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REG - Robert Walters PLC - Half-yearly financial results

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RNS Number : 9961T  Robert Walters PLC  28 July 2022

 

28 July 2022

 

ROBERT WALTERS PLC

(the "Company" or the "Group")

 

Half-yearly financial results for the six months ended 30 June 2022

 

RECORD FIRST HALF

 

Robert Walters plc (LSE: RWA), the leading international recruitment group,
today announces its half-yearly financial results for the six months ended 30
June 2022.

 

Financial and Operational Highlights

 

                                H1 2022   H1 2021   % change  % change (constant currency*)
 Revenue                        £538.6m   £468.2m   15%       16%
 Gross profit (net fee income)  £210.5m   £166.2m   27%       27%
 Operating profit               £27.7m    £24.1m    15%       17%
 Profit before taxation         £26.4m    £22.1m    19%       22%
 Basic earnings per share       27.5p     20.9p     32%       n/a
 Interim dividend per share     6.5p      5.4p      20%       n/a

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

 

Group highlights

§ Record first half performance with Group net fee income up 27% (27%*) to
£210.5m (£211.3m*) (2021: £166.2m) and

   operating profit rising by 15% (17%*) year-on-year to £27.7m (£28.4m*)
(2021: £24.1m).

§ Acute talent shortages and wage inflation across all geographies and
specialist professional disciplines. Fierce competition

   for talent as demand continues to outstrip supply.

§ Recruitment activity levels were strong across all forms of recruitment -
permanent, contract, interim and recruitment

   process outsourcing.

§ Permanent recruitment now represents 71% (2021: 67%) of the Group's net fee
income.

§ 82% (2021: 79%) of the Group's net fee income now derived from our
international businesses.

§ Opened a first office in Italy (Milan).

§ Group headcount up by 16% during the first half to 4,051 (31 December 2021:
3,484).

§ Group's hybrid working model has continued to operate successfully across
the globe underpinned by our long-term

   investment in technology.

§ The Group purchased 2,024,071 shares at an average price of £6.25 for
£12.7m through the Group's Employee Benefit Trust.

§ The Board has authorised a share buyback of up to £10m shares for
cancellation.

§ Strong balance sheet with net cash of £81.8m as at 30 June 2022 (30 June
2021: £122.8m).

 

Regional highlights

§ Asia Pacific net fee income up 27% (27%*) to £93.7m (£93.9m*) (2021:
£73.7m) and operating profit up 15% (17%*) to

   £16.2m (£16.5m*) (2021: £14.0m).

§ Europe net fee income up 35% (39%*) to £61.1m (£62.7m*) (2021: £45.2m)
and operating profit up 18% (24%*) to £7.3m

   (£7.7m*) (2021: £6.2m).

§ UK net fee income up 8% to £38.0m (2021: £35.2m) with operating profit
increasing by 8% to £3.6m (2021: £3.3m).

§ Other International (the Americas, Middle East and South Africa) net fee
income up 46% (38%*) to £17.7m (£16.7m*)

   (2021: £12.1m) and operating profit up 3% (11%*) to £0.6m (£0.7m*)
(2021: £0.6m).

 

Robert Walters, Chief Executive, said:

 

"The Group delivered a record first half performance with all regions growing
both net fee income and operating profit. An acute shortage of professionals
coupled with growing wage inflation has resulted in a significant increase in
job churn and a fierce competition for talent across all of the Group's
geographies and specialist disciplines.

 

"We have continued to invest in additional headcount during the first half to
ensure we are able to further capitalise on the current demand for talent that
exists across the globe.

 

"Looking ahead, we are yet to see signs of any slowdown in job market activity
despite the volatile macro-economic backdrop and inflationary pressure that is
being experienced across global markets. Current trading remains in line with
the recently upwardly revised market expectations."

 

The Company will publish a trading update for the third quarter ending 30
September 2022 on 11 October 2022.

 

Further information

 

 Robert Walters plc                        +44 (0) 20 7379 3333

 Robert Walters, Chief Executive

 Alan Bannatyne, Chief Financial Officer

 Williams Nicolson                         +44 (0) 77 6734 5563

 Steffan Williams

About Robert Walters Group

The Robert Walters Group is a market-leading international specialist
professional recruitment group with over 4,000 staff spanning 31 countries. We
specialise in the placement of the highest calibre professionals across the
disciplines of accountancy and finance, banking, engineering, healthcare, HR,
IT, legal, sales, marketing, secretarial and support and supply chain,
logistics 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.robertwaltersgroup.com (http://www.robertwaltersgroup.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 2022

 

Half-yearly Management Report

The Group delivered a record first half performance with profit before
taxation increasing by 19% (22%*) year-on-year to £26.4m (2021: £22.1m).
Activity levels were strong across all forms of recruitment - permanent,
contract, interim and recruitment process outsourcing - and the Group's
ability to provide an end-to-end recruitment solution to our clients and
candidates remains a key source of competitive advantage. Permanent
recruitment currently represents 71% (2021: 67%) of the Group's net fee
income.

