2 Feb 2009 07:00
Cpl RESOURCES plc
Results for the Half Year Ended 31 December 2008
Cpl Resources plc, Ireland's leading employment services group, today announced results for the half year ended 31st December 2008.
Financial results
| | Half Year ended | Half Year ended |
| | 31-Dec-08 | 31-Dec-07 |
| Operating highlights | €'000 | €'000 |
| | ( Unaudited) | ( Unaudited) |
| | | |
| Revenue | 118,945 | 132,421 |
| Gross profit | 20,517 | 27,804 |
| Profit before tax and Impairment | 6,022 | 11,732 |
| Goodwill Impairment | (4,500) | |
| Profit Before tax | 1,522 | 11,732 |
| EPS | 2.0 cent | 27.4 cent |
| | | |
| Gross Margin | 17% | 21% |
| Operating Margin | 5% | 9% |
| Conversion Ratio | 29% | 42% |
| | | |
| Permanent Fees as % of total gross profit | 40% | 49% |
| Temporary Fees as % of total gross profit | 60% | 51% |
| | | |
| | | |
| Number of Net Fee Earners | 255 | 327 |
| | | |
Cpl is pleased to report profits before tax and impairment charges of €6.022 million for the six months ended 31 December 2008. This result has been achieved against an extremely challenging business and employment background in our principal markets.
Since 30th June 2008 the global economic downturn has gathered pace, adversely affecting business performance and employment activity in Ireland and in many other parts of the world. The confidence of employers and job candidates has been adversely affected by the downturn and this has had a negative impact on the trading and financial performance of the Cpl Group. We are experiencing a significant reduction in activity as businesses retrench and potential job candidates defer possible job changes, and it has become more difficult to forecast future performance accurately.
Notwithstanding these developments, Cpl continues to be the leader in a highly competitive environment. Although we have reduced our costs significantly, we are maintaining our focus on the delivery of valuable products and quality services to our clients and candidates.
In the six months to 31 December 2008 Group net fee income fell by 26% when measured against the same period last year, reflecting the deterioration in market conditions in most of the countries in which we operate. Net fee income from the permanent placement business decreased by 40% in the six months to December 2008. Net fee income in our temporary placement business, which has been more resilient to date across most of the group, fell by 10%. The pace of the fall in net fee income accelerated during the six months to 31 December 2008.
Cpl has reacted quickly and decisively to the downturn in business caused by the worsening economic environment. We are continuing to respond appropriately to these challenges by managing our cost base, focusing on cash generation and maximising our opportunities in both the temporary and permanent placement markets. The Group had cash balances of €36.4 million at 31 December 2008, and our net cash position has improved further since that date. Our balance sheet remains strong.
In the period since we issued our trading statement in December 2008 we have taken the opportunity to review the carrying value of Goodwill in our balance sheet. Although our annual impairment review was not due to be undertaken until mid-2009, we decided to conduct such a review now in the context of the current business environment. As might be expected, the reduction in business activity caused by the downturn, combined with the uncertain trading conditions facing us in the near future, have given rise to the need to recognise impairments in the carrying values of goodwill arising from the acquisitions of certain businesses in recent years. The total impairment charge required on foot of this review is €4.5 million, and the Board has decided that it is appropriate to record this charge in the six month period to 31 December 2008. A further impairment review will be conducted in connection with the preparation of our financial statements for the year to 30 June 2009.
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The continued success of CPL Resources plc, notwithstanding the difficult trading conditions, is attributable in the main to our entire team and to their tireless dedication to providing a service of exceptional quality. It is also a result of the loyalty and partnership approach of our clients. We are grateful to our clients for their support and their creative approach to doing business.
The Board is recommending an interim dividend of 1.5 cent per share. The dividend will be payable on 13th March 2009 to shareholders on the company's register at the close of business on the record date of 13th February 2009.
John Hennessy
Group Income Statement
For the half year ended 31 December 2008
| Half Year ended | Half Year ended | Year ended | |
| 31 Dec 2008 | 31 Dec 2007 | 30 Jun 2008 | |
| €'000 | €'000 | €'000 | |
| ( Unaudited) | ( Unaudited) | Audited | |
| Revenue | 118,945 | 132,421 | 257,640 |
| Cost of sales | (98,428) | (104,617) | (205,162) |
| Gross profit | 20,517 | 27,804 | 52,478 |
| Distribution expenses | (982) | (1,171) | (2,296) |
| Administrative expenses | (18,844) | (15,202) | (30,413) |
| Operating profit | 691 | 11,431 | 19,769 |
| Financial income | 832 | 302 | 928 |
| Financial expenses | (1) | (1) | (20) |
|
|
|
| |
| Profit before tax | 1,522 | 11,732 | 20,677 |
| Income tax expense | (783) | (1,525) | (2,657) |
