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RNS Number : 1457V

CPL Resources PLC

26 January 2017

Cpl Resources Plc

Results for the six months ended 31 December 2016

CPL delivers revenue, gross profit and earnings growth in

the first half of financial year 2017

Cpl Resources Plc ('Cpl' or the 'Group'), Ireland's leading employment services group, today announced results for the half year ended 31 December 2016.

Chairman's Statement

I am pleased to report that in the six months to 31 December 2016 the Group delivered continued growth in revenues, net fee income and profits.

Half year highlights

· 6% increase in revenues to €228.7 million

· 6% increase in gross profit (net fee income) to €36.2 million

· Profit before tax of €8.1m a 7% increase

· Earnings per share increases 8.5% to 23.0 cent

· 10% increase in interim dividend to 5.75 cent per share

Half year highlights	Half year ended	Half year ended	% change
€000s except where indicated	31-Dec-16	31-Dec-15

Revenue	228,717	216,364	5.7%
Gross Profit	36,188	33,999	6.4%
Adjusted Operating profit*	8,971	8,475	5.9%
Adjusted Profit before tax*	8,979	8,481	5.9%

Operating profit	8,088	7,565	6.9%
Profit before tax	8,096	7,571	6.9%
Earnings per share	23.0 cent	21.2 cent	8.5%
Dividend per share	5.75 cent	5.25 cent	9.5%

Conversion ratio **
Adjusted Operating Profit	24.8%	24.9%
Adjusted Profit before tax	24.8%	24.9%
Operating Profit	22.3%	22.3%
Profit before tax	22.4%	22.3%

Net fee income - permanent placements	13,279	13,640	(2.6%)
Net fee income - temporary and contract	22,909	20,359	12.5%

Permanent net fee income as a %
of total gross profit	37%	40%
Temporary and contract net fee income as a %
of total gross profit	63%	60%

* Adjusted operating profit and adjusted profit before tax exclude non-cash charges relating to the Group's Long-Term Incentive Plan (LTIP) and foreign exchange

** As a % of gross profit.

During the six months ended 31 December 2016, we experienced further improvements in trading conditions in certain of our markets. Revenues for the six months to 31 December 2016 increased by 6% to €228.7 million. Our gross profit increased by 6% against the same period last year to €36.2 million. The Group's adjusted operating profit, which excludes non-cash foreign exchange and LTIP charges, was €9.0 million for the six months to 31 December 2016, a 6% increase on the same period last year. Our conversion rate of gross profit to operating profit (excluding LTIP & foreign exchange) was 24.8% in the period.

The foreign exchange charge of €0.5 million in the period was mainly due to the accounting translation of sterling into euro, as a result of fluctuations in the sterling exchange rate following the Brexit vote. The foreign exchange charge was €0.1 million for the period to 31 December 2015. The non-cash LTIP charge was €0.4 million in the six months to 31 December 2016 and €0.9 million in the six months to 31 December 2015. The LTIP charge for the six months to 31 December 2016 reflects current expectations in relation to the achievement of performance targets included in the LTIP awards.

The Group delivered a 9% increase in earnings per share to 23.0 cent for the six months to 31 December 2016.

The Group continues to work with clients to understand their specific requirements and with our candidates in order to match their skills to those client requirements. The proportion of our net fee income that is made up of permanent fees has reduced from 40% in the same period last year to 37%, mainly as a result of longer lead times in appointing nursing staff in the UK following regulatory changes. The temporary staffing market remains highly competitive but we have seen some margin improvement.

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.

Cash

The strength of our Balance Sheet reflects the positive cash-generating capability of Cpl. The Group has a cash balance of €35.2 million as at 31 December 2016 (December 2015: €27.6 million). In the six months to 31 December 2016 €9.0 million was generated in cash flow from operating activities before tax and changes in working capital. Although our business requires significant investment in working capital, we recorded a net cash inflow of €2.2 million in the period.

Dividend

The Board proposes to pay an interim dividend of 5.75 cent per share, an increase of 10% on last year's interim dividend, reflecting the Group's strong performance in the period. The interim dividend will be payable on 3^rd March 2017 to shareholders on the register at the close of business on the record date of 3^rd February 2017.

Outlook

In the six month period to 31 December 2016 we have seen continued organic growth across many of our key business sectors. Political and economic events globally during the period to 31 December 2016 have had limited impact on our key sectors, except for foreign exchange translations. During calendar year 2017 we expect the outcome of these events to become clearer, and consequent opportunities and challenges to present themselves.

