TIDMCPS
RNS Number : 2705Y
CPL Resources PLC
08 September 2020
Cpl Resources Plc Results for Year Ended 30 June 2020
Resilient business model driving excellent earnings growth
Dublin, 8 September 2020: Cpl Resources Plc ('Cpl', the 'Group'
or the 'Company'), Ireland's leading talent and workforce solutions
group, today announces results for the year ended 30 June 2020.
Financial Highlights
-- 10% increase in adjusted profit before tax to EUR27.9m
-- 10% increase in adjusted basic earnings per share to 88.8 cent
-- 4% increase in gross profit (net fee income) to EUR100.3m
-- Gross profit margin up 58 basis points to 17.6%
-- Strong cash generation with net cash position of EUR68.1m, up from EUR40.1m a year ago
Operational & Strategic Highlights
-- Demonstrated resilience of operating model during challenging
market conditions presented by Covid-19 pandemic
-- Strategic and decisive actions taken to manage costs and
preserve cash in response to Covid-19
-- Continued growth in recurring revenues with Flexible Talent
(including Covalen, our managed solutions division) now
representing almost 73% of gross profit
-- Operational efficiencies, proactive cost actions and a
growing contribution from Covalen delivered a 44 basis point
increase in adjusted operating margin to 5.0%
-- New organisation structure established around core service
pillars - Recruitment, Managed Solutions and Healthcare
-- Investment in both internal and external innovative technology solutions
-- Investment in Cpl brand refresh, rolling out across financial year 2021
Other Highlights
-- Swift and effective reaction to Covid-19 pandemic, putting
the safety of our people at the centre of our response
-- Successful mobilisation of workforce to a remote working
environment and associated investment in support structures for the
health and wellbeing of our people
-- Continued focus on diversity and inclusiveness in the
workforce and the ongoing support of charities and community
engagement
-- Publication of inaugural Responsible Business Policy Report
detailing environmental, social and governance activities and
targets
-- The process of Board refreshment continues with the
retirement of Breffni Byrne from the Board at Cpl's AGM on 23
November
John Hennessy, Chairman, commented: "The Cpl team has delivered
an outstanding performance and excellent earnings growth for the
year to June 2020. The performance delivered is particularly
impressive given the impact of Covid-19 on our business since March
2020. Although the ongoing pandemic has impacted our Permanent
fees, we have delivered profitable growth, demonstrating the
resilience of the Group's business model, particularly in Flexible
Talent .
Our business delivers value by responding to the essential needs
of businesses and candidates by matching the right people with the
right opportunities, and by providing workforce solutions that
support our clients' business objectives. Our success is driven by
the quality of our people, who operate to the highest standards
across a rich and diverse client portfolio. The quality and
commitment of all of our people is evident in the strength of our
full year performance, and particularly against the backdrop of
Covid-19 in the second half of the year.
During the year we also strengthened our focus on, and
commitment to, ESG issues, which we believe will play an
increasingly important role in the long-term success of our
business. We are committed to ensuring that our ESG profile aligns
with the expectations of our shareholders and other
stakeholders.
Whilst early in the financial year we are pleased with the
trading performance to date which is in line with our
expectations."
Anne Heraty, CEO, added: "Cpl has delivered another year of
strong earnings growth and excellent cash conversion, while
increasing our net fee income by 4%, gross margin by almost 0.6%
and our adjusted profit before tax by 10%.
The Group's strong performance in the year to June 2020 is a
testament to the success of our strategy to increase the
contribution of recurring revenues across high growth sectors. This
provides a strong degree of resilience in the face of
unprecedented, economic shocks such as the Covid-19 pandemic. Our
managed solutions division, Covalen, continues to experience
strong, consistent growth and is well positioned for future growth
both domestically and internationally.
Since year-end, we have seen an encouraging improvement in
Permanent fees driven mainly by our technology and finance
divisions. I would like to thank our team, our clients and all of
our stakeholders whose support and commitment ultimately define our
success."
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 and Euronext Growth Advisor)
Ivan Murphy/ Daragh O'Reilly: +353 1 679 6363
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)
Melanie Farrell/ Jonathan Neilan: +353 1 765 0888
About Cpl Resources Plc
Cpl Resources Plc is a global provider of talent and workforce
solutions, with almost 13,000 employees across 45 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.
Cpl Resources Plc
Chairman's Statement
In recent years Cpl has developed a strong and diverse business
model, combining revenues generated by our Permanent business with
the recurring fee income associated with our growing business in
Flexible Talent.
In the face of the Covid-19 pandemic, our strategy has been to
drive the growth of our Flexible Talent division, which includes
our managed solutions brand Covalen, while maintaining a strong
proposition in Permanent recruitment. The Cpl team has continued to
deliver against this strategic objective, which has increased the
proportion of recurring net fee income and provides a strong degree
of resilience in the face of unprecedented economic shocks such as
the ongoing pandemic. The benefits of this strategy and of the
Group's business model are reflected in the strong full year
results to 30 June 2020.