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|
|
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| Profit for the Financial Year | 739 | 10,207 | 18,020 |
| Attributable to: | |||
| Equity Shareholders | 697 | 10,190 | 17,976 |
| Minority interest | 42 | 17 | 44 |
| 739 | 10,207 | 18,020 | |
| Basic earnings per share | 2.0 cent | 27.4 cent | 48.3 cent |
| Diluted earnings per share | 2.0 cent | 27.4 cent | 48.3 cent |
Consolidated Balance Sheet
@ 31 December 2008
| Half Year ended | Half Year ended | Year ended | |
| 31 Dec 2008 | 31 Dec 2007 | 30 Jun 2008 | |
| €'000 | €'000 | €'000 | |
| ( Unaudited) | ( Unaudited) | ( Audited) | |
| Assets | |||
| Non-current assets | |||
| Property, plant and equipment | 1,436 | 1,469 | 1,541 |
| Goodwill and Intangible assets | 13,875 | 17,846 | 18,513 |
| Deferred tax asset | 93 | 13 | 4 |
| Total non-current assets | 15,404 | 19,328 | 20,058 |
| Current assets | |||
| Trade and other receivables | 34,387 | 33,234 | 35,086 |
| Cash and cash equivalents | 36,437 | 29,636 | 37,622 |
| Total current assets | 70,824 | 62,870 | 72,708 |
| Total assets | 86,228 | 82,198 | 92,766 |
| Equity | |||
| Issued capital | 3,720 | 3,719 | 3,720 |
| Share premium | 1,705 | 1,701 | 1,705 |
| Merger reserve | (3,300) | (3,300) | (3,300) |
| Retained earnings | 58,075 | 51,453 | 58,309 |
| 60,200 | 53,573 | 60,434 | |
| Minority Interest | 98 | 29 | 56 |
| Total equity | 60,298 | 53,602 | 60,490 |
| Liabilities | |||
| Non-current liabilities | |||
| Financial liabilities | 56 | - | 69 |
| Provisions | 268 | 967 | 268 |
| Total non-current liabilities | 324 | 967 | 337 |
| Current liabilities | |||
| Financial liabilities | 21 | 67 | 18 |
| Bank overdraft | - | - | 76 |
| Trade and other payables | 24,401 | 23,537 | 29,059 |
| Corporation tax payable | 941 | 1,415 | 182 |
| Provisions | 243 | 2,610 | 2,604 |
| Total current liabilities | 25,606 | 27,629 | 31,939 |
| Total liabilities | 25,930 | 28,596 | 32,276 |
| Total equity and liabilities | 86,228 | 82,198 | 92,766 |
| Group Cash Flow statements | Half Year ended | Half Year ended | Year ended |
| for the half year ended 31 December 2008 | 31 Dec 2008 | 31 Dec 2007 | 30 Jun 2008 |
| €'000 | €'000 | €'000 | |
| ( Unaudited) | ( Unaudited) | ( Audited) | |
| Cash flows from operating activities | |||
| Profit for the period | 738 | 10,207 | 18,020 |
| Adjustments for: | |||
| Depreciation on property, plant and equipment | 275 | 196 | 347 |
| Profit on disposal of Fixed assets | (32) | ||
| Amortisation of intangible assets | 138 | 96 | 394 |
| Impairment of Goodwill | 4,500 | - | - |
| Financial income | (832) | (302) | (928) |
| Financial expense | 1 | 1 | 20 |
| Income tax expense | 783 | 1,525 | 2,657 |
| Operating profit before changes in working | |||
| capital and provisions | 5,603 | 11,723 | 20,478 |
| decrease/(increase) in trade and | |||
| other receivables | 698 | (7,287) | (7,473) |
| (decrease) /increase in trade and other payables and provisions | (4,576) | 643 | 4,526 |
| Cash generated from operations | 1,725 | 5,079 | 17,531 |
| Interest paid | (1) | (1) | (20) |
| Income tax refund / ( paid) | (28) | - | (2,282) |
| Interest received | 666 | 302 | 777 |
| Net cash from operating activities | 2,362 | 5,380 | 16,006 |
| Cash flows from investing activities | |||
| Acquisition of subsidiary, net of cash acquired | - | (2,639) | (3,450) |
| Deferred consideration paid | (2,361) | (1,313) | (1,902) |
| Purchase of property, plant and equipment | (170) | (308) | (622) |
| Sale of property , Plant and equipment | - | - | 63 |
| Purchase of intangible assets | - | - | (160) |
| Net cash from investing activities | (2,531) | (4,260) | (6,071) |
| Cash flows from financing activities | |||
| Repayment of borrowings | (10) | (271) | (338) |
| Proceeds from new loan | - | - | 87 |
| Dividends paid | (930) | (837) | (1,767) |
| Proceeds from issue of share capital | - | - | 5 |
| Net cash from financing activities | (940) | (1,108) | (2,013) |
| Net increase in cash and cash equivalents | (1,109) | 12 | 7,922 |
| Cash and cash equivalents at beginning of year | 37,546 | 29,624 | 29,624 |
| Cash and cash equivalents end of year | 36,437 | 29,636 | 37,546 |
Notes supporting 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 endorsed by the European Commission.
The figures for the half year ended 31 December 2008 are unaudited. The comparative figures for the half year ended 31 December 2007 are also unaudited. The amounts for the year ended 30 June 2008 represent an abbreviated version of the Group's full financial statements for the year on which the auditors issued an unqualified audit report.
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 paid | |||
| Half Year ended | Half Year ended | Year ended | |
| 31 December 2008 | 31 December 2007 | 30 June 2008 | |
| €'000 | €'000 | €'000 | |
| Ordinary dividends: | |||
| Interim dividend paid | - | - | 837 |
| Final dividend paid | 930 | 837 | 930 |
| 930 | 837 | 1,767 |
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 2008 is 37,211,825 (period ended 31 December 2007 - 37,199,825; year ended 30 June 2008 - 37,208,800). It has been calculated based on the profit for the financial period ended 31 December 2008 of €697,000 (period ended 31 December 2007 - €10,190,000; year ended 30 June 2008 - €17,976,000).
For Further Information:
Anne Heraty, CEO , CPL Resources, 01 614 6000
Josephine Tierney, Finance Director, 01 6146000
Ends