CPS.L Regulatory News (CPS)

11 Sep 2007 07:00

CPL Resources PLC11 September 2007 CPL RESOURCES plc Full Year Results for the Year Ended 30th June 2007 Record Results for Cpl; Profit before Tax up 82%; EPS up 80% CPL Resources plc, Ireland's leading employment services group, today announcedfull year results for the year ended 30th June 2007. Financial Highlights • Sales €195.5 m up 32% (2006: €148 m)• Net Fee Income €43 m up 53% (2006: €28.2 m)• Profit before tax €19.3m up 82 % (2006: €10.6 m)• Earning per share 45.1 cent up 80% (2006: 25.1 cent)• Conversion ratio 44.7% (2006: 37.5%)• Cash €29.7m (2006: €21.3 million)• Dividend 4.0 cent per share (2006: 2.9 cent) John Hennessy Chairman of the Group said "We are please to announce an outstanding set of results for the year ended 30June 2007. This performance continues a five year trend of exceptional growthin the business. This continuation of very strong growth in profits reflects ahighly successful business model involving talented and committed peopledelivering exceptional client service, a focused acquisition strategy that hasadded new sectors and countries to the Group's business and a sustained focus oncost control. Development momentum continued in the year to June 2007 and our net acquisitionspend for the twelve months amounted to €4.9 million. Cpl's strategy has been todevelop robust and diversified revenue streams, and to enhance these through theaddition of carefully selected acquisitions, which we work hard to integrateinto the Group." Commenting on the group's performance and outlook, Cpl Chief Executive, AnneHeraty, said: "I am pleased to report another strong performance for Cpl in the year to 30June 2007. Profit before tax increased by 82% to €19.3 million, this is ourthird consecutive year to deliver profit before tax growth of over 80%. Our performance can be attributed to the ability and focus of our people inresponding to the needs of our clients. In Cpl we recognise that our clients'needs are constantly changing and that flexibility is a key factor to developingand growing strong client relationships. We believe that our success comes fromour core belief in candidate care and our commitment to delivering a high valueservice to all our clients The year to June 2007 was an excellent year for the Group. We expanded ourbusiness in every sector and continued our international expansion with theopening of offices in key countries. As a result, we see great opportunity forgrowth of our international business. Cpl has sufficient financial andoperational flexibility to respond to the needs of the marketplace as theyarise. We maintain a strong balance sheet and healthy cash position, which willenable us to take advantage of any opportunities that the market may present." About Cpl Resources plc Cpl is a specialist provider of recruitment and employment services, operatingthrough distinct specialist brands in a wide range of business sectors,including technology, accounting and finance, healthcare, pharmaceutical, sales,engineering, light industrial, and office administration. Chairman's Statement Once again the Group has delivered an outstanding set of results for the year toJune 2007. Profit before tax of €19.3 million and earnings per share of 45.1cent represent increases of 82% and 80% respectively. This continuation of verystrong growth in profits reflects a highly successful business model involvingtalented and committed people delivering exceptional client service, a focusedacquisition strategy that has added new sectors and countries to the Group'sbusiness and a sustained focus on cost control. The Chief Executive's reviewdeals in some detail with the financial and business performance of the Groupand each of its divisions. The Group has generated excellent returns by maintaining a balanced clientfocused strategy. Increased revenue and gross profit reflect substantialincreases in profitable activity across all sectors and markets, and a strongperformance in each of our principal business areas, being the placement ofcontract, temporary and permanent employees with clients. Permanent placementnet fee income in the year to 30 June 2007 increased by 52% over the prior year.All divisions have performed well. Our contractor and temporary fees haveincreased by 53%, reflecting growth in the demand for non-permanent staff in allareas. The Cpl Managed Services business, which manages selected businessprocesses (including call centres, administrative services and recruitmentsolutions) on behalf of clients, now represents 17% of our net fee income. The Group had cash balances of €29.7 million at 30 June 2007. Notwithstandingthe working capital demands associated with strong growth in business activity,this figure is €8.4 million higher than the corresponding balance at 30 June2006. Development momentum continued in the year to June 2007 and our