Company Announcements
Final Results
Related Companies
By LSE RNS
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 |
£998.5m |
£812.7m |
23% |
15% |
|
Gross profit (net fee income) |
£278.3m |
£234.4m |
19% |
8% |
|
Operating profit |
£26.2m |
£23.1m |
14% |
4% |
|
Profit before taxation |
£28.1m |
£22.4m |
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 £117.6m (£101.8m*) (2015: £96.3m) and operating profit up 13% (0%*) to £14.7m (£12.9m*) (2015: £12.9m).
§ 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 £86.7m (2015: £80.4m) and operating profit up 4% to £6.4m (2015: £6.2m).
§ 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 £60.1m (£53.2m*) (2015: £46.3m) and operating profit up 27% (19%*) to £4.2m (£3.9m*) (2015: £3.3m).
§ 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 £14.0m (£11.8m*) (2015: £11.5m) and operating profit up 36% (16%*) to £1.0m (£0.8m*) (2015: £0.7m).
§ 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 £22.6m at an average price of £3.10. Since 31 December 2016, a further 2.1m shares have been purchased and cancelled at an average price of £3.79 for £8.0m.
§ Strong cash generation with net cash of £22.5m as at 31 December 2016 (31 December 2015: £17.8m).
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 £28.1m. 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.
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 £28.1m (2015: £22.4m). 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 £998.5m (2015: £812.7m) and gross profit (net fee income) increased by 19% (8%*) to £278.3m (2015: £234.4m). Operating profit was up 14% (4%*) to £26.2m (2015: £23.1m) 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 £22.5m as at 31 December 2016 (31 December 2015: £17.8m). 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 £3.04 for £19.2m through the Group's Employee Benefit Trust. The Group also purchased 1m shares at an average price of £3.44 for £3.4m, which were subsequently cancelled. A further 2.1m shares have been purchased and cancelled at an average price of £3.79 for £8.0m 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 £348.6m (2015: £285.1m) and net fee income increased by 22% (6%*) to £117.6m (£101.8m*) (2015: £96.3m) and operating profit increased by 13% (0%*) to £14.7m (£12.9m*) (2015: £12.9m).
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 £480.6m (2015: £403.4m), net fee income increased by 8% to £86.7m (2015: £80.4m) and operating profit increased by 4% to £6.4m (2015: £6.2m).
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 £147.0m (2015: £112.7m) and net fee income increased by 30% (15%*) to £60.1m (£53.2m*) (2015: £46.3m) producing a 27% (19%*) increase in operating profit to £4.2m (£3.9m*) (2015: £3.3m).
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 £22.3m (2015: £11.5m) and net fee income increased by 22% (3%*) to £14.0m (£11.8m*) (2015: £11.5m) producing a 36% (16%*) increase in operating profit to £1.0m (£0.8m*) (2015: £0.7m).
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
INDEPENDENT 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, which accounted for 17% of the revenue of the Group in 2016 (2015: 17%), the Group's policy (as detailed in the Accounting Policies note) is to record revenue when specific recognition criteria have been met, namely where a candidate accepts a position in writing and a start date is agreed. Accordingly revenue is accrued in respect of permanent placements meeting the above criteria but which remain unbilled.
A provision is made for placements expected to be cancelled prior to the start date (back-outs) on the basis of past experience.
Determining the level of provision required for back-outs involves a significant degree of management judgement.
For temporary placements, which accounted for 83% of the revenue of the Group in 2016 (2015: 83%), the Group's policy (as detailed in the Accounting Policies note) is to record revenue as the service is provided. Accordingly revenue is accrued in respect of temporary placements where temporary staff 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.
|
Our testing involved agreeing a sample of permanent placement fees earned but not invoiced to written evidence of candidate acceptance, including confirmation of start date.
We assessed the level of provision held at the year-end against the average level of back-outs experienced on a monthly basis during the year. We also evaluated the back-outs following the year end.
We reviewed a sample of timesheets received after the year end date, to ensure that revenue in respect of these had been recorded in the correct period.
We recalculated the accrued income balance relating to temporary placements, and assessed the cut-off applied to the receipt of post year-end timesheets relating to services provided before year end. Our testing also involved a retrospective review of timesheets submitted during 2016 which related to 2015. This was done to assess the likely level of accrued income required at 31 December 2016 for 'missing' timesheets.
|
|
Recoverability of trade receivables and bad debt provisioning Gross trade receivables at 31 December 2016 were £187.0m (2015: £140.7m).
Whilst historically the Group has not suffered from a significant level of write-offs, given the relatively small balances due from a large number of customers, significant management judgement is required in estimating the appropriate level of provision against trade receivables.
The Group's policy is to record a provision based on anticipated recoverable cash flows, nature of counterparty, past due date, geographical location, the costs of recovery and the fair value of any guarantee received, as detailed in the Accounting Policies note. In all full scope locations, we evaluated the design and implementation of the internal controls in place to ensure that an appropriate provision is recognised against trade receivables. In the UK we performed additional testing to confirm whether these internal controls were operating effectively.
