RNS Number : 8004C
CPL Resources PLC
04 September 2008
CPL RESOURCES plc
Full Year Results for the Year Ended 30th June 2008
CPL Resources plc, Ireland's leading employment services group, today announced full year results for the year ended 30th June 2008.
Financial Highlights
* Sales EUR257.6 m (2007: EUR195.5 m)
* Net Fee Income EUR52.5 m (2007: EUR43 m)
* Profit before tax EUR20.7m (2007: EUR19.3 m)
* Earning per share 48.3 cent (2007: 45 cent)
* Conversion ratio 39.4% (2007: 44.8%)
* Net Cash EUR37.5m (2007: EUR29.6 million)
* Dividend 5.0 cent per share (2007: 4 cent)
John Hennessy Chairman of the Group said
"It has been a year of two very different halves. In January we reported profit before tax for the six months to 31 December 2007 of
EUR11.7 million, up 45%. The Group has been operating in a changing and more difficult environment, reflecting a significant decline in
employment growth in Ireland and an increase in the numbers on the live register. The Profit before tax for the year of EUR20.7 million is
7.1% higher than last year"
The strength of CPL's Balance sheet is demonstrated by the reported net cash balances of EUR37.5 million at 30 June 2008. Our debtor
days remain at 35, similar to last year, and we remain focused on ensuring that cash is collected from debtors as quickly as possible. As a
result, we have not experienced any significant increase in the levels of bad or doubtful debts.
The year to 30 June 2009 will be a challenging one for the Group, but we are well positioned and resourced to take advantage of any
opportunities that may emerge to add to our business, through organic growth or acquisition, in specific markets and sectors."
Commenting on the group's performance and outlook, Cpl Chief Executive, Anne Heraty, said:
"Cpl is a robust and well developed business with a solid earnings history and good earnings potential. The Group has many strengths
including our reputation, our ability to deliver for our customers and candidates and our Managed Service customer base.
Permanent placement is the part of our business most affected by the economic environment and as a result fees generated from permanent
placement for the group declined by 18% in the second half of the year. All divisions with the exception of our overseas offices have been
affected by the slowdown; banking, construction and manufacturing have experienced the most severe impact. Our technology division which
represents 21% of our gross profit fared well compared to other sectors. Leading indicators still predict that the technology sector will be
one of the better sectors for future job growth
We are targeting selective acquisitions provided they build on our capability to deliver for clients and they enhance shareholder value.
We are particularly focused on continuing to grow our international base through organic growth and acquisition. Our international expansion
to date has strengthened our ability to support multinational clients with cross border recruitment requirements.
The nature of our business is that we have limited visibility on demand for our services in the medium term. However our business
objectives are clear: deepen our customer relationships, keep our temporary employees in jobs, gain market share and expand internationally
while also managing our cost base and maintaining a lean and flexible structure." Chariman's Statement
Profit before tax in the year to June 2008 of EUR20.7 million and earnings per share of 48.3 cent both represent increases of 7.1% over
the preceding year
Highlights
Profitability and shareholder value
* Profit before tax of EUR20.7 million, up 7%
* Earnings per share of 48.3 cent, an increase of 7%
* Final Dividend proposed of 2.5 cent
Operational performance
* Revenue of EUR257.6 million for year, representing growth of 32% year on year
* Gross profit of EUR52.5 million, up 22 % on the year to June 2007
* Net cash balances of EUR37.5 million at 30 June 2008 (EUR29.6 million at 30 June 2007)
* Conversion ratio of 39.4%, down from 44.8% in the preceding year
It has been a year of two very different halves for the Group. In January we reported profit before tax for the six months to 31
December 2007 of EUR11.7 million, up 45% on the corresponding six months in the previous year and net fee income (gross profit) of EUR27.4
million. Earnings per share in the first six months to December 2007 amounted to 27.4 cent.