net acquisitionspend for the twelve months amounted to €4.9 million. Cpl's strategy has been todevelop robust and diversified revenue streams, and to enhance these through theaddition of carefully selected acquisitions, which we work hard to integrateinto the Group. During the year we added important businesses in the healthcaresector through our purchase of Kate Cowhig International Recruitment Limited,and in the retail and light industrial sectors through our acquisition ofNorthside Recruitment Services Limited. We also enhanced the geographicalspread of our business, both in Ireland (principally through the acquisition ofthe former regional operations of Richmond Recruitment) and internationally,further extending our presence in Eastern Europe. The quality of these selectinvestments will be an important element in the continuing diversification ofour business and in delivering further growth in the Group over the years ahead. Just five years ago, the Cpl group operated principally in one business sector -the IT industry - and exclusively in the Irish market. Our turnover in the yearto 30 June 2002 was less than €23 million and our earnings per share amounted to2.7 cent. The corresponding figures for 2007 represent compound growth over 5years of more than 50% per annum in turnover and more than 75% per annum inearnings per share. The sustained strength of the Irish economy has undoubtedlycontributed significantly to this outstanding performance. However, the qualityand commitment of our people, the loyalty of our customers and a successfulstrategy for organic growth, business development, diversification andacquisition have been the principal drivers of Cpl's success. The achievements and success of Cpl are founded on the exceptional commitmentand capability of the people who lead, manage and work in its businesses. Ourability to attract, develop, motivate and retain talented people is in many waysour most important competence. Our continuing efforts to deliver top classservice to all our clients and customers have made us Ireland's leading providerof employment services. I congratulate the whole team on another outstandingset of achievements in 2007 and thank them for the commitment and contributionto the success of the Group. I would also like to extend the appreciation of theBoard to our customers for their continued loyalty and support. The Board is recommending a final dividend of 2.25 cent per share. The dividendwill be payable on 26 October 2007 to shareholders on the company's register atthe close of business on the record date of 21 September 2007. The finaldividend together with the interim dividend of 1.75 cent per share, amounts to atotal dividend of 4.00 cent per share. John Hennessy Chairman 11 September 2007 Chief Executive Review I am pleased to report another strong performance for Cpl in the year to 30 June2007. Profit before tax increased by 82% to €19.3 million, this is our thirdconsecutive year to deliver profit before tax growth of over 80%. Consideringthat we operate in a highly competitive marketplace, our results can beattributed to the ability and focus of our people in responding to the needs ofour clients. In Cpl we recognise that our clients' needs are constantlychanging and that flexibility is a key factor to developing and growing strongclient relationships. We believe that our success comes from our core belief incandidate care and our commitment to delivering a high value service to all ourclients. The Irish economy remained healthy in the year to 30 June 2007 providing a solidbase for Cpl to achieve strong organic growth. The employment environment wasfavourable and unemployment remained low at just over 4%. A strong inwardmigration trend continued over this period and was a significant source ofskilled candidates. However, recent labour market data seems to indicate thatemployment growth has begun to moderate. Employment is forecast to increase by3% in 2007 down from 4.3 % in the last quarter of 2006 and to further decreaseto 1% in 2008, with most of this deceleration resulting from job losses in theconstruction industry. Currently there is full employment in the professionaland technical areas and skills shortages are being experienced. Over 74% ofCpl's gross profit is generated from professional and specialist recruitment,and key markets for the Group such as the services sector are expected tocontinue to experience job growth. People Cpl's reputation is built on the talent and commitment of the people who serveour clients. I want to take this opportunity to thank them for delivering forour candidates and clients and to acknowledge their contribution andachievements in making the year to 30 June 2007 an exceptional year. I amdelighted to welcome those people who joined us during the year, especiallythose who were employees of the businesses we acquired, their