30 Jan 2014 07:00
Cpl Resources plc
Results for the Half Year Ended 31 December 2013
Cpl Resources plc ('Cpl', the 'Group' or the 'Company'), Ireland's leading employment services group, today announced results for the half year ended 31st December 2013.
Chairman's statement
I am pleased to report that in the six months to 31 December 2013 the Group delivered a strong operating performance, with improved revenues, gross profits and earnings per share.
Highlights
§ Strong operating performance
§ 14% increase in revenue to €184.3 million
§ 18% increase in operating profit to €6.9 million
§ 17% increase in profit before tax to €7.0 million
§ 17% increase in earnings per share to 19.8 cent
§ 19% increase in interim dividend per share to 4.75 cent
Half Year Highlights | Half Year Ended | Half Year Ended | % change |
31-Dec-13 | 31-Dec-12 | ||
€ 000's | € 000's | ||
Revenue | 184,327 | 161,671 | 14% |
Gross profit | 27,002 | 23,713 | 14% |
Operating profit | 6,855 | 5,811 | 18% |
Profit before tax | 6,956 | 5,954 | 17% |
Earnings per share | 19.8 cent | 16.9 cent | 17% |
Dividend per share | 4.75 cent | 4.0 cent | 19% |
Conversion Ratio* | |||
Operating profit | 25.4% | 24.5% | |
Profit before tax | 25.8% | 25.1% | |
Permanent gross profit | 10,043 | 7,521 | 34% |
Temporary gross profit | 16,959 | 16,192 | 5% |
Permanent gross profit as % of the total gross profit | 37% | 32% | |
Temporary gross profit as % of the total gross profit | 63% | 68% |
* as % of gross profit.
During the six months to 31 December 2013 the Group continued the delivery of strong growth across the business, resulting in record revenues of €184.3 million for the half year. The Group's operating profit of €6.9 million for the six months to 31 December 2013 is 18% higher than the same period last year. Profit before tax increased by €1.0 million to €7.0 million. Earnings per share of 19.8 cent for the six months to 31 December 2013, represents a 17% increase when compared to 16.9 cent for the half year to 31 December 2012.
We have 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 25.4% up from 24.5% in the same period last year.
We continue to experience a degree of positive momentum in our principal markets, although significant economic challenges remain in many of those markets. There is a general oversupply of people available for work, but at the same time there is a shortage of specific skills that are in demand. The Cpl team has 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 2013 was €10.0 million, an increase of 34%. I am particularly pleased to report strong growth in our international business, reflected by the fact that 40% of our permanent fees were generated outside of Ireland in the six months to 31 December 2013
We continue to see many companies opting for temporary employment offering that enables them to recruit personnel based on the variable demands of their businesses. In the six months to 31 December 2013 the Group has continued to develop our competence in the provision of fully outsourced services, which require specific technical skills and multiple European languages. Revenue generated from temporary assignments was €174.2 million, representing 13% growth over same period last year. The corresponding gross profit was €17.0 million, 5% higher than the six months to 31 December 2012. 9% of temporary gross profit was generated outside of Ireland.
Margin pressure continues across the temporary staffing market and this market segment remains highly competitive. We are very pleased to have increased the average number of people placed with our clients to in excess of 9,150 for the period ended 31 December 2013.
We continue to enjoy the benefits of having highly talented and energetic people within the Group. On behalf of the Board I wish to express my gratitude for the continuing hard work and dedication of our people and for their commitment to our core values - customer focus, accountability, respect, effective communication and empowerment.
Cash
The Group has a cash balance of €22.1 million as at 31 December 2013. In the six months to 31 December 2013 €7.1 million was generated in cash flow from operating activities before changes in working capital and provisions. Strong organic growth in our temporary business requires significant investments in working capital, and this has given rise to a net cash outflow from operations of €3.2 million in the period.
Dividend
The Board has decided that the Company will pay an interim dividend of 4.75 cent per share, an increase of 19% on the corresponding period last year. The dividend will be payable on 7th March 2014 to shareholders on the company's register at the close of business on the record date of 7th February 2014. The Group has a progressive dividend policy which reflects underlying earnings growth and the continued strength of the Group's balance sheet.
Outlook
Recent months have seen some indicators in our principal markets move tentatively into positive territory. We see opportunities for growth but we still face challenges in many markets arising from economic uncertainty and competitive pressures. Our strong financial position provides use with the resources to capitalise on growth opportunities as they arise. We expect further profitable growth in the second half of our financial year.