The Group has been operating in a changing and more difficult environment, reflecting a significant decline in employment growth in
Ireland and an increase in the numbers on the live register. It is the nature of our business that we are exposed at an early stage to the
effects of downturns in the markets and sectors in which we operate. As a result, in the six months to 30 June 2008 our fees from the
permanent placement business have fallen by 18% to EUR11.1 million, compared with EUR13.5 million in the first six months of our fiscal
year. The Gross profit of EUR13.6 million generated in the six months to June 2008 from our temporary business is slightly behind the first
six months gross profit of EUR14.3 million.
A key performance measure for the Group is the conversion ratio of gross profit to profit before tax and amortisation. This was 39.4% in
the year to June 2008, down from 44.8% in the year to June 2007. This reduction reflects the Group's continuing investments in the
development of the business in new markets, particularly in Central Europe. Although conversion ratios are lower in the development stage,
we expect that our newly developed and growing businesses will make a significant contribution to Group profits in the future.
Cost management in CPL has been a significant factor in the profitable growth achieved in recent years. We have a flexible cost base and
will continue to ensure that the size and structure of our organisation is appropriate to market conditions, while allowing us to continue
to take advantage of opportunities to expand our business organically and by acquisition.
The strength of CPL's Balance sheet is demonstrated by the reported net cash balances of EUR37.5 million at 30 June 2008.
Notwithstanding the working capital demands associated with our growth in revenues of 32%, this figure is EUR7.9 million higher than the
corresponding balance at 30 June 2007. Our debtor days remain at 35, similar to last year, and we remain focused on ensuring that cash is
collected from debtors as quickly as possible. As a result, we have not experienced any significant increase in the levels of bad or
doubtful debts.
The current economic downturn in Ireland is posing challenges for the Group as we attempt to continue to grow our business profitably.
It is inevitable that a reduction in business activity and confidence will affect recruitment in the short term. However, our business
operates across a number of sectors, some of which have been affected less than others by recent events. Furthermore, although employers
tend to reduce recruitment of permanent staff in difficult times, utilisation of temporary personnel is not affected to the quite the same
extent. The diversification of our business is helping us to deal with more challenging times and to focus our efforts in areas of potential
for growth. In this regard, our expansion to other countries (we now have offices in 5 countries outside Ireland) will help to diversify the
business.
I would like to thank the whole team for their contribution and loyalty again this year. We are operating in more challenging time but
we have a group of highly skilled and motivated people who are committed to the Group and are constantly looking for new ways to deliver
value and outstanding service to our clients and candidates. I would also like to extend the appreciation of the Board to our customers for
their continued loyalty and support.
I would like also to extend my thanks on behalf of the Board to Mr Pat Garvey, who retired from the Board during the year after more
than 8 years as a director. Pat was an outstanding Board member who brought to the Group exceptional skills and experience as an
entrepreneur and businessman. His input to the growth and development of the Group was extremely valuable and we are very grateful to him
for his contribution.
I would also like to welcome Mr Breffni Byrne and Mr Oliver Tattan to the Board, both of whom were appointed non executive directors
during the year. They are both already making a very valuable contribution to the Group and we are delighted to have them as members of the
Cpl team.
The year to 30 June 2009 will be a challenging one for the Group. The Irish economy has slowed significantly and the effects of this
slowdown on the labour market will be seen for some time to come. Cpl intends to continue to respond appropriately to market conditions by
managing our cost base carefully while continuing to provide our customers (clients and candidates) with excellent service. We expect the
coming months to be difficult, but we are well positioned and resourced to take advantage of any opportunities that may emerge to add to our
business, through organic growth or acquisition, in specific markets and sectors.
The Board is recommending a final dividend of 2.5 cent per share. The dividend will be payable on 31 October 2008 to shareholders on the
company's register at the close of business on the record date of 19 September 2008. The final dividend together with the interim dividend
of 2.5 cent per share amounts to a total dividend of 5.0 cent per share.
Chief Executive's Review
The year to June 2008 was a challenging one for the Group particularly in the second half. We started the financial year with strong
demand for our services and a substantial pipeline of new assignments and customers. As the year progressed the employment environment in
Ireland deteriorated and by June 2008 the unemployment rate stood at 5.7% of the labour force up from 4.4% a year earlier. The most telling
indicator of the weakness in the labour market was the increase in the number of people on the Live Register which is up 45% in the 12
months to August 2008. The sectors most affected were construction, manufacturing and banking. Our results reflect the impact of the
weakening labour market.
