CPL Resources PLC Half Yearly Report (9330N)

TIDMCPS

RNS Number : 9330N

CPL Resources PLC

24 January 2019

Cpl Resources Plc

Results for the six months ended 31 December 2018

Cpl delivers double digit earnings growth in the first half of financial year 2019

Cpl Resources Plc ("Cpl" or the "Group"), Ireland's leading employment and talent advisory services group, today announced results for the half year ended 31 December 2018.

Financial highlights

   --      9% increase in revenues to EUR278.6 million 
   --      15% increase in gross profit (net fee income) to EUR46.4 million 
   --      23% increase in profit before tax of EUR11.0 million 
   --      32% increase in earnings per share to 34.9 cent 
   --      Adjusted operating margin up 52 basis points to 4.16% 
   --      Net cash of EUR30.2m (2017: EUR12.4m) 
   --      26% increase in interim dividend to 8.00 cent per share 
 
 Half year highlights                Half year   Half year   % change 
                                         ended       ended 
  EUR'000s except where indicated    31-Dec-18   31-Dec-17 
----------------------------------  ----------  ----------  --------- 
 
 Revenue                               278,591     256,714         9% 
 Gross Profit                           46,401      40,502        15% 
 Adjusted Operating profit*             11,590       9,343        24% 
 Adjusted Profit before tax*            11,479       9,666        19% 
 
 Operating profit                       11,153       8,684        28% 
 Profit before tax                      11,042       9,007        23% 
 Earnings per share                  34.9 cent   26.4 cent        32% 
 Dividend per share                  8.00 cent   6.35 cent        26% 
----------------------------------  ----------  ----------  --------- 
 
 Conversion ratio ** 
 Adjusted Operating profit               25.0%       23.1% 
 Adjusted Profit before tax              24.7%       23.9% 
 Operating profit                        24.0%       21.4% 
 Profit before tax                       23.8%       22.2% 
----------------------------------  ----------  ----------  --------- 
 
 Net fee income - Permanent             13,812      13,037         6% 
 Net fee income - Flexible Talent       32,589      27,465        19% 
----------------------------------  ----------  ----------  --------- 
 
 Permanent net fee income as a 
  % 
 of total gross profit                     30%         32% 
 Flexible Talent net fee income 
  as a % 
 of total gross profit                     70%         68% 
----------------------------------  ----------  ----------  --------- 
 

* 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 2018 is EUR0.5 million (2017: EUR0.5 million)

** As a % of gross profit

Chairman's Statement

I am pleased to report that in the six months to 31 December 2018, the Group delivered continued growth in revenues, net fee income and profits, underpinned by strong growth in our Finance and Technology divisions.

Our revenue for the six months to 31 December 2018 increased by 9% to EUR278.6 million and our gross profit increased to EUR46.4 million, up 15% on the same period in 2017. The Group's profit before tax was EUR11.0 million for the six months to 31 December 2018, a year-on-year increase of 23%. Our conversion rate of gross profit to operating profit (excluding non-cash foreign currency translations and LTIP charges) was 25.0% in the period (2017: 23.1%).

The Group delivered a 32% increase in earnings per share to 34.9 cent for the first half driven by the growth in profitability in the period and in part by the benefit of the reduced share capital base arising from 2017's tender offer.

Permanent recruitment performed well in the period, driven by significant increases in our Finance and Technology divisions. The Group continues to harness the global shift in workforce preferences and we have evolved and adapted our business model to meet this demand. The Group delivered strong growth in our Flexible Talent division during the period, with this business segment now equating to 70% of total net fee income (2017: 68%). The Group increased its gross margin to 16.7% (2017: 15.8%) and its adjusted operating margin to 4.16% (2017: 3.64%), demonstrating management's focus on controlling our cost base, improving margins and increasing recruiter productivity.

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 the Group.

Strategy

We believe deeply in the transformational effect of matching the right candidate to the right organisation. Our vision as we grow is to be the world's best at supporting transformation in our clients through total talent solutions and experiences. We are focused on three strategic pillars to deliver growth for our shareholders - 'Future Ready', 'Client First' and 'Total Solutions'. We continue to be at the leading edge of the future of work and have recently opened our Future of Work Hub in Dublin, which focuses on co-creating new solutions with our clients. We will continue to adopt a people centred, strategic approach to how we deal with our clients ('the Cpl Way') and to design and deploy integrated solutions that will create transformational value, appropriate to the needs of our clients and our candidates. This combined with our investment in technology and the support of our partners will provide us with a strong platform for future growth.

We have appointed a Technology Advisory Board - a panel of experts that will advise and guide Cpl on its technology and digital strategy. We continue to pioneer Artificial Intelligence ("AI") solutions and, together with our market leading technology partners, we have custom built and deployed three scalable AI applications built on the latest machine learning and deep learning toolsets. These applications are transforming the way in which we source and match candidates, improving the speed and quality of our service for the benefit of candidates and clients alike.

Cash

The Group had a net cash balance of EUR30.2 million as at 31 December 2018 (2017: EUR12.4 million). In the six months to 31 December 2018, EUR12.3 million was generated in cash flow from operating activities before tax and changes in working capital (2017: EUR9.8 million). Although the growth in our Flexible Talent business requires significant investment in working capital, we recorded a net cash inflow of EUR6.0 million in the period (2017: EUR3.9 million (excluding impact of tender offer)), demonstrating the profitable, cash generative nature of our business and the effectiveness of our working capital management. We focus mainly on organic expansion and are selective in our acquisition activity, acquiring only where we perceive a strong fit with our existing business or to drive innovation in our organisation. Allocation of surplus cash is monitored by the Board and we continue to adopt a progressive dividend policy.

Dividend

The Board proposes to pay an interim dividend of 8.00 cent per share, an increase of 26% on last year's interim dividend, reflecting the Group's strong performance in the period. The interim dividend will be payable on 1 March 2019 to shareholders on the register at the close of business on the record date of 1 February 2019.

Board

Having been a non-executive director of the Group since 2007, Oliver Tattan today retires from the Board. On behalf of my fellow directors and all of our people I would like to thank Oliver for his exceptional dedication and commitment to his role as a director and for his valuable contribution to our success.

Outlook

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 of political, regulatory and economic events globally on our business, in particular Brexit. We operate in a cyclical industry which is sensitive to changes in economic activity within our core markets. While our business model has evolved over the years to include more forward secured revenue streams, a material proportion of our net fee income has short term visibility.

Current market conditions are favourable with high demand for talent and low unemployment rates in our key markets. We remain confident in the outlook for the business and expect to deliver continued profitable growth for the remainder of the financial year.

John Hennessy

Chairman

24 January 2019

Financial Statements

The financial statements for the six-month period ending 31 December 2018 can be accessed below:

http://www.rns-pdf.londonstockexchange.com/rns/9330N_1-2019-1-23.pdf

For Further Information:

 
 Cpl Resources plc                                  [phone] 
 Anne Heraty (CEO) 
 Mark Buckley (Deputy CEO & COO) 
 Lorna Conn (CFO) 
 
 
   Davy Corporate Finance (NOMAD, ESM Adviser)      [phone] 
 Ivan Murphy 
 Daragh O'Reilly 
 

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January 24, 2019 02:00 ET (07:00 GMT)