Solutions has won a number of large new client accounts
over the last 15 months which necessitated a significant investment
in both staff numbers and infrastructure particularly during the
first half of the year. I am pleased to report that Resource
Solutions has benefited from this investment and delivered
excellent year-on-year net fee income growth and we expect this to
continue into 2017.
Europe (22% of net fee income)
Revenue was GBP147.0m (2015: GBP112.7m) and net fee income
increased by 30% (15%*) to GBP60.1m (GBP53.2m*) (2015: GBP46.3m)
producing a 27% (19%*) increase in operating profit to GBP4.2m
(GBP3.9m*) (2015: GBP3.3m).
Our European business delivered a strong performance resulting
in significant increases in both net fee income and operating
profit. Spain, Germany and Switzerland delivered the strongest
rates of growth, all increasing net fee income in excess of 40%
year-on-year.
France, our largest business in the region, had a record year
growing across permanent, contract and interim and a new regional
office was opened in Toulouse. The Benelux region also had a record
year with our contract and interim businesses in particular
delivering standout performances. A new office was opened in
Antwerp to further develop our regional office network in
Belgium.
During the fourth quarter, the Group entered a new European
market with the opening of our first Portuguese office in
Lisbon.
Other International (5% of net fee income)
Other International comprises the USA, Canada, Brazil, the
Middle East and South Africa. Revenue was GBP22.3m (2015: GBP11.5m)
and net fee income increased by 22% (3%*) to GBP14.0m (GBP11.8m*)
(2015: GBP11.5m) producing a 36% (16%*) increase in operating
profit to GBP1.0m (GBP0.8m*) (2015: GBP0.7m).
Performance was mixed across the region. In the USA, New York
was impacted by a decline in activity in financial services whereas
our office in San Francisco continued to perform well and grew net
fee income. We extended our North American footprint with the
opening of our first office in Canada in Toronto at the beginning
of the fourth quarter. Challenging market conditions continued to
prevail in both Brazil and South Africa.
The Middle East had a record year and grew strongly benefiting
from our continued diversification into new recruitment
disciplines.
Outlook
Looking ahead, we remain mindful of the unpredictable
geopolitical environment, however, the Group's global footprint
coupled with the range of recruitment services we provide positions
us well to maximise opportunities for growth as they arise.
Robert Walters
Chief Executive
14 March 2017
INDEPENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF ROBERT WALTERS
PLC ON THE PRELIMINARY ANNOUNCEMENT OF ROBERT WALTERS PLC
We confirm that we have issued an unqualified opinion on the
full financial statements of Robert Walters plc.
Our audit report on the full financial statements sets out the
following risks of material misstatement which had the greatest
effect on our audit strategy; the allocation of resources in our
audit; and directing the efforts of the engagement team, together
with how our audit responded to those risks and the key
observations arising from our work:
Revenue Recognition
For permanent placements, Our testing involved
which accounted for 17% agreeing a sample of
of the revenue of the permanent placement fees
Group in 2016 (2015: earned but not invoiced
17%), the Group's policy to written evidence of
(as detailed in the Accounting candidate acceptance,
Policies note) is to including confirmation
record revenue when specific of start date.
recognition criteria
have been met, namely We assessed the level
where a candidate accepts of provision held at
a position in writing the year-end against
and a start date is agreed. the average level of
Accordingly revenue is back-outs experienced
accrued in respect of on a monthly basis during
permanent placements the year. We also evaluated
meeting the above criteria the back-outs following
but which remain unbilled. the year end.
A provision is made for We reviewed a sample
placements expected to of timesheets received
be cancelled prior to after the year end date,
the start date (back-outs) to ensure that revenue
on the basis of past in respect of these had
experience. been recorded in the
correct period.
Determining the level
of provision required We recalculated the accrued
for back-outs involves income balance relating
a significant degree to temporary placements,
of management judgement. and assessed the cut-off
applied to the receipt
For temporary placements, of post year-end timesheets
which accounted for 83% relating to services
of the revenue of the provided before year
Group in 2016 (2015: end.
