29 Jan 2015 07:00
Cpl Resources plc
Results for the Half Year Ended 31 December 2014
Cpl Resources plc ('Cpl', the 'Group' or the 'Company'), Ireland's leading employment services group, today announced results for the half year ended 31 December 2014.
Chairman's statement
I am pleased to report that in the six months to 31 December 2014 the Group delivered a growth in revenues and gross profit. We have also made significant investment in our operations during the period.
Highlights
§ 5% increase in revenue to €193.2 million
§ 5% increase in gross profit to €28.2 million
§ 13% decrease in operating profit and earnings per share as we invest in operations
§ Interim dividend unchanged at 4.75 cent per share
Half Year Highlights | 6 months ended | 6 months ended | % change | |
31 December 2014 | 31 December 2013 | |||
€ 000's | € 000's | |||
Revenue | 193,218 | 184,327 | 5% | |
Gross profit | 28,227 | 27,002 | 5% | |
Operating profit | 5,970 | 6,855 | (13%) | |
Profit before tax | 6,051 | 6,956 | (13%) | |
Earnings per share | 17.2 cent | 19.8 cent | (13%) | |
Dividend per share | 4.75 cent | 4.75 cent | - | |
Conversion Ratio* | ||||
Operating profit | 21.1% | 25.4% | ||
Profit before tax | 21.4% | 25.8% | ||
Permanent gross profit | 11,162 | 10,043 | 11% | |
Temporary gross profit | 17,065 | 16,959 | 1% | |
Permanent gross profit as % of the total gross profit | 40% | 37% | ||
Temporary gross profit as % of the total gross profit | 60% | 63% | ||
* as % of gross profit.
During the six months to 31 December 2014 the Group delivered growth across the business, resulting in revenues of €193.2 million for the half year. Our gross profit grew by 5% against the same period last year to €28.2m. The Group's operating profit of €6.0 million for the six months to 31 December 2014 is 13% lower than the same period last year. Profit before tax decreased by €0.9 million to €6.1 million as the Group invested in its operations during the period. The Group delivered earnings per share of 17.2 cent for the six months to 31 December 2014.
We have made significant investment in our people, operations, infrastructure and facilities, and much of the associated cost has been charged against profits. As a consequence, our conversion rate of gross profit to operating profit has fallen to 21.1%, from 25.4% in the same period last year.
We are experiencing gradual improvements in market conditions, although significant pricing challenges and economic headwinds are being experienced in a number of sectors and locations. 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 31 December 2014 was €11.2 million, an increase of 11%. Permanent fees generated outside of Ireland represented 42% of total permanent fees in the period.
In the six months to 31 December 2014 revenue generated from temporary assignments was €182.0 million, representing 5% growth over same period last year. The gross profit on these fees was €17.1 million, 1% higher than the six months to 31 December 2013.
Margin pressure continues across the temporary staffing market and this market segment remains highly competitive. We have an average number of people placed with our clients of 11,079 for the period ended 31 December 2014.
We continue to employ 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 the Group.
Cash
The Group has a cash balance of €24.2 million as at 31 December 2014. In the six months to 31 December 2014 €6.3 million was generated in cash flow from operating activities before changes in working capital. Our temporary business requires significant investments in working capital and this, together with our investments in our operations, has given rise to a net cash outflow from cash and cash equivalents of €6.3 million in the period.
Dividend
The Board has decided that the Company will pay an interim dividend of 4.75 cent per share. The dividend will be payable on 6th March 2015 to shareholders on the company's register at the close of business on the record date of 6th February 2015. The Group has a progressive dividend policy which reflects underlying earnings growth and the continued strength of the Group's balance sheet.
Outlook
In the six month period to 31 December 2014 we have increased significantly our investment in the Group's operations. We have done so in order to be well positioned to take advantage of expected improvements in our key markets. Although we still face challenges in several markets and sectors arising from economic uncertainty and continuing competitive and client pressures, our strong financial position will provide us with the resources to capitalise on growth opportunities as they arise. While the pace of recovery remains uncertain in many markets, we expect the remainder of the financial year to show profitable growth on the previous six months for the Group.