efforts in thesuccessful integration of these companies into the Group is greatly appreciated. I also want to thank our loyal customers for their partnership and supportduring the year. Acquisitions In January 2007 Cpl acquired 75% of the share capital of Key 6 BusinessSolutions S.r.o. Cpl wishes to expand and develop its business in the CentralEuropean Region. Key 6 Business Solutions S.r.o. currently has offices in bothPrague and Bratislava and the company's vision is to grow and develop as adynamic recruitment company in the Central European Region. This acquisitiondovetails with our existing business in Poland. In March 2007 Cpl acquired Kate Cowhig International Recruitment Limited, aleading healthcare direct placement company which has been in operation since1990. The company specialises in the recruitment of registered nurses, midwivesand allied health professionals, for many of the largest teaching hospitals inIreland and the UK. Located in Dublin, Kate Cowhig International RecruitmentLimited also has local agents in India, Philippines, the Middle East and EasternEurope. Cpl intends to expand and develop its international healthcarebusiness. In June 2007 Cpl acquired Northside Recruitment Services Limited ("NRS") and wepurchased the assets in the Richmond Recruitment Group. NRS specialises in theIndustrial and Retail sectors. The company is based in North Dublin and hasgrown an excellent business, working closely with local candidates and localclients. While predominately a temporary recruitment business there is anopportunity to grow permanent fees. The Richmond Recruitment Group was established in 1990 and has offices inLimerick, Cork and Galway offering permanent and temporary recruitment servicesto a broad range of clients. Cpl has seen the value of having a number ofregional offices and believe that these acquisitions present a significantopportunity to expand its presence throughout Ireland. Cpl has a very professional and robust infrastructure and will apply our systemsand processes to NRS and the Richmond Recruitment businesses. Cpl will use itsestablished infrastructure to enable the local offices to offer a broad range ofservices to local employers. Cpl believe that the addition of both thesebusinesses to the Cpl network will have a strategic benefit for the Cpl Group. Subsequent to the year end, Cpl acquired Allied Nurses Agency Limited on 1 July2007. Allied Nurses Agency Limited is located in Dublin, providing locum nursesand health care assistants to clients throughout Ireland. With its extensiveoperations in the nursing sector Allied Nurses Agency Limited is an excellentfit with Cpl's existing healthcare businesses, Medical Recruitment Specialists,Kate Cowhig International Recruitment Limited and Nursefinders UK Limited.Together these businesses will firmly establish Cpl's healthcare division as amajor national player in the healthcare sector and will offer opportunities foroperational synergies and an enlarged source of candidates for clients. Helped by the acquisitions completed in 2007 Cpl is now even better positionedto offer exceptional quality services to our valued clients. Financial results Profitability and shareholder value • Profit before tax of €19.3 million, up 82% • Record earnings per share of 45.1 cent, an increase of 81% • Total dividend of 4.00 cent Delivering growth • Revenue of €196 million for the 12 months, representing growth of 32% year on year • Gross profit of €43 million, up 52 % from €28.2 million in the year to June 2006 • Cash balances of €29.6 million at 30 June 2007 (€21.3 million at 30 June 2006) • Improved conversion ratio of 44.7% Group revenue increased by 32% to €196 million in the year to 30 June 2007(2006: €148 million). Gross profit increased by 52% to €43 million (2006: €28.2million) yielding an 82% increase in profit before tax to €19.3 million (2006:€10.6 million). Operating expenses increased by 37% to €24.5 million (2006:€17.8 million). For the fifth year in a row the Group has delivered double digitearnings growth in excess of gross profit growth through rigorous cost controland a strong focus on productivity. A key performance measure for the Group is the conversion ratio of gross profitto profit before tax. This was 44.7% in the year to 30 June 2007 (2006: 37.5%),an increase of more than 7% in a year when we increased our investment inheadcount, training and infrastructure. Fully diluted earnings per share were 45.0 cent, up from 24.9 cent in 2006, anincrease of 81%. The Group ended the year with cash of €29.6 million. Notwithstanding theworking capital demands associated with strong growth in business activity, thisfigure is €8.3 million higher than the corresponding balance at 30 June 2006. Italso worth noting that the closing cash figure is after paying €4.9 million forthe acquisitions made during the year. Operations review The Cpl