83%), the Group's policy Our testing also involved
(as detailed in the Accounting a retrospective review
Policies note) is to of timesheets submitted
record revenue as the during 2016 which related
service is provided. to 2015. This was done
Accordingly revenue is to assess the likely
accrued in respect of level of accrued income
temporary placements required at 31 December
where temporary staff 2016 for 'missing' timesheets.
have provided a service
but which remain unbilled.
Whilst the calculation
of accrued income for
temporary placements
is not complex, management
judgement is required
in determining the amount
of accrued income to
recognise in respect
of placements where it
is believed that temporary
staff provided the service
before year end, but
where no timesheet had
been received at the
year-end date.
-------------------------------- -----------------------------------
Recoverability of trade
receivables and bad debt We agreed a sample of
provisioning balances to subsequent
Gross trade receivables cash receipts and other
at 31 December 2016 were supporting documentation
GBP187.0m (2015: GBP140.7m). (such as subcontractor
timesheets) which supported
Whilst historically the the recoverability of
Group has not suffered the balance. For certain
from a significant level components, debtor confirmations
of write-offs, given were also sent out for
the relatively small a sample of balances.
balances due from a large
number of customers, We have evaluated the
significant management diligence applied by
judgement is required management in determining
in estimating the appropriate the risk associated with
level of provision against the recoverability of
trade receivables. the receivables balance
and tested the adequacy
The Group's policy is of provisioning by recalculating
to record a provision the provision for significantly
based on anticipated aged balances, and considering
recoverable cash flows, receivables where the
nature of counterparty, ageing profile of debtors
past due date, geographical has deteriorated or there
location, the costs of is evidence that the
recovery and the fair credit quality of the
value of any guarantee debtor is considered
received, as detailed a risk, and challenged
in the Accounting Policies management to justify
note. why no provision is required.
In all full scope locations,
we evaluated the design We analysed the make-up
and implementation of of the year end provision
the internal controls for bad debts and assessed
in place to ensure that it against the bad debt
an appropriate provision cost experienced in the
is recognised against year. Additionally, we
trade receivables. In evaluated post year-end
the UK we performed additional developments to determine
testing to confirm whether whether any provisions
these internal controls required reversal or
were operating effectively. further provision.
We did not identify any
We focussed our testing misstatements or significant
on higher risk balances deficiencies as a result
on the basis of the ageing of our audit work.
profile, collection history
and the credit quality We concluded that the
of the customer. provision for bad debts
was in the middle of
the acceptable range.
-------------------------------- -----------------------------------
These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion
thereon, and we did not provide a separate opinion on these
matters.
Our liability for this report, and for our full audit report on
the financial statements is to the company's members as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our
audit work has been undertaken so that we might state to the
company's members those matters we are required to state to them in
an auditor's 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 and the company's members as a body,
for our audit work, for our audit report or this report, or for the
opinions we have formed.
Deloitte LLP
Chartered Accountants and Statutory Auditor
Consolidated Income Statement
FOR THE YEARED 31 DECEMBER 2016
2016 2015
GBP'000 GBP'000
--------------------------------- ---------- ----------
Revenue 998,535 812,715
Cost of sales (720,205) (578,287)
---------------------------------
Gross profit 278,330 234,428
Administrative expenses (252,088) (211,325)
--------------------------------- ---------- ----------
Operating profit 26,242 23,103
Finance income 460 168
Finance costs (895) (630)
Gain (loss) on foreign exchange 2,334 (283)
---------------------------------
Profit before taxation 28,141 22,358
Taxation (8,244) (7,068)
--------------------------------- ---------- ----------
Profit for the year 19,897 15,290
--------------------------------- ---------- ----------
Earnings per share (pence):
Basic 27.7 20.6
Diluted 25.4 18.7
--------------------------------- ---------- ----------
The amounts above relate to continuing operations.
