Profits rise at recruitment group Cpl but Covid-19 weighs on momentum

Profits rose at recruitment group Cpl Resources, but double-digit growth in the first half of the year slowed as the coronavirus pandemic hit the business.

The company said adjusted pretax profit rose 10 per cent in the year to June 30th, 2020, reaching €27.9 million, and adjusted basic earnings per share were 10 per cent higher at 88.8 cent.

Gross profit rose 4 per cent in the 12-month period to €100.3 million, with revenue up 1 per cent to €569.3 million.

When the impact of non-cash charges relating to the group’s long-term incentive plan, currency translation and a goodwill impairment relating to the RIG Healthcare Group were excluded, pretax profit was static.

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Cpl said profits were experiencing double-digit growth in the six months to the end of December, with momentum continuing into the second half of the financial year until the Covid-19 pandemic hit in March.

Cpl said it saw strong cash generation with a net cash position of €68.1 million, up from €40.1 million a year ago.

"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," said chairman John Hennessy.

There was continued growth in recurring revenues with flexible talent now representing almost 73 per cent of gross profit. That included Cpl’s managed solutions division Covalen.

The ongoing pandemic hit the company’s permanent fees, but there had been an “encouraging” improvement in the sector since the end of June, driven mainly by technology and finance divisions.

Chief executive Anne Heraty said the company's strategy to increase the contribution of recurring revenues across high-growth sectors had paid off in the current crisis.

“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.”