CPS.L Regulatory News (CPS)

2nd September 2014

Cpl Resources Plc

Results for the Full Year Ended 30 June 2014

Dublin, 2 September 2014: Cpl Resources Plc ('Cpl', the 'Group' or the 'Company'), Ireland's leading employment services group, today announced results for the year ended 30 June 2014.

 Full Year Highlights

- Revenue increase to €369.3 million, up 12% on last year

- 21% increase in Operating Profit to €14.2 million

- Profit Before Tax up 17% to €14.4 million

- Basic earnings per share increase by 16% to 40.7 cent from 35.0 cent

- Total dividend per share of 9.75 cent (2013: 8.5 cent)

John Hennessy, Chairman commented:

"I am pleased to report that the 12 months ended 30 June 2014 has been another successful year for Cpl. Operating profit rose by 21% to €14.2 million on record revenues of €369.3 million. Earnings per share of 40.7 cent are 16% higher than the previous year.

Our results reflect growth across all our major areas and locations. Economic conditions and employment trends are improving, although recovery in many of the markets in which we operate is fragile, and our industry remains highly competitive. We expect to continue to deliver growth in profits over the coming year."

Anne Heraty CEO added:

"Cpl achieved record revenues and gross profit, with gross profit increasing by 12% to €54.7 million in the year. The labour market continues to recover with total employment on the rise in both the international and domestic sectors of the economy. Companies are gaining the confidence to invest in hiring people on a permanent basis."

For Further Information:

Anne Heraty, CEO, CPL Resources Plc: +353 1 614 6000

Mark Buckley, CFO, CPL Resources Plc: +353 1 614 6000

Ivan Murphy/ Daragh O'Reilly, Davy Corporate Finance: +353 1 679 6363

Cpl Resources Plc

Chairman's statement

I am pleased to report that the 12 months ended 30 June 2014 has been another successful year for CPL.

Financial highlights of the Group's performance include:

· Increase in revenue, up 12% to €369.3 million

· 21% increase in operating profit to €14.2 million

· Earnings per share of 40.7 cent (2013: 35.0 cent)

· Total dividend per share of 9.75 cent (2013: 8.5 cent)

Full Year Highlights

The Group's results for the year to 30 June 2014 reflect growth across all our major areas and locations. While economic conditions are improving, recovery in many of the markets in which we operate is fragile, and our industry remains highly competitive.

During the year we experienced growth in demand for people to fill permanent and temporary positions across the many sectors in which we operate. Fees from permanent placements grew by 31% year on year. Downward pressure on margins in our temporary business continues to pose challenges, particularly given the significant investment in working capital that this part of our business requires. Nevertheless, we have continued to achieve growth in both revenues and gross profit in our temporary business.

We maintain a constant focus on the management of costs in our business, and this is reflected in an improved operating profit ratio of 26% (24% in the prior year). The Group continues to have a strong balance sheet, with net assets in excess of €72 million at 30 June 2014 and net cash of more than €30 million at that date.

Cpl Resources Plc

Chairman's statement (continued)

People

We operate in what is in many respects the ultimate 'people business'. We work with our clients to find the right solutions to their needs for skills, and we find the right people to meet those needs. We also work to develop and enhance the skills of candidates and client personnel.

All of this is done by our own people, a growing and dedicated group with a wide array of talents, qualities and abilities. We continue to recruit and train outstanding women and men who apply our core values to the delivery of exceptional service to our clients and candidates. I thank them all for their hard work and commitment to the success of the Group. I am also grateful to our clients for their continued support.

Earnings per Share, Dividend & Dividend Policy

CPL has delivered a 16% increase in earnings per share in the twelve months to June 2014, to 40.7 cent. The Board's current priorities for our free cash flow are to maintain the strength of our balance sheet, to allow the Group to optimise opportunities to drive organic growth and fund development through appropriate acquisitions, and to support a sustainable dividend policy. The Group has a progressive dividend policy, which reflects underlying earnings growth and the continued strength of the Group's balance sheet.