Full year highlights Year ended Year ended % change
EUR000s except where indicated 2020 2019
---------------------------------- ----------- ----------- ---------
Revenue 569,268 564,858 1%
Gross profit 100,291 96,258 4%
Adjusted Operating profit* 28,389 25,726 10%
Operating profit 24,978 24,818 1%
Adjusted Profit before tax* 27,933 25,492 10%
Profit before tax 24,522 24,584 0%
Adjusted Basic Earnings per
share* 88.8 cent 80.6 cent 10%
Basic Earnings per share 76.3 cent 77.3 cent (1%)
Net fee income - Permanent 27,334 27,768 (2%)
Net fee income - Flexible Talent 72,957 68,490 7%
Conversion ratio **
Adjusted Operating profit 28.3% 26.7%
Adjusted Profit before tax 27.9% 26.5%
Operating profit 24.9% 25.8%
Profit before tax 24.5% 25.5%
---------------------------------- ----------- ----------- ---------
* Adjusted Operating profit, adjusted Profit before tax and
adjusted Basic Earnings per share exclude non-cash charges relating
to the Group's Long-Term Incentive Plan (LTIP) of EUR895k (2019:
EUR895k), currency translation of EUR16k (2019: EUR13k) and
goodwill impairment of EUR2.5m (2019: EURNil).
** As a % of gross profit.
Revenue grew by EUR4.4 million to EUR569.3 million, up 1% on the
prior year. Group gross profit grew by 4% and adjusted profit
before tax grew by 10% in the year. The growth in the year was
driven mainly by the performance in the first nine months of the
financial year until March 2020, when the Group started to
experience the adverse impact of the Covid-19 pandemic. The global
demand for flexible workforce solutions continues and our Flexible
Talent net fee income grew by 7% during the year.
Adjusted operating profit margin was 5.0% (2019: 4.6%) which,
given the shifting mix of business from Permanent recruitment to
Flexible Talent, is testament to our commitment to improving
margins.
At year end, the Group had a strong balance sheet, with net
assets of EUR126.4 million, up from EUR110.4 million in the prior
year. We ended the year with net cash of EUR68.1 million, up
EUR28.0 million from the prior year, after funding the working
capital demands of our growing Flexible Talent division and
implementing strong cash conservation policies across the Group in
response to Covid-19.
Cpl is a profitable, cash generative business and the continued
strength of the Group's balance sheet, its access to external
financing and its capabilities in working capital management
positions the Company well to pursue growth opportunities.
Culture and Values
Cpl's culture is one of openness, respect and clear
communication. As an organisation, we are entrepreneurial in spirit
and are passionate about the work we do. We believe that this
culture enables us to deliver consistently outstanding service to
our clients and candidates, and that it has contributed
significantly to the strong performance across the business in the
past year. Like many other businesses, the rapid onset of the
Covid-19 pandemic and the associated economic slowdown have posed
significant challenges for our organisation. However, it is in such
testing times that the strength of culture comes to the fore. Our
people-centred values, innovative outlook and client focus have
helped us to successfully mobilise our entire workforce to a remote
working environment. This is testament to the culture we have
created in Cpl over thirty years - one of absolute dedication to
our clients and of open, clear communication with our people.
People
The success of Cpl is built on the quality, commitment and work
ethic of our people. The commitment and flexibility shown by our
staff to adapt and react to changing work-practices due to the
Covid-19 pandemic have been truly impressive. On behalf of the
Board, I would like to thank all of our people for their positive
attitude and hard work during the year. I would also like to thank
our clients and candidates for their continuing support and loyalty
to Cpl and for their partnership-led approach throughout this
crisis.
Stakeholder Engagement
As a Board, we are conscious of the importance of stakeholder
engagement in both assessing our culture and ensuring we maintain
high standards of corporate governance. We have developed strong
relationships and partnerships with customers, suppliers and
communities. We actively engage with our workforce in the
development of strategy as well as in identifying risks and
promoting new opportunities.
Environmental, Social & Governance
We are committed to becoming a more sustainable business,
ensuring inclusive opportunities for all and minimising our
environmental impact. We believe that environmental, social and
governance, or 'ESG', issues will play an increasingly important
role in the long-term success all businesses. We are committed to
operating a business that has a positive impact on all stakeholders
and we are determined that our ESG activities and targets will
fulfil that ambition.
Historically, Cpl has invested in a range of initiatives in the
sustainability area, which have been targeted at benefitting all
our stakeholders as well as mitigating risk and driving
efficiencies. In February 2020, we published our Responsible
Business Policy Report which formalises the objectives, policies
and targets of our ESG activities. It outlines the key strategic
initiatives enabling the development of deeper, better and more
meaningful relationships with our clients (both candidates and
customers), our colleagues, our collaborators and the communities
in which we work.
Board Developments
On 23 November 2020, Breffni Byrne will retire from the Board
having been a Non-Executive Director of the Group since 2007.
Breffni had indicated that he would step down during the financial
year but agreed to stay on the Board until the AGM, given the
challenges posed by Covid-19. On behalf of my fellow Directors and
our people, I would like to thank Breffni for the outstanding
contribution he made to Cpl's success during his tenure.
Cash & Capital Allocation
Cpl is a profitable, cash generative business and is highly
effective at managing its working capital. Measures taken to
maximise available cash flow and strengthen the Group's balance
sheet in the wake of Covid-19, have resulted in record cash
generation at year-end. In the twelve months to 30 June 2020,
EUR31.4 million was generated in cash flow from operating
activities before tax and changes in working capital (2019: EUR27.1
million), and the Group closed the financial year with a net cash
balance of EUR68.1 million (2019: EUR40.1 million).
The Board regularly reviews its allocation of capital. 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 for our clients. A strong balance sheet will
enable us to consider acquisition opportunities that may emerge
from the current crisis, to drive growth and to create additional
shareholder value.