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

26 January 2017

Condensed Group Statement of Comprehensive Income

for the period ended 31 December 2016

	6 months ended	6 months ended	Year ended
	31-Dec-16	31-Dec-15	30-Jun-16
	€'000	€'000	€'000
	(Unaudited)	(Unaudited)	(Audited)

Revenue	228,717	216,364	433,391
Cost of sales	(192,529)	(182,365)	(363,338)
	_______	_______	_______
Gross profit	36,188	33,999	70,053

Distribution expenses	(2,190)	(2,091)	(4,059)
Administrative expenses	(25,910)	(24,343)	(50,610)
	_______	_______	_______
Operating profit	8,088	7,565	15,384
Financial income	8	6	61
Financial expenses	-	-	(55)
	_______	_______	_______
Profit before taxation	8,096	7,571	15,390

Income tax expense	(1,052)	(984)	(1,968)
	_______	_______	_______
Profit for the financial period/year	7,044	6,587	13,422
	_______	_______	_______
Other comprehensive income
Foreign currency translation differences -
foreign operations	(43)	33	(198)
	_______	_______	_______
Total comprehensive income for the
period/year	7,001	6,620	13,224
	_______	_______	_______

Profit attributable to:
Owners of the Parent	7,024	6,482	13,434
Non - controlling interests	20	105	(12)
	_______	_______	_______
	7,044	6,587	13,422
	_______	_______	_______
Total comprehensive income attributable to
Owners of the Parent	(107)	(51)	(64)
Non - controlling interests	64	84	(134)
	_______	_______	_______
	(43)	33	(198)
	_______	_______	_______

Basic earnings per share (cent)	23.0	21.2	43.9

Diluted earnings per share (cent)	23.0	21.2	43.9

Condensed Group Balance Sheet

as at 31 December 2016

	31-Dec-16	31-Dec-15	30-Jun-16
	€'000	€'000	€'000
	(Unaudited)	(Unaudited)	(Audited)
Fixed Assets
Non current assets
Property, plant and equipment	1,980	1,933	1,994
Goodwill and intangible assets	17,185	18,701	17,489
Deferred tax asset	786	444	786
	_______	_______	_______
Total non-current assets	19,951	21,078	20,269
	_______	_______	_______
Current assets
Trade and other receivables	93,071	90,689	90,333
Cash and Cash equivalents	36,014	28,591	34,843
	_______	_______	_______
Total current assets	129,085	119,280	125,176
	_______	_______	_______
Total assets	149,036	140,358	145,445
	_______	_______	_______
Capital and reserves
Issued share capital	3,053	3,053	3,053
Share premium	1,705	1,705	1,705
Other reserves	(1,181)	(2,052)	(1,462)
Retained earnings	95,712	85,096	90,444
	_______	_______	_______
Equity attributable to owners of the Company	99,289	87,802	93,740
Non - controlling interests	55	172	(29)
	_______	_______	_______
Total equity	99,344	87,974	93,711
	_______	_______	_______
Liabilities
Non current liabilities	400	1,285	1,601
	_______	_______	_______
Total non current liabilities	400	1,285	1,601
	_______	_______	_______
Current liabilities
Trade and other payables	48,076	49,724	50,133
Provisions	1,216	1,375	-
	_______	_______	_______
Total current liabilities	49,292	51,099	50,133
	_______	_______	_______
Total liabilities	49,692	52,384	51,734
	_______	_______	_______
Total equity and liabilities	149,036	140,358	145,445
	_______	_______	_______

Condensed Group Statement of Changes in Equity

for the period ended 31 December 2016

			Other				Share
			denominated		Currency	Put	based			Non -	Total
	Share	Share	capital	Merger	translation	option	payment	Retained		controlling	Shareholders
	Capital	Premium	fund	reserve	reserve	reserve	reserve	earnings	Total	interests	equity
	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000

Balance at 1 July 2015	3,053	1,705	724	(3,357)	(395)	-	177	80,141	82,048	(89)	81,959
Total comprehensive income for the period
Profit for the financial period	-	-	-	-	-	-	-	6,482	6,482	105	6,587
Foreign currency translation	-	-	-	-	(51)	-	-	-	(51)	84	33
Transactions with shareholders
Share based payment charge	-	-	-	-	-	-	850	-	850	-	850
Dividends paid	-	-	-	-	-	-	-	(1,527)	(1,527)	-	(1,527)
	_______	_______	_______	_______	_______	_______	_______	_______	_______	_______	_______
Total contributions and distribution	3,053	1,705	724	(3,357)	(446)	-	1,027	85,096	87,802	100	87,902
	______	_______	_______	_______	_______	_______	_______	_______	_______	_______	_______
	______	_______	_______	_______	_______		_______	_______	_______	_______	_______
Changes in ownership interests
Non controlling interest on acquisition in year	-	-	-	-	-	-	-	-	-	72	72
	_______	_______	_______	_______	_______	_______	_______	_______	_______	_______	_______
Total changes in ownership interests	-	-	-	-	-	-	-	-	-	72	72
	_______	_______	_______	_______	_______	_______	_______	_______	_______	_______	_______
Balance at 31 December 2015	3,053	1,705	724	(3,357)	(446)	-	1,027	85,096	87,802	172	87,974
	_______	_______	_______	_______	_______	_______	_______	_______	_______	_______	_______
Balance at 1 July 2016	3,053	1,705	724	(3,357)	(593)	(400)	2,164	90,444	93,740	(29)	93,711
Total comprehensive income for the period
Profit for the financial period	-	-	-	-	-	-	-	7,024	7,024	20	7,044
Foreign currency translation	-	-	-	-	(107)	-	-	-	(107)	64	(43)
Transactions with shareholders
Share based payment charge	-	-	-	-	-	-	388	-	388	-	388
Dividends paid	-	-	-	-	-	-	-	(1,756)	(1,756)	-	(1,756)
	_______	_______	_______	_______	_______	_______	_______	_______	_______	_______	_______
Balance at 31 December 2016	3,053	1,705	724	(3,357)	(700)	(400)	2,552	95,712	99,289	55	99,344
	_______	_______	_______	_______	_______	_______	_______	_______	_______	_______	_______

