24 Jan 2013 07:00
Cpl Resources plc
Results for the Half Year Ended 31 December 2012
Cpl Resources plc, Ireland's leading employment services group, today announced results for the half year ended 31st December 2012.
Chairman's statement
I am pleased to report that in the six months to 31 December 2012 the Cpl Group ('Cpl' or the 'Group') delivered a strong operating performance, with improved revenues, gross profits and earnings per share.
Highlights
" Strong operating performance
" 13% increase in revenue to €161.7 million
" 37% increase in operating profit to €5.8 million
" 31% increase in profit before tax to €5.9 million
" 55% increase in earnings per share to 16.96 cent
" Interim dividend per share of 4.0 cent (2011: 3.0 cent)
Half Year Highlights | Half Year Ended | Half Year Ended | % change |
31-Dec-12 | 31-Dec-11 | ||
€ 000's | € 000's | ||
Revenue | 161,671 | 142,718 | 13% |
Gross profit | 23,713 | 20,837 | 14% |
Operating profit | 5,811 | 4,237 | 37% |
Profit before tax | 5,954 | 4,528 | 31% |
Earnings per share | 16.96 cent | 10.91 cent | 55% |
Dividend per share | 4.0 cent | 3.0 cent | 33% |
Conversion Ratio** | |||
Operating profit | 24.5% | 20.3% | |
Profit before tax | 25.1% | 21.7% | |
Permanent gross profit | 7,521 | 6,241 | 21% |
Temporary gross profit | 16,192 | 14,596 | 11% |
Permanent gross profit as % of the total gross profit | 32% | 30% | |
Temporary gross profit as % of the total gross profit | 68% | 70% |
** as % of gross profit.
In our Annual Report for June 2012 I said that the Group continued to grow profitably through a combination of innovative service offerings, organic expansion and the delivery of high quality service to clients and candidates. I am very pleased to report that in the six months to 31 December 2012 the continued application of these strategies delivered another strong performance for the Group. Cpl again delivered record revenues, amounting to €161.7 million for the half year ended 31 December 2012, an increase of 13% over the same period last year. The Group's operating profit of €5.8 million for the six months to December 2012 is 37% higher than the same period last year. Profit before tax increased by 31% to €6.0 million. Earnings per share of 16.9 cent for the six months to 31 December 2012, represents a 55% increase when compared to 10.9 cent for the half year to 31 December 2012. This increase reflects both improved net profits and the reduced average number of shares in issue. 6,666,666 shares were cancelled in December 2011 following the successful tender offer.
We continued our policy of controlling costs tightly and improving productivity across the Group in order to maximise profitability. This has delivered an improvement in the Group's conversion ratio of gross profit to operating profit to 24% in the six months to December 2012, compared with 20% for the same period in 2011.
Although our principal markets remain difficult, many employers in these markets continue to experience mismatches between the skills they need and those that are available. There is a general oversupply of people available for work, but at the same time there is an undersupply of specific skills that are in demand. During the six months to 31 December 2012 the Cpl team continued to work closely with our clients to understand their specific requirements and with our candidates in order to match their skills to those client requirements. As a result our gross profit generated from permanent placements in the six months to December 2012 was €7.5 million, an increase of 21%. 38% of permanent fees are generated outside of Ireland.
Alongside this improvement in permanent placements, we continue to see many companies relying on innovative temporary employment solutions that allow them to recruit personnel based on the variable demands of the business. In the six months to 31 December 2012 the Group has continued to develop our competence in the provision of fully outsourced services that are complex and difficult to replicate, and which usually require a combination of a European language and a technical skill. Revenue generated from temporary assignments was €154.2 million representing 10% growth over last year. The corresponding gross profit was €16.2 million, 11% higher than the six months to December 2011. 9% of temporary fees are generated outside of Ireland.
The temporary staffing market is highly competitive. Against this backdrop we are very pleased to have increased the number of people placed with our clients from 7,853 in June 2012 to 8,500 in December 2012.
I am very proud of the Cpl team. They continue to demonstrate their skills, talents and abilities daily, for the benefit of our clients and our candidates, and I thank them for their on-going hard work and commitment to the Group.
Cash
The Group has a cash balance of €26.6 million at 31st December 2012. In the six months to December 2012 €6.0 million was generated in cash flow from operating activities before changes in working capital and provisions. We are encouraged by the increase in demand for our services. However, we remain cognisant of the investment in working capital required to drive organic growth in our temporary business.
Dividend
The Board has decided that the Company will pay an interim dividend of 4 cent per share, an increase of 33% on the corresponding period last year. The dividend will be payable on 8 March 2013 to shareholders on the company's register at the close of business on the record date of 1 February 2013. The Group has a progressive dividend policy which reflects underlying earnings growth and the continued strength of the Group's balance sheet.