EPS & Dividend Policy
Cpl delivered full year adjusted basic earnings per share of
88.8 cent, a 10% increase on the prior year, reflecting the growth
in profitability in the year. This was driven primarily by the
performance in the first nine months of the financial year, until
March 2020 when the Group started to experience the adverse impact
of the Covid-19 pandemic.
Considering the interests of all stakeholders along with the
uncertainty surrounding the Covid-19 pandemic, the Board has deemed
it necessary to prioritise a strong balance sheet. As a result, the
Board is not recommending payment of a final dividend in respect of
the financial year ended 30 June 2020. While the Board recognises
the importance of dividend income to shareholders and is confident
in the medium-term prospects of the business, it is prudent to
conserve cash and maintain a strong balance sheet in the current
business environment. The Board will keep capital allocation and
shareholder returns under continuous review and intends to
reinstate the Group's dividend policy as and when appropriate.
Outlook
We operate in a cyclical industry which is sensitive to changes
in economic activity within our core markets. While we have
strategically re-positioned our business model over the years to
include more secure revenue streams, the visibility of a proportion
of our net fee income, particularly within the Permanent division,
remains short term. The Covid-19 pandemic has further reduced this
visibility as uncertainty around the global economic outlook has
increased. Additionally, Brexit continues to give rise to
uncertainty for businesses in all sectors, including our own.
Key economic indicators in our most important markets are
generally improving from the low points experienced in the second
quarter of calendar year 2020. As demonstrated by the resilience of
our business model in recent months, we believe we are well
positioned to respond to current challenges, to take advantage of
business opportunities as they arise, and to benefit from economic
recovery in our markets.
John Hennessy
Chairman
8 September 2020
Chief Executive's Review
In the financial year to 30 June 2020, Cpl delivered record
adjusted EPS and strong cash conversion. Delivering this strong
performance, against the backdrop of the Covid-19 pandemic,
reflects the resilience of the Cpl business model, our ability to
respond quickly to the changing market environment and the
commitment of our people.
The Group's strategy over the past number of years has been to
diversify our revenue streams and increase the contribution of
recurring revenues across high growth sectors (technology,
pharmaceutical, life science and financial services). Our success
in implementing this strategy has contributed to our strong full
year performance and the delivery of profitability and cashflow in
challenging conditions.
The commitment of our staff is outstanding. At the onset of the
pandemic, our people rapidly adapted to the changed work-practices
required to mobilise from an office-based to a remote working
environment and ensured business continuity by working closely with
employees, candidates and clients. Our pre-Covid investment in
technology ensured our teams remained productive throughout this
challenging period. A key priority for Cpl has been protecting the
health of all of its employees, including those on-site with
clients, while ensuring the implementation of all health and safety
measures recommended by the relevant authorities.
I want to thank Cpl's employees for the commitment shown across
the year and in particular since March 2020 in dealing with the
changes required in work practices due to the pandemic. Breffni
Byrne will retire from the board at our AGM on 23 November 2020.
Breffni has made a significant contribution to the success of the
Group over the years, both as a Board member and Senior Independent
Director. We will miss his insightful contributions and wise
counsel. I would like to personally express my sincere thanks and
wish him well for the future.
Financial Highlights
Group revenue increased by EUR4.4 million to EUR569.3 million in
the year to 30 June 2020 (2019: EUR564.9 million). Gross profit
grew by 4% to EUR100.3 million (2019: EUR96.3 million) and gross
margin increased by 0.6% to 17.6% (2019: 17.0%). We delivered a 10%
increase in adjusted profit before tax to EUR27.9 million (2019:
EUR25.5 million) and our adjusted basic earnings per share is up
10% to 88.8 cent (2019: 80.6 cent). The improvement in the adjusted
operating margin to 5% (2019: 4.6%) demonstrates management's focus
on operational leverage and a growing contribution from Covalen,
our managed solutions division.
The Group reported double-digit growth in profits and earnings
per share in the six months to 31 December 2019. This momentum
continued into the second half of the financial year until March
2020, at which time the Group started to experience the adverse
impact of the Covid-19 pandemic. The Group has implemented a series
of cost saving and cash conservation initiatives to help mitigate
the impact of the pandemic on the long-term prospects of the
Group.
We recognised a EUR2.5 million impairment charge against the
carrying value of goodwill at year-end relating to the RIG
Healthcare Group ("RIG"). RIG is a UK specialist recruiter of locum
doctors and allied health professionals in which we acquired a 91%
shareholding in June 2017. Changes in regulation and continuing
Brexit uncertainty have proven challenging for this business but
the management team responded well to evolving market conditions.
The demand case remains for healthcare professionals and we are
committed to the UK healthcare market in the longer term.
Our balance sheet is robust with net assets of EUR126.4 million
at 30 June 2020 (2019: EUR110.4 million). Cash flow in the year was
exceptional with a closing net cash balance of EUR68.1 million, up
from EUR40.1 million in the prior year. Cash generation was driven
by a range of operational measures taken to maximise available cash
flow and strengthen our balance sheet, together with highly
effective working capital management.
The Board announced an interim dividend of 10.0 cent per share
in January representing an increase of 25% on the prior year and
reflecting the Group's strong first half performance. Considering
the interests of all stakeholders along with the uncertainty in the
global economic outloo k created by the Covid-19 pandemic,
maintaining a strong balance sheet is a key priority for the Group.
Following careful consideration, and given the payment of the
interim dividend to shareholders in February, the Board is not
recommending a final dividend in respect of the 2020 financial
year.
Operations Review
Cpl's capability spans the full talent spectrum and we deliver a
range of services through two operating segments - flexible
workforce solutions ('Flexible Talent') and permanent recruitment
('Permanent').
