cpl resources plc global search local jobs Annual Report for the year ended 30 June 2010 There’s a whole world of possibilities out there Contents Directors and other information 2 Chairman’s statement 4 Chief executive’s review 6 Directors’ report 10 Statement of directors’ responsibilities 17 Independent auditor’s report 18 Group income statement 20 Group statement of changes in equity 21 Company statement of changes in equity 22 Group and Company balance sheets 23 Group and Company cash flow statements 25 Significant accounting policies 27 Notes forming part of the financial statements 34 annual report for the year ended 30 June 2010 1 Directors and other information Directors Breffni Byrne (Non-Executive) Paul Carroll John Hennessy (Non-Executive Chairman) Anne Heraty (Chief Executive) Garret Roche Oliver Tattan (Non-Executive) Josephine Tierney (Finance Director) Secretary Wilton Secretarial Limited First Floor Fitzwilton House Wilton Place Dublin 2 Registered office 83 Merrion Square Dublin 2 Auditor KPMG Chartered Accountants 1 Stokes Place St. Stephen’s Green Dublin 2 Solicitors William Fry Fitzwilton House Wilton Place Dublin 2 Principal bankers AIB Plc 62 St Brigid’s Road Artane Dublin 5 Registrars and paying agents Computershare Investor Services (Ireland) Limited Heron House Corrig Road Sandyford Industrial Estate Dublin 18 UK paying agents Computershare Investor Services Plc The Pavilions Bridgewater Road Bristol BS99 6ZZ England 2 annual report for the year ended 30 June 2010 annual report for the year ended 30 June 2010 3 Directors and other information (continued) Board of Directors Oliver Tattan joined Cpl Resources Plc in December John Hennessy (Non-Executive – Chairman) 2007. He was the founder and CEO of Vivas Insurance Breffni Byrne * (Non-Executive) Limited. He previously held the role of chief executive at Oliver Tattan ** (Non-Executive) VHI Healthcare and was co-founder of Daon. Anne Heraty (Executive) Anne Heraty, Paul Carroll and Garret Roche each Paul Carroll (Executive) entered into service agreements dated 22 June 1999 Garret Roche (Executive) with the Company in respect of their appointment as Josephine Tierney (Executive) executive directors. Josephine Tierney entered into a * Chairman of the Audit Committee service agreement dated 1 July 2001 with the Company ** Chairman of the Nomination and Remuneration in respect of her appointment as an executive director. Committee John Hennessy entered into an engagement letter John Hennessy is a member of the Audit Committee and dated 22 June 1999 with the Company in respect of the Nomination and Remuneration Committee. Breffni of his appointment as non-executive director of the Byrne is a member of the Nomination and Remuneration Company. Breffni Byrne and Oliver Tattan both entered Committee. into engagement letters dated 1 December 2007 with the Company in respect of their appointments as non- John Hennessy, Chairman, joined the Board of Cpl executive directors of the Company. Resources Plc in 1999. He is a practicing barrister and a chartered accountant. All directors are required to present themselves for re-election every three years. Breffni Byrne joined the Board of Cpl Resources Plc in December 2007. He is chairman of NCB Stockbrokers and is a non-executive director of Irish Life and Permanent Plc, Coillte Teoranta, Hikma Pharmaceutical Plc, Tedcastle Holdings Limited and a number of other companies. A chartered accountant, he was formerly a Senior Partner of the Audit and Business Advisory practice of Arthur Andersen in Ireland. 2 annual report for the year ended 30 June 2010 annual report for the year ended 30 June 2010 3 Chairman’s statement The year to 30 June 2010 was a very challenging one for The Group had cash balances of €43.5 million at 30 many Irish-based businesses. The downturn in the global June 2010. The business generated €4.2 million from economy, and particularly in Ireland, has been severe, operating activities in the twelve months to June 2010, and full recovery from it will take considerable time. while €1.8 million was spent on acquisitions in the same period. We continue to manage our debtor book actively The effect of these economic conditions on the and carefully. Our debtor days are similar to last year, and employment market presented particular challenges for we remain focused on ensuring that cash is collected the Cpl Group in the year just ended. As Ireland’s leading from debtors as quickly as possible. As a result, we have provider of employment services, economic changes not experienced any significant increase in levels of bad affecting the jobs market have an immediate impact on or doubtful debts. our business. In line with our stated strategy to increase the range of I am therefore pleased to report a pre-tax profit of €5.3 services we offer to our customers, we