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RNS
Robert Walters PLC   -  RWA   

Half-year Report

Released 07:00 25-Jul-2019

RNS Number : 6408G
Robert Walters PLC
25 July 2019
 

 

 

 

25 July 2019

ROBERT WALTERS PLC

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

 

Half-yearly financial results for the six months ended 30 June 2019

 

RECORD FIRST HALF PERFORMANCE. PROFITS IN LINE WITH EXPECTATIONS

 

Robert Walters plc (LSE: RWA), the leading international recruitment group, today announces its half-yearly financial results for the six months ended 30 June 2019.

 

Financial and Operational Highlights

 


H1 2019

H1 2018

% change

% change (constant currency*)

Revenue

£634.5m

£625.9m

1%

1%

Gross profit (net fee income)

£204.9m

£188.6m

9%

7%

Operating profit

£21.9m**

£20.7m

6%**

4%

Profit before taxation

£21.7m**

£20.6m

5%**

4%

Basic earnings per share

22.5p**

21.2p

6%**

n/a

Interim dividend per share

4.5p

4.0p

13%

n/a

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

** Adjusted figures exclude the impact of IFRS 16 lease adjustments which only impact 2019 and respectively the statutory figures are £22.5m and £20.9m with the specific adjustments disclosed in note 12.

 

§ Solid first half performance with operating profit increasing 6%** (4%*) to a half-year record of £21.9m** (£21.5m*) (2018: £20.7m) despite uncertainty in a number of the Group's markets.

§ 74% of the Group's net fee income derived from our international businesses (2018: 72%).

§ Continued investment in growing the Group's international footprint. Launched in Mexico, a new country; and opened four new offices (Cologne, Nantes, Thailand's Eastern Seaboard and Utrecht) in existing countries.

§ Asia Pacific net fee income up 10% (8%*) to £80.5m (£78.7m*) (2018: £73.1m) and operating profit up 6%** (2%*) to £9.8m** (£9.4m*) (2018: £9.2m).

§ Good growth across Japan and Korea where we have a market-leading position and bilingual candidate shortages prevail. Hong Kong significantly impacted by political unrest.

§ Emerging market footprint across South East Asia continues to provide a strong platform for long-term growth.

§ Single digit* growth in net fee income across Australia with Melbourne and Sydney performing well.

§ Europe net fee income up 10% (11%*) to £54.0m (£54.3m*) (2018: £48.9m) and operating profit up 5%** (6%*) to £7.5m** (£7.6m*) (2018: £7.1m).

§ Good performance across the region underpinned by the blend of permanent, contract and interim revenue streams.

§ Strong bounce-back in France, the region's largest business following the impact of the gilet jaunes protests during the first quarter.

§ Benelux, Germany and Spain all performing well; delivering increases in both net fee income and operating profit.

§ UK net fee income up 1% to £52.9m (2018: £52.6m) producing an operating profit of £4.1m** (2018: £4.2m).

§ Robust performance against a backdrop of political turmoil which impacted both candidate and client confidence as the period progressed.

§ Growth strongest in the UK regions. In London, pockets of strong demand existed in both financial services and technology.

§ Other International (the Americas, Middle East and South Africa) net fee income up 25% (20%*) to £17.5m (£16.7m*) (2018: £14.0m) producing 172%** (146%*) increase in operating profit to £0.5m** (£0.4m*) (2018: £0.2m).

§ Growth strongest across North America and the Middle East.

§ Fledgling business in Chile has started well and is already profitable.

§ 2.5m shares purchased through the Group's Employee Benefit Trust at an average price of £5.99 for £15.0m.

§ Group headcount increased by 8% to 4,323 (30 June 2018: 3,996).

§ Strong balance sheet with net cash of £54.4m as at 30 June 2019 (30 June 2018: £24.8m).

 

Robert Walters, Chief Executive, said:

 

"The Group produced a solid first half performance, increasing operating profit by 6%** (4%*) to a first half record of £21.9m** (£21.5m*) despite political and economic uncertainty in some of the Group's markets. We are particularly encouraged by double digit net fee income growth in Japan and France, the Group's two largest markets.

 

"Our ability to produce this profitable growth is testament to the diversity the Group now has internationally, with a footprint spanning 31 countries, as well as the breadth of our offering to clients and candidates covering permanent, contract and interim recruitment and recruitment process outsourcing.