 

All of the Group's regions delivered increases in both net fee income and
operating profit, with Asia Pacific and Europe delivering the standout
performances in terms of operating profit growth. A record high of 82% (2021:
79%) of the Group's net fee income is now derived from our international
businesses reflecting the strength of the Group's global brand and geographic
footprint. With Covid restrictions also easing across many countries, talent
has begun to move more frictionlessly across international borders and our
International Candidate Management function is once again proving a valuable
asset to the Group.

 

During the period, we continued to invest in growing the business to
capitalise on the acute talent shortages that exist right across both our
international footprint and our range of specialist disciplines. We have grown
our headcount by 16% since the beginning of the year and also opened our first
office in Italy, in Milan, and are excited about the opportunity to develop a
thriving business in one of Europe's largest economies.

 

Wage inflation continued to grow, creating significant churn in the job market
right across the globe as candidates capitalised on the salary premiums on
offer for job movers. With job churn high and the competition for talent
fierce, the Group was able to successfully increase fee margins during the
period and also benefited from higher candidate salary levels.

 

The Group's hybrid working model is operating successfully across the globe
underpinned by our long-term investment in technology - it was particularly
encouraging to receive excellent feedback on how the Group responded and
continues to respond to the needs of our people through our global employee
engagement survey that was launched in February. The health and wellbeing of
our people remains our number one priority and we will continue to listen to
feedback through regular surveys.

 

ESG

ESG remains a key priority and we continue to strive to ensure the Group is
adopting all relevant best practice. Highlights from the first half include:

 

 Activity                                      Progress
 Purpose                                       ·      The Group's purpose is to power people and organisations to
                                               fulfil their unique potential and it is the foundation that underpins what we
                                               do as a business.

                                               ·      During the first half, we helped over 23,700 people and 8,500
                                               organisations fulfil that unique potential through providing new careers and
                                               valued team members.
 Materiality Assessment                        ·      The Group engaged Sillion, a leading sustainability strategy and
                                               communications consultancy, to undertake a Group-wide ESG materiality
                                               assessment - the findings will be disclosed in the Group's annual report and
                                               will further inform and influence our policies and approach moving forward.
 Investment in our People                      ·      We continued to invest in the development of our people with over
                                               1,200 training, coaching and leadership sessions delivered across the globe
                                               during the first half.

                                               ·      589 (60% female) promotions.
 Corporate Social Responsibility               ·      Investment and resourcing and mentoring support to GoodJob, an
                                               initiative co-founded by one of the Group's consultants, to help displaced
                                               Ukrainian professionals find meaningful employment.

                                               ·      The Group has employed six Ukrainian professionals within our
                                               Technology & Transformation team.

                                               ·      Donation to RefuAid, a charity supporting refugees in the UK.
 Equity, Diversity & Inclusion (ED&I)          ·      The Group's Diversity Audit client service won two further
                                               industry awards including the Innovation of the Year Award at the Firm Awards
                                               2022.

                                               ·      Hosted our second global ED&I Webinar for clients with our
                                               global ED&I partner, Vercida Consulting.

                                               ·      Held a series of internal and external events and campaigns on a
                                               broad range of initiatives such as Pride, Neurodiversity and International
                                               Women's Day.

 

Technology and Insights

The roll out of Zenith, the Group's new customer relationship management
system, progressed well through the first half with successful deployments to
our businesses in the US, Canada, Brazil, Mexico and Chile. The next stage of
the roll out will cover the South-East Asia region.

 

The Group continued to provide market insights and analysis to our clients and
candidates by harnessing comprehensive internal and external data sources to
better inform recruitment searches and decision-making. This has proven to be
a source of competitive advantage and a successful revenue-generating tool.

 

Group Financials

Revenue was up 15% (16%*) to £538.6m (£541.3m*) (2021: £468.2m) and gross
profit (net fee income) increased by 27% (27%*) to £210.5m (£211.3m*) (2021:
£166.2m). Operating profit increased by 15% (17%*) to £27.7m (£28.4m*)
(2021: £24.1m). Profit before taxation increased by 19% (22%*) to £26.4m
(£27.1m*) (2021: £22.1m).

 

The Group has a strong balance sheet with net cash of £81.8m as at 30 June
2022 (30 June 2021: £122.8m). The Group also has a £60.0m committed loan
facility due for renewal in 2025. At 30 June 2022, £26.6m (2021: £9.4m) was
drawn down under this facility.

 

Asia Pacific (45% of net fee income)

Revenue was £240.1m (2021: £194.0m) and net fee income increased by 27%
(27%*) to £93.7m (£93.9m*) (2021: £73.7m), delivering an operating profit
of £16.2m (£16.5m*) (2021: £14.0m).