Financial Highlights
Group revenue increased by 32% to EUR258 million in the year to 30 June 2008 (2007: EUR196 million). In the second half of the year
revenue was 5% lower than the first half. The increase in revenue from organic growth was 7.7 % and revenue from acquisitions completed
since June 07 was EUR48.5 million, 18.8% of total revenue.
Gross profit increased by 22% to EUR52.5million (2007: EUR43 million) yielding a gross margin of 20.4%,
(2007 22%). Gross profit was 11.3% lower in the second half of the year. Gross profit from permanent placement declined by 22% in the
second half whereas gross profit from temporary placement declined by 5%, reflecting the greater resilience of the temporary business.
Profit before tax increased by 7.3% to EUR20.7 million (2007: EUR19.3 million). Profit before tax was 23.8% lower in the second half.
Operating expenses increased by 33% to EUR32.7 million (2007: EUR24.5 million). Operating expenses were similar in the second half, due to
our continued investment in people and new international offices. Management have implemented a full review of all expenditure and costs and
we will continue to appropriately size our cost base to the operating environment.
Fully diluted earnings per share were 48.3 cent, up from 45 cent in the year to June 2007.
Cash flow was again very strong during the year with the group generating EUR16 million from operating activities (2007: EUR15.2
million). We have a strong focus on timely collection of debtors which resulted in debtor days outstanding of 35 at year end. At 30th June
2008 the Group had net cash of EUR37.5 million (2007: EUR29.6 million). Net interest received in the year was EUR908,000 (2007: EUR726,000)
A final dividend of 2.5 cent per share is proposed, bringing the total dividend for the year to 5 cent per share.
Operations Review
Cpl Resources plc is recognised as a leader in providing specialist recruitment and employment services. We source permanent and
temporary/contract personnel for clients in a wide range of sectors including technology, accounting and finance, healthcare,
pharmaceutical, sales, engineering, construction, retail and office support/light industrial.
The key performance indicators are outlined below. In the second half of the year these indicators weakened reflecting the impact of the
weaker economic environment.
Key performance indicators 30th June 2008 30th June 2008
Gross Margin 20.4% 22.0%
Operating Margin 7.7% 9.5%
Conversion Ratio 39.4% 44.8%
47% 52%
Permanent Fees as % of total gross profit
Temporary Fees as % of total gross profit 53% 48%
5,143 4,145
Contractor and temporary staff headcount
Number of Net Fee Earners 299 237
Gross margin declined 1.6% to 20.4% in the year to June 2008. This decline is a result of the change in business mix between temporary
and permanent staff. Our permanent business generates a 100% gross margin. In the year to June 2008 the gross profit earned on permanent
fees represented 47% of our total fees compared with the 52% last year. The average margin earned on placing our temporary staff was similar
to prior year.
Operating margin was 7.7% for the year down from 9.5% a year earlier. Operating expenses in the second half of the year were similar to
the first half. Given the more challenging operating environment the management team are focused on reducing operating costs in all
divisions of the business. Our challenge is to ensure that our ability to deliver for our customers and to expand our business locally and
internationally is not impacted by these initiatives.
A key performance measure for the Group is the conversion ratio of gross profit to profit before tax. This was 39.4% in the year to June
2008, down from 44.8% in the year to June 2007. The reduction in conversion rate is as a result of our investment in organic growth, opening
international offices and investing in people.
Permanent Placement
We achieved a strong performance in permanent placement in the first half of the year. Permanent placement is the part of our business
most affected by the economic environment and as a result fees generated from permanent placement for the group declined by 18% in the
second half of the year. All divisions with the exception of our overseas offices have been affected by the slowdown; banking, construction
and manufacturing have experienced the most severe impact. Our technology division which represents 21% of our gross profit fared well
compared to other sectors. Leading indicators still predict that the technology sector will be one of the better sectors for future job
growth.