 

"Trading remains in line with market expectations for the full year and the Group is well positioned to continue to maximise market opportunities as they arise."

 

The Company will be holding a presentation for analysts at 10.00am today at Robert Walters, 11 Slingsby Place, St Martin's Courtyard, London WC2E 9AB.

 

The Company will publish a trading update for the third quarter ending 30 September 2019 on 9 October 2019.

 

Further information

 

Robert Walters plc

Robert Walters, Chief Executive

Alan Bannatyne, Chief Financial Officer

 

+44 (0) 20 7379 3333

Portland Communications

Steffan Williams

Simon Hamer

Lauren Gallagher

+44 (0) 20 7554 1840

 

About Robert Walters

 

Robert Walters is a market-leading international specialist professional recruitment group with over 4,300 staff spanning 31 countries. We specialise in the placement of the highest calibre professionals across the disciplines of accountancy and finance, banking, engineering, HR, IT, legal, sales, marketing, secretarial and support and supply chain and procurement. Our client base ranges from the world's leading blue-chip corporates and financial services organisations through to SMEs and start-ups. The Group's outsourcing division, Resource Solutions is a market leader in recruitment process outsourcing and managed services.

 

www.robertwalters.com

 

Forward looking statements

 

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



 

Robert Walters plc

Half-yearly financial results for the six months ended 30 June 2019

 

Half-yearly Management Report

The Group delivered a solid first half performance increasing operating profit by 6%** (4%*) to £21.9m** (£21.5m*) (2018: £20.7m) despite uncertainty in a number of the Group's markets. 

 

Revenue was up 1% (1%*) to £634.5m (£632.7m*) (2018: £625.9m) and gross profit (net fee income) increased by 9% (7%*) to £204.9m (£202.7m*) (2018: £188.6m). Profit before taxation increased 5%** (4%*) to £21.7m** (£21.3m*) (2018: £20.6m). The Group has a strong balance sheet with net cash of £54.4m as at 30 June 2019 (30 June 2018: £24.8m).

 

The diversity of the Group's international footprint across both emerging and established recruitment markets continues to underpin our ability to deliver profitable growth whilst uncertainties such as Brexit, trade wars, gilet jaunes protests and political unrest in Hong Kong disrupt client and candidate confidence. International diversification is a key strategic pillar for the Group and during the first half we have launched in Mexico, a new country; and opened four additional offices (Cologne, Nantes, Thailand's Eastern Seaboard and Utrecht) in existing markets. 74% (2018: 72%) of the Group's net fee income is now derived from our international businesses.

 

The Group's second strategic pillar, discipline diversification, has also enabled the Group to grow into newer disciplines such as fintech, cyber, digital and technology whilst maintaining strength in core disciplines such as accounting and finance, legal, HR and sales and marketing. Our blend of revenue streams covering permanent, contract and interim recruitment and the portfolio of services we provide covering specialist professional recruitment and recruitment process outsourcing ensures we are well placed to meet the ever-evolving needs of both our candidates and clients, even when market conditions are tight.

 

Permanent recruitment currently represents 69% (2018: 69%) of the Group's recruitment net fee income. Group headcount now stands at 4,323 (30 June 2018: 3,996), an 8% increase year-on-year, with growth largely focused in our Asia Pacific, European and Americas businesses.

 

Asia Pacific (39% of net fee income)

Revenue was £197.4m (2018: £189.7m) and net fee income increased by 10% (8%*) to £80.5m (£78.7m*) (2018: £73.1m) delivering a 6%** (2%*) increase in operating profit to £9.8m** (£9.4m*) (2018: £9.2m).

 

In Asia, where the Group continues to enjoy an unrivalled footprint and an acute shortage of bilingual professionals prevails, Japan and Korea continued to deliver good growth and in South East Asia, Malaysia, Thailand and the Philippines were the most notable performers. Market conditions have been tough in Malaysia over the last eighteen months and it was positive to see encouraging signs of recovery. In Greater China, Hong Kong was significantly impacted in the second quarter by political unrest, whereas Mainland China, despite trade tariff concerns, delivered growth in both net fee income and operating profit.

 

In Australia, we saw single digit* net fee income growth and a mixed state by state performance, with Melbourne and Sydney performing well and conditions more challenging in Western Australia and regional New South Wales. Our business in New Zealand continues to be a market leader, with our office in Wellington in particular performing well.