 

All markets across the region delivered double-digit growth in net fee income
year-on-year. In Japan, the Group's largest and most profitable business, net
fee income increased by 25%* year-on-year driven by the ongoing demand for
bilingual professionals, digital transformation, and the recovery of
Covid-impacted sectors. Elsewhere across Asia, Korea, Malaysia and Thailand
all delivered record performances in terms of both net fee income and
operating profit. Activity levels in Mainland China were however negatively
impacted by the prolonged period of Covid-enforced lockdown with operating
profit remaining flat year-on-year.

 

Skill shortages remain particularly acute across both Australia and New
Zealand, a situation exacerbated by the re-opening of international borders
and the negative net migration that exists. Whilst permanent recruitment
activity remained solid, contract recruitment activity increased during the
period as the shortage of permanent talent began to bite. Net fee income in
Australia grew by 17%* year-on-year and in New Zealand, where we have a
dominant market position, net fee income increased by 36%* year-on-year.

 

Resource Solutions, our recruitment process outsourcing business, delivered a
strong performance in the first half as a number of recent new client wins
came fully on stream. The business has a broad range of clients spanning
multiple markets across the region and is well positioned to deliver long-term
growth.

 

Europe (29% of net fee income)

Revenue was £136.6m (2021: £100.8m) and net fee income increased by 35%
(39%*) to £61.1m (£62.7m*) (2021: £45.2m), delivering an operating profit
of £7.3m (£7.7m*) (2021: £6.2m).

 

A strong performance right across the region with all markets delivering net
fee income growth of more than 25%* year-on-year.

 

In France, our largest business in the region, net fee income increased by
26%* year-on-year as permanent and interim recruitment continued to
bounce-back well.

 

Our operations in the Netherlands and Belgium delivered record levels of net
fee income, further cementing our market-leading position across this region.
Spain also produced record net fee income and during the period we opened a
new office in Bilbao giving us four offices across this rapidly growing
recruitment market. Our business in Germany built upon its strong 2021
performance and delivered a record first half performance in terms of both net
fee income and operating profit.

 

United Kingdom (18% of net fee income)

Revenue in the UK was £141.2m (2021: £159.2m) and net fee income increased
by 8% to £38.0m (2021: £35.2m), delivering an operating profit of £3.6m
(2021: £3.3m).

 

Recruitment volumes across both London and the regions accelerated through the
first half of the year, with live job numbers increasing month-on-month. Wage
inflation further fuelled candidate confidence to move roles with activity
levels across the disciplines of commerce finance, banking, legal and
technology particularly strong. Financial services recruitment bounced-back
particularly strongly during the second quarter. To counter the premiums on
offer for job movers, many organisations have been forced to implement blanket
pay rises in the battle to retain existing staff.

 

Net fee income in Resource Solutions in the UK declined by 8% year-on-year.
Recruitment activity levels improved as the period progressed however
placement rates were impacted by candidate shortages and delays in the time
taken to onboard new hires. A number of new client wins and extensions were
secured during the first half across a range of sectors including mining,
healthcare, technology and insurance which will deliver returns in the second
half of the year and beyond.

 

Other International (8% of net fee income)

Other International comprises the Americas, Middle East and South Africa.
Revenue was £20.7m (2021: £14.2m) and net fee income was up 46% (38%*) to
£17.7m (£16.7m*) (2021: £12.1m), delivering an operating profit of £0.6m
(£0.7m*) (2021: £0.6m).

 

We invested significantly during the period to grow scale in many of our newer
businesses across the Americas. Chile and Mexico produced record performances
in terms of both net fee income and operating profit. In the US net fee
income, whilst up by 4%* year-on-year, was impacted by large-scale lay-offs in
the tech start-up space. Our business in the Middle East continued to perform
very strongly aided by a post-Covid normalisation of the region's economies,
high oil prices and the breadth and strength of the Robert Walters brand.

 

Cash flow

The Group maintained a strong net cash position of £81.8m as at 30 June 2022
(30 June 2021: £122.8m). Working capital in the period has increased by
£39.5m in line with improved trading and a positive increase in contract
recruitment activity. Notable cash outflows included a dividend payment of
£10.6m, £8.2m of lease liabilities, £11.0m of corporation tax payments and
£6.9m of capital expenditure. On behalf of global governments, the Group has
collected and paid £142.3m in payroll taxes, £54.0m in net sales and VAT
taxes and £11.0m in corporation taxes, totalling £207.3m.

 

Dividend and Share Buybacks

The interim dividend will be increased by 20% to 6.5p per share (2021: 5.4p)
and will be paid on 30 September 2022 to those shareholders on the Company's
register as at 2 September 2022.

 

During the first half of the year, the Group purchased 2,024,071 shares at an
average price of £6.25 per share for £12.7m through the Group's Employee
Benefit Trust. The Board has authorised a share buyback of up to £10m shares
for cancellation.