Temporary/contract placement
Our temporary and contract staff work in a wide range of industries and functional areas. We source challenging assignments for them and
pay competitive rates while also providing flexible work options. Fees from temporary/contract placement were up 35% in the year. The market
softened in the second half; as a result temporary fees for the Group were down 5% in the second half. We increased the number of contractor
and temporary staff working on assignment throughout the year to 5,143 up from 4,145.
Overseas Offices
We have continued to build on our success in Central and Eastern Europe. Having acquired Key 6 in Czech Republic and Slovakia in January
2007, we have increased our recruiter numbers in that company from 13 to 29. Gross profit increased by 300%. We also expanded our Polish
operation and now have offices in Warsaw and Krakow. We have 94 of temporary staff working on client sites in Poland. Our Central and
Eastern European operations now represent 5 % of Group gross profit at June 2008. We also opened additional offices in Barcelona and Brno in
the second half of the year. We expect gross profit derived from our overseas offices to continue to increase significantly as a proportion
of total gross profit in 2009.
Acquisitions
In July 2007 we broadened our position in the healthcare marketplace by adding Alliance Personnel to our existing healthcare business.
We now have three strong businesses in healthcare, Medical Recruitment Specialists, Kate Cowhig Ltd and Alliance Personnel. The last year
was a very successful one for the healthcare division. Gross profit for the year increased by 57%. Post acquisition we have implemented new
front and back office technology to enhance our service delivery to our clients and candidates. We have expanded the number of doctors,
pharmacists, nurses and healthcare professionals working on assignment. At year end we had more than 1,000 people working on healthcare
assignments.
Although in the short term we are experiencing some weakness in demand in Ireland for permanent healthcare professionals, demand for
temporary staff is strong. We are excited about the opportunities in healthcare over the longer term as demand for healthcare professionals
is driven by:
* the advances in medical procedures and technologies
* an aging population
* the move by healthcare organisations towards outsourcing their recruitment
* the requirement for flexible business models to meet spikes in demand
* the acute shortage of nurses and healthcare professionals
Strategy
Cpl is a robust and well developed business with a solid earnings history and good earnings potential. The Group has many strengths
including our reputation, our ability to deliver for our customers and candidates and our Managed Service customer base. The management team
are committed to building on these strengths and driving the business forward to deliver our long term strategy. This includes growing our
business organically by winning market share and by increasing the range of services we offer to our existing customers. We are also
targeting selective acquisitions provided they build on our capability to deliver for clients and they enhance shareholder value. We are
particularly focused on continuing to grow our international base through organic growth and acquisition. Our international expansion to
date has strengthened our ability to support multinational clients with cross border recruitment requirements.
People
It is through the support of our people that we are able to adjust to the changing market conditions, expand internationally and grow
our customer base. I want to take this opportunity to thank all of them for delivering for our candidates and clients and for their hard
work and commitment throughout the year. I would also like to extend my appreciation to our customers for their continued loyalty and
support.
Outlook
Our first quarter has started slowly with the level of activity below that of our first quarter last year. We are prepared for 2009 to
be a difficult year. The nature of our business is that we have limited visibility on demand for our services in the medium term. However
our business objectives are clear: deepen our customer relationships, keep our temporary employees in jobs, gain market share and expand
internationally while also managing our cost base and maintaining a lean and flexible structure. The Group has a strong Balance Sheet and a
committed experienced team who are intent on driving the business forward.