Consolidated Statement of Comprehensive Income
FOR THE YEARED 31 DECEMBER 2016
2016 2015
GBP'000 GBP'000
------------------------------------- -------- --------
Profit for the year 19,897 15,290
Items that may be reclassified
subsequently to profit and loss:
Exchange differences on translation
of overseas operations 12,953 (1,347)
--------
Total comprehensive income and
expense for the year 32,850 13,943
------------------------------------- -------- --------
Consolidated Balance Sheet
AS AT 31 DECEMBER 2016
2016 2015
GBP'000 GBP'000
------------------------------- ---------- ----------
Non-current assets
Intangible assets 11,402 10,788
Property, plant and equipment 8,183 7,740
Deferred tax assets 8,253 8,785
------------------------------- ---------- ----------
27,838 27,313
------------------------------- ---------- ----------
Current assets
Trade and other receivables 236,507 191,849
Corporation tax receivables 1,531 1,103
Cash and cash equivalents 62,601 43,378
------------------------------- ---------- ----------
300,639 236,330
------------------------------- ---------- ----------
Total assets 328,477 263,643
------------------------------- ---------- ----------
Current liabilities
Trade and other payables (178,008) (139,906)
Corporation tax liabilities (5,069) (4,276)
Bank overdrafts and loans (40,070) (25,573)
Provisions (1,244) (294)
------------------------------- ---------- ----------
(224,391) (170,049)
----------
Net current assets 76,248 66,281
------------------------------- ---------- ----------
Non-current liabilities
Deferred tax liabilities - (4)
Provisions (2,143) (1,933)
(2,143) (1,937)
------------------------------- ---------- ----------
Total liabilities (226,534) (171,986)
Net assets 101,943 91,657
------------------------------- ---------- ----------
Equity
Share capital 16,101 17,249
Share premium 21,854 21,836
Other reserves (72,241) (73,410)
Own shares held (19,906) (7,136)
Treasury shares held (9,095) (19,860)
Foreign exchange reserves 14,038 1,085
Retained earnings 151,192 151,893
------------------------------- ---------- ----------
Equity attributable to owners
of the Company 101,943 91,657
------------------------------- ---------- ----------
Consolidated Cash Flow Statement
FOR THE YEARED 31 DECEMBER 2016
2016 2015
GBP'000 GBP'000
------------------------------------------- --------- --------
Cash generated from operating activities 37,178 23,214
Income taxes paid (7,693) (7,433)
Net cash from operating activities 29,485 15,781
------------------------------------------- --------- --------
Investing activities
Interest received 460 169
Purchases of computer software (2,172) (2,058)
Purchases of property, plant and
equipment (2,841) (3,929)
Purchase of non-controlling interest - (498)
Net cash used in investing activities (4,553) (6,316)
------------------------------------------- --------- --------
Financing activities
Equity dividends paid (5,410) (4,688)
Proceeds from issue of equity 39 140
Interest paid (895) (630)
Proceeds from bank loans and overdrafts 14,350 1,672
Share buy-back and cancellation (3,446) -
Purchase of own shares (19,168) (822)
Proceeds from exercise of share
options 26 452
------------------------------------------- --------- --------
Net cash used in financing activities (14,504) (3,876)
Net increase in cash and cash equivalents 10,428 5,589
Cash and cash equivalents at beginning
of year 43,378 38,205
Effect of foreign exchange rate
changes 8,795 (416)
Cash and cash equivalents at end
of year 62,601 43,378
------------------------------------------- --------- --------
Consolidated Statement of Changes in Equity
FOR THE YEARED 31 DECEMBER 2016
Own Treasury Foreign
Share Share Other shares shares exchange Retained Total
capital premium reserves held held reserves earnings equity
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- --------- --------- ---------- --------- --------- ---------- ---------- ---------
Balance at
1 January 2015 17,192 21,753 (73,410) (8,765) (19,860) 2,432 138,032 77,374
Profit for
the year - - - - - - 15,290 15,290
Foreign currency
translation
differences - - - - - (1,347) - (1,347)
----------------------- --------- --------- ---------- --------- --------- ---------- ---------- ---------
Total comprehensive
income and
expense for
the year - - - - - (1,347) 15,290 13,943
Dividends paid - - - - - - (4,688) (4,688)
Credit to equity
for equity-settled
share-based
payments - - - - - - 4,656 4,656
Deferred tax
on share-based
payment transactions - - - - - - 602 602
Transfer to
own shares
held on
exercise of
equity incentives - - - 1,999 - - (1,999) -
New shares
issued and
own shares
purchased 57 83 - (370) - - - (230)