Outlook
As we move into the second half of our financial year we are closely monitoring activity levels in all of our markets. Overall, we expect conditions to remain challenging but we continue to see opportunities for growth in key parts of our business. Although medium term visibility remains difficult in current market conditions, we expect our performance for the second half of our financial year to be similar to the first six months.
John Hennessy
Chairman
24 January 2013
Condensed Group Statement of Comprehensive Income | |||
for the period ended 31 December 2012 | |||
Half Year ended | Half Year ended | Year ended | |
31 Dec 2012 | 31 Dec 11 | 30 Jun 2012 | |
€'000 | €'000 | €'000 | |
(Unaudited) | (Unaudited) | Audited | |
Revenue | 161,671 | 142,718 | 290,240 |
Cost of sales | (137,958) | (121,881) | (246,702) |
Gross profit | 23,713 | 20,837 | 43,538 |
Distribution expenses | (1,399) | (1,366) | (2,555) |
Administrative expenses | (16,503) | (15,234) | (30,968) |
Operating profit | 5,811 | 4,237 | 10,015 |
Financial income | 145 | 292 | 501 |
Financial expenses | (2) | (1) | (762) |
Profit before tax | 5,954 | 4,528 | 9,754 |
Income tax expense | (773) | (589) | (1,364) |
Profit for the financial period / year - all attributable to equity shareholders |
5,181 | 3,939 | 8,390 |
Other Comprehensive Income Foreign currency translation differences - foreign operations | (11) | - | 49 |
Total comprehensive income for the period / year all attributable to equity shareholders |
5,170 | 3,939 | 8,439 |
Basic earnings per share | 16.9 cent | 10.9 cent | 25.6 cent |
Diluted earnings per share | 16.9 cent | 10.9 cent | 25.6 cent |
Condensed Group Statement of Changes in Equity
For the period ended 31 December 2012
Capital | Capital |
| ||||||||||
redemption | conversion | Currency | ||||||||||
Share | Share | reserve | reserve | Merger | translation | Retained | Total | |||||
Capital | Premium | fund | fund | reserve | reserve | earnings | equity | |||||
€'000 | €'000 | €'000 | €'000 | €'000 | €'000 | €'000 | €'000 | |||||
Balance at 1 July 2011 | 3,720 | 1,705 | - | 57 | (3,357) | 28 | 66,179 | 68,332 | ||||
Total comprehensive | ||||||||||||
income for the period | ||||||||||||
Profit for the financial period | - | - | - | - | - | - | 3,939 | 3,939 | ||||
Transactions with owners Capital redemption | (667) | - | 667 | - | - | - | (20,000) | (20,000) | ||||
Dividends paid | - | - | - | - | - | - | (930) | (930) | ||||
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|
|
|
|
| |||||||
Balance at 31 December 2011 | 3,053 | 1,705 | 667 | 57 | (3,357) | 28 | 49,188 | 51,341 | ||||
Balance at 1 July 2012 | 3,053 | 1,705 | 667 | 57 | (3,357) | 77 | 52,722 |
54,924 | ||||
Total comprehensive income for the period | ||||||||||||
Profit for the financial period | - | - | - | - | - | - | 5,181 | 5,181 | ||||
Foreign currency translation | (11) | (11) | ||||||||||
Transactions with owners Dividends paid | - | - | - | - | - | - | (1,069) | (1,069) | ||||
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|
|
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Balance at 31 December 2012 | 3,053 | 1,705 | 667 | 57 | (3,357) | 66 | 56,834 | 59,025 | ||||
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Condensed Group Balance Sheet | ||||||
at 31 December 2012 | ||||||
31 Dec 2012 | 31 Dec 2011 | 30 Jun 2012 |
| |||
| €'000 | €'000 | €'000 |
| ||
(Unaudited) | (Unaudited) | (Audited) |
| |||
Assets |
| |||||
Non-current assets |
| |||||
Property, plant and equipment | 1,250 | 1,111 | 1,233 |
| ||
Goodwill and intangible assets | 12,880 | 11,682 | 12,752 |
| ||
Deferred tax asset | 483 | 467 | 483 |
| ||
Total non-current assets | 14,613 | 13,260 | 14,468 |
| ||
| ||||||
Current assets |
| |||||
Trade and other receivables | 58,034 | 51,443 | 52,012 |
| ||
Cash and cash equivalents | 22,416 | 13,543 | 23,871 |
| ||
Short-term bank deposits | 4,176 | 8,000 | 4,176 |
| ||
Current tax recoverable | 727 | - | 719 |
| ||
Total current assets | 85,353 | 72,986 | 80,778 |
| ||
Total assets | 99,966 | 86,246 | 95,246 |
| ||
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Equity |
| |||||
Issued share capital | 3,053 | 3,053 | 3,053 |
| ||
Share premium | 1,705 | 1,705 | 1,705 |
| ||
Other reserves | (2,567) | (2,605) | (2,556) |
| ||
Retained earnings | 56,834 | 49,188 | 52,722 |