Gross margin in the year to 30 June 2020 was 17.6%, an increase
of 58 basis points from the prior year. This was driven by our
Flexible Talent division through a combination of volume and
pricing improvements.
Our Permanent placement business represented 27% of total gross
profit compared to 29% in the prior year. Despite the developments
in our business mix, our adjusted operating profit conversion ratio
from gross profit was 28.3%, up 1.6% on last year when adjusted for
non-cash charges.
Key Performance Indicators
2020 2019
Gross margin
17.6% 17.0%
Adjusted Operating margin*
5.0% 4.6%
Operating margin
4.4% 4.4%
Conversion Ratio **
Adjusted Operating profit
28.3% 26.7%
Adjusted Profit before tax
27.9% 26.5%
Operating profit
24.9% 25.8%
Profit before tax
24.5% 25.5%
Permanent fees as % of the total gross profit
27.3% 28.8%
Flexible Talent fees as % of the total gross profit
72.7% 71.2%
Average Flexible Talent staff headcount during the year
11,790
12,240
Average number of recruiters during the year
565 567
* Adjusted Operating margin excludes non-cash charges relating
to the Group's Long-Term Incentive Plan (LTIP) of EUR895k (2019:
EUR895k), currency translation of EUR16k (2019: EUR13k) and
goodwill impairment of EUR2.5m (2019: EURNil).
** As % of gross profit.
Flexible Talent
Service Overview
Flexible Talent incorporates managed solutions, temporary and
contract recruitment, training and strategic talent advisory
services. We support multiple clients including leading
multinational organisations in the financial services, technology,
healthcare and pharmaceutical sectors. Cpl is typically engaged on
multi-year contracts, becoming trusted strategic partners to our
clients and adding significant value to their businesses.
Flexible Talent services are provided across four distinct
areas:
-- Managed Solutions ( Covalen ) assumes accountability for
business processes on behalf of our clients, becoming trusted
strategic partners and creating measurable improvements and cost
savings.
-- Enterprise Solutions (temporary and contract recruitment
services), which offer clients flexibility through managed services
and recruitment outsourcing solutions, including high-volume
contingency recruitment and seasonal ramp-ups.
-- Healthcare Solutions (temporary and contract recruitment
services for public and private healthcare services and hospitals
including homecare provision), which offer clients flexibility
through managed services and recruitment outsourcing solutions,
including high-volume contingency recruitment and seasonal
needs.
-- The Future of Work Institute, which provides strategic talent
advisory services catering for the broader supports required by our
clients to further evolve and transform their businesses.
Performance
Flexible Talent net fee income increased by 7% to EUR73.0
million during the year (2019: EUR68.5 million). Gross margin in
the year to 30 June 2020 was 13.5% (2019: 12.8%) and we had an
average of almost 12,000 skilled people working on client
engagements on behalf of Cpl. Since March 2020 trading has been
resilient and continued to perform well with solid demand across
the pharmaceutical, life science and technology sectors. Covalen,
in particular, continued to experience good growth across its
client base.
The increased demand for outsourced talent and business process
solutions is part of a secular trend which is expected to continue
as employers seek greater flexibility in their global workforces.
We believe a consequence of the Covid-19 pandemic is likely to be
an acceleration in the demand for both remote working practices and
outsourced workforce solutions. The breadth of our service lines in
this space positions us well for further growth.
Permanent
Service Overview
The majority of our Permanent placement work is undertaken on a
contingent basis, which means we only generate revenue when the
candidate successfully starts in a role. We operate in a
competitive environment where the speed and quality of delivery is
a differentiator. We will continue to invest in Artificial
Intelligence (AI) to optimise the placement cycle. Cpl combines the
power of AI and analytics to support our skilled recruitment
professionals who bring a personal touch to the process, focusing
on the qualities of the candidate and culture fit to recommend the
right recruitment decision for our clients.
Performance
Permanent net fee income decreased by 2% during the year to
EUR27.3 million (2019: EUR27.8 million). The Group's Permanent
division traded strongly until March 2020 at which point trading
was negatively impacted as hiring activity was reduced across many
sectors.
In both the UK and Ireland, we supported national and local
campaigns for the frontline delivery effort in respect of the
healthcare service response to Covid-19. International nurse
recruitment in the UK performed well in the first half of the year,
following a relaxation of the regulatory environment, until the
Covid-19 pandemic began to impact. While there was still strong
demand for nurses, the ban on international flights from several
countries impacted on the arrival and start dates of candidates. We
expect these demand levels to continue given the on-going pressures
on healthcare services across the UK and Ireland.
Divisions such as technology, pharma and financial services
performed well during the year, where demand for skilled talent is
at a premium. In today's digitally driven marketplace, companies
are becoming increasingly dependent on technology to deliver for
their customers and drive efficiency. This combined with increased
regulation, compliance and the growing risks of cyber security
suggests that the demand for technology and finance professionals
will continue.
Strategy
Our strategy is to be world class at supporting our clients
through transformational talent solutions and experiences. Over the
past 30 years, we have established a deep portfolio of customer
relationships and talent services. We have evolved our business
from a traditional recruitment company to one which operates across
the entire talent spectrum with a comprehensive managed solutions
offering, supported by strategic talent and advisory services.