----------------------- --------- --------- ---------- --------- --------- ---------- ---------- ---------
Balance at
31 December
2015 17,249 21,836 (73,410) (7,136) (19,860) 1,085 151,893 91,657
----------------------- --------- --------- ---------- --------- --------- ---------- ---------- ---------
Profit for
the year - - - - - - 19,897 19,897
Adjustment(1) - - - - - - 1,254 1,254
Foreign currency
translation
differences - - - - - 12,953 - 12,953
----------------------- --------- --------- ---------- --------- --------- ---------- ---------- ---------
Total comprehensive
income and
expense for
the year - - - - - 12,953 21,151 34,104
Dividends paid - - - - - - (5,410) (5,410)
Shares repurchased
for cancellation (1,169) - 1,169 - 10,765 - (14,211) (3,446)
Credit to equity
for equity-settled
share-based
payments - - - - - - 4,590 4,590
Deferred tax
on share-based
payment transactions - - - - - - (449) (449)
Transfer to
own shares
held on exercise
of equity incentives - - - 6,372 - - (6,372) -
New shares
issued and
own shares
purchased 21 18 - (19,142) - - - (19,103)
Balance at
31 December
2016 16,101 21,854 (72,241) (19,906) (9,095) 14,038 151,192 101,943
----------------------- --------- --------- ---------- --------- --------- ---------- ---------- ---------
(1)An immaterial adjustment of GBP1.25 million has been made to
increase brought forward retained earnings. GBP0.195 million of
this adjustment is related to the income statement for the 2015
financial year. The adjustment was made in order to recognise two
changes in the current year in the application of the revenue
recognition policy in part of the business (the impact on the
equivalent balance sheet and income statement captions is similarly
immaterial).
The first change relates to permanent placements. These were
previously recognised by this part of the business when a candidate
started a position. However, given the maturity of the market for
this part of the business, the Group considers that it is more
appropriate to recognise this revenue when the candidate accepts a
position and the start date is determined, in line with the rest of
the Group, as this reflects the underlying agreements. A provision
is made for candidates who fail to start employment after accepting
the offer and is based on the historic rate of 'back-outs'. The
adjustment has not been treated as a change in accounting policy,
under IAS 8, as it is not material.
The second change relates to temporary placements. The
adjustment made is to recognise the impact of timesheets received
after the year--end date, where work was performed during the 2016
financial year. The adjustment has also not been treated as a
change in accounting policy, under IAS 8, as it is not
material.
Statement of Accounting Policies
FOR THE YEARED 31 DECEMBER 2016
Accounting Policies
Basis of preparation
Robert Walters plc is a Company incorporated and domiciled in
the United Kingdom under the Companies Act. The financial report
for the year ended 31 December 2016 has been prepared in accordance
with the historic cost convention and with International Financial
Reporting Standards (IFRSs), including International Accounting
Standards and Interpretations as adopted for use by the European
Union, though this announcement does not itself contain sufficient
information to comply with IFRSs.
The Group had net cash of GBP22.5m at 31 December 2016. Despite
the volatile and uncertain global economic conditions, the Group
remains confident of its long-term growth prospects. The Group has
a strong balance sheet and considerable financial resources,
together with a diverse range of clients and suppliers across
different geographic locations and sectors. As a consequence, the
Directors believe that 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 accounts,
that there is a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable
future. For this reason, the Directors continue to adopt the going
concern basis in preparing the accounts.
The financial information in this announcement, which was
approved by the Board of Directors on 14 March 2017, does not
constitute the Company's statutory accounts for the year ended 31
December 2016 but is derived from these accounts. Statutory
accounts for 2015 have been delivered to the Registrar of Companies
and those for 2016 will be delivered following the Company's Annual
General Meeting. The auditors have reported on these accounts;
their reports were unqualified, did not draw attention to any
matters by way of emphasis without qualifying their report and did
not contain statements under Section 498(2) or (3) of the Companies
Act 2006.