Group has delivered significant operational improvements in the year toJune 2007. We have increased our level of efficiency. This is evidenced by anumber of key performance indicators outlined below. Operating highlights 2007 2006 IncreaseGross Margin 22% 19% 16%Operation Margin 10% 7% 38%Conversion Ratio 44.7% 37.5% 19% Permanent Fees as % of total gross profit 51.8% 52.5%Temporary Fees as % of total gross profit 48.2% 47.5% Contractor and temporary staff headcount 4,145 3,459 20% Number of Net Fee Earners ** 237 166 43%Average Fees per Net Fee Earner €16,000 €15,000 7% ** June 2007 and June 2006 In the past Cpl has achieved revenue growth coupled with stringent cost control.This has continued in the year to June 2007 and we have increased our revenuesby 32% while improving our conversion ratio of gross profit to profit before taxto 44.7%. Our gross margin has increased to 22%, 3% higher than last year. Thisis partly due to the improvement of 1% in our contractor and temporary marginand secondly by the growth in our managed service business. Managed servicefees now account for 17% of Group's gross profit compared with 11% last year. Wehave achieved a 7% growth in the average fees per net fee earner to €16,000 inJune 2007. We are especially pleased with this as the number of net fee earnershas increased by 43% to 237 in the corresponding period. Cpl operate through distinct specialist brands in a wide range of businesssectors, including technology, accounting and finance, healthcare,pharmaceutical, sales, engineering, light industrial, and office administration. All of our divisions grew their business during the year, with the strongestperformance from Managed Services, ICT and Finance and Accounting. Performanceby division is outlined below. Careers Register provides experienced accounting and finance, risk management,internal audit and financial services professionals to clients on a temporaryand permanent basis. The permanent placement division performed exceptionallywell as a result of the strong demand for finance and accounting professionals.In the year to June 2007 gross profit grew by 23%, all of which representedorganic growth. Temporary fees were up by 9% and Permanent fees grew by 24%.This excellent performance reflects Careers Register's growing presence in astrengthening financial services industry in Ireland driven by the ongoing focusof companies on internal controls and compliance. The quality and deep networksof the recruiters in Careers Register is particularly appealing to clientsseeking talent in a scarce market. Cpl Managed Services is focused on the provision of Recruitment ProcessOutsourcing, Call-Centre Operations, Technical Support, Back-Office and AssemblyServices to the Information Technology and Pharmaceutical industries. Our plansfor expanding this business include launching new service lines and penetratingnew sectors in Ireland, as well as promoting our established service lines toour Central and Eastern European customers. The success of this part of ourbusiness is based on a combination of a focused and motivated salesorganisation, with a committed and professional service delivery team thatconsistently meets and exceeds our clients' service level requirements. We seecontinued and growing demand from our customers for an efficient andcost-effective service to manage and resource high-volume people-basedactivities and we will continue to invest in building our capabilities in thisarea. Gross profit in this area has increased by 132% year on year. The ManagedServices business now accounts for 17% of the Group's gross profit. Medical Recruitment Specialists (MRS) provides qualified healthcare staff on atemporary and permanent basis to leading hospitals and healthcare facilitiesnationwide. Gross profit for the year to June 2007 has increased by 25%.Temporary fees from our agency nursing business have increased by 39%. Many factors are contributing to the demand for flexible healthcare staffingservices. These include a shortage of nurses with specialist skills, a greaterdemand for care professionals both in the home and in hospitals, and the risingdemand for healthcare services with increasing life expectancy. Theacquisitions of Kate Cowhig International Recruitment Limited and Alliance alongwith Medical Recruitment Specialists will allow us to build on our reputation asthe leading provider of healthcare staffing services in Ireland. Following thesuccessful integration of these key acquisitions, we will further develop ourcore central support services that allow us to deliver an exemplary service toour private and public sector healthcare clients. Techskills Resources source contract and permanent engineering professionals fortheir clients. They recruit for a wide range of positions including ConstructionManagers, Project Managers, Estimators, Design and Structural