We continue to execute our strategy based on our core themes of
'Future Ready', 'Client First' and 'Total Solutions' - to deliver
value for clients and growth for our shareholders. The Group's
strong performance in the year to June 2020 is a testament to the
success of our strategy for growth. Various initiatives have been
undertaken as part of these themes to further the development of
our approach to engaging and adding value to our clients including:
the establishment of an enterprise solutions team to support the
delivery of talent solutions programs; the bolstering of our
technology capability; and the further evolution of the Future of
Work Institute to ensure we are at the leading edge of the world of
work.
As part of our core strategy, during the year we rolled out a
three-pillar structure within the organisation focused on the core
service offerings in the business - Recruitment, Managed Solutions
and Healthcare. This reorganisation creates better ownership and
focus over our core service offerings, supported by an executive
governance group that is driving strong cross and upselling
opportunities in a more focused way.
During the year, we also started the process of evolving the Cpl
brand to better reflect our evolution as a provider of talent and
workforce solutions across the entire talent spectrum. This process
involved interactions with our clients and colleagues and the
development of a new brand look, feel and language for the Cpl
organisation. During the 2021 financial year, the brand will be
further integrated into the business and activated across core
channels.
Our investment over recent years in the Future of Work Institute
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. The
growth of Covalen, is a key area of focus for us as we prioritise
our acquisition activity in the short to medium term.
Technology
Technological change is accelerating exponentially and is
revolutionising the way workplace, workforce and work tasks are
managed. We continue to explore and pilot leading edge technology
solutions that enhance the employee and client experience. Our
focus is two-fold - firstly, the continuing integration of
technology solutions into our value propositions; and, secondly to
fully utilise technology in delivering operational excellence in
our service delivery.
Alongside significant ongoing investment in our core systems, we
actively seek out and evaluate early-stage technology propositions.
We have made two investments during the period - the first in a UK
based 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 technology platform
in the UK and Ireland. MyCpl has been successfully deployed to over
80% of our flexible healthcare workers in Ireland. It has
facilitated 92% of work shifts, now filled within 30 minutes of
being released to the app by the client and is being developed for
further rollout across our healthcare businesses in Ireland and the
UK.
People and Culture
Over the past 30 years, we have developed a strong culture
across the Cpl Group. Our people are passionate about helping
others and are driven to provide the best talent solutions possible
for our clients and candidates. Our teams, in Ireland and
internationally, collaborate daily to transform lives and they are
central to the success of the Cpl Group.
This year, Cpl was recognised as one of the best large
workplaces in Ireland by The Great Place to Work programme for the
sixth consecutive year, achieving our highest ranking to date. We
have also been recognised as one of the best workplaces for women
in Ireland for the first time, highlighting our inclusive nature. I
would like to thank everyone across the Group for their continued
commitment and resilience, and for making Cpl a truly great place
to work.
Environmental, Social & Governance
Across the Cpl Group, there is a collective passion for helping
others and giving back and it's heartening to see this ethos come
to the fore across the business community in Ireland and
internationally. We are passionate about becoming a more
sustainable business and with almost 13,000 people and 45 offices
across the Group, we are confident we can continue to make a real
difference, particularly within the areas of ensuring inclusive
opportunities for all and minimising our environmental impact.
Our recently published Responsible Business Policy Report
outlines our commitment to improving the objectives, policies and
governance of our ESG activities. In terms of sustainability, we
have increased our use of renewable energy by 50% in the financial
year, with all electricity supplies across 22 sites now coming from
renewable sources. We also recently implemented a supplier code of
conduct committing to work only with companies who share our
corporate values. We are proud to have been named one of the best
workplaces for women in Ireland, continue to support a range of
charities selected by our people and encourage all employees to
avail of two fully paid volunteering days each year.
Summary & Outlook
Current market conditions and trading continue to be impacted by
the economic slowdown associated with Covid-19. We are very pleased
with the resilience demonstrated by our Flexible Talent division to
date and anticipate the impact of the slowdown will principally be
on our Permanent division, which comprises 27% of Cpl's net fee
income. That said, we are not complacent about the potential impact
on our business as a whole and remain focused on continuing to
deliver for our clients; while adopting a range of efficiency and
cost saving measures to protect the business and our client
relationships. As an organisation, we are prepared for the
potential macro-economic challenges driven by the Covid-19 pandemic
and Brexit.
Cpl has a strong balance sheet with net assets in excess of
EUR126.4 million, generated over 30 years of continuous
profitability. We believe our balance sheet and strong cash flow
generation provide the resources to withstand current challenges,
and also to continue to invest in the growth and expansion of our
business while providing an attractive return to shareholders.
Anne Heraty
Chief Executive Officer
8 September 2020
Cpl Resources Plc
Group Statement of Comprehensive Income
for the year ended 30 June 2020
2020 2019
Pre-exceptional
Exceptional* Total
EUR'000 EUR'000 EUR'000 EUR'000
Revenue 569,268 - 569,268 564,858
Cost of sales (468,977) - (468,977) (468,600)
Gross profit 100,291 - 100,291 96,258
Distribution expenses (4,332) - (4,332) (4,837)
Administrative expenses (68,334) (2,500) (70,834) (66,541)
Expected credit loss charged (147) - (147) (62)
Operating profit 27,478 (2,500) 24,978 24,818
Financial income 97 - 97 93
Financial expenses (553) - (553) (327)
Profit before tax 27,022 (2,500) 24,522 24,584
Income tax expense (3,470) - (3,470) (3,256)
Profit for the financial year
- all
attributable to equity
shareholders 23,552 (2,500) 21,052 21,328
Profit attributable to:
Owners of the Parent 20,950 21,186
Non-controlling interests 102 142
21,052 21,328
Other comprehensive income
attributable to:
Owners of the Parent (388) (291)
Non-controlling interests (7) 70
(395) (221)
Total comprehensive income
for the year - all
attributable
to equity shareholders and
non-
controlling interests 20,657 21,107
Basic Earnings per share 76.3 77.3
cent cent
Diluted Earnings per share 75.4 77.2
cent cent
Adjusted basic earnings per 88.8 80.6
share** cent cent
* Exceptional item relates to goodwill impairment of EUR2.5m
(2019: EURNil).