The Board is recommending a final dividend of 5.0 cent per share. This will bring the total dividend for the year to 9.75 cent per share. The dividend, if approved by the shareholders, will be payable on 3 November 2014 to shareholders on the Company's register at the close of business on the record date of 10 October 2014.

Outlook

It is always difficult in our industry to arrive at a reliable view of what might lie ahead. However, we expect economic recovery to gather some momentum in our principal markets over the medium term. This, combined with the ongoing efforts of our team, should allow us to continue to deliver growth in profits over the coming year.

John Hennessy

Chairman

1 September, 2014

Cpl Resources Plc

Chief Executive's review

I am pleased to report another strong performance for the Group in the year to June 2014. We achieved record revenue and gross profit. Revenue increased by €38.5 million to €369.3 million, an increase of 12%, and gross profit increased by €5.8 million to €54.7 million, also an increase of 12%. Profit before tax is €14.4 million, an increase of 17% on the previous year. Revenue and gross profit are almost double their level of 4 years ago.

Almost all the economic indicators show that the island of Ireland's economy continued to recover in the year to June 2014. Across the island the unemployment rate has fallen, and business and consumer confidence has improved. This backdrop provided a solid base for Cpl to achieve strong organic growth. Growth in our revenues and gross profit was broad based, driven by strong demand for skilled talent in sectors and occupations such as ICT, Healthcare, Pharmaceutical and Professional Services.

Since the start of 2012, the Republic of Ireland has created approximately 4,000 new jobs per month and Northern Ireland 1,750 per month (source: EY Economic Eye). It is encouraging that 70% of new jobs created in the Republic of Ireland were full time, although this still leaves full time jobs 17% below peak and 6% below peak in Northern Ireland.

Despite this progress, unemployment remains high with the Republic of Ireland's unemployment rate at 11.6% and Northern Ireland at 6.7% in June 2014. Long term unemployment is a significant problem with just over 46% of those unemployed in the Republic of Ireland on the Live Register for over one year. In Cpl we believe it is critically important for the job seeker to stay close to the labour market and have the opportunity to develop their skills through training and reskilling. During the year we continued to invest in Cpl Learning and Development where we focus on flexible training programmes that are responsive to employers needs and include work placement. Our experience is that this type of training provides better outcomes for the learner and gives them a better opportunity to gain employment.

Across the Eurozone unemployment has been falling very slowly and economic growth is weak. In May 2014 the unemployment rate stood at 11.6% versus 12% a year earlier. Notwithstanding the slow pace of recovery in the Eurozone, our international offices performed well with strong demand for skilled professionals and multilingual talent.

We finished the year with 9,572 people working on behalf of Cpl on client projects, an increase of 1,349 on the previous year. The most important ingredient to our success is our talented and hardworking team. They care about our candidates and are committed to developing innovative solutions for our clients to meet their changing needs.

Financial Highlights

The Group increased its revenue by 12% to €369.3 million in the year to June 2014 (2013: €330.8 million). Gross profit increased by 12% to €54.7 million (2013: €48.8 million). The Group's gross margin was 14.8% (2013: 14.8%). Our operating profit increased by 21% to €14.2 million (2013: €11.7 million). Profit before tax was up 17% at €14.4 million (2013: €12.3 million). Our earnings per share was 40.7 cent (2013: 35.0 cent), an increase of 16%.

Our operating expenses were €40.5 million, 9% higher than last year. We continue to balance cost management with investing for the future. The majority of our cost base, circa 74%, is staff related costs. We continue to invest in building and training our recruitment team. We provide them with best in class technology and infrastructure to support and drive productivity. We are committed to

Chief Executive's review (continued)

technology innovation to increase our operational efficiency and make it easy for our clients and candidates to do business with us.

Our balance sheet is strong. At 30 June 2014 our net cash balance was €30.5 million, up 9% on the previous year, notwithstanding the investment in working capital required as a result of a €38.5 million increase in revenue. Our largest asset is our trade and other receivables which grew to €70 million in June 2014 from €61.9 million in June 2013.

We paid our shareholders an interim dividend of 4.75 cent per share. The Board is recommending a final dividend of 5.0 cent per share for the year to June 2014. The total dividend per share for the year is 9.75 cent.

