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Cpl Resources plc Still Going Strong

Cpl Resources plc Still Going Strong

Cpl Resources plc, Ireland's leading employment services group, today announced results for the half year ended 31st December 2012.

Company statement

I am pleased to report that in the six months to 31 December 2012 the Cpl Group delivered a strong operating performance, with improved revenues, gross profits and earnings per share.

Cpl again delivered record revenues, amounting to &euro161.7 million for the half year ended 31 December 2012, an increase of 13% over the same period last year. The Group's operating profit of &euro5.8 million for the six months to December 2012 is 37% higher than the same period last year. Profit before tax increased by 31% to &euro6.0 million.

Highlights

Strong operating performance

13% increase in revenue to &euro161.7 million

37% increase in operating profit to &euro5.8 million

31% increase in profit before tax to &euro5.9 million

55% increase in earnings per share to 16.96 cent

Interim dividend per share of 4.0 cent (2011: 3.0 cent)

Half Year Highlights

Half Year Ended

Half Year Ended

% change

31-Dec-12

31-Dec-11

&euro 000's

&euro 000's

Revenue

161,671

142,718

13%

Gross profit

23,713

20,837

14%

Operating profit

5,811

4,237

37%

Profit before tax

5,954

4,528

31%

Earnings per share

16.96 cent

10.91 cent

55%

Dividend per share

4.0 cent

3.0 cent

33%

Conversion Ratio**

 

Operating profit

24.5%

20.3%

Profit before tax

25.1%

21.7%

 

 

Permanent gross profit

7,521

6,241

21%

Temporary gross profit

16,192

14,596

11%

 

 

Permanent gross profit as % of the total gross profit

32%

30%

Temporary gross profit as % of the total gross profit

68%

70%

** as % of gross profit.

In our Annual Report for June 2012 I said that the Group continued to grow profitably through a combination of innovative service offerings, organic expansion and the delivery of high quality service to clients and candidates. I am very pleased to report that in the six months to 31 December 2012 the continued application of these strategies delivered another strong performance for the Group. Cpl again delivered record revenues, amounting to &euro161.7 million for the half year ended 31 December 2012, an increase of 13% over the same period last year. The Group's operating profit of &euro5.8 million for the six months to December 2012 is 37% higher than the same period last year. Profit before tax increased by 31% to &euro6.0 million. Earnings per share of 16.9 cent for the six months to 31 December 2012, represents a 55% increase when compared to 10.9 cent for the half year to 31 December 2012. This increase reflects both improved net profits and the reduced average number of shares in issue. 6,666,666 shares were cancelled in December 2011 following the successful tender offer.

We continued our policy of controlling costs tightly and improving productivity across the Group in order to maximise profitability. This has delivered an improvement in the Group's conversion ratio of gross profit to operating profit to 24% in the six months to December 2012, compared with 20% for the same period in 2011.

Although our principal markets remain difficult, many employers in these markets continue to experience mismatches between the skills they need and those that are available. There is a general oversupply of people available for work, but at the same time there is an undersupply of specific skills that are in demand. During the six months to 31 December 2012 the Cpl team 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 December 2012 was &euro7.5 million, an increase of 21%. 38% of permanent fees are generated outside of Ireland.

Alongside this improvement in permanent placements, we continue to see many companies relying on innovative temporary employment solutions that allow them to recruit personnel based on the variable demands of the business. In the six months to 31 December 2012 the Group has continued to develop our competence in the provision of fully outsourced services that are complex and difficult to replicate, and which usually require a combination of a European language and a technical skill. Revenue generated from temporary assignments was &euro154.2 million representing 10% growth over last year. The corresponding gross profit was &euro16.2 million, 11% higher than the six months to December 2011. 9% of temporary fees are generated outside of Ireland.

The temporary staffing market is highly competitive. Against this backdrop we are very pleased to have increased the number of people placed with our clients from 7,853 in June 2012 to 8,500 in December 2012.

I am very proud of the Cpl team. They continue to demonstrate their skills, talents and abilities daily, for the benefit of our clients and our candidates, and I thank them for their on-going hard work and commitment to the Group.

Cash

The Group has a cash balance of &euro26.6 million at 31st December 2012. In the six months to December 2012 &euro6.0 million was generated in cash flow from operating activities before changes in working capital and provisions. We are encouraged by the increase in demand for our services. However, we remain cognisant of the investment in working capital required to drive organic growth in our temporary business.

Dividend

The Board has decided that the Company will pay an interim dividend of 4 cent per share, an increase of 33% on the corresponding period last year. The dividend will be payable on 8 March 2013 to shareholders on the company's register at the close of business on the record date of 1 February 2013. The Group has a progressive dividend policy which reflects underlying earnings growth and the continued strength of the Group's balance sheet.

Outlook

As we move into the second half of our financial year we are closely monitoring activity levels in all of our markets. Overall, we expect conditions to remain challenging but we continue to see opportunities for growth in key parts of our business. Although medium term visibility remains difficult in current market conditions, we expect our performance for the second half of our financial year to be similar to the first six months.

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