John Hennessy
Chairman
29 January 2015
Condensed Group Statement of Comprehensive Income | |||
for the period ended 31 December 2014 | |||
6 months ended | 6 months ended | Year ended | |
31 December 2014 | 31 December 2013 | 30 June 2014 | |
€'000 | €'000 | €'000 | |
(Unaudited) | (Unaudited) | Audited | |
Revenue | 193,218 | 184,327 | 369,273 |
Cost of sales | (164,991) | (157,325) | (314,601) |
Gross profit | 28,227 | 27,002 | 54,672 |
Distribution expenses | (1,852) | (1,650) | (3,423) |
Administrative expenses | (20,405) | (18,497) | (37,032) |
Operating profit | 5,970 | 6,855 | 14,217 |
Financial income | 81 | 107 | 170 |
Financial expenses | - | (6) | (3) |
Profit before tax | 6,051 | 6,956 | 14,384 |
Income tax expense | (787) | (904) | (1,937) |
Profit for the financial period/year - all attributable to equity shareholders |
5,264 |
6,052 | 12,447 |
Other Comprehensive Income Foreign currency translation differences - foreign operations | (91) | (70) | (101) |
Total comprehensive income for the period/year all attributable to equity shareholders |
5,173 |
5,982 | 12,346 |
Basic earnings per share | 17.2 cent | 19.8 cent | 40.7 cent |
Diluted earnings per share | 17.2 cent | 19.8 cent | 40.7 cent |
Condensed Group Statement of Changes in Equity
for the period ended 31 December 2014
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Condensed Group Balance Sheet | ||||||
at 31 December 2014 | ||||||
31 December 2014 | 31 December 2013 | 30 June 2014 | ||||
| €'000 | €'000 | €'000 | |||
(Unaudited) | (Unaudited) | (Audited) | ||||
Assets | ||||||
Non-current assets | ||||||
Property, plant and equipment | 1,817 | 1,268 | 1,320 | |||
Goodwill and intangible assets | 12,346 | 11,679 | 11,984 | |||
Deferred tax asset | 422 | 507 | 386 | |||
Total non-current assets | 14,585 | 13,454 | 13,690 | |||
Current assets | ||||||
Trade and other receivables | 77,891 | 71,335 | 69,978 | |||
Cash and cash equivalents | 24,226 | 22,097 | 30,518 | |||
Current tax recoverable | - | 702 | - | |||
Total current assets | 102,117 | 94,134 | 100,496 | |||
Total assets | 116,702 | 107,588 | 114,186 | |||
Equity | ||||||
Issued share capital | 3,053 | 3,053 | 3,053 | |||
Share premium | 1,705 | 1,705 | 1,705 | |||
Other reserves | (2,688) | (2,693) | (2,670) | |||
Retained earnings | 74,482 | 65,801 | 70,745 | |||
Total equity | 76,552 | 67,866 | 72,833 | |||
Liabilities | ||||||
Current liabilities | ||||||
Financial liabilities | - | - | - | |||
Bank overdraft | - | - | - | |||
Trade and other payables | 40,051 | 39,648 | 40,892 | |||
Current tax payable | 99 | - | 386 | |||
Provisions | - | 74 | 75 | |||
Total current liabilities | 40,150 | 39,722 | 41,353 | |||
Total liabilities | 40,150 | 39,722 | 41,353 | |||
Total equity and liabilities | 116,702 | 107,588 | 114,186 | |||
Condensed Group Cash Flow statement | ||||||
for the period ended 31 December 2014 | ||||||
6 months ended 31 December 2014 | 6 months ended 31 December 2013 | Year ended 30 June 2014 | |
€'000 | €'000 | €'000 | |
(Unaudited) | (Unaudited) | (Audited) | |
Cash flows from operating activities | |||
Profit for the financial period/year | 5,264 | 6,052 | 12,447 |
Adjustments for: | |||
Depreciation on property, plant and equipment | 192 | 245 | 415 |
Share based payment charge | 73 | - | 54 |
Amortisation of intangible assets | 43 | 40 | 81 |
Financial income | (81) | (107) | (170) |
Financial expense | - | 6 | 3 |
Income tax expense | 787 | 904 | 1,937 |
Operating cash flows before changes in working | |||
capital | 6,278 | 7,140 | 14,767 |
(Increase) in trade and | |||
other receivables | (8,088) | (9,471) | (8,097) |
(Decrease)/increase in trade and other payables and provisions | (841) | (876) | 368 |
Net cash (used in)/generated from operations | (2,651) | (3,207) | 7,038 |
Interest paid | - | (6) | (3) |
Income tax paid | (1,110) | (900) | (724) |
Interest received | 165 | 92 | 108 |
Net cash (outflow)/inflow from operating activities | (3,596) | (4,021) | 6,419 |
Cash flows from investing activities | |||
Deferred consideration paid | (75) | (76) | (75) |
Purchase of property, plant and equipment | (689) | (342) | (567) |
Purchase of intangible assets | (405) | (20) | (364) |
Net cash (used in) investing activities | (1,169) | (438) | (1,006) |
Cash flows from financing activities | |||
Dividends paid | (1,527) | (1,375) | (2,826) |
Net cash (used in) financing activities | (1,527) | (1,375) | (2,826) |
Net (decrease)/increase in cash and cash equivalents | (6,292) | (5,834) | 2,587 |
Cash and cash equivalents at beginning of period/year | 30,518 | 27,931 | 27,931 |
Cash and cash equivalents end of period/year | 24,226 | 22,097 | 30,518 |
Notes supporting condensed interim financial statements
1. Basis of preparation
The consolidated financial information of the Group has been prepared in euro 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 2014 are unaudited. The comparative figures for the half year ended 31 December 2013 are also unaudited. The amounts for the year ended 30 June 2014 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 2014 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
6 months ended | 6 months ended | Year ended | |
31 December 2014 | 31 December 2013 | 30 June 2014 | |
€'000 | €'000 | €'000 | |
Ordinary dividends: | |||
Interim dividends paid | - | - | 1,451 |
Final dividend paid | 1,527 | 1,375 | 1,375 |
1,527 | 1,375 | 2,826 |
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 2014 is 30,545,159 (period ended 31 December 2013 - 30,545,159; year ended 30 June 2014 - 30,545,159). It has been calculated based on the profit for the financial period ended 31 December 2014 of €5,264,000 (period ended 31 December 2013 - €6,052,000; year ended 30 June 2014 - €12,447,000).