acquired four million for the year ended 30 June 2010. This compares businesses in the year to June 2010. These are: with pre-tax profits of €1.7 million (after impairment charges of €8.1 million) for the prior year. n Loss Control Services Limited (trading as Nifast) – one of Ireland’s leading providers of training and In the year to 30 June 2010 Group gross profit fell by consultancy in all aspects of Health & Safety; 19% when measured against the same period last year. n Ecom Interaction Services Limited – a business However, the Group’s gross profit for the six months process outsourcing company for customer contact to June 2010 was 18% higher than the six months to management, outsourced insurance administration December 2009, and 5% higher than the gross profit and back-office processes; generated in the six months to June 2009. n Techstaff International Limited – a construction Net fee income generated by our permanent placement contractor business; and business, decreased by 36% in the twelve months to n Servisource – a provider of a broad range of June 2010. However, the rate of decline slowed to 15% homecare and healthcare staffing services. We focus in the six months to December 2009, and permanent on services that deliver value to our clients and placement net fee income in the six months to June candidates. We continue to grow our capabilities 2010 increased by 28% when compared to the previous organically and, where appropriate, acquire six months. Net fee income in our temporary placement companies which will enhance our service offering business has been more resilient to date across most and improve the breadth and geographic balance of of the Group. Unfortunately the pricing environment in our business. the temporary placement business has become more challenging. This has resulted in an 11% decline in gross Our strategy balances the need to take actions to profit in this segment of our business compared with last protect current profitability with the investment required year. We are, however, beginning to see an increase in to build both now and for the next cycle of growth. demand for temporary staff, and net fee income in our Despite the uncertainty we still face in the economic temporary business in the six months to June 2010 was landscape, there are a number of positive factors that will 14% greater than the preceding six month period and drive growth momentum over the coming years. These 4% higher than in the six months to June 2009. include deregulation, skills shortages and increased demand for flexible employment. annual report for the year ended 30 June 2010 annual report for the year ended 30 June 2010 Chairman’s statement (continued) I am particularly grateful to everyone who has worked with Cpl in a very challenging year. We are operating in more difficult times but we are fortunate to have a group of highly skilled and motivated people who are committed to the Group and are constantly looking for new ways to deliver value and outstanding service to our clients and candidates. I would also like to extend the appreciation of the Board to our customers for their continued loyalty and support. The Board is recommending a final dividend of 2.5 cent per share. This will bring the total dividend for the year to 4.0 cent per share. The dividend, if approved by the shareholders, will be payable on 26 November 2010 to shareholders on the company’s register at the close of business on the record date of 19 November 2010. Outlook Although it is too early to conclude that a sustained economic recovery has begun in Ireland or in the other markets in which we operate, we are currently experiencing gradual, but noticeable, improvements in those markets. We believe that we are well positioned to take full advantage of economic recovery as and when it occurs and to avail of other opportunities that may arise for profitable growth in our business. John Hennessy Chairman 7 September 2010 annual report for the year ended 30 June 2010 annual report for the year ended 30 June 2010 Chief Executive’s review Against a backdrop of the most severe labour market n We retained all our top customers and we had a conditions and operating environment in our 20 year number of significant customer wins. history I am pleased to report profit before tax of €5.3 n We are in the process of implementing a fully million and net cash of €43.5 million in the year to June integrated, web-enabled enterprise-wide information 2010. Our strong financial position is complemented by systems platform. Phase 1 is now successfully a focused team of talented people who are committed complete. to supporting our customers with innovative and flexible n We continued to build our European footprint with workforce solutions to meet their business needs in a investment in new offices in Poland and Hungary.