 

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

The Group does not have material transactional exposures, although it 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 2021,
namely, political factors, economic, environmental and market uncertainty;
talent attraction and retention; competition and emerging technologies; brand,
reputation and business strategy; candidate risk; non-compliance with laws,
regulations and contractual obligations; regulatory environment, data breach
and cyber security; reliance on technology infrastructure; and treasury risk.
The Board does not foresee a material change in respect of these factors for
the remainder of the year.

 

Related party transactions

There were no related party transactions in the period to 30 June 2022 (30
June 2021: none), other than employment and share-based remuneration payments
to key management personnel and receipt of dividends for key management
shareholders. There were no outstanding balances as at 30 June 2022.

 

Board

Ron Mobed stepped down from his role as Non-Executive Chair on 15 July. On
behalf of the Board, we would like to thank Ron for his commitment to best
practice, professionalism and contribution to the development of the Group.
The Group has commenced a formal search process for a successor to the role.
Brian McArthur-Muscroft stepped down from the Board, at the Group's Annual
General Meeting in April, after completing his nine-year term. Brian made a
significant contribution to the business during his tenure and we wish him
well for the future.

 

Outlook

The jobs market remained active throughout the first half of the year, and we
are yet to see signs of any slowdown despite the volatile macro-economic
backdrop and inflationary pressure that is being experienced across global
markets. Current trading remains in line with the recently upwardly revised
market expectations.

 

 

 Tanith Dodge                 Robert Walters
 Interim Non-Executive Chair  Chief Executive
 27 July 2022

 

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

 

ROBERT WALTERS PLC

Half-yearly Financial Results 2022

CONDENSED CONSOLIDATED INCOME STATEMENT

 

 

                                        2022          2021          2021

                                        6 mths to     6 mths to     12 mths to

                                        30 June       30 June       31 Dec

                                        Unaudited     Unaudited     Audited
                                  Note  £s millions   £s millions   £s millions
 Continuing operations
 Revenue                          4     538.6         468.2         970.7
 Cost of sales                          (328.1)       (302.0)       (617.1)
 Gross profit (net fee income)    4     210.5         166.2         353.6
 Administrative expenses                (182.8)       (142.1)       (299.5)
 Operating profit                 4     27.7          24.1          54.1
 Finance income                         0.1           0.1           0.4
 Finance costs                          (1.6)         (1.4)         (3.0)
 Gain (loss) on foreign exchange        0.2           (0.7)         (1.3)
 Profit before taxation           4     26.4          22.1          50.2
 Taxation                         5     (7.0)         (7.0)         (16.7)
 Profit for the period                  19.4          15.1          33.5

 Earnings per share (pence):      7
 Basic                                  27.5          20.9          46.3
 Diluted                                26.0          19.6          43.7

 

 

 

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME AND EXPENSE

 

 

                                                                 2022          2021          2021

                                                                 6 mths to     6 mths to     12 mths to 31 Dec

                                                                 30 June       30 June       Audited

                                                                 Unaudited     Unaudited
                                                                 £s millions   £s millions   £s millions
 Profit for the period                                           19.4          15.1          33.5
 Items that may be reclassified subsequently to profit or loss:
 Exchange differences on translation of overseas operations      4.7           (6.8)         (7.4)
 Total comprehensive income and expense for the period           24.1          8.3           26.1

 

 

 

 

ROBERT WALTERS PLC

Half-yearly Financial Results 2022

CONDENSED CONSOLIDATED BALANCE SHEET

 

                                                          2022          2021          2021

                                                          30 June        30 June       31 December

                                                          Unaudited     Unaudited     Audited
                                 Note                     £s millions   £s millions   £s millions
 Non-current assets
 Intangible assets                                        27.2          20.7          24.7
 Property, plant and equipment                            10.1          7.5           9.0
 Right-of-use assets                                      61.2          59.9          62.6
 Deferred tax assets                                      10.5          10.2          11.2
                                                          109.0         98.3          107.5

 Current assets
 Trade and other receivables                              236.8         161.3         190.4
 Corporation tax receivables                              4.0           3.4           6.1
 Cash and cash equivalents                                108.4         132.2         142.3
                                                          349.2         296.9         338.8
 Total assets                                             458.2         395.2         446.3

 Current liabilities
 Trade and other payables                                 (180.5)       (142.3)       (173.5)
 Corporation tax liabilities                              (6.6)         (4.4)         (12.5)
 Bank overdrafts and borrowings  8                        (26.6)        (9.4)         (15.7)
 Lease liabilities                                        (15.6)        (15.1)        (15.2)
 Provisions                                               (1.1)         (1.4)         (1.3)
                                                          (230.4)       (172.6)       (218.2)
 Net current assets                                       118.8         124.3         120.6