 

Resource Solutions continued to grow net fee income and secured two new client wins.

 

Europe (26% of net fee income)

Revenue was £125.8m (2018: £114.1m) and net fee income increased by 10% (11%*) to £54.0m (£54.3m*) (2018: £48.9m) delivering a 5%** (6%*) increase in operating profit to £7.5m** (£7.6m*) (2018: £7.1m).

 

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

 

France, our largest business in the region, bounced back strongly from a gilet jaunes impacted first quarter, delivering a 12%* increase in net fee income for the first half. Our Benelux business has performed well across permanent, contract and interim, and Spain goes from strength to strength growing both net fee income and operating profit by more than 15%*. Germany, a high potential growth market, where the Group now has four offices, grew both net fee income and operating profit in excess of 40%*.

 

United Kingdom (26% of net fee income)

Revenue in the UK was £293.2m (2018: £306.7m) and net fee income increased by 1% to £52.9m (2018: £52.6m) delivering an operating profit of £4.1m** (2018: £4.2m).

 

Political and economic uncertainty related to Brexit increasingly impacted client and candidate confidence as the period progressed. Nevertheless, our UK business did manage to grow net fee income against tough comparatives.  Activity levels were stronger outside of London with our offices in Milton Keynes and Birmingham in particular performing well, and technology as a sector delivering good growth. In London, market conditions were more muted but financial services, particularly buy-side in risk and compliance, and technology did see growth. The emergence of London as a global centre for the fintech industry has also proven beneficial.

 

Resource Solutions delivered single digit growth in net fee income and won four new client deals covering the professional services, financial services and entertainment sectors.

 

Other International (9% of net fee income)

Other International comprises the Americas, Middle East and South Africa. Revenue was £18.1m (2018: £15.4m), net fee income was up 25% (20%*) to £17.5m (£16.7m*) (2018: £14.0m) delivering an operating profit of £0.5m** (£0.4m*) (2018: £0.2m).

 

Our footprint across Latin America continues to grow with the addition of Chile last year and Mexico most recently. Chile has started well and is already profitable. In North America, San Francisco has been the standout performer as the Silicon Valley effect shows no sign of slowing. Elsewhere, our business in the Middle East had a record first half, whilst South Africa, where market conditions have been tough, performed well. 

 

Cash flow

The Group maintained a strong net cash position of £54.4m as at 30 June 2019 (30 June 2018: £24.8m). Working capital in the period has increased by £13.7m and notable cash outflows included a dividend of £7.5m, £7.1m of tax payments and capital expenditure of £4.7m. During the period, 2.5m shares have been purchased through the Group's Employee Benefit Trust at an average price of £5.99 for £15.0m.

 

Dividend

The interim dividend will be increased by 13% to 4.5p per share (2018: 4.0p) and will be paid on 18 October 2019 to those shareholders on the Company's register as at 6 September 2019.

 

Board Changes

As announced at the Group's Annual General Meeting, Giles Daubeney stepped down from the Board and his role as Deputy CEO on 17 May 2019.

 

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

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

 

The other principal risks and uncertainties affecting the Group's business activities remain those detailed within the Principal Risks and Uncertainties section of the Annual Report and Accounts for the year ended 31 December 2018, namely the economic environment, business model, people management, brand and reputation, laws and regulation and technology. The Board does not foresee a material change in respect of these factors for the remainder of the year.



Outlook

Trading remains in line with market expectations for the full year and the Group is well positioned to continue to maximise market opportunities as they arise.

 

Carol Hui

Robert Walters

Chairman

Chief Executive

24 July 2019


 

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

** Adjusted figures have been calculated to eliminate the impact of IFRS 16 leases adjustments.

 



ROBERT WALTERS PLC

Half-yearly Financial Results 2019

CONDENSED CONSOLIDATED INCOME STATEMENT

 

 



2019


2018


2018



6 mths to


6 mths to


12 mths to



30 June


30 June


31 December



Unaudited


Unaudited


Audited


Note

£s millions


£s millions


£s millions








Revenue

4

634.5


625.9


1,233.2

Cost of sales


(429.6)


(437.3)


(841.2)

Gross profit

4

204.9


188.6


392.0

Administrative expenses


(182.4)


(167.9)


(342.3)