The Annual General Meeting of Robert Walters plc will be held on
25 May 2017 at 11 Slingsby Place, St Martin's Courtyard, London
WC2E 9AB.
1. Segmental information
-----------------------------------------
2016 2015
GBP'000 GBP'000
--------------------- -------- --------
i) Revenue:
Asia Pacific 348,636 285,145
UK 480,587 403,437
Europe 146,985 112,676
Other International 22,327 11,457
998,535 812,715
--------------------------- -------- --------
ii) Gross profit:
Asia Pacific 117,591 96,270
UK 86,675 80,352
Europe 60,062 46,349
Other International 14,002 11,457
278,330 234,428
--------------------------- -------- --------
1. Segmental information (continued)
----------------------------------------------------
2016 2015
GBP'000 GBP'000
------------------------------ -------- --------
iii) Profit before taxation:
Asia Pacific 14,655 12,930
UK 6,396 6,162
Europe 4,243 3,316
Other International 948 695
Operating profit 26,242 23,103
Net finance costs 1,899 (745)
------------------------------------- -------- --------
Profit before taxation 28,141 22,358
------------------------------------- -------- --------
iv) Net assets:
Asia Pacific 32,621 31,765
UK 28,867 28,903
Europe 9,592 6,050
Other International 3,617 1,526
Unallocated corporate assets
and liabilities* 27,246 23,413
101,943 91,657
------------------------------------- -------- ----------
* For the purposes of segmental information, unallocated
corporate assets and liabilities include cash, bank loans,
corporation and deferred tax balances.
The analysis of revenue by destination is not materially
different to the analysis by origin and the analysis of finance
income and costs are not significant.
The Group is divided into geographical areas for management
purposes, and it is on this basis that the segmental information
has been prepared.
v) Other information P,P&E
- 2016 and software Depreciation Non-current
additions and amortisation assets Assets Liabilities
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- -------------- ------------------ ------------ ------------ ------------
Asia Pacific 922 1,237 11,160 63,621 (31,000)
UK 2,392 2,300 6,219 146,599 (117,732)
Europe 901 505 1,304 37,168 (27,576)
Other International 798 137 902 8,704 (5,086)
Unallocated
corporate assets
and liabilities* - - 8,253 72,385 (45,140)
-------------------------- -------------- ------------------ ------------ ------------ ------------
5,013 4,179 27,838 328,477 (226,534)
-------------------------- -------------- ------------------ ------------ ------------ ------------
1. Segmental information (continued)
---------------------------------------------------------------------------------------------------
v) Other information P,P&E
- 2015 and software Depreciation Non-current
additions and amortisation assets Assets Liabilities
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- -------------- ------------------ ------------ ------------ ------------
Asia Pacific 1,436 1,261 10,897 58,001 (26,236)
UK 3,262 1,739 6,612 119,644 (90,741)
Europe 1,205 1,202 887 28,121 (22,071)
Other International 84 74 132 4,611 (3,085)
Unallocated
corporate assets
and liabilities* - - 8,785 53,266 (29,853)
-------------------------- -------------- ------------------ ------------ ------------ ------------
5,987 4,276 27,313 263,643 (171,986)
-------------------------- -------------- ------------------ ------------ ------------ ------------
*For the purposes of segmental information, unallocated
corporate assets and liabilities include cash, bank loans,
corporation and deferred tax balances.