Engineers,Architects and Technicians. Techskills experienced strong organic growth in theperiod, with gross profit increasing by 37%. While growth in the residentialconstruction sector has slowed considerably, Techskills with an establishednetwork of loyal clients is well positioned to benefit from the infrastructureprojects that are already underway and the infrastructure investment planned forIreland over the coming years. Cpl is the leading recruitment specialist in Ireland in the ICT contract andpermanent market. The year to June 2007 was an outstanding year for thisdivision. Gross profit increased by 46%, contractors working on client sitewere up by 11%, contractor margin increased by 1%, permanent fees increased by56% and we had significant public and private sector client wins in 2006/2007.IT represents 20% of our gross profit in the year to June 2007. The marketremains buoyant for permanent IT positions as skill shortages are apparent insome key areas. We are optimistic about the opportunities for this division in2007/2008. BroadReach International Executive Search, established in October 2004, operatesat board level and across a range of senior management disciplines. Ourexecutive recruiters target the top 10% of qualified candidates and provide ourclient companies with an in-depth service, to meet their need for leadershiptalent. The opportunity for Executive Search is immense, with the majority ofCEO's reporting the scarcity of key talent as the one of significant limitingfactors in growing their businesses. The number and value of assignments inBroadReach was encouraging particularly in the second half of the year. Ann O Brien Office Support places skilled temporary and permanent administrativeprofessionals with clients in all industries. This division has offices inDublin City Centre, Blanchardstown, Stillorgan and Naas. Permanent feesincreased by 52% in the 12 months to June 2007. Multiflex is Ireland's leading supplier of Light Industrial and Technical staff. Established in 1998, Multiflex has pioneered the way forward in the deliveryof flexible and permanent workforce practices. Multiflex has designed a varietyof effective and efficient flexible and permanent workforce models to meet theever changing demands of the client in today's market. Permanent feesincreased by 27% in the year to June 2007. Thornshaw Scientific and Cpl Science specialise in the placement of permanentand contract personnel in the pharmaceutical, biotechnology, clinical researchand medical device industry. The combined business produced strong growth ingross profit of 63%. Fees earned on placing temporary workers more than doubledin the twelve months. Strategy We will continue to focus on delivering our long term strategy in 2008. Keyelements of that strategy as outlined in last year's report include growing ourbusiness organically by winning market share and by increasing the range ofservices we offer to our existing clients, selective acquisitions provided theybuild on our capability to deliver to clients and they enhance shareholdervalue, geographic expansion and maintaining a balanced earnings stream. In the year to 30 June 2007 we achieved organic growth in revenue of €44million. We continued to develop our Managed Services business which nowrepresents 17% of our gross profit. We continue to see opportunity for strongorganic growth across the Group and remain focussed on this as a key element ofour overall growth strategy. We expanded our geographic reach during the year with development of our officein Poland and the acquisition of Key 6 Business Solutions S.r.o. Key 6 BusinessSolutions S.r.o. is our platform for expansion in Central Europe. While theseoffices provide a source of highly qualified candidates to meet the needs of ourclients in Ireland our main focus is to provide our international client base inthese regions with a strong local service and access to the range of innovativerecruitment solutions that Cpl has to offer. We are also committed to identifying acquisitions that deliver quality serviceand build on our capability to deliver market leading solutions to our clients.In the second half of the year to 30 June 2007 we completed five acquisitions,which further advanced our growth strategy for our Healthcare, Light Industrial,Regional and International businesses. Although it is early days we are verypleased with the way these businesses are performing and we are therefore veryconfident we will drive substantial growth through these businesses in thecoming years. Over the past several years we have continued to strengthen the business bybuilding a robust and balanced earnings stream. We operate through specialistbrands in several business sectors. We are not overly dependent on any onesector. Our gross profit in the year to June 2007 was made up of 47% fromtemporary recruitment and 53% from permanent