 Non-current liabilities
 Deferred tax liabilities                                 (0.1)         (0.1)         (0.2)
 Lease liabilities                                        (49.7)        (49.3)        (51.2)
 Provisions                                               (1.8)         (1.7)         (1.9)
                                                          (51.6)        (51.1)        (53.3)
 Total liabilities                                        (282.0)       (223.7)       (271.5)
 Net assets                                               176.2         171.5         174.8

 Equity
 Share capital                                            16.2          16.1          16.1
 Share premium                                            22.6          22.2          22.6
 Other reserves                                           (71.8)        (71.8)        (71.8)
 Own shares held                                          (41.0)        (18.0)        (29.9)
 Treasury shares held                                     (9.1)         (9.1)         (9.1)
 Foreign exchange reserves                                9.8           5.7           5.1
 Retained earnings                                        249.5         226.4         241.8
 Equity attributable to owners of the Company             176.2         171.5         174.8

 

ROBERT WALTERS PLC

Half-yearly Financial Results 2022

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

 

 

                                                                             2022                                    2021          2021

                                                                             6 mths to                               6 mths to     12 mths to

                                                                             30 June                                 30 June       31 Dec

                                                                             Unaudited                               Unaudited     Audited
                                                                             £s millions                             £s millions   £s millions
 Operating profit for the period                                             27.7                                    24.1          54.1

 Adjustments for:
 Depreciation and amortisation charges                                       10.4                                    10.9          21.0
 Impairment of right-of-use assets (reversal)                                -                                       -             (1.1)
 Loss on disposal of property, plant and equipment and computer software     0.3                                     0.2           0.3
 Charge in respect of share-based payment transactions                       1.6                                     1.4           2.3
 Unrealised foreign exchange loss (gain)                                                       1.5                   (1.8)         (0.3)
 Operating cash flows before movements in working capital                    41.5                                    34.8          76.3

 Increase in receivables                                                     (42.6)                                  (12.1)        (42.2)
 Increase (decrease) in payables                                             3.1                                     (24.2)        8.6
 Cash generated from operating activities                                    2.0                                     (1.5)         42.7

 Income taxes paid                                                           (11.0)                                  (4.1)         (9.1)
 Net cash generated from operating activities                                (9.0)                                   (5.6)         33.6

 Investing activities
 Interest received                                                           0.1                                     0.1           0.4
 Purchases of computer software                                              (3.9)                                   (3.9)         (8.7)
 Purchases of property, plant and equipment                                  (3.0)                                   (0.9)         (4.5)
 Net cash used in investing activities                                       (6.8)                                   (4.7)         (12.8)

 Financing activities
 Equity dividends paid                                                       (10.6)                                  (8.0)         (11.9)
 Interest paid                                                               (0.4)                                   (0.3)         (0.8)
 Interest on lease liabilities                                               (1.2)                                   (1.1)         (2.2)
 Principal paid on lease liabilities                                         (7.0)                                   (7.6)         (16.4)
 Proceeds from financing facility                                            18.1                                    17.3          41.8
 Repayment of financing facility                                             (7.2)                                   (7.9)         (26.1)
 Proceeds from issue of equity                                               -                                       0.1           0.5
 Proceeds from exercise of share options                                     0.1                                     -             0.2
 Purchase of own shares                                                      (12.7)                                  -             (12.3)
 Net cash used in financing activities                                       (20.9)                                  (7.5)         (27.2)
 Net decrease in cash and cash equivalents                                   (36.7)                                  (17.8)        (6.4)

 Cash and cash equivalents at beginning of the period                        142.3                                   155.5         155.5
 Effect of foreign exchange rate changes                                     2.8                                     (5.5)         (6.8)
 Cash and cash equivalents at end of the period                              108.4                                   132.2         142.3

 

 

 

ROBERT WALTERS PLC

Half-yearly Financial Results 2022

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

                                                                Share capital  Share premium  Other reserves  Own shares held  Treasury shares held  Foreign exchange reserves  Retained earnings

                                                                                                                                                                                                        Total equity
                                                                £s millions    £s millions    £s millions     £s millions      £s millions           £s millions                £s millions             £s millions
 Balance at 1 January 2021                                      16.0           22.2           (71.8)          (18.1)           (9.1)                 12.5                       217.6                   169.3
 Profit for the period                                          -              -              -               -                -                     -                          15.1                    15.1
 Foreign currency translation differences                       -              -              -               -                -                     (6.8)                      -                       (6.8)
 Total comprehensive income and expense for the period          -              -              -               -                -                     (6.8)                      15.1                    8.3
 Dividends paid                                                 -              -              -               -                -                     -                          (8.0)                   (8.0)
 Credit to equity for equity-settled share-based payments       -              -              -               -                -                     -                          1.4                     1.4
 Deferred tax on share-based payment transactions               -              -              -               -                -                     -                          0.3                     0.3
                                                                -              -              -               -                -                     -                          -                       -