2016 2015
GBP'000 GBP'000
--------------------------------- -------- --------
vi) Revenue by business grouping:
Robert Walters 599,356 499,749
Resource Solutions (recruitment
process outsourcing) 399,179 312,966
--------------------------------------- -------- --------
998,535 812,715
--------------------------------------- -------- --------
2. Finance costs
-------------------------------------------------
2016 2015
GBP'000 GBP'000
----------------------------- -------- --------
Interest on bank overdrafts 841 588
Interest on bank loans 54 42
Total borrowing costs 895 630
---------------------------------- -------- --------
3. Taxation
-------------------------------------------------------------
2016 2015
GBP'000 GBP'000
----------------------------------------- -------- --------
Current tax charge
Corporation tax - UK 1,971 343
Corporation tax - Overseas 6,520 6,685
Adjustments in respect of prior
years
Corporation tax - UK 126 114
Corporation tax - Overseas (686) (104)
7,931 7,038
---------------------------------------------- -------- --------
Deferred tax
Deferred tax - UK 173 425
Deferred tax - Overseas 16 (699)
Adjustments in respect of prior
years
Deferred tax - UK (16) 162
Deferred tax - Overseas 140 142
313 30
Total tax charge for year 8,244 7,068
---------------------------------------------- -------- --------
Profit before taxation 28,141 22,358
---------------------------------------------- -------- --------
Tax at standard UK corporation
tax rate of 20% (2015: 20.25%) 5,628 4,528
Effects of:
Unrelieved (relieved) losses 683 (78)
Other expenses not deductible
for tax purposes 477 308
Overseas earnings taxed at different
rates 1,785 1,927
Adjustments to tax charges in
previous years (435) 313
Impact of tax rate change 106 70
---------------------------------------------- -------- --------
Total tax charge for year 8,244 7,068
---------------------------------------------- -------- --------
2016 2015
GBP'000 GBP'000
----------------------------------------- -------- --------
Tax recognised directly in equity
Tax on share-based payment transactions 449 (602)
---------------------------------------------- -------- --------
4. Dividends
-------------------------------------------------------------------
2016 2015
GBP'000 GBP'000
------------------------------------- ------------- -------------
Amounts recognised as distributions
to equity holders in the year:
Interim dividend paid of 2.3p
per share (2015: 1.95p) 1,620 1,459
Final dividend for 2015 of 5.13p
per share (2014: 4.35p) 3,790 3,229
------------------------------------------ ------------- -------------
5,410 4,688
------------------------------------------ ------------- -------------
Proposed final dividend for
2016 of 6.2p per share
(2015: 5.13p) 4,316 3,809
------------------------------------------ ------------- -------------
The proposed final dividend of GBP4,316,000
is subject to approval by shareholders at the
Annual General Meeting and has not been included
as a liability in these financial statements.
The final dividend, if approved, will be paid
on 9 June 2017 to those shareholders on the
register as at 19 May 2017.
5. Earnings per share
-------------------------------------------------------------------
The calculation of earnings per share is based
on the profit for the year attributable to
equity holders of the Parent and the weighted
average number of shares of the Company.
2016 2015
GBP'000 GBP'000
------------------------------------- ------------- -------------
Profit for the year attributable
to equity holders of the parent 19,897 15,290
------------------------------------------ ------------- -------------
2016 2015
Number Number
of shares of shares
------------------------------------- ------------- -------------
Weighted average number of shares:
Shares in issue throughout the
year 86,251,859 85,970,809
Shares issued in the year 74,666 204,562
Shares cancelled in the year (1,652,089) -
Treasury and own shares held (12,799,910) (12,018,059)
For basic earnings per share 71,874,526 74,157,312
Outstanding share options and
equity 6,470,656 7,540,850
For diluted earnings per share 78,345,182 81,698,162
------------------------------------------ ------------- -------------
6. Intangible assets
---------------------------------------------------------------
Computer
Goodwill software Total
GBP'000 GBP'000 GBP'000
------------------------------ --------- ---------- --------
Cost:
At 1 January 2015 7,984 8,191 16,175
Additions - 2,058 2,058
Disposals - (295) (295)
Foreign currency translation
differences (7) (26) (33)
----------------------------------- --------- ---------- --------
At 31 December 2015 7,977 9,928 17,905
----------------------------------- --------- ---------- --------
Additions - 2,172 2,172
Disposals - (1,170) (1,170)
Foreign currency translation
differences 111 265 376
----------------------------------- --------- ---------- --------
At 31 December 2016 8,088 11,195 19,283
----------------------------------- --------- ---------- --------
Accumulated amortisation
and impairment:
At 1 January 2015 - 6,598 6,598
Charge for the year - 838 838
Disposals - (294) (294)
Foreign currency translation
differences - (25) (25)
----------------------------------- --------- ---------- --------
At 31 December 2015 - 7,117 7,117
----------------------------------- --------- ---------- --------
Charge for the year - 1,191 1,191
Disposals - (679) (679)
Foreign currency translation