| ||
Total equity | 59,025 | 51,341 | 54,924 |
| ||
Liabilities |
| |||||
Non-current liabilities |
| |||||
Financial liabilities | 8 | 40 | 25 |
| ||
Provisions | 1,740 | 625 | 1,740 |
| ||
Total non-current liabilities | 1,748 | 665 | 1,765 |
| ||
Current liabilities |
| |||||
Financial liabilities | 5 | 97 | 8 |
| ||
Bank overdraft | 17 | 26 | 17 |
| ||
Trade and other payables | 38,633 | 33,696 | 37,181 |
| ||
Current tax payable | 256 | 116 | 521 |
| ||
Provisions | 282 | 305 | 830 |
| ||
Total current liabilities | 39,193 | 34,240 | 38,557 |
| ||
Total liabilities | 40,941 | 34,905 | 40,322 |
| ||
Total equity and liabilities | 99,966 | 86,246 | 95,246 |
| ||
Condensed Group Cash Flow statement |
| |||||
for the period ended 31 December 2012 |
| |||||
Half year ended 31 Dec 2012 | Half year ended 31 Dec 2011 | Year ended 30 Jun 2012 | |
€'000 | €'000 | €'000 | |
(Unaudited) | (Unaudited) | (Audited) | |
Cash flows from operating activities | |||
Profit for the financial period / year | 5,181 | 3,939 | 8,390 |
Adjustments for: | |||
Depreciation on property, plant and equipment | 165 | 239 | 330 |
Amortisation of intangible assets | 59 | 62 | 255 |
Financial income | (145) | (292) | (501) |
Financial expense | 2 | 1 | 762 |
Income tax expense | 773 | 589 | 1,364 |
Operating cashflows before changes in working | |||
capital and provisions | 6,035 | 4,538 | 10,600 |
(Increase) in trade and | |||
other receivables | (6,547) | (10,079) | (10,655) |
Increase in trade and other payables and provisions | 1,452 | 2,461 | 5,622 |
Cash generated from operations | 940 | (3,080) | 5,567 |
Interest paid | (2) | (1) | (12) |
Income tax (paid) | (517) | (594) | (1,724) |
Interest received | 130 | - | 465 |
Net cash from operating activities | 551 | (3,675) | 4,296 |
Cash flows from investing activities | |||
Acquisition of business, net of cash acquired | - | - | (204) |
Deferred consideration paid | (548) | (100) | (100) |
Purchase of property, plant and equipment | (182) | (114) | (334) |
Purchase of intangible assets | (187) | (1) | (14) |
Transfer from short term deposits | - | - | 3,824 |
Net cash (used in) / from investing activities | (917) | (215) | 3,172 |
Cash flows from financing activities | |||
(Decrease) / increase in finance leases | (20) | 13 | (91) |
Dividends paid | (1,069) | (930) | (1,847) |
Repurchase of own shares | - | (20,000) | (20,000) |
Net cash (used in) financing activities | (1,089) | (20,917) | (21,938) |
Net decrease in cash and cash equivalents | (1,455) | (24,807) | (14,470) |
Cash and cash equivalents at beginning of period / year | 23,854 | 38,324 | 38,324 |
Cash and cash equivalents end of period / year | 22,399 | 13,517 | 23,854 |
Notes supporting condensed interim financial statements
1. Basis of preparation
The consolidated financial information of the Group has been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards (IFRS), including interpretations issued by the International Accounting Standards Board ("IASB") and its committees and adopted by the EU.
The figures for the half year ended 31 December 2012 are unaudited. The comparative figures for the half year ended 31 December 2011 are also unaudited. The amounts for the year ended 30 June 2012 represent an abbreviated version of the Group's full financial statements for the year on which the auditors issued an unqualified audit report. The financial statements for the year ended 30 June 2012 have been filed with the registrar of companies.
The preparation of financial information in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources.
2. Dividends to equity shareholders
Half Year ended | Half Year ended | Year ended | |
31 Dec 2012 | 31 Dec 2011 | 30 June 2012 | |
€'000 | €'000 | €'000 | |
Ordinary dividends: | |||
Interim dividends paid | - | - | 917 |
Final dividend paid | 1,069 | 930 | 930 |
1,069 | 930 | 1,847 |
3. Earnings per ordinary share
The earnings per ordinary share is calculated on the basis that the weighted average number of shares in issue for the half year ended 31 December 2012 is 30,545,159 (period ended 31 December 2011 - 36,100,714; year ended 30 June 2012 - 32,767,381). It has been calculated based on the profit for the financial period ended 31 December 2012 of €5,170,000 (period ended 31 December 2011 - €3,939,000; year ended 30 June 2012 - €8,390,000).