 Transfer of own shares held on exercise of equity incentives
 New shares issued and own shares purchased                     0.1            -              -               0.1              -                     -                          -                       0.2
 Unaudited balance at 30 June 2021                              16.1           22.2           (71.8)          (18.0)           (9.1)                 5.7                        226.4                   171.5
 Profit for the period                                          -              -              -               -                -                     -                          18.4                    18.4
 Foreign currency translation differences                       -              -              -               -                -                     (0.6)                      -                       (0.6)
 Total comprehensive income and expense for the period          -              -              -               -                -                     (0.6)                      18.4                    17.8
 Dividends paid                                                 -              -              -               -                -                     -                          (3.9)                   (3.9)
 Credit to equity for equity-settled share-based payments       -              -              -               -                -                     -                                    0.9                  0.9
 Deferred tax on share-based payment transactions               -              -              -               -                -                     -                          0.3                     0.3
                                                                -              -              -               0.3              -                     -                          (0.3)                   -

 Transfer of own shares held on exercise of equity incentives
 New shares issued and own shares purchased                     -              0.4            -               (12.2)           -                     -                          -                       (11.8)
 Balance at 31 December 2021                                    16.1           22.6           (71.8)          (29.9)           (9.1)                 5.1                        241.8                   174.8
 Profit for the period                                          -              -              -               -                -                     -                          19.4                    19.4
 Foreign currency translation differences                       -              -              -               -                -                     4.7                        -                       4.7
 Total comprehensive income and expense for the period          -              -              -               -                -                     4.7                        19.4                    24.1
 Dividends paid                                                 -              -              -               -                -                     -                          (10.6)                  (10.6)
 Credit to equity for equity-settled share-based payments       -              -              -               -                -                     -                          1.6                     1.6
 Deferred tax on share-based payment transactions               -              -              -               -                -                     -                          (1.1)                   (1.1)
                                                                -              -              -               1.6              -                     -                          (1.6)                   -

 Transfer of own shares held on exercise of equity incentives
 New shares issued and own shares purchased                     0.1            -              -               (12.7)           -                     -                          -                       (12.6)
 Unaudited balance at 30 June 2022                              16.2           22.6           (71.8)          (41.0)           (9.1)                 9.8                        249.5                   176.2

ROBERT WALTERS PLC

Half-yearly Financial Results 2022

NOTES TO THE CONDENSED SET OF FINANCIAL STATEMENTS

 

1.         Statement of accounting policies

Basis of preparation

These condensed set of interim financial statements for the six months to 30
June 2022 have been prepared in accordance with IAS 34 'Interim Financial
Reporting' and in compliance with the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom's Financial Conduct Authority.

 

They do not include all of the information required for full annual financial
statements and should be read in conjunction with the 2021 Annual Report and
Accounts, which were prepared in accordance with international accounting
standards in conformity with the requirements of the Companies Act 2006 and in
accordance with UK-adopted International Financial Reporting Standards
(IFRSs).

 

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 2021. The Group has
applied the same accounting policies and methods of computation in its interim
consolidated financial statements as in its 2021 annual financial statements,
except for amendments which applied for the first time in 2022, none of which
are expected to impact the Group as they are either not relevant to the
Group's activities or require accounting which is consistent with the Group's
current accounting policies.

 

There are a number of standards and interpretations which have been issued by
the International Accounting Standards Board that are effective for periods
beginning subsequent to 31 December 2022 that the Group has not adopted early
and which the Group does not believe will have a material impact on the
financial statements when adopted.

 

Going concern

The Group has delivered a record performance in the first half of 2022 and has
considerable financial resources, including £81.8m of net cash at 30 June
2022, 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.

 

The Directors have assessed the long-term prospects of the Company and the
Group based upon business plans, cash flow projections for the remaining six
months ending 31 December 2022, the three-year period ending 31 December 2025,
and consideration of the ongoing impact of the Covid pandemic, the
Ukraine-Russia conflict and the current economic uncertainties.

 

The three-year period was chosen as it is considered the longest timeframe
over which any reasonable view can be formed, given the nature of the market
in which the Group operates. Furthermore, the nature of recruitment activity
is highly reactive to market sentiment and the forward visibility of permanent
recruitment, which represents 71% of the Group's net fee income, can be
measured in weeks, whilst temporary recruitment and recruitment process
outsourcing may be less affected.

 

The forecasts and cash flow projections used to assess going concern have been
comprehensively stress-tested by using simulation techniques involving
sensitivity analysis applying, in particular, projections of reduced net fee
income of up to 20% from forecasts each year over a three-year period. In
light of the Covid pandemic and the current economic uncertainties, the
Directors have completed reverse stress testing, designed to explore the
resilience of the Group to the potential impact of the principal risks using
various downside scenarios. The scenarios included but were not limited to
significant reductions in revenue, losses of key clients, losses of key
internal talent, reputation damage, technology disintermediation, increases in
debtor days, and limited cost management. The Group also considered mitigating
actions that could be undertaken in the event of one or more of the scenarios
occurring, or that of an even more significant downturn, which included but
are not limited to, further reductions in capital expenditure, further
reductions in non-business critical expenditure as well as the potential for
headcount reductions. The scenarios were designed to be impactful but at the
same time realistic and the Group remained viable throughout.