differences - 252 252
----------------------------------- --------- ---------- --------
At 31 December 2016 - 7,881 7,881
----------------------------------- --------- ---------- --------
Carrying value:
At 1 January 2015 7,984 1,593 9,577
At 31 December 2015 7,977 2,811 10,788
----------------------------------- --------- ---------- --------
At 31 December 2016 8,088 3,314 11,402
----------------------------------- --------- ---------- --------
The carrying value of goodwill primarily relates to the
acquisition of Talent Spotter in China (GBP1,229,000) and the
acquisition of the Dunhill Group in Australia (GBP6,847,000). The
historical acquisition cost of Talent Spotter was GBP768,000, with
the movement to the current carrying value a result of foreign
currency translation differences. Goodwill is tested annually for
impairment, or more frequently if there are indications that
goodwill might be impaired. The recoverable amount of the goodwill
is based on value-in-use in perpetuity. The key assumptions in the
value-in-use are those regarding expected changes to cash flow
during the period, growth rates and the discount rates.
Estimated cash flow forecasts are derived from the most recent
financial budgets and an assumed average growth rate of 5% for
years two and three, which does not exceed the long-term average
potential growth rate of the respective operations. The forecast
for revenue and costs as approved by the Board reflect the latest
industry forecasts and management expectations based on past
experience.
The value of the cash flows is then discounted at a post-tax
rate of 10.2% (pre-tax rate of 14.5%), based on the Group's
estimated weighted average cost of capital and risk adjusted
depending on the location of goodwill. The weighted average cost of
capital has also been adjusted for a terminal growth rate, between
2-3% depending on location, for year four onwards.
Management has undertaken sensitivity analysis taking into
consideration the impact in key assumptions. This included reducing
the cash flow growth from year two onwards by 0%, 10% and 20% in
absolute terms. The sensitivity analysis shows no impairment would
arise under each scenario.
7. Property, plant and equipment
-------------------------------------------------------------------------------------------------
Fixtures,
fittings
Leasehold and office Computer Motor
improvements equipment equipment vehicles Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ --------------- ------------ ----------- ---------- ---------
Cost:
At 1 January 2015 6,806 10,120 5,748 18 22,692
Additions 668 2,100 1,159 2 3,929
Disposals (865) (1,381) (702) (2) (2,950)
Foreign currency translation
differences (15) (431) (56) - (502)
------------------------------------- --------------- ------------ ----------- ---------- ---------
At 31 December 2015 6,594 10,408 6,149 18 23,169
------------------------------------- --------------- ------------ ----------- ---------- ---------
Additions 281 1,758 802 - 2,841
Disposals (75) (1,084) (498) - (1,657)
Foreign currency translation
differences 611 1,495 689 - 2,795
------------------------------------- --------------- ------------ ----------- ---------- ---------
At 31 December 2016 7,411 12,577 7,142 18 27,148
------------------------------------- --------------- ------------ ----------- ---------- ---------
Accumulated depreciation
and impairment:
At 1 January 2015 3,707 6,250 4,569 10 14,536
Charge for the year 746 1,828 860 4 3,438
Disposals (398) (1,188) (645) (1) (2,232)
Foreign currency translation
differences (2) (256) (55) 0 (313)
------------------------------------- --------------- ------------ ----------- ---------- ---------
At 31 December 2015 4,053 6,634 4,729 13 15,429
------------------------------------- --------------- ------------ ----------- ---------- ---------
Charge for the year 707 1,218 1,061 2 2,988
Disposals (65) (937) (480) - (1,482)
Foreign currency translation
differences 502 1,012 516 (0) 2,030
------------------------------------- --------------- ------------ ----------- ---------- ---------
At 31 December 2016 5,197 7,927 5,826 15 18,965
------------------------------------- --------------- ------------ ----------- ---------- ---------
Carrying value:
At 1 January 2015 3,099 3,870 1,179 8 8,156
At 31 December 2015 2,541 3,774 1,420 5 7,740
------------------------------------- --------------- ------------ ----------- ---------- ---------
At 31 December 2016 2,214 4,650 1,316 3 8,183
------------------------------------- --------------- ------------ ----------- ---------- ---------
8. Trade and other receivables
------------------------------------------------------
2016 2015
GBP'000 GBP'000
---------------------------------- -------- --------
Receivables due within one year:
Trade receivables 183,692 138,869
Other receivables 8,970 12,640
Prepayments 5,468 13,389
Accrued income 38,377 26,951
--------------------------------------- -------- --------
236,507 191,849
--------------------------------------- -------- --------
Included within prepayments and accrued income is a provision
against the cancellation of placements where a candidate may
reverse their acceptance prior to the start date. The value of this
provision as of 31 December 2016 is GBP1,716,000 (31 December 2015:
GBP1,450,000). The movement in this provision during the year is a
charge to administrative expenses in the income statement of
GBP266,000 (2015: GBP39,000).