Condensed Group cash flow statement

for the period ended 31 December 2016

	6 months ended	6 months ended	Year ended
	31-Dec-16	31-Dec-15	30-Jun-16
	€'000	€'000	€'000
	(Unaudited)	(Unaudited)	(Audited)
Cash flows from operating activities
Profit for the financial period/year	7,044	6,587	13,422
Depreciation on property, plant and equipment	308	274	590
Share based payment charge	388	850	1,987
Amortisation of intangible assets	212	145	343
Financial income	(8)	(6)	(61)
Financial expense	-	-	55
Income tax expense	1,052	984	1,968
	_______	_______	_______
Operating cash flows before changes in working capital	8,996	8,834	18,304

(Increase) in trade and other receivables	(2,368)	(5,347)	(4,849)
(Decrease)/increase in trade and other payables and provisions	(1,429)	487	1,092
	_______	_______	_______
Cash generated from in operations	5,199	3,974	14,547

Interest (paid)	-	-	(55)
Income tax (paid)	(914)	(464)	(2,485)
Interest received	4	60	110
	_______	_______	_______
Net cash provided by operating activities	4,289	3,570	12,117
	_______	_______	_______
Cash flows from investing activities
Acquisition of business, net of cash acquired	-	(4,471)	(5,083)
Purchase of property, plant and equipment	(313)	(307)	(684)
Purchase of intangible assets	(63)	(132)	(602)
	_______	_______	_______
Net cash (outflow) from investing activities	(376)	(4,910)	(6,369)
	_______	_______	_______

Cash flows from financing activities
Dividends paid	(1,756)	(1,527)	(3,131)
	_______	_______	_______
Net cash (used in) financing activities	(1,756)	(1,527)	(3,131)
	_______	_______	_______

Net increase/(decrease) in cash and cash equivalents	2,157	(2,867)	2,617

Cash and cash equivalents at beginning of period/year	33,092	30,475	30,475
	_______	_______	_______
Cash and cash equivalents at end of period/year	35,249	27,608	33,092
	_______	_______	_______

Notes supporting condensed interim financial statements

1. Basis of preparation

The condensed consolidated interim financial information of the Group has been prepared in euro in accordance with the recognition and measurement principles of International Financial Reporting Standards (IFRS), including interpretations issued by the International Accounting Standards Board ("IASB") and its committee and adopted by the EU. There are no new standards, amendments to standards or interpretations which are mandatory for the first time for financial periods commencing on 1 July 2016 which have a significant impact on the Group's accounting policies or on the reported results. The accounting policies adopted in the preparation of the condensed consolidated interim financial information are consistent with those applied in the Annual Report for the financial year ended 30 June 2016.

The figures for the half year ended 31 December 2016 are unaudited. The comparative figures for the half year ended 31 December 2015 are also unaudited. The amounts for the year ended 30 June 2016 represent an abbreviated version of the Group's full financial statements for the year on which the auditors issued an unqualified audit report. The Group is not subject to significant seasonal factors.

The Annual Report and financial statements for the year ended 30 June 2016 have been filed with the Registrar of Companies and are publically available. The preparation of financial information in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources.

2. Dividends to equity shareholders

	6 months ended	6 months ended	Year ended
	31-Dec-16	31-Dec-15	30-Jun-16
	€'000	€'000	€'000
Ordinary dividends:
Interim dividends paid	-	-	1,604
Final dividends paid	1,756	1,527	1,527
	_______	_______	_______
	1,756	1,527	3,131
	_______	_______	_______

3. Earnings per share

The earnings per ordinary share is calculated on the basis that the weighted average number of shares in issue for the half year ended 31 December 2016 is 30,545,159 (period ended 31 December 2015 - 30,545,159; year ended 30 June 2016 - 30,545,159). It has been calculated based on the profit attributable to the owners of the Company for the financial period ended 31 December 2016 of €7,024,000 (period ended 31 December 2015 - €6,482,000; year ended 30 June 2016 - €13,434,000).

4. Share Based Payments

The LTIP charge for the six months to 31 December 2016 was €388k and €850k in the six months to 31 December 2015. This reflects current expectations on achieving the performance targets included in the LTIP awards which may result in the vesting of these instruments. Full details of the scheme are outline in Note 29 of the 2016 Annual Report.

5. Events after the reporting date

There have been no significant events since the period end 31 December 2016 that would require disclosure in the interim financial statements.

[END]

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