TIDMCPS
RNS Number : 6579A
CPL Resources PLC
23 January 2020
Cpl Resources Plc
Results for the six months ended 31 December 2019
Cpl delivers 23% EPS growth in the first half of financial year
2020
Dublin, 23 January 2020: Cpl Resources Plc ("Cpl" or the
"Group"), Ireland's leading talent and workforce solutions group,
today announced results for the half year ended 31 December
2019.
Financial Highlights
-- 5% increase in revenues to EUR291.4 million
-- 10% increase in gross profit (net fee income) to EUR51.1 million
-- 24% increase in adjusted profit before tax to EUR14.2 million
-- 23% increase in earnings per share to 42.9 cent
-- 25% increase in interim dividend to 10.0 cent per share
-- Gross margin up 80 basis points to 17.5%
-- Adjusted operating margin up 70 basis points to 4.9%
-- Net cash of EUR47.1m (2018: EUR30.2m)
John Hennessy, Chairman, commented:
"I am pleased to report that in the six months to 31 December
2019, the Group delivered another set of strong results with double
digit earnings growth and improved margin performance.
Whilst we remain conscious of the impact political, regulatory
and economic events globally can have on our business, we now
expect profit before tax for the full year to be ahead of current
market expectations."
Anne Heraty, CEO, added:
"It has been another period of very robust growth for Cpl as the
Group delivered a 10% increase in net fee income and a 23% increase
in earnings. During the six-month period we made additional
investment in products focused on innovative technology solutions,
adding further value for our clients.
We continue to see increasing client demand for solution
oriented and flexible workforce models. With our recent investments
in the "Future of Work Institute" initiative and our managed
solutions division "Covalen", we believe that Cpl is well
positioned to deepen our client relationships further, both
domestically and internationally."
For further information, please contact:
Cpl Resources Plc +353 1 614 6000
Anne Heraty, CEO
Lorna Conn, CFO
David Marshall, Head of Corporate Development
Davy Corporate Finance (Nomad, Euronext Growth Advisor and Joint
Corporate Broker) +353 1 679 6363
Ivan Murphy/ Daragh O'Reilly
Shore Capital (Joint Corporate Broker) +44 (0)20 7408 4090
Stephane Auton/ Daniel Bush (Corporate Advisory)
Malachy McEntyre/ Fiona Conroy (Corporate Broking)
FTI Consulting (Media Relations) +353 1 765 0888
Melanie Farrell/ Jonathan Neilan
About Cpl Resources Plc
Cpl Resources Plc is a global provider of talent and workforce
solutions, with over 13,000 employees across 47 offices worldwide.
We operate through distinct specialist brands in a wide range of
sectors including technology, finance and legal, healthcare,
pharmaceutical, life sciences, sales, engineering, HR, light
industrial and office administration. We have a diverse range of
clients from market leading multinationals to small and medium
sized enterprises and we operate across the full talent spectrum
from permanent, contract and temporary recruitment to the provision
of managed solutions and strategic talent advisory services.
Forward-Looking Statements
This announcement contains forward-looking statements, which are
subject to risks and uncertainties. These forward-looking
statements are based on current expectations and projections about
future events. The Group believes that current expectations and
assumptions with respect to these forward-looking statements are
reasonable. However, because they involve known and unknown risks,
uncertainties and other factors, which are in some cases beyond the
Group's control, actual results or performance may differ
materially from those expressed or implied by such forward-looking
statements.
Chairman's Statement
I am pleased to report that in the six months to 31 December
2019, the Group delivered another set of strong results with double
digit earnings growth and improved margin performance.
Half year highlights Half year Half year % change
ended ended
EUR'000s except where indicated 31-Dec-19 31-Dec-18
---------------------------------- ---------- ---------- ---------
Revenue 291,358 278,591 5%
Gross Profit 51,060 46,401 10%
Adjusted Operating profit* 14,378 11,590 24%
Adjusted Profit before tax* 14,203 11,479 24%
Operating profit 13,799 11,153 24%
Profit before tax 13,624 11,042 23%
Earnings per share 42.9 cent 34.9 cent 23%
Dividend per share 10.0 cent 8.0 cent 25%
---------------------------------- ---------- ---------- ---------
Conversion ratio **
Adjusted Operating profit 28.2% 25.0%
Adjusted Profit before tax 27.8% 24.7%
Operating profit 27.0% 24.0%
Profit before tax 26.7% 23.8%
---------------------------------- ---------- ---------- ---------
Net fee income - Permanent 15,137 13,812 10%
Net fee income - Flexible Talent 35,923 32,589 10%
---------------------------------- ---------- ---------- ---------
Permanent net fee income as a
%
of total gross profit 30% 30%
Flexible Talent net fee income
as a %
of total gross profit 70% 70%
---------------------------------- ---------- ---------- ---------
* Adjusted operating profit and adjusted profit before tax
exclude non-cash charges relating to the Group's Long-Term
Incentive Plan (LTIP) and currency translation. LTIP charge in
first half of 2019 is EUR0.6 million (2018: EUR0.5 million)
** As a % of gross profit
Our revenue for the six months to 31 December 2019 increased by
5% to EUR291.4 million and our gross profit increased to EUR51.1
million, up 10% on the same period in 2018. The Group's adjusted
profit before tax (excluding non-cash foreign currency translation
and LTIP charges) was EUR14.2 million for the six months to 31
December 2019, an increase of 24% on the prior period. Our
conversion rate of gross profit to adjusted profit before tax was
27.8% in the period (2018: 24.7%). This increase was driven in part
by the strong performance in permanent recruitment, but also by
management's focus on controlling costs, improving margins and
increasing recruiter productivity. In addition, key margin
improvements achieved in the period include a gross margin increase
to 17.5% (2018: 16.7%) and an adjusted operating margin increase to
4.9% (2018: 4.2%).