Our gross margin was 14.8% in the year to June 2014. We are still experiencing margin pressure in our temporary business, particularly where clients have high volume requirements from us. We are focused on restructuring how we deliver to these customers in order to drive efficiency and maximise returns. Permanent revenue increased by 31.7% to €20.8 million. Gross profit from permanent placement accounts for 37.9% of the total gross profit.

Our conversion rate of gross profit to operating profit is one of our key performance metrics in the Group. We improved our conversion rate to 26% from 24% in 2013.

Operations Review

Cpl is a leader in the provision of specialist recruitment and outsourcing services. Our capability spans the entire employment lifecycle and includes permanent, temporary and contract recruitment, workforce management, training and outplacement. We have a broad and diverse range of customers from market-leading multinationals to small and medium enterprises.

Our recruitment business operates through distinct specialist brands in a wide range of sectors including technology, accounting and finance, healthcare, pharmaceutical, sales, engineering, light industrial and office administration.

Our managed services and outsourcing business is the platform for delivering more complex services that help client's manage their workforce in an efficient and flexible manner. Some of the services provided by these divisions are Recruitment Process Outsourcing (RPO), Contact Centre Outsourcing including IT Service Desk, Insurance Claims Administration, Payments Administration and Training. These will be drivers of growth for Cpl as clients look for greater efficiencies and cost savings combined with flexibility.

Chief Executive's review (continued)

Permanent Placement

The labour market continues to recover with total employment on the rise in both the international and domestic sectors of the economy. Foreign Direct Investment into Ireland remains strong. In the three years from 2011 - 2013, an average of more than 6,000 jobs per year were attracted into Ireland. Demand from indigenous companies has also improved with sectors such as agriculture and food, ICT, professional and administrative support services accounting for the jobs growth. Cpl has benefited from this recovery with an increase in demand for permanent staff. This is a common trend of the employment cycle when employer confidence and demand for permanent talent increases. Companies have gained the confidence again to invest in hiring people on a permanent basis.

In the year to June 2014 permanent fees revenue increased by 31.7% to €20.8 million (2013: €15.8 million). Permanent placement was strong in our international business.

Temporary Staffing

Demand for temporary staff remained strong during the year to June 2014. We finished the year with 9,572 people working on behalf of Cpl on client projects, an increase of 1,349 on the previous year.

Revenues generated from temporary assignments in the year to June 2014 were €348.5 million (2013: €315.0 million) representing 10.6% growth. We generated €34.0 million gross profit, 2.5% higher than the year to June 2013. In recent years, margin erosion has been a challenge in our temporary business. Many of our clients have high volume needs from us and we have seen our margins with these clients decrease as volume increases.

Our clients see the advantage of using temporary staff. It adds a variable cost component to a company's otherwise fixed labour costs. We believe the downturn initiated a structural shift towards temporary staffing and outsourcing and the value of a more flexible workforce became clear. Companies with a higher share of employees working on a flexible basis were better positioned to respond to fluctuations in demand for their products and services. We expect to see continued utilisation of temporary staffing in our high volume accounts, however, as confidence improves and visibility is better for employers there is a trend towards hiring on a permanent basis.

Overseas business

We had a successful year in our international divisions in the year to June 2014. We continue to expand our client base and service offerings. We now have 36 offices in 9 countries. We have made some good client wins in the year and will continue to expand outside of Ireland. While it is too early to say that a recovery in Europe is underway, we believe our overseas businesses are well positioned to benefit as economies and labour markets in Europe strengthen.

Strategy

Our overall strategy remains unchanged. We are focused mainly on organic expansion, although we will use selective acquisitions to build platforms in new sectors or markets with good long term potential. In the last four years almost all our growth was organic. We have extended our geographic reach opening new offices in Poland, Spain and the UK. We have expanded our recruitment divisions by adding new disciplines such as Oil & Gas and Construction. We continue to invest in our training business, Cpl Learning and Development, and expect to increase the number of training courses we provide this year.