 

It should be noted that the Group has limited forward visibility and
consequently there is still a high degree of uncertainty in respect of future
outcomes, however, the various stress test scenarios indicate that the Group
still has a strong balance sheet and cash resources and can continue to
operate within its banking covenants.

 

Historically, the Group has successfully managed its cost base during economic
downturns. The same policy and cost management measures were put in place
throughout the pandemic. Following on from a record performance in 2021 and
the first half of 2022 when Covid restrictions were still in place in several
of the Group's markets, the Directors remain confident of the Group's
long-term growth prospects, and a diverse range of clients and suppliers
across different geographic locations and sectors means that the Group
benefited from a strong bounce-back across the Asia Pacific and Europe
regions.

 

As a consequence, the Directors have formed a judgement, at the time of
approving the condensed set of financial statements, that there is a
reasonable expectation that the Group has adequate resources to continue in
operational existence and meet its liabilities as they fall due over the
three-year assessment period. For this reason, the Directors continue to adopt
the going concern basis in preparing the condensed set of financial
statements. Accordingly, the Group and the Company continues to adopt the
going concern basis in preparing its financial statements.

 

Impact of Covid on the half-yearly financial results

Trade debtors increased by 23% during the first half of 2022 mainly as a
result of the growth in revenue. The Directors adjusted the forward-looking
analysis within the expected credit loss model to consider the improved level
of recruitment activity, the historical recovery rate of the trade debtors
balance while considering the potential risk arising from the ongoing impact
of Covid, higher inflation and weaker growth in the global economy. As a
result, the Group recognised an expected credit loss provision of £4.0m at 30
June 2022 (30 June 2021: £3.2m, 31 December 2021: £3.7m).

 

Cash management

At 30 June 2022, the Group has £81.8m of net cash, compared to £122.8m in
2021. The Group has a committed financing facility of £60.0m, which expires
in March 2025 and at 30 June 2022, £26.6m (2021: £9.4m) was drawn down under
this facility.

 

Principal risks and uncertainties

The Board recognises the importance of identifying and actively monitoring the
full range of financial and non-financial risks facing the business, at both a
local and Group level. Since the year-end, the Board has reviewed the risk
profile of the business, and inherently do not believe the principal risks for
the business are different in nature overall as those detailed within the
Principal Risks and Uncertainties section of the Annual Report and Accounts
for the year ended 31 December 2021. The impact of the Covid pandemic,
political factors, and the Ukraine-Russia conflict on the economic and market
uncertainty risk remains ongoing. The Group has taken a number of actions to
mitigate the impact of those risks. The Board continues to assess the
Company's risk profile, consequences of any decision in the long term,
appropriate risk mitigation strategies and identification and consideration of
emerging risks.

 

Significant accounting judgements and estimates

Judgement and estimates are continually evaluated and are based on historical
experience and other factors, including expectation of future events that are
believed to be reasonable under the circumstances. Due to the inherent
uncertainty involved in making estimates and assumptions, actual outcomes
could differ from those assumptions and estimates.

 

In light of the ongoing impact of the Covid pandemic, the Ukraine-Russia
conflict and the current economic uncertainties, further review of the
judgements and estimates has been performed when preparing the half-yearly
financial results. Following the review, it was concluded that the significant
accounting judgements and estimates made by management were the same as those
that applied in the Group's Annual Report and Accounts for the year ended 31
December 2021.

 

2.         Financial information

 

The financial information on pages 7 to 15 was formally approved by the Board
of Directors on 27 July 2022. 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 2021
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 2022 is
unaudited but has been reviewed by the Company's auditor. The financial
information in respect of the period ended 30 June 2021 is also unaudited.

 

 

3.         Currency conversion

 

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

 

The Condensed Consolidated Income Statement for the period ended 30 June 2022
has been prepared using, among other currencies, the average exchange rate of
€1.1874 to the Pound (period ended 30 June 2021: €1.1517; year ended 31
December 2021: €1.1626); ¥159.3960 to the Pound (30 June 2021: ¥149.5407;
31 December 2021: ¥150.9885) and AU$1.8060 to the Pound (30 June 2021:
AU$1.7995; 31 December 2021: AU$1.8310).

 

The Condensed Consolidated Balance Sheet as at 30 June 2022 has been prepared
using the exchange rates on that day of €1.1622 to the Pound (30 June 2021:
€1.1646; 31 December 2021: €1.1910); ¥165.3122 to the Pound (30 June
2021: ¥153.2083; 31 December 2021: ¥155.4925) and AU$1.7621 to the Pound (30
June 2021: AU$1.8428; 31 December 2021: AU$1.8603).