Operating profit

4

22.5


20.7


49.7

Finance income


0.2


0.2


0.5

Finance costs


(1.9)


(0.3)


(1.0)

Gain (loss) on foreign exchange


0.1


(0.0)


(0.1)

Profit before taxation

4

20.9


20.6


49.1

Taxation

5

(5.7)


(5.5)


(13.5)

Profit for the period


15.2


15.1


35.6








Earnings per share (pence):

7






Basic


21.7


21.2


50.4

Diluted


19.9


19.2


45.8

 

Adjusted results excluding IFRS 16 Leases:

12






Adjusted operating profit


21.9


20.7


49.7

Adjusted profit before taxation


21.7


20.6


49.1

 

Adjusted earnings per share (pence):

12






Basic


22.5


21.2


50.4

Diluted


20.7


19.2


45.8

 

The amounts above relate to continuing operations.

 

 

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME AND EXPENSE

 



2019


2018


2018



6 mths to


6 mths to


12 mths to



30 June


30 June


31 December



Unaudited


Unaudited


Audited



£s millions


£s millions


£s millions

Profit for the period


15.2


15.1


35.6

Items that may be reclassified subsequently to profit or loss:







Exchange differences on translation of overseas operations


1.0


(0.3)


2.3

Total comprehensive income for the period


16.2


14.8


37.9
























ROBERT WALTERS PLC

Half-yearly Financial Results 2019

CONDENSED CONSOLIDATED BALANCE SHEET

 



2019

 


2018

 


2018

 



30 June


30 June


31 December



Unaudited


Unaudited


Audited


Note

£s millions


£s millions


£s millions

Non-current assets







Intangible assets


11.9


11.4


11.2

Property, plant and equipment


11.6


9.6


10.6

Right-of-use assets

12

80.3


-


-

Deferred tax assets


10.9


10.3


12.4



114.7


31.3


34.2








Current assets







Trade and other receivables


236.9


250.6


231.0

Corporation tax receivables


5.6


1.6


4.7

Cash and cash equivalents


81.8


51.3


79.9



324.3


303.5


315.6

Total assets


439.0


334.8


349.8








Current liabilities







Trade and other payables


(166.8)


(166.2)


(176.2)

Corporation tax liabilities


(11.1)


(6.0)


(11.8)

Bank overdrafts and loans

9

(27.4)


(26.5)


(5.7)

Lease liabilities

12

(17.7)


-


-

Provisions


(1.4)


(1.0)


(1.6)



(224.4)


(199.7)


(195.3)

Net current assets


99.9


103.8


120.3








Non-current liabilities







Lease liabilities

12

(65.0)


-


-

Provisions


(1.7)


(1.9)


(1.7)



(66.7)


(1.9)


(1.7)

Total liabilities


(291.1)


(201.6)


(197.0)

Net assets


147.9


133.2


152.8








Equity







Share capital


16.0


15.9


15.9

Share premium


22.0


22.0


22.0

Other reserves


(71.8)


(71.8)


(71.8)

Own shares held


(26.3)


(13.2)


(18.3)

Treasury shares held


(9.1)


(9.1)


(9.1)

Foreign exchange reserves


15.6


12.0


14.6

Retained earnings


201.5


177.4


199.5

Total equity


147.9


133.2


152.8

 



ROBERT WALTERS PLC

Half-yearly Financial Results 2019

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

 



2019


2018


2018

 



6 mths to


6 mths to


12 mths to

 



30 June


30 June


31 December

 



Unaudited


Unaudited


Audited

 


Note

£s millions


£s millions


£s millions

 

Cash generated from operating activities

8

22.2


8.3


73.4

 

Income taxes paid


(7.1)

(4.6)


(10.7)

 

Net cash generated from operating activities


15.1


3.7


62.7

 








 

Investing activities







 

Interest received


0.2


0.2


0.5

 

Purchases of computer software


(1.4)


(0.6)


(0.6)

 

Purchases of property, plant and equipment


(3.3)


(2.2)


(5.7)

 

Net cash used in investing activities


(4.5)


(2.6)


(5.8)

 








 

Financing activities







 

Equity dividends paid


(7.5)


(6.6)


(9.5)

 

Proceeds from issue of equity


0.1


0.1


0.1

 

Interest paid on bank borrowing


(0.5)


(0.3)


(1.0)