Group income statement
for the year ended 30 June 2008
Year ended Year ended
30 June 2008 30 June 2007
EUR'000 EUR'000
Revenue 257,640 195,540
Cost of sales (205,162) (152,530)
Gross profit 52,478 43,010
Distribution expenses (2,296) (2,007)
Administrative expenses (30,413) (22,456)
Operating profit 19,769 18,547
Financial income 928 736
Financial expenses (20) (10)
Profit before tax 20,677 19,273
Income tax expense (2,657) (2,475)
Profit for the Financial Year 18,020 16,798
Attributable to:
Equity Shareholders 17,976 16,786
Minority interest 44 12
18,020 16,798
Basic earnings per share 48.3 cent 45.1 cent
Diluted earnings per share 48.3 cent 45.0 cent
Group Balance Sheet
for the year ended 30 June 2008
Year ended Year ended
30 June 2008 30 June 2007
EUR'000 EUR'000
Assets
Non-current assets
Property, plant and equipment 1,541 1,273
Goodwill and Intangible assets 18,513 15,105
Deferred tax asset 4 13
Total non-current assets 20,058 16,391
Current assets
Trade and other receivables 35,086 24,913
Cash and cash equivalents 37,622 29,653
Corporation tax refundable 37
Total current assets 72,708 54,603
Total assets 92,766 70,994
Equity
Issued capital 3,720 3,719
Share premium 1,705 1,701
Merger reserve (3,300) (3,300)
Retained earnings 58,309 42,100
60,434 44,220
Minority Interest 56 12
Total equity 60,490 44,232
Liabilities
Non-current liabilities
Financial liabilities 69 296
Provisions 268 967
Total non-current liabilities 337 1,263
Current liabilities
Financial liabilities 18 42
Bank overdraft 76 29
Trade and other payables 29,059 22,316
Corporation tax payable 182 -
Provisions 2,604 3,112
Total current liabilities 31,939 25,499
Total liabilities 32,276 26,762
Total equity and liabilities 92,766 70,994
Group statement of changes in shareholders' equity
for the year ended 30 June 2008
Capital
conversion
Share Share Reserve Merger Retained Minority Total
capital premium fund reserve earnings Total interest equity
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Balance at 1 July 2006 3,714 1,686 57 (3,357) 26,522 28,622 - 28,622
Shares issued 5 15 - - - 20 - 20
Profit for the financial year - - - - 16,786 16,786 12 16,798
Dividends 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
Balance at 1 July 2007 3,719 1,701 57 (3,357) 42,100 44,220 12 44,232
Shares issued 1 4 - - - 5 - 5
Profit for the financial year - - - - 17,976 17,976 44 18,020
Dividends paid - - - - (1,767) (1,767) - (1,767)
Balance at 30 June 2008 3,720 1,705 57 (3,357) 58,309 60,434 56 60,490
Group cash flow statement
for the year ended 30 June 2008
Year Ended Year ended
30 June 2008 30 June 2007
EUR'000 EUR'000
Cash flows from operating activities
Profit for the financial year 18,020 16,798
Adjustments for:
Depreciation on property, plant and equipment 347 209
Profit on disposal of property, plant and (32) -
equipment
Amortisation of intangible assets 394 106
Financial income (928) (734)
Financial expense 20 10
Income tax expense 2,657 2,475
Operating profit before changes in working 20,478 18,864
capital and provisions
(Increase)/decrease in trade and other (7,473) (5,186)
receivables
Increase in trade and other payables and 4,526 3,251
provisions
Cash generated from operations 17,531 16,929
Interest paid (20) (10)
Income tax refund / ( paid) (2,282) (2,411)
Interest received 777 734
Net cash from operating activities 16,006 15,242
Cash flows from investing activities
Acquisition of subsidiary, net of cash acquired (3,450) (4,888)
Deferred consideration paid (1,902) (151)
Purchase of property, plant and equipment (622) (319)
Disposal of property 63 -
Purchase of intangible assets (160) (306)
Net cash from investing activities (6,071) (5,664)
Cash flows from financing activities
Repayment of borrowings (338) (41)
Proceeds from new loan 87 -
Dividends paid (1,767) (1,208)
Proceeds from issue of share capital 5 20
Net cash from financing activities (2,013) (1,229)
Net increase in cash and cash equivalents 7,922 8,349
Cash and cash equivalents at beginning of year 29,624 21,275
Cash and cash equivalents end of year 37,546 29,624
For Further Information:
Anne Heraty, CEO , CPL Resources, 01 614 6000
Josephine Tierney, Finance Director, 01 6146000
Ends
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR LIMRTMMMMBAP
Cpl Resources (LSE:CPS)
Historical Stock Chart
From Jun 2024 to Jul 2024
Cpl Resources (LSE:CPS)
Historical Stock Chart
From Jul 2023 to Jul 2024