We focussed our testing on higher risk balances on the basis of the ageing profile, collection history and the credit quality of the customer.
|
We agreed a sample of balances to subsequent cash receipts and other supporting documentation (such as subcontractor timesheets) which supported the recoverability of the balance. For certain components, debtor confirmations were also sent out for a sample of balances.
We have evaluated the diligence applied by management in determining the risk associated with the recoverability of the receivables balance and tested the adequacy of provisioning by recalculating the provision for significantly aged balances, and considering receivables where the ageing profile of debtors has deteriorated or there is evidence that the credit quality of the debtor is considered a risk, and challenged management to justify why no provision is required.
We analysed the make-up of the year end provision for bad debts and assessed it against the bad debt cost experienced in the year. Additionally, we evaluated post year-end developments to determine whether any provisions required reversal or further provision. We did not identify any misstatements or significant deficiencies as a result of our audit work.
We concluded that the 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 YEAR ENDED 31 DECEMBER 2016
|
|
2016 |
2015 |
|
|
£'000 |
£'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 YEAR ENDED 31 DECEMBER 2016
|
|
2016 |
2015 |
|
|
£'000 |
£'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 |
|
|
£'000 |
£'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 YEAR ENDED 31 DECEMBER 2016
|
|
2016 |
2015 |
|
|
£'000 |
£'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 YEAR ENDED 31 DECEMBER 2016
|
|
Share capital |
Share premium |
Other reserves |
Own shares held |
Treasury shares held |
Foreign exchange reserves |
Retained earnings |
Total equity |
|
Group |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'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 |
|
Adjustment¹ |
- |
- |
- |
- |
- |
- |
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 |
¹An immaterial adjustment of £1.25 million has been made to increase brought forward retained earnings. £0.195 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 YEAR ENDED 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 £22.5m 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 |
|
|
|
£'000 |
£'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 |
|
||
|
|
|
£'000 |
£'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 - 2016 |
P,P&E and software additions |
Depreciation and amortisation |
Non-current assets |
Assets |
Liabilities |
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'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 - 2015 |
P,P&E and software additions |
Depreciation and amortisation |
Non-current assets |
Assets |
Liabilities |
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'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 |
|
|
|
£'000 |
£'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 |
|
|
|
£'000 |
£'000 |
|
|
Interest on bank overdrafts |
841 |
588 |
|
|
Interest on bank loans |
54 |
42 |
|
|
Total borrowing costs |
895 |
630 |
|
3. |
Taxation |
||
|
|
|
2016 |
2015 |
|
|
|
£'000 |
£'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 |
|
|
|
£'000 |
£'000 |
|
|
Tax recognised directly in equity |
|
|
|
|
Tax on share-based payment transactions |
449 |
(602) |
|
4. |
Dividends |
||
|
|
|
2016 |
2015 |
|
|
|
£'000 |
£'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 £4,316,000 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 |
|
|
|
£'000 |
£'000 |
|
|
Profit for the year attributable to equity holders of the parent |
19,897 |
15,290 |
|
|
|
|
|
|
|
|
2016 |
2015 |
|
|
|
Number of shares |
Number 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 |
|||
|
|
|
Goodwill |
Computer software |
Total |
|
|
|
£'000 |
£'000 |
£'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 (£1,229,000) and the acquisition of the Dunhill Group in Australia (£6,847,000). The historical acquisition cost of Talent Spotter was £768,000, 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 |
|||||
|
|
|
Leasehold improvements £'000 |
Fixtures, fittings and office equipment £'000 |
Computer equipment £'000 |
Motor vehicles £'000 |
Total £'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 |
|
|
|
£'000 |
£'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 £1,716,000 (31 December 2015: £1,450,000). The movement in this provision during the year is a charge to administrative expenses in the income statement of £266,000 (2015: £39,000).
There is no material difference between the fair value and the carrying value of the Group's trade and other receivables.
|
9. |
Trade payables and other payables: amounts falling due within one year |
||
|
|
|
2016 |
2015 |
|
|
|
£'000 |
£'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 |
|
|
|
£'000 |
£'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 £45.0m which expires in December 2020. At 31 December 2016, £38.9m (2015: £25.1m) was drawn down under this facility.
The Group has a short-term facility of Renminbi 25m (£2.9m) of which Renminbi 10m (£1.2m) 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 £40,070,000 (2015: £25,573,000).
|
11. |
Notes to the cash flow statement |
||
|
|
|
2016 |
2015 |
|
|
|
£'000 |
£'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 |
|
12. |
Reconciliation of net cash flow to movement in net funds |
|
|
|
|
|
2016 |
2015 |
|
|
|
£'000 |
£'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
You are here: news > regulatory news
10 Lower Thames St,
London EC3R 6EN