There is no material difference between the fair value and the
carrying value of the Group's trade and other receivables.
Trade payables and other payables: amounts
9. falling due within one year
--------------------------------------------------------
2016 2015
GBP'000 GBP'000
------------------------------------ -------- --------
Trade payables 6,727 8,020
Other taxation and social security 24,529 19,628
Other payables 22,489 19,246
Accruals and deferred income 124,263 93,012
------------------------------------------- -------- --------
178,008 139,906
------------------------------------------- -------- --------
There is no material difference between the fair value and the
carrying value of the Group's trade and other payables.
10. Bank overdrafts and loans
--------------------------------------------------------
2016 2015
GBP'000 GBP'000
------------------------------------ -------- --------
Bank overdrafts and loans: current 40,070 25,573
40,070 25,573
-------------------------------------------- -------- --------
The borrowings are repayable
as follows:
Within one year 40,070 25,573
40,070 25,573
-------------------------------------------- -------- --------
In January 2017, the Group renewed and extended to four years
its committed financing facility of GBP45.0m which expires in
December 2020. At 31 December 2016, GBP38.9m (2015: GBP25.1m) was
drawn down under this facility.
The Group has a short-term facility of Renminbi 25m (GBP2.9m) of
which Renminbi 10m (GBP1.2m) was drawn down as at 31 December 2016.
The loan is secured against cash deposits in Hong Kong.
The Directors estimate that the fair value of all borrowings is
not materially different from the amounts stated in the
Consolidated Balance Sheet of GBP40,070,000 (2015:
GBP25,573,000).
11. Notes to the cash flow statement
---------------------------------------------------------
2016 2015
GBP'000 GBP'000
----------------------------------- --------- ---------
Operating profit 26,242 23,103
Adjustments for:
Depreciation and amortisation
charges 4,179 4,276
Loss on disposal of property,
plant and equipment and computer
software 666 719
Charge in respect of share-based
payment transactions 4,590 4,656
Operating cash flows before
movements in working capital 35,677 32,754
----------------------------------------- --------- ---------
Increase in receivables (29,634) (25,711)
Increase in payables 31,135 16,171
----------------------------------------- --------- ---------
Cash generated from operating
activities 37,178 23,214
----------------------------------------- --------- ---------
Reconciliation of net cash flow
12. to movement in net funds
--------------------------------------- --------- --------
2016 2015
GBP'000 GBP'000
--------------------------------------- --------- --------
Increase in cash and cash equivalents
in the year 10,428 5,589
Cash flow from increase in bank
loans (14,350) (1,672)
Foreign currency translation
differences 8,649 (415)
--------------------------------------------- --------- --------
Movement in net cash in the
year 4,727 3,504
Net cash at beginning of year 17,805 14,301
--------------------------------------------- --------- --------
Net cash at end of year 22,532 17,805
--------------------------------------------- --------- --------
Net cash is defined as cash and cash equivalents less bank
loans.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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