Chief Executive's review (continued)

In May 2014 we opened a sourcing hub in Krakow. We are seeing skills shortages emerge in certain sectors and the market for specialist skilled talent is increasingly global. The sourcing hub will support our managed services division in creating and designing solutions for clients who have difficulty accessing scarce skills or who need to hire teams rapidly.

People

I would like to thank all our employees for their commitment and hard work. We have come through some very challenging years and they have consistently delivered to a high standard for our clients and candidates. I would also like to extend my appreciation to our clients for their continued loyalty and support.

Outlook

In the past year, we have delivered on our goals, growing our revenue, profitability and cash generation. The economy and employer confidence is improving and as a result we are investing in people, infrastructure and in new service lines such as the sourcing hub in Krakow, our training business and new offices. Our management team and recruiting professionals are deeply committed to delivering innovative and flexible staffing solutions to our clients. We are encouraged by our results and expect to perform in line with market expectations.

Anne Heraty

Chief Executive Officer

1 September, 2014

Cpl Resources Plc

Group Statement of Comprehensive Income

for the year ended 30 June 2014

Cpl Resources Plc

Group Statement of Changes in Equity

for the year ended 30 June 2014

Cpl Resources Plc

Company Statement of Changes in Equity

for the year ended 30 June 2014

Cpl Resources Plc

Group and Company Balance Sheets

as at 30 June 2014

Cpl Resources Plc

Group and Company Balance Sheets (continued)

as at 30 June 2014

Cpl Resources Plc

Group and Company Cash Flow Statements

for the year ended 30 June 2014

Cpl Resources Plc

Group and Company Cash Flow Statements (continued)

for the year ended 30 June 2014

Cpl Resources Plc

Notes 

1 Financial income and expenses

2 Income tax expense

Cpl Resources Plc

Notes (continued)

3 Dividends to equity shareholders

Interim dividends to equity shareholders in Cpl Resources Plc are recognised when the interim dividend is paid by the Company. The final dividend in respect of each financial year is recognised when the dividend has been approved by the Company's shareholders. During the financial year, the following dividends were recognised:

The directors have proposed a final dividend in respect of the 2014 financial year of 5.0 cent per ordinary share. This dividend has not been provided for in the Company or Group balance sheet as there was no present obligation to pay the dividend at the year end. The final dividend is subject to approval by the Company's shareholders at the Annual General Meeting.

Cpl Resources Plc

Notes (continued)

4 Earnings per share

5 Trade and other receivables

Amounts due from subsidiary undertakings are repayable on demand.

Cpl Resources Plc

Notes (continued)

6 Net funds

7 Share capital, share premium, and other reserves

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company.

Share premium at 30 June 2014 amounted to €1,705,000 (2013: €1,705,000).

Other reserves comprise a capital redemption reserve fund of €666,666 (2013: €666,666), a capital conversion reserve of €57,000 (2013: €57,000), a merger reserve of €3,357,000 negative (2013: €3,357,000 negative) a currency translation reserve of €91,000 negative (2013: €10,000 positive) and a share based payment reserve of €54,000 (2013: Nil). The merger reserve arose in 1998 when the Company acquired by way of a share for share exchange the share capital of two group companies formerly under common ownership, management, and control. The translation reserve comprises all foreign exchange differences from 1 July 2013 arising from the translation of the net assets of the Group's non-euro denominated operations including the translation of the results of such operations from the average exchange rate for the year to the exchange rate at the balance sheet date.

Cpl Resources Plc

Notes (continued)

8 Trade and other payables

Amounts falling due in less than one year:

Amounts due to subsidiary undertakings are repayable on demand.

9 Basis of preparation

The financial information included in this preliminary result statement has been extracted from the Group's financial statements for the year ended 30 June 2014 and is prepared based on accounting policies set out therein. As permitted by EU law and in accordance with AIM / ESM rules, the Group financial statements have been prepared in accordance with International Financial Reporting Standards and their interpretations issued by the International Accounting Standards Board as adopted by the EU. The Group Financial Statements will be filed with the Irish Registrar of Companies and circulated to shareholders in due course.

END