** Excludes non-cash charges relating to the Group's Long-Term
Incentive Plan (LTIP) of EUR895k (2019: EUR895k), currency
translation of EUR16k (2019: EUR13k) and goodwill impairment of
EUR2.5m (2019: EURNil).
Cpl Resources Plc
Group Statement of Changes in Equity
for the year ended 30 June 2020
Share
Other Currency Put based Non- Total
Share Share undenominated Merger translation option payment Retained controlling shareholders'
capital premium capital Reserve reserve reserve reserve earnings Total interests equity
fund
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Balance at 1
July 2018 2,716 1,705 1,094 (3,357) (1,385) (1,140) 4,245 88,488 92,366 131 92,497
Total
comprehensive
income for the
year
Profit for the
financial
year - - - - - - - 21,186 21,186 142 21,328
Foreign
currency
translation
effects - - - - (291) - - - (291) 70 (221)
Transactions
with
shareholders
Share based
payment
charge - - - - - - 895 - 895 - 895
Dividends paid - - - - - - - (4,158) (4,158) - (4,158)
Unvested share
options - - - - - - (67) 67 - - -
Share options
exercised 27 1,911 - - - - (1,911) - 27 - 27
Balance at 30
June
2019 2,743 3,616 1,094 (3,357) (1,676) (1,140) 3,162 105,583 110,025 343 110,368
========== ========== ============== ========== ============ ========== ========== ========== ============= ============ ==============
Cpl Resources Plc
Group Statement of Changes in Equity (continued)
for the year ended 30 June 2020
Share
Other Currency Put based Non- Total
Share Share undenominated Merger translation option payment Retained controlling Shareholders'
capital premium capital Reserve reserve reserve reserve earnings Total interests Equity
fund
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Balance at 1
July 2019 2,743 3,616 1,094 (3,357) (1,676) (1,140) 3,162 105,583 110,025 343 110,368
Adjustment on
application
of IFRS 16 - - - - - - - (192) (192) - (192)
---------- ---------- -------------- ---------- ------------ ---------- ---------- ---------- ------------- ------------ --------------
Restated balance
at
1 July 2019 2,743 3,616 1,094 (3,357) (1,676) (1,140) 3,162 105,391 109,833 343 110,176
Total
comprehensive
income for the
year
Profit for the
financial
year - - - - - - - 20,950 20,950 102 21,052
Foreign currency
translation
effects - - - - (388) - - - (388) (7) (395)
Transactions
with
shareholders
Share based
payment
charge - - - - - - 895 - 895 - 895
Dividends paid - - - - - - - (5,763) (5,763) - (5,763)
Put option fair
value
movements - - - - - 450 - - 450 - 450
Acquisition of
non-controlling
interests - - - - - 209 - (388) (179) 179 -
Share options
exercised - - - - - - (1,526) 1,526 - - -
Balance at 30
June
2020 2,743 3,616 1,094 (3,357) (2,064) (481) 2,531 121,716 125,798 617 126,415
========== ========== ============== ========== ============ ========== ========== ========== ============= ============ ==============
Cpl Resources Plc
Company Statement of Changes in Equity
for the year ended 30 June 2020
Other Put Share based
Share Share undenominated Option payment Retained Shareholders'
capital premium capital Reserve reserve earnings Equity
fund
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Balance at 1 July
2018 2,716 1,705 1,094 (1,140) 4,245 7,837 16,457
Total comprehensive
income for the year
Profit for the
financial
year - - - - - 5,272 5,272
Transactions with
shareholders
Share based payment
charge - - - - 895 - 895
Dividends paid - - - - - (4,158) (4,158)
Unvested share options - - - - (67) 67 -
Share options
exercised 27 1,911 - - (1,911) - 27
------- --------- -------------- -------- ------------ ---------- ---------------
------------------
Balance at 30 June
2019 2,743 3,616 1,094 (1,140) 3,162 9,018 18,493
======= ========= ============== ======== ============ ========== ===============
Balance at 1 July
2019 2,743 3,616 1,094 (1,140) 3,162 9,018 18,493
Adjustment on
application
of IFRS 16 - - - - - (148) (148)
------- --------- -------------- -------- ------------ ---------- ---------------
Restated balance at
1 July 2019 2,743 3,616 1,094 (1,140) 3,162 8,870 18,345
Total comprehensive
income for the year
Profit for the
financial
year - - - - - 3,886 3,886
Transactions with
shareholders
Share based payment
charge - - - - 895 - 895
Dividends paid - - - - - (5,763) (5,763)
Put option fair value
movements - - - 450 - - 450
Acquisition of
non-controlling
interests - - - 209 - (209) -
Share options
exercised - - - - (1,526) 1,526 -
------- --------- -------------- -------- ------------ ---------- ---------------
Balance at 30 June
2020 2,743 3,616 1,094 (481) 2,531 8,310 17,813
======= ========= ============== ======== ============ ========== ===============
Cpl Resources Plc
Group and Company Balance Sheets
as at 30 June 2020
Group Company
2020 2019 2020 2019
Assets EUR'000 EUR'000 EUR'000 EUR'000
Non current assets
Property, plant and equipment 2,866 2,320 2,499 1,903