Interest on lease liabilities

12

(1.4)


-


-


Principal paid on finance leases


(6.9)


-


-


Proceeds from bank loans


21.7


0.6


0.5

 

Repayment of bank loans


-


(4.9)


(25.7)

 

Share buy-back and cancellation


-


-


-

 

Purchase of own shares


(15.0)


-


(5.1)

 

Proceeds from exercise of share options


0.3


0.0


0.0

 

Net cash used in financing activities


(9.2)


(11.1)


(40.7)

 

Net increase (decrease) in cash and cash equivalents


1.4

(10.0)


16.2









 

Cash and cash equivalents at beginning of the period


79.9


61.9


61.9

 

Effect of foreign exchange rate changes


0.4


(0.6)


1.8

 

Cash and cash equivalents at end of the period


81.8

51.3


79.9

 


ROBERT WALTERS PLC

Half-yearly Financial Results 2019

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 


Share capital

Other reserves

Own shares held

                    

 

 

Total equity


£s millions

£s millions

£s millions

£s millions

£s millions

£s millions

£s millions

£s millions

Balance at 1 January 2018

15.9

21.9

(71.8)

(18.2)

(9.1)

12.3

170.8

121.8

Profit for the period

-

-

-

-

-

-

15.1

15.1

Foreign currency translation differences

-

-

-

-

-

(0.3)

-

(0.3)

Total comprehensive income and expense for the period

-

-

-

-

-

(0.3)

15.1

14.8

Dividends paid

-

-

-

-

-

-

(6.6)

(6.6)

Credit to equity for equity-settled share-based payments

-

-

-

-

-

-

2.8

2.8

Deferred tax on share-based payment transactions

-

-

-

-

-

-

0.3

0.3

Transfer to own shares held on exercise of equity incentives

-

-

-

5.0

-

-

(5.0)

-

New shares issued and own shares purchased

0.0

0.1

-

0.0

-

-

-

0.1

Unaudited balance at 30 June 2018

15.9

22.0

(71.8)

(13.2)

(9.1)

12.0

177.4

133.2

Profit for the period

-

-

-

-

-

-

20.5

20.5

Foreign currency translation differences

-

-

-

-

-

2.6

 -

2.6

Total comprehensive income and expense for the period

-

-

-

-

-

2.6

20.5

23.1

Dividends paid

-

-

-

-

-

-

(2.8)

(2.8)

Credit to equity for equity-settled share-based payments

-

-

-

-

-

-

2.8

2.8

Deferred tax on share-based payment transactions

-

-

-

-

-

-

1.6

1.6

Transfer to own shares held on exercise of equity incentives

-

-

-

-

-

-

(0.0)

(0.0)

New shares issued and own shares purchased

0.0

0.0

-

(5.1)

-

-

-

(5.1)

Balance at 31 December 2018

15.9

22.0

(71.8)

(18.3)

(9.1)

14.6

199.5

152.8

Profit for the period

-

-

-

-

-

-

15.2

15.2

Foreign currency translation differences

-

-

-

-

-

1.0

-

1.0

Total comprehensive income and expense for the period

-

-

-

-

-

1.0

15.2

16.2

Dividends paid

-

-

-

-

-

-

(7.5)

(7.5)

Credit to equity for equity-settled share-based payments

-

-

-

-

-

-

2.7

2.7

Deferred tax on share-based payment transactions

-

-

-

-

-

-

(1.7)

(1.7)

Transfer of own shares held on exercise of equity incentives

-

-

-

6.7

-

-

(6.7)

-

New shares issued and own shares purchased

0.1

0.0

-

(14.7)

-

-

-

(14.6)

Unaudited balance at 30 June 2019

16.0

22.0

(71.8)

(26.3)

(9.1)

15.6

201.5

147.9



ROBERT WALTERS PLC

Half-yearly Financial Results 2019

NOTES TO THE CONDENSED SET OF FINANCIAL STATEMENTS

 

1.         Statement of accounting policies 

 

Basis of preparation

The annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.

 

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

 

The accounting policies applied by the Group are as set out in detail in the Annual Report and Accounts for the year ended 31 December 2018.

 

IFRS 16 Leases was adopted from 1 January 2019, the new accounting policy and impact of the adoption of IFRS 16 Leases on the Group's financial statements is included in note 12 and stated in the Annual Report and Accounts for the year ended 31 December 2018.

