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UK – Robert Walters “well positioned” to meet challenges as profits rise

01 March 2012

The British recruitment firm Robert Walters (RWA:LSE) today reported “strong results against a difficult economic backdrop” with revenues rising +24% (21% in constant currency) in 2011 to £528.1 million, up from £424.2 million in the previous year.

The firm said it was well positioned to meet challenges ahead as net fee income went up +18% (15% in constant currency) to £183.4 million from £155.4 million in 2010. Results for the year ended 31 December 2011 also showed that operating profit was up +18% (14% in constant currency) amounting to £15.6 million from £13.2 million in 2010. Profit before tax increased by +15% (11% in constant currency) from £13.1 million in 2010 to £15.1 million in 2011.

Chief executive, Robert Walters, said he was particularly pleased with the Group's strong performance “in a year which has seen more than its fair share of economic turbulence. We have trimmed or expanded the shape of the business according to the challenges and opportunities we have experienced in different regions and sectors.”

In the UK (26% of net fee income) revenue grew to £189 million (2010: £157.9 million) and net fee income increased by +3% to £47 million (2010: £45.8 million). This resulted in a reduction in operating profit to £0.5 million from £1.3 million in 2010. Although the firm increased its revenue in the region, it also pointed out that trading conditions in the UK remained difficult. Hiring activity in the financial services sector continued to be weak, although demand remained for high quality professionals, particularly across risk, compliance and governance. The firm also reported a rise of net fee income across commerce finance in both London and the regions while it also grew its presence in sales & marketing and human resources.

Resource Solutions, the Group’s recruitment process outsourcing business, performed well as the firm secured a number of new clients across both commerce and industry and financial services. During the year, the business also further developed its offering across both the Asia Pacific and European regions.

Looking towards the rest of Europe, Philip Aiken commented that “Europe was the Group's fastest-growing region with net fee income increasing by +29% this year.” In Continental Europe (21% of net fee income) revenue was £87.4 million (2010: £71.3 million) while net fee income surged to £39.1 million (2010: £30.4 million), providing an improved operating profit of £2.8 million (2010: £0.8 million). France, the region's largest business, delivered a strong performance, growing market share and significantly increasing operating profit. Germany also delivered solid growth as the firm opened a second office in Frankfurt to take advantage of buoyant conditions in what is said to remain “an immature recruitment market.” The Group’s other offices in the region also delivered solid performances as the uncertainty surrounding the Eurozone crisis toughened market conditions.

In Asia Pacific net fee income grew by +23% to £92.7 million (2010: £75.6 million) and this region now generates more than half (51%) of the Group's net fee income. Revenue amounted to £246.6 million (2010: £191.3 million) while the firm reported an operating profit of £12.3 million (2010: £11.3 million). Australia, the largest business in the region, produced strong growth in both net fee income and operating profit with offices in Brisbane and Perth performing especially well. A new office in Sydney was said to be profitable in its first year of operation. China continued to produce strong net fee income growth as the firm opened its fourth office, Nanjing, during the second quarter of the year. Business in Japan recovered well in the second half of the year, following the earthquake and tsunami in March. Hong Kong also performed well, aided by strong growth in its recently established contract business and Singapore delivered solid levels of net fee income. The smaller, more recently established businesses in Malaysia, Thailand and Korea continued to deliver strong growth and offer opportunities.

The Group also expanded further across the region, opening new offices in Jakarta, Taipei and Ho Chi Minh City. In Asia Pacific, the Group now has 22 offices in 11 countries.

In the Americas and South Africa (2% of net fee income) revenue was £5.1 million (2010: £3.7 million) and net fee income increased by +29% (35% in constant currency) to £4.6 million (2010: £3.6m), producing no operating profit (£nil in constant currency) (2010: operating loss of £0.1m). The firm recently established its presence in Brazil and intends to grow the Group's presence across South America. Operations in New York experienced difficult market conditions and in South Africa, the firm moved into new, larger premises to support local expansion and grew both net fee income and operating profit.

The firm commented that it derives 74% (2010: 71%) of net fee income from its international businesses and permanent recruitment represents 69% (2010: 69%) of the Group's recruitment net fee income.

Mr Aiken said that “it [has] been a difficult year from a macro-economic perspective, but some of our operations also experienced other unexpected challenges” deriving from natural disasters in Brisbane, Bangkok, New Zealand and Japan.

"We are mindful of current market conditions and weaker client and candidate confidence,” said Mr Aiken. “We will run the business as we have in previous times of economic uncertainty, through sensible cost management and long-term investment in those markets offering strong growth potential.”

"The Group remains well positioned to meet the challenges ahead and well placed to exploit opportunities where growth potential is strongest, given the power of our global brand, the strength of our balance sheet and the depth and experience of our management team."

Robert Walters provides professional recruitment services on a permanent and contract basis in the United Kingdom, Europe, Asia Pacific, the Americas and South Africa, serving clients in the financial, commercial and industrial sectors. The company recruits in the accounting, finance, banking, information technology (IT), human resources, legal, sales and marketing, supply chain and procurement, secretarial and support disciplines.

In early trading this morning, Robert Walter’s shares were up by +2.84% to 235.75 pence, down -29.84% on a year ago but +50.16% above the 52-week low of 157.00 pence set on 20 December 2011. This values the company at £175.47 million.


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