Goodwill and intangible
assets 23,658 25,658 1,428 972
Right-of-use asset 5,525 - 3,696 -
Investments in subsidiaries - - 29,987 33,118
Financial assets 592 - 592 -
Deferred tax asset 964 851 113 113
Total non current assets 33,605 28,829 38,315 36,106
Current assets
Trade and other receivables 108,839 116,611 67,266 63,789
Cash and cash equivalents 69,239 45,755 43,915 15,912
Total current assets 178,078 162,366 111,181 79,701
Total assets 211,683 191,195 149,496 115,807
Issued share capital 2,743 2,743 2,743 2,743
Share premium 3,616 3,616 3,616 3,616
Other reserves (2,277) (1,917) 3,144 3,116
Retained earnings 121,716 105,583 8,310 9,018
125,798 110,025 17,813 18,493
Non-controlling interests 617 343 - -
Total equity 126,415 110,368 17,813 18,493
Cpl Resources Plc
Group and Company Balance Sheets (continued)
as at 30 June 2020
Group Company
2020 2019 2020 2019
EUR'000 EUR'000 EUR'000 EUR'000
Current liabilities
Trade and other payables 79,073 79,687 127,387 96,174
Lease liabilities 1,450 - 913 -
Put option liability 481 1,140 481 1,140
Total current liabilities 81,004 80,827 128,781 97,314
Non current liabilities
Lease liabilities 4,264 - 2,902 -
Total non current liabilities 4,264 - 2,902 -
Total liabilities 85,268 80,827 131,683 97,314
Total equity and liabilities 211,683 191,195 149,496 115,807
Cpl Resources Plc
Group and Company Cash Flow Statements
for the year ended 30 June 2020
Group Company
2020 2019 2020 2019
EUR'000 EUR'000 EUR'000 EUR'000
Cash flows from operating
activities
Profit for the financial year 21,052 21,328 3,886 5,272
Adjustments for:
Depreciation on property,
plant and
equipment 811 845 646 656
Depreciation on right-of-use
asset 1,607 - 953 -
Share based payment charge 895 895 - -
Impairment of goodwill/investment 2,500 - 2,500 -
Amortisation of intangible
assets 564 511 542 511
Financial income (97) (93) (53) -
Financial expense 553 327 113 -
Income tax expense 3,470 3,256 - 38
_______ _______ _______ _______
Operating cashflows before
changes in
working capital 31,355 27,069 8,587 6,477
Decrease/(increase) in trade
and other receivables 4,092 (13,745) (1,940) (3,465)
Increase in trade and other
payables 4,103 10,352 31,225 2,442
_______ ________ ________ _______
Cash generated from operations 39,550 23,676 37,872 5,454
Interest paid (394) (327) (15) -
Income tax (paid)/refunded (341) (2,221) 39 (60)
Interest received 44 93 - -
________ ________ ________ _______
Net cash from operating activities 38,859 21,221 37,896 5,394
________ ________ ________ ______
Cash flows from investing
activities
Purchase of property, plant
and
equipment (1,372) (927) (1,251) (766)
Purchase of intangible assets (1,064) (282) (998) (282)
Investment in financial asset (592) - (592) -
________ _______ _______ _______
Net cash (outflow) from investing
activities (3,028) (1,209) (2,841) (1,048)
Cpl Resources Plc
Group and Company Cash Flow Statements (continued)
for the year ended 30 June 2020
Group Company
2020 2019 2020 2019
EUR'000 EUR'000 EUR'000 EUR'000
Cash flows used in financing
activities
Shares options exercised - 27 - 27
Lease principal payment (1,793) - (1,079) -
Dividends paid (5,763) (4,158) (5,763) (4,158)
Acquisition of non-controlling
interests (209) - (209) -
(Decrease)/increase in invoice
discounting facility (4,581) 49 - -
________ ________
Net cash (used in) financing
activities (12,346) (4,082) (7,051) (4,131)
________ ________
Net increase in cash and cash
equivalents 23,485 15,930 28,004 215
Cash and cash equivalents
at beginning
of year 45,749 29,819 15,906 15,691
________ ________
Cash and cash equivalents
at end of year 69,234 45,749 43,910 15,906
Net funds (see Note 6) 68,124 40,058 43,910 15,906
Cpl Resources Plc
Notes
1 Financial income and expenses
2020 2019
EUR'000 EUR'000
Interest income (97) (93)
_____ _____
(97) (93)
Interest expense
Interest payable 553 327
2 Income tax expense
2020 2019
EUR'000 EUR'000
Recognised in the income statement:
Current tax expense
Current year 3,546 3,155
Adjustments in relation to prior years 37 -
_____ _____
Current tax expense 3,583 3,155
Deferred tax
Origination and reversal of temporary
differences (64) 12
Adjustments in relation to prior years (49) 89
_____
Total tax in the income statement 3,470 3,256
_____ _____
EUR'000 EUR'000
Profit before tax 24,522 24,584
_____ _____
Tax based on Irish corporation tax rate
of 12.5% 3,065 3,073
Non-deductible items 434 58
Differences in effective tax rates on
overseas earnings (50) 32
Losses on which deferred tax not recognised 10 -
Income taxed at higher rate 23 4
(Over)/under provision in prior years (12) 89
_____ _____
Total tax in income statement 3,470 3,256
_____ _____
Cpl Resources Plc
Notes (continued)
3 Dividends to equity shareholders
Interim dividends to equity shareholders in Cpl Resources plc
are recognised when the interim dividend is paid by the Company.