 

 

 4.          Segmental information
                                                                          2022              2021              2021

                                                                          6 mths to         6 mths to         12 mths to

                                                                          30 June           30 June           31 Dec

                                                                          Unaudited         Unaudited         Audited
                                                                          £s millions       £s millions       £s millions
     i)                Revenue:
                       Asia Pacific                                       240.1             194.0                    427.0
                       UK                                                 141.2             159.2                    297.6
                       Europe                                             136.6             100.8                    216.1
                       Other International                                20.7              14.2                     30.0
                                                                          538.6             468.2                    970.7

     ii)               Gross profit (net fee income):
                       Asia Pacific                                       93.7              73.7                     164.2
                       UK                                                 38.0              35.2                     68.7
                       Europe                                             61.1              45.2                     95.3
                       Other International                                17.7              12.1                     25.4
                                                                          210.5             166.2                    353.6

     iii)              Operating profit and profit before taxation:
                       Asia Pacific                                       16.2              14.0                     36.5
                       UK                                                 3.6               3.3                      3.3
                       Europe                                             7.3               6.2                      13.7
                       Other International                                0.6               0.6                      0.6
                       Operating profit                                   27.7              24.1                     54.1
                       Net finance costs                                  (1.3)             (2.0)                    (3.9)
                       Profit before taxation                             26.4              22.1                     50.2

 

 

 vi)  Revenue by business grouping:
      Robert Walters(1)                                     406.4  317.2  700.0
      Resource Solutions (recruitment process outsourcing)  132.2  151.0  270.7
                                                            538.6  468.2  970.7

(1.        ) Walters People is included within Robert Walters

 

 5.  Taxation
                                      2022          2021          2021

                                      6 mths to     6 mths to     12 mths to

                                      30 June       30 June       31 Dec

                                      Unaudited     Unaudited     Audited
                                      £s millions   £s millions   £s millions
     Current tax                      7.5           6.3           15.4
     Deferred tax                     (0.5)         0.7           1.3
     Total tax charge for the period  7.0           7.0           16.7

 

The tax charge is based on the expected annual effective tax rate of 26.5%
(2021: 31.6%) 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 the Netherlands, the impact of adjustments to accounting
profit in the tax calculation and the movement in deferred tax assets in
relation to accruals and provisions.

 

 

 6.  Dividends
                                                                           2022          2021          2021

                                                                           6 mths to     6 mths to     12 mths to

                                                                           30 June       30 June       31 Dec

                                                                           Unaudited     Unaudited     Audited
                                                                           £s millions   £s millions   £s millions
     Amounts recognised as distributions to equity holders in the period:
     Final dividend for 2021 of 15.0p per share (2020: 11.0p)              10.6          8.0           8.0
     Interim dividend for 2021 of 5.4p (2020: 4.5p)                        -             -             3.9
                                                                           10.6          8.0           11.9

     Proposed interim dividend for 2022 of 6.5p (2021: 5.4p)               4.5           3.9           N/A

 

The proposed interim dividend was approved by the Board on 27 July 2022 and
has not been included as a liability at 30 June 2022.

 

 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.

                                                                         2022                  2021                  2021

                                                                         6 mths to             6 mths to             12 mths to 31 Dec

                                                                         30 June               30 June               Audited

                                                                         Unaudited             Unaudited
                                                                         £s millions           £s millions           £s millions
     Profit for the period attributable to equity holders of the Parent  19.4                  15.1                  33.5

                                                                         Number of shares      Number of shares      Number of shares
     Weighted average number of shares:
     Shares in issue throughout the period                               80,689,295            80,167,760            80,167,760
     Shares issued in the period                                         146,996               170,333               310,858
     Treasury and own shares held                                        (10,314,787)          (7,943,789)           (8,152,297)
     For basic earnings per share                                        70,521,504            72,394,304            72,326,321
     Outstanding share options                                           4,068,262             4,464,893             4,266,350
     For diluted earnings per share                                      74,589,766            76,859,197            76,592,671

 

8.           Bank
loans

The Group has a committed financing facility of £60.0m, which expires in
March 2025.

At 30 June 2022, £26.6m (2021: £9.4m) was drawn down under this facility.

 

The Group has a short-term facility of Renminbi 25m (£2.9m) of which Renminbi
nil (£nil) was drawn down as at 30 June 2022 (2021: Renminbi nil (£nil)).
The loan is secured against cash deposits in Hong Kong.

 

9.           Related party transactions

There were no related party transactions in the period to 30 June 2022 (30
June 2021: none), other than employment and share-based remuneration payments
to key management personnel and receipt of dividends for key management
shareholders. There were no outstanding balances as at 30 June 2022.

 

10.        Registered office

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

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