 

The Group was profitable for the period and has considerable financial resources, including £54.4m of net cash at 30 June 2019, together with a diverse range of clients and suppliers across different geographic locations and sectors. As a consequence, the Directors believe the Group is well placed to manage its business risks successfully.

 

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

 

2.         Financial information

 

The financial information on pages 6 to 15 was formally approved by the Board of Directors on 24 July 2019. The financial information set out in this document does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006.

 

Statutory accounts prepared under IFRSs for the year ended 31 December 2018 for Robert Walters plc have been delivered to the Registrar of Companies. The auditor's report on these accounts was not qualified, did not draw attention to any matters by way of emphasis and did not contain statements under section 498(2) or (3) of the Companies Act 2006.

 

The financial information in respect of the period ended 30 June 2019 is unaudited but has been reviewed by the Company's auditor. The financial information in respect of the period ended 30 June 2018 is also unaudited.

 

3.         Currency conversion

 

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

 

The Condensed Consolidated Income Statement for the period ended 30 June 2019 has been prepared using, among other currencies, the average exchange rate of €1.1449 to the Pound (period ended 30 June 2018: €1.1363; year ended 31 December 2018: €1.1130); ¥142.3428 to the Pound (30 June 2018: ¥149.5392; 31 December 2018: ¥147.3219) and AU$1.8309 to the Pound (30 June 2018: AU$1.7836; 31 December 2018: AU$1.7855).

 

The Condensed Consolidated Balance Sheet as at 30 June 2019 has been prepared using the exchange rates on that day of €1.1159 to the Pound (30 June 2018: €1.1298; 31 December 2018: €1.1126); ¥136.1260 to the Pound (30 June 2018: ¥146.1260; 31 December 2018: ¥140.1091) and AU$1.8055 to the Pound (30 June 2018: AU$1.7815; 31 December 2018: AU$1.8049).



ROBERT WALTERS PLC

Half-yearly Financial Results 2019

 

4.

Segmental information








2019


2018


2018



6 mths to


6 mths to


12 mths to



30 June


30 June


31 December



Unaudited


Unaudited


Audited



£s millions


£s millions


£s millions

i)

Revenue:







Asia Pacific

197.4


189.7


394.0


UK

293.2


306.7


571.9


Europe

125.8


114.1


237.1


Other International

18.1


15.4


30.2



634.5


625.9


1,233.2








ii)

Gross profit (net fee income):







Asia Pacific

80.5


73.1


154.1


UK

52.9


52.6


107.5


Europe

54.0


48.9


100.7


Other International

17.5


14.0


29.7



204.9


188.6


392.0








iii)

Profit before taxation:







Asia Pacific

10.0


9.2


21.2


UK

4.2


4.2


12.4


Europe

7.7


7.1


15.0


Other International

0.6


0.2


1.1


Operating profit

22.5


20.7


49.7


Net finance costs

(1.6)


(0.1)


(0.6)


Profit before taxation

20.9


20.6


49.1








iv)

Total assets:







Asia Pacific

96.2


66.1


70.8


UK

140.8


141.5


110.5


Europe

80.8


53.4


59.5


Other International

20.5


10.6


12.0


Unallocated corporate assets*

100.7


63.2


97.0



439.0


334.8


349.8








v)

Total liabilities:







Asia Pacific

(62.6)


(36.7)


(39.2)


UK

(127.8)


(98.4)


(99.0)


Europe

(50.9)


(29.1)


(35.4)


Other International

(14.1)


(5.0)


(5.9)


Unallocated corporate liabilities*

(35.7)


(32.4)


(17.5)



(291.1)


(201.6)


(197.0)








 

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



ROBERT WALTERS PLC

Half-yearly Financial Results 2019

 

4.

Segmental information (continued)








2019


2018


2018



6 mths to


6 mths to


12 mths to



30 June


30 June


31 December



Unaudited


Unaudited


Audited



£s millions


£s millions


£s millions

vi)

Revenue by business grouping:







Robert Walters

356.4


338.6


702.1


Resource Solutions

278.1


287.3


531.1



634.5


625.9


1,233.2

 

 

5.     