John Hennessy
Chairman
30 January 2014
Condensed Group Statement of Comprehensive Income | |||
for the period ended 31 December 2013 | |||
Half Year ended | Half Year ended | Year ended | |
31 Dec 2013 | 31 Dec 2012 | 30 Jun 2013 | |
€'000 | €'000 | €'000 | |
(Unaudited) | (Unaudited) | Audited | |
Revenue | 184,327 | 161,671 | 330,758 |
Cost of sales | (157,325) | (137,958) | (281,915) |
Gross profit | 27,002 | 23,713 | 48,843 |
Distribution expenses | (1,650) | (1,399) | (2,930) |
Administrative expenses | (18,497) | (16,503) | (34,193) |
Operating profit | 6,855 | 5,811 | 11,720 |
Financial income | 107 | 145 | 573 |
Financial expenses | (6) | (2) | (9) |
Profit before tax | 6,956 | 5,954 | 12,284 |
Income tax expense | (904) | (773) | (1,591) |
Profit for the financial period / year - all attributable to equity shareholders |
6,052 |
5,181 | 10,693 |
Other Comprehensive Income Foreign currency translation differences - foreign operations | (70) | (11) | (67) |
Total comprehensive income for the period / year all attributable to equity shareholders |
5,982 |
5,170 | 10,626 |
Basic earnings per share | 19.8 cent | 16.9 cent | 35.0 cent |
Diluted earnings per share | 19.8 cent | 16.9 cent | 35.0 cent |
Condensed Group Statement of Changes in Equity
for the period ended 31 December 2013
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Condensed Group Balance Sheet | ||||||
at 31 December 2013 | ||||||
31 Dec 2013 | 31 Dec 2012 | 30 Jun 2013 | ||||
| €'000 | €'000 | €'000 | |||
(Unaudited) | (Unaudited) | (Audited) | ||||
Assets | ||||||
Non-current assets | ||||||
Property, plant and equipment | 1,268 | 1,250 | 1,168 | |||
Goodwill and intangible assets | 11,679 | 12,880 | 11,701 | |||
Deferred tax asset | 507 | 483 | 457 | |||
Total non-current assets | 13,454 | 14,613 | 13,326 | |||
Current assets | ||||||
Trade and other receivables | 71,335 | 58,034 | 61,920 | |||
Cash and cash equivalents | 22,097 | 22,416 | 27,931 | |||
Short-term bank deposits | - | 4,176 | - | |||
Current tax recoverable | 702 | 727 | 756 | |||
Total current assets | 94,134 | 85,353 | 90,607 | |||
Total assets | 107,588 | 99,966 | 103,933 | |||
Equity | ||||||
Issued share capital | 3,053 | 3,053 | 3,053 | |||
Share premium | 1,705 | 1,705 | 1,705 | |||
Other reserves | (2,693) | (2,567) | (2,623) | |||
Retained earnings | 65,801 | 56,834 | 61,124 | |||
Total equity | 67,866 | 59,025 | 63,259 | |||
Liabilities | ||||||
Non-current liabilities | ||||||
Financial liabilities | - | 8 | - | |||
Provisions | - | 1,740 | - | |||
Total non-current liabilities | - | 1,748 | - | |||
Current liabilities | ||||||
Financial liabilities | - | 5 | - | |||
Bank overdraft | - | 17 | - | |||
Trade and other payables | 39,648 | 38,633 | 40,524 | |||
Current tax payable | - | 256 | - | |||
Provisions | 74 | 282 | 150 | |||
Total current liabilities | 39,722 | 39,193 | 40,674 | |||
Total liabilities | 39,722 | 40,941 | 40,674 | |||
Total equity and liabilities | 107,588 | 99,966 | 103,933 | |||
Condensed Group Cash Flow statement | ||||||
for the period ended 31 December 2013 | ||||||
Half year ended 31 Dec 2013 | Half year ended 31 Dec 2012 | Year ended 30 Jun 2013 | |
€'000 | €'000 | €'000 | |
(Unaudited) | (Unaudited) | (Audited) | |
Cash flows from operating activities | |||
Profit for the financial period / year | 6,052 | 5,181 | 10,693 |
Adjustments for: | |||
Depreciation on property, plant and equipment | 245 | 165 | 327 |
Amortisation of intangible assets | 40 | 59 | 124 |
Financial income | (107) | (145) | (573) |
Financial expense | 6 | 2 | 9 |
Income tax expense | 904 | 773 | 1,591 |
Loss on sale of subsidiary | - | - | 167 |
Operating cashflows before changes in working | |||
capital | 7,140 | 6,035 | 12,338 |
(Increase) in trade and | |||
other receivables | (9,471) | (6,547) | (10,748) |
(Decrease)/Increase in trade and other payables and provisions | (876) | 1,452 | 3,702 |
Net Cash generated from operations | (3,207) | 940 | 5,292 |
Interest paid | (6) | (2) | (9) |
Income tax paid | (900) | (517) | (2,086) |
Interest received | 92 | 130 | 329 |
Net cash (outflow)/inflow from operating activities | (4,021) | 551 | 3,526 |
Cash flows from investing activities | |||
Deferred consideration paid | (76) | (548) | (799) |
Disposal of business net of cash disposed of | - | - | 25 |
Purchase of property, plant and equipment | (342) | (182) | (260) |
Purchase of intangible assets | (20) | (187) | (267) |
Transfer from short term deposits | - | - | 4,176 |
Net cash (used in) / from investing activities | (438) | (917) | 2,875 |
Cash flows from financing activities | |||
(Decrease) in finance leases | - | (20) | (33) |
Dividends paid | (1,375) | (1,069) | (2,291) |
Net cash (used in) financing activities | (1,375) | (1,089) | (2,324) |
Net (decrease)/increase in cash and cash equivalents | (5,834) | (1,455) | 4,077 |
Cash and cash equivalents at beginning of period / year | 27,931 | 23,854 | 23,854 |
Cash and cash equivalents end of period / year | 22,097 | 22,399 | 27,931 |
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 2013 are unaudited. The comparative figures for the half year ended 31 December 2012 are also unaudited. The amounts for the year ended 30 June 2013 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 2013 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 2013 | 31 Dec 2012 | 30 June 2013 | |
€'000 | €'000 | €'000 | |
Ordinary dividends: | |||
Interim dividends paid | - | - | 1,222 |
Final dividend paid | 1,375 | 1,069 | 1,069 |
1,375 | 1,069 | 2,291 |
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 2013 is 30,545,159 (period ended 31 December 2012 - 30,545,159; year ended 30 June 2013 - 30,545,159). It has been calculated based on the profit for the financial period ended 31 December 2013 of €6,052,000 (period ended 31 December 2012 - €5,181,000; year ended 30 June 2013 - €10,693,000).