The final dividend in respect of each financial year is recognised
when the dividend has been approved by the Company's shareholders.
During the financial year, the following dividends were
recognised:
2020 2019
EUR'000 EUR'000
Final dividend paid in respect of
previous financial year
of 11.00 cent (2019: 7.15 cent) per
ordinary share 3,019 1,962
Interim dividend paid in respect of
current financial year
of 10.00 cent (2019: 8.00 cent) per
ordinary share 2,744 2,196
5,763 4,158
4 Earnings per share
2020 2019
EUR'000 EUR'000
Numerator for basic and diluted earnings
per share:
Profit for the financial year attributable
to equity
Shareholders 20,950 21,186
Denominator for basic earnings per
share:
Weighted average number of shares in
issue
for the year 27,443,935 27,398,638
Denominator for diluted earnings per
share: 27,790,963 27,433,838
Basic earnings per share 76.3 cent 77.3 cent
Diluted earnings per share 75.4 cent 77.2 cent
Adjusted basic earnings per share* 88.8 cent 80.6 cent
* Excludes non-cash charges relating to the Group's Long-Term
Incentive Plan (LTIP) of EUR895k (2019: EUR895k), currency
translation of EUR16k (2019: EUR13k) and goodwill impairment of
EUR2.5m (2019: EURNil).
Cpl Resources Plc
Notes (continued)
5 Trade and other receivables
Group Company
2020 2019 2020 2019
EUR'000 EUR'000 EUR'000 EUR'000
Trade receivables 73,860 81,670 - -
Expected credit loss (455) (316) - -
Accrued income/contract
assets 28,188 29,232 - -
Prepayments 3,076 2,595 2,103 1,380
Other debtors 3,612 1,676 809 862
Corporation tax 558 1,754 - -
VAT
Amounts due from subsidiary - - 519 493
undertakings - - 63,835 61,054
108,839 116,611 67,266 63,789
Amounts from subsidiary undertakings are interest free,
unsecured and repayable on demand.
6 Net funds
Group Company
2020 2019 2020 2019
EUR'000 EUR'000 EUR'000 EUR'000
Cash and cash equivalents 69,239 45,755 43,915 15,912
Bank overdraft (5) (6) (5) (6)
Cash and cash equivalents
at end of year 69,234 45,749 43,910 15,906
Invoice discounting
facility (1,110) (5,691) - -
Net funds 68,124 40,058 43,910 15,906
Cpl Resources Plc
Notes (continued)
7 Share capital, share premium, and other reserves
2020 2019
EUR'000 EUR'000
Authorised
50,000,000 ordinary shares at EUR0.10 each 5,000 5,000
EUR'000 EUR'000
Allotted, called up and fully paid
27,443,935 (2019: 27,443,935) ordinary shares at EUR0.10 each 2,743 2,743
The holders of ordinary shares are entitled to receive dividends
as declared from time to time and are entitled to one vote per
share at meetings of the Company.
Share premium at 30 June 2020 amounted to EUR3,616k (2019:
EUR3,616k).
Other reserves comprise an other undenominated capital fund of
EUR1,094k (2019: EUR1,094k), a merger reserve of EUR3,357k negative
(2019: EUR3,357k negative), a currency translation reserve of
EUR2,064k negative (2019: EUR1,676k negative), a share based
payment reserve of EUR2,531k (2019: EUR3,162k) and a put option
reserve of EUR481k negative (2019: EUR1,140k negative). The merger
reserve arose in 1998 when the Company acquired by way of a share
for share exchange the share capital of two group companies
formerly under common ownership, management and control. The
translation reserve movement comprises all foreign exchange
differences from 1 July 2019 arising from the translation of the
net assets of the Group's non-euro denominated operations including
the translation of the results of such operations from the average
exchange rate for the year to the exchange rate at the balance
sheet date.
Cpl Resources Plc
Notes (continued)
8 Trade and other payables
Amounts falling due in less than one year:
Group Company
2020 2019 2020 2019
EUR'000 EUR'000 EUR'000 EUR'000
Trade creditors 1,131 3,665 70 2,125
Invoice discounting
facility 1,110 5,691 - -
Bank overdraft 5 6 5 6
Accruals 53,155 45,248 4,774 4,413
Corporation Tax - - 2 -
VAT 12,578 13,547 - -
PAYE/PRSI 11,094 11,530 - -
Amounts due to subsidiary
undertakings - - 122,536 89,630
79,073 79,687 127,387 96,174
Amounts due to subsidiary undertakings are interest free,
unsecured and repayable on demand.
9 Basis of preparation
The financial information included in this preliminary result
statement has been extracted from the Group's financial statements
for the year ended 30 June 2020 and is prepared based on accounting
policies set out therein. Except for IFRS 16: Leases, there are no
other new standards, amendments to standards or interpretations
which are mandatory for the first time for financial periods
commencing 1 July 2019 which have significant impact on the Group's
accounting policies or on the reported results. As permitted by EU
law and in accordance with AIM / Euronext rules, the Group
financial statements have been prepared in accordance with
International Financial Reporting Standards and their
interpretations issued by the International Accounting Standards
Board as adopted by the EU. The Group Financial Statements will be
filed with the Irish Registrar of Companies and circulated to
shareholders in due course.
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END
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