Taxation








2019


2018


2018



6 mths to


6 mths to


12 mths to



30 June


30 June


31 December



Unaudited


Unaudited


Audited



£s millions


£s millions


£s millions


Current tax

5.8


5.3


14.6


Deferred tax

(0.1)


0.2


(1.0)


Total tax charge for the period

5.7


5.5


13.6

 

The tax charge is based on the expected annual effective tax rate of 27.5% (2018: 26.8%) on profit before taxation. The effective tax rate is higher than the standard UK rate of 19%, primarily as a result of overseas taxation in Japan, Australia and France, and the impact of adjustments to accounting profit in the tax calculation and disallowable costs.

 

6.

Dividends








2019


2018


2018



6 mths to


6 mths to


12 mths to



30 June


30 June


31 December



Unaudited


Unaudited


Audited



£s millions


£s millions


£s millions


Amounts recognised as distributions to equity holders in the period:







Final dividend for 2018 of 10.70p (2017: 9.30p)

7.5


6.6


7.1


Interim dividend for 2018 of 4.00p (2017: 2.75p)

-


-


2.8



7.5


6.6


9.9









Proposed interim dividend for 2019 of 4.50p (2018: 4.00p)

3.2


2.8


N/A

 

The proposed interim dividend was approved by the Board on 24 July 2019 and has not been included as a liability at 30 June 2019.


ROBERT WALTERS PLC

Half-yearly Financial Results 2019

 

 

7.

Earnings per share


The calculation of earnings per ordinary share is based on the profit for the period attributable to equity holders of the parent and the weighted average number of shares of the Company.

 



2019


2018


2018



6 mths to


6 mths to


12 mths to



30 June


30 June


31 December



Unaudited


Unaudited


Audited



£s millions


£s millions


£s millions


Profit for the period attributable to equity holders of the parent

15.2


15.1


35.6


IFRS 16 leases adjustment (note 12)

0.6


-


-


Adjusted profit for the period attributable to equity holders of the parent**

15.8


15.1


35.6









** Adjusted profit for the period has been calculated to eliminate the impact of the IFRS 16 Leases adjustments as disclosed in note 12.







Number of shares


Number of shares


Number of shares


Weighted average number of shares:







Shares in issue throughout the period

79,652,285


79,374,520


79,374,520


Shares issued in the period

187,120


125,389


196,213


Shares cancelled in the period

-


-


-


Treasury and own shares held

(9,659,696)


(8,543,036)


(9,043,151)


For basic earnings per share

70,179,709


70,956,873


70,527,582


Outstanding share options

6,087,934


7,370,243


7,054,450


For diluted earnings per share

76,267,643


78,327,116


77,582,032

 

 

8.     

Notes to the cash flow statement








2019


2018


2018



6 mths to


6 mths to


12 mths to



30 June


30 June


31 December



Unaudited


Unaudited


Audited



£s millions


£s millions


£s millions


Operating profit for the period

22.5

20.7


49.7


Adjustments for:






Depreciation and amortisation charges

10.7

2.5


5.2


Loss on disposal of property, plant and equipment and computer software

0.0

0.1


0.4


Charge in respect of share-based payment transactions

2.7


2.8


5.7


Operating cash flows before movements in working capital

35.9

26.1


61.0


Increase in receivables

(5.3)


(23.0)


(1.1)


(Decrease) increase in payables

(8.4)

5.2


13.5


Cash generated from operating activities

22.2

8.3


73.4








 



ROBERT WALTERS PLC

Half-yearly Financial Results 2019

 

 

9.           Bank loans                                                                            

The Group has a committed financing facility of £60.0m, which expires in March 2023.

 

At 30 June 2019, £26.3m (30 June 2018: £25.4m) was drawn down under this facility.

 

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

 

The Group has a short-term facility of Renminbi 25m (£2.9m) of which Renminbi 10m (£1.1m) was drawn down as at 30 June 2019. The loan is secured against cash deposits in Hong Kong.

 

10.        Related party transactions

During the first six months of the year, there were related party transactions totalling £1,400 (30 June 2018: £45,000) with Tay Associates Limited, a related party through a Director of Robert Walters plc.

 

There were no outstanding balances as at 30 June 2019.

 

All transactions were undertaken on an arms-length basis.

 

11.        Registered office

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

 

12.        Changes in accounting policy

The Group has adopted the modified retrospective application of IFRS 16 Leases from 1 January 2019, and has not restated comparatives for the 2018 reporting period, in accordance with IFRS 16:C5(b). Consequently, the Group has recognised the reclassifications and the adjustments arising from the new leasing rules in the opening balance sheet on 1 January 2019.