recruitment. Specialist recruitmentwas 74% of our gross profit and general recruitment 26%. Outlook The year to June 2007 was an excellent year for the Group. We continued todemonstrate the fundamental quality of the Cpl business model and strategy. Cplhas sufficient financial and operational flexibility to respond to the needs ofthe marketplace as they arise. We continue to diversify our portfolio ofservices by sector, service-line and geographical location and maintain a strongbalance sheet and healthy cash position, which will enable us to take advantageof any opportunities that the market may present. Our new acquisitions alsoprovide us with the opportunity to expand and deliver quality long-term growthin Ireland and Central Europe. Group income statementfor the year ended 30 June 2007 Year ended Year ended 30-Jun-07 30-Jun-06 •'000 •'000 Revenue 195,540 148,065Cost of sales (152,530) (119,898) Gross profit 43,010 28,167Distribution expenses (2,007) (1,725)Administrative expenses (22,456) (16,111) Operating profit 18,547 10,331Financial income 736 255Financial expenses (10) (20) Profit before tax 19,273 10,566Income tax expense (2,475) (1,278) Group Profit for the Financial Year 16,798 9,288 Profit attributable to equity shareholders 16,786 9,288Minority interest 12Group Profit for the Financial Year 16,798 9,288 Basic earnings per share 45.1 cent 25.1 cent Diluted earnings per share 45.0 cent 24.9 cent Group Balance Sheetfor the year ended 30 June 2007 Year ended Year ended 30-Jun-07 30-Jun-06 •'000 •'000AssetsNon-current assetsProperty, plant and equipment 1,273 1,144Goodwill and Intangible Assets 15,105 6,518Deferred tax asset 13 42Total non-current assets 16,391 7,704 Current assetsTrade and other receivables 23,201 17,025Cash and cash equivalents 29,653 21,292Corporation tax refundable 37 81Total current assets 52,891 38,398 Total assets 69,282 46,102 EquityIssued capital 3,734 3,714Share premium 1,686 1,686Merger reserve (3,300) (3,300)Retained earnings 42,100 26,522 44,220 28,622Minority Interest 12Total equity 44,232 28,622LiabilitiesNon-current liabilitiesFinancial liabilities 42 317Provisions 3,112 177Total non-current liabilities 3,154 494 Current liabilitiesFinancial liabilities 296 79Trade and other payables 20,604 16,688Corporation tax payableProvisions 967 219Total current liabilities 21,867 16,986 Total liabilities 25,021 17,480Total equity and liabilities 69,253 46,102 Group statement of changes in shareholders' equityfor the year ended 30 June 2007 Capital conversion Share Share Reserve Merger Retained Minority Total capital premium fund reserve earnings Total interest equity •'000 •'000 •'000 •'000 •'000 •'000 •'000 •'000 Balance at 1 July 2005 3,688 1,671 57 (3,357) 18,051 20,110 - 20,110Shares issued 26 15 - - - 41 - 41Profit for the financial - - - - 9,288 9,288 - 9,288yearDividends paid - - - - (817) (817) - (817) Balance at 30 June 2006 3,714 1,686 57 (3,357) 26,522 28,622 - 28,622 Balance at 1 July 2006 3,714 1,686 57 (3,357) 26,522 28,622 - 28,622Shares issued 5 15 - - - 20 - 20Profit for the financial - - - - 16,786 16,786 12 16,798yearDividends paid - - - - (1,208) (1,208) - (1,208) Balance at 30 June 2007 3,719 1,701 57 (3,357) 42,100 44,220 12 44,232 Group cash flow statementfor the year ended 30 June 2007 Year ended Year ended 30-Jun-07 30-Jun-06 •'000 •'000Cash flows from operating activitiesProfit for the financial year 16,798 9,288Adjustments for:Depreciation on property, plant and equipment 209 223Amortisation of intangible assets 106 54Financial income (734) (255)Financial expense 10 20Income tax expense 2,475 1,278Operating profit before changes in workingcapital and provisions 18,864 10,608(Increase)/decrease in trade andother receivables (5,186) (3,620)Increase in trade and other payables and provisions 3,251 5,715 Cash generated from operations 16,929 12,703Interest paid (10) (20)Income tax refund / ( paid) (2,411) (1,493)Interest received 734 255Net cash from operating activities 15,242 11,445 Cash flows from investing activitiesAcquisition of subsidiary, net of cash acquired (4,888) (194)Deferred consideration paid (151) (234)Purchase of property, plant and equipment (319) (550)Purchase of intangible assets (306) (140)Net cash from investing activities (5,664) (1,118) Cash flows from financing activitiesRepayment of borrowings (41) (30)Proceeds from new loan - 93Dividends paid (1,208) (817)Proceeds from issue of share capital 20 41Net cash from financing activities (1,229) (713) Net increase in cash and cash equivalents 8,349 9,614Cash and cash equivalents at beginning of year 21,275 11,661Cash and cash equivalents end of year 29,624 21,275 For Further Information: Anne Heraty, CPL Resources, 01 614 6000 Josephine Tierney, Finance Director, 01 6146000 11 September 2007 This information is provided by RNS The company news service from the London Stock Exchange