Growth in the period was all organic with both divisional
segments reporting an increase of 10% in net fee income. The
Permanent division has benefited from favourable economic
conditions in its key markets and, in particular, from strong
growth in the Technology and UK Healthcare sectors. The Flexible
Talent division continues to grow as it responds to an increasing
demand globally for more flexible workforce solutions. Covalen, our
recently launched managed solutions brand, is a key contributor to
the growth of this division.
The Group delivered a 23% increase in earnings per share to 42.9
cent for the first half of the financial year, and the Board has
approved an interim dividend of 10.0 cent per share, up 25% on the
prior period.
We continue to grow and develop our people within the Group and,
on behalf of the Board, I wish to express my gratitude for the
continuing hard work and dedication of all of our people and for
their commitment to Cpl.
Strategy & Technology
Cpl's strategy is to be world class at supporting our clients
through transformational talent solutions and experiences. Progress
continues to be made in key initiatives across our three strategic
pillars - 'Future Ready', 'Client First' and 'Total Solutions' - to
deliver value for clients and growth for our shareholders. Cpl
enjoys a deep and rich client database that has been built over
almost 30 years of trading. During this time, we have significantly
evolved the business from a traditional recruitment company to one
which operates across the entire talent spectrum, with a growing
emphasis on managed solutions and strategic talent advisory
services. These services are benefiting from the global trend
towards increased demand for solution oriented and flexible
workforce models. Our recent investments in the "Future of Work
Institute" initiative and our managed solutions division "Covalen",
are helping us to ensure that Cpl is well positioned to deepen our
client relationships further, both domestically and
internationally.
Technology is a key enabler of our business strategy and we have
made two significant investments during the period - one in an
employment platform which is in scale-up, and the second in
'MyCpl', our mobile based rostering app for healthcare where we
have acquired the right to use the underlying tech platform in the
UK and Ireland. MyCpl has been successfully deployed to over 60% of
our flexible healthcare workers in Ireland and continues to grow,
as clients and candidates alike recognise the efficiency and
service excellence it provides.
Cash & Capital Allocation
Cpl is a profitable, cash generative business and is highly
effective at managing its working capital. Although the growth in
our Flexible Talent business requires significant investment in
working capital, the Group continues to generate positive cash
flows. In the six months to 31 December 2019, EUR16.1 million was
generated in cash flow from operating activities before tax and
changes in working capital (2018: EUR12.3 million), and the Group
closed the half year with a net cash balance of EUR47.1m (2018:
EUR30.2 million).
The Board regularly reviews its allocation of capital with the
objective always to enhance shareholder value. We prioritise
organic expansion and are selective in our acquisition activity,
acquiring only where we perceive a strong fit with our existing
business or where we can drive further innovation in our
organisation and clients. We continue also to implement a
progressive dividend policy. The Board will continue to appraise
the most effective use of any excess capital and consider how to
deploy it in the interest of all shareholders.
Dividend
The Board has approved the payment of an interim dividend of
10.0 cent per share, an increase of 25% on last year's interim
dividend, reflecting the Group's strong performance in the period.
The interim dividend will be payable on 28 February 2020 to
shareholders on the register at the close of business on the record
date of 31 January 2020.
Corporate Development Update
The Group continues to invest in its corporate structures and
strategic development, including investor engagement, with two
recent appointments made to help us raise the profile of the Group
within the wider investment community. In January 2020, David
Marshall joined us as Head of Corporate Development and will
oversee the Group's Investor Relations function, and in December
2019 the Group appointed Shore Capital as joint corporate broker to
work alongside Davy. Following continued strong operational and
financial performance, these investments reflect the Group's
commitment to building further awareness of Cpl within investment
communities across our key regions.
Outlook
While our business model has become much more resilient over the
years with an increased contribution from Flexible Talent, the
visibility of a material proportion of our net fee income remains
short-term and is sensitive to changes in economic activity.
As we move into the second half of our financial year, we are
closely monitoring activity levels in our key markets. We remain
conscious of the impact that political, regulatory and economic
events globally can have on our business, in particular the
implementation of Brexit. However, economic indicators remain
broadly positive, with high demand for talent and low unemployment
rates in our most important markets.
We remain confident in the outlook for our business. As a
result, we now expect profit before tax for the full year to be
ahead of current market expectations.
John Hennessy
Chairman
23 January 2020
Financial Statements
The summary financial statements for the six-month period ending
31 December 2019 can be accessed below:
http://www.rns-pdf.londonstockexchange.com/rns/6579A_1-2020-1-22.pdf
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END
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