 

Impact of the new definition of a lease

The Group has applied the practical expedient available on transition to IFRS 16 not to reassess whether a contract is or contains a lease. Accordingly, the definition of a lease in accordance with IAS 17 will continue to apply to those leases entered into before 1 January 2019.

 

The change in definition of a lease mainly relates to the concept of control. IFRS 16 distinguishes between leases and service contracts on the basis of whether the use of an identified asset is controlled by the customer. Control is considered to exist if the customer has:

·  The right to obtain substantially all of the economic benefits from the use of an identified asset; and

·  The right to direct the use of that asset.

 

The Group will apply the definition of a lease and related guidance set out in IFRS 16 to all lease contracts entered into on or after 1 January 2019. In preparation for the first time application of IFRS 16, the Group carried out an implementation project. The project has shown that the new definition in IFRS 16 will not change significantly the scope of contracts that meet the definition of a lease for the Group.

 

Impact on lessee accounting

Operating leases

IFRS 16 has impacted how the Group accounts for leases previously classified as operating leases under IAS 17, which were off balance sheet. On initial application of IFRS 16, for all leases (except as noted below), the Group has:

·      Recognised right of use assets and lease liabilities in the Consolidated Balance Sheet, initially measured at the present value of the future lease payments, discounted using the interest rate implicit in the lease or the lessee's incremental borrowing rate if this is not stated;

·      Recognised depreciation of right of use assets and interest on lease liabilities in the Consolidated Income Statement;

·      Separated the total amount of cash paid into a principal portion (presented within financing activities) and interest (presented within operating activities) in the Consolidated Cash Flow Statement.

 

The incremental borrowing rate is calculated on a lease by lease basis. The weighted average lessee's borrowing rate applied to the lease liabilities on 1 January 2019 was 3.38%.

 

Lease incentives (e.g. rent-free period) have been recognised as part of the measurement of the right of use assets and lease liabilities whereas under IAS 17 they resulted in the recognition of a lease liability incentive, amortised as a reduction of rental expenses on a straight-line basis.

 

Under IFRS 16, right of use assets will be tested for impairment in accordance with IAS 36 Impairment of Assets. This has replaced the previous requirement to recognise a provision for onerous lease contracts.

 

For short-term leases (lease term of 12 months or less) and leases of low value assets (less than £3,000), the Group has opted to recognise a lease expense on a straight-line basis as permitted by IFRS 16.

 

Adjustments recognised on adoption of IFRS 16

As at 1 January 2019, the Group has non cancellable operating lease commitments of £64.3m. An assessment indicates that £64.0m of these arrangements relate to leases other than short-term leases and leases of low value assets. Taking into consideration the exercise of options to extend where it is reasonably certain these options will be exercised, the Group has recognised a right of use asset of £82.1m and a corresponding lease liability of £83.7m in respect of these leases. The provision for onerous lease contracts which was required under IAS 17 of £0.7m, rental prepayments of £1.3m and lease liability incentives of £2.1m previously recognised in respect of the operating leases have been derecognised and the amount factored into the measurement of the right to use assets and lease liabilities.

 

The net impact on retained earnings at 30 June 2019 was a decrease of £0.6m. This adjustment contains the reversal of the rental charge under IAS 17 of £8.0m, an amortisation charge of £7.4m, finance costs of £1.4m and a reduction in corporation tax of £0.2m.

 

Impact on segment disclosures and earnings per share

The change in accounting policy has resulted in a decrease in the Group's profit before taxation, for the six months ended 30 June 2019, and an increase in the total assets and total liabilities as at 30 June 2019. The following segments were affected by the change in policy:

 








PBT

£s millions

Assets

£s millions

Liabilities

£s millions

2019:





Asia Pacific


0.2

25.4

(26.0)

UK


0.1

26.3

(27.6)

Europe


0.2

20.8

(21.0)

Other International


0.1

7.8

(8.1)

Unallocated corporate assets and liabilities*


(1.4)

0.0

0.0



(0.8)

80.3

(82.7)

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

 

Earnings per share decreased by 0.8p per share for the six months to 30 June 2019 as a result of the adoption of IFRS 16 Leases.


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Half-year Report - RNS