CPL reports jump in profits

CPL Reources was trading more than 15 per cent higher this lunchtime after the recruitment company published better than expected full-year results which showed that pre-tax profits jumped by 54 per cent last year from €5.3 million to €8.1 million.

The recruitment company saw revenues increase by a quarter to €235.3 million in the year ended June 30th 2011 up from just under €190 million the previous year. Operating profit grew by 81 per cent to €7.2 million from €3.9 million.

The company also announced its intention to return up to €20 million of surplus capital in the form of a tender offer to shareholders at €3 a share, a process which will be subject to shareholder approval.

The price represents a premium of 20 per cent to the closing price of €2.50 on September 13th 2011 and a premium of 12.8 per cent to the volume weighted average price over the three month period to September 13th, the company said.

"The board has determined that, given the strength of the balance sheet, and taking account of continued positive cash flow generation, a return of surplus capital is in the best interests of shareholders as a whole," chairman John Hennessy said. A tender offer provides all shareholders with choice and certainty of value, he added.

Earnings per share rose by 57 per cent to 19.2 cents last year, while the dividend to be paid to shareholders increased to 5.0 cent from 4.0 cent. CPL Resources had €46.3 million in net cash at year end, compared to €43.4 million in the twelve months to June 2010, a 7 per cent increase.

In terms of the Irish job market, the company said that a "two speed economy" has developed, with certain sectors such as technology witnessing skills shortages whilst other sectors, such as construction, continue to offer very few job opportunities. CPL's IT recruiting division performed particularly well during the year, with strong demand for engineers with internet and software skills. The finance and accounting sector also had a strong performance in the second half, with CPL noting an increase in the demand for qualified annountants across different disciplines.

Chief executive and founder Anne Heraty noted that while unemployment continues to rise, the level of employment in Ireland remains relatively high from a historical perspective.

Fees from permanent placements increased by 46 per cent, reversing the 36 per cent fall in the year to June 2010. A 22 per cent increase in CPL's net fees from the placement of temporary employees was also noted by analysts.

During the year the company acquired PHC care management and Runway Personnel, as well as integrating its Servisource business, improving the company's footprint in the healthcare sector.

It also reduced its dependence on the Irish market, opening offices in Poland and Bulgaria. The company now generates 33 per cent of its permanent fees outside of Ireland.

Mr Hennessy described the company's performance as "strong" in light of the economic uncertainty, though the company continued to experience significant pressure on prices and margins during the year.

The company is "cautious" on outlook. While it expects to record profitable growth in the six month period to end the end of December 2011, the continued uncertainty in the economy generally makes it "impossible" to make any useful forecast of trading conditions and performance beyond that date, the company said.