Interim Results 6 months to 31 st December 2019
Disclaimer The presentation contains forward- looking statements, including statements about the Group’s intentions, beliefs and expectations. These statements are based on the Group’s current plans, estimates and projections, as well as the Group’s expectations of external conditions and events. Forward-looking statements involve inherent risks and uncertainties and speak only as of the date they are made. The Group undertakes no duty to and will not necessarily update any such statements in light of new information or future events, except to the extent required by any applicable law or regulation. Recipients of this presentation are therefore cautioned that a range of factors could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements. 2
Financial Highlights Record EPS and strong PBT conversion Gross profit: +10% to €51.1m ▪ Record gross profit Adjusted* PBT: +24% to €14.2m ▪ Reflecting increased operational leverage EPS: +23% to 42.9c ▪ Business model producing strong bottom-line growth DPS: +25% to 10.0c ▪ Progressively increasing dividend Cash: +€16.9m to €47.1m ▪ Strong 12 month cash conversion and working capital management * Adjusted operating profit and adjusted profit before tax (PBT) exclude non- cash charges relating to the Group’s Long -Term Incentive Plan (LTIP) and currency translation. LTIP charge in first half of 2019 is €0.6 million (2018: €0.5 million) 3
Key Performance Metrics Focus on productivity and conversion ratios 6 Months to 31 Dec 2019 2018 Gross margin 17.5% 16.7% Adjusted operating margin 4.93% 4.16% Conversion ratio: gross profit to adj. operating profit 28.2% 25.0% Conversion ratio: gross profit to adj. PBT 27.8% 24.7% Permanent fees: % of gross profit 29.6% 29.8% Flexible Talent fees: % of gross profit 70.4% 70.2% Number of recruiters 583 562 4
Operational Highlights Significant improvement in operational efficiencies Balanced Growth 10% organic growth across Permanent and Flexible Talent NFI Operational Leverage 70bp increase in adjusted operating margin to 4.9% Conversion Ratio 28.2% conversion ratio in adjusted operating profit (+3.2%) Investment Investment to support innovation & operational efficiencies Productivity Increased consultant productivity, strong MyCpl penetration 5
H1 FY20 Business Profile (NFI) Focus on higher growth sectors with a majority of NFI under contract 18% 30% 22% 38% 11% Sector Geography Business Type 78% 7% 70% 5% 21% Healthcare Information Technology RoI* International Perm Flexible Talent Pharma and Engineering Light Industrial Finance and Accounting Other *If RoI NFI adjusted for NFI of non – Irish markets the mix would be approx. 50 : 50 (RoI : International) 6
Evolution of Net Fee Income Trend toward Flexible Talent and higher margin contract revenue GEOGRAPHIC MIX NFI MIX 22% 24% 24% 28% 28% 29% 30% 32% 36% 42% 78% 76% 76% 72% 72% 71% 70% 68% 64% 58% 2016 2017 2018 2019 2020 H1 2016 2017 2018 2019 2020 H1 ROI International Fleixible Talent Permanent 7
Continuing Robust Growth Trend Growth in managed solutions is a key driver ADJUSTED PBT (€M) NFI (€M) AND NFI MARGIN (%) 30.0 18.0% 120.0 25.0 17.5% 100.0 20.0 17.0% 14.0 80.0 49.9 16.5% 10.7 15.0 42.7 60.0 8.9 7.4 35.6 36.1 16.0% 10.0 40.0 15.5% 14.2 51.1 11.5 46.4 40.5 5.0 9.7 20.0 9.0 36.2 8.5 34.0 15.0% 14.5% 0.0 0.0 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 H1 H2 H1 H2 NFI % 8
Cashflow (€m) H1 FY20 Strong free cashflow & cash generation with excellent working capital management 16.1 3.2 1.1 3 1.8 47.1 40.1 Cashflow Increase Decrease 9
Capital Allocation Track record of returning surplus capital Existing Bolt on Return Dividends Business Acquisitions Surplus Cash Multiple opportunities Must be strategic fit Progressive dividend €45m returned to for continued organic or drive innovation policy shareholders through expansion tender offers 10
Growth Strategy To be the world’s best at transforming our clients through total talent solutions & experiences Technology Client Focus Solutions Internationalise Continued investment Targeted growth in key Diversification of in technology to international markets, product and profit mix, Expand and enhance future proof our building on our existing with a focus on higher partnerships with clients business and drive relationships and margin, managed further innovation international footprint services and solutions 11
Investment Case Excellent foundation for continued growth and expansion Attractive market Experienced management Strong balance sheet & Evolution to increased positions & deep International expansion with strong track record cash generation managed services relationships • Over 30 years • Strong market • Strongly cash- • Continued global shift • 47 offices across 9 generative in workforce countries with 3,400 industry experience positions in higher preferences clients growth markets • Continuously • Effective working • 23 brands and over • Launch of managed • Targeted global capital management profitable since solutions brand, expansion foundation 13,000 employees • Net Cash (€47m) Covalen • Proven resilience in • Attractive sector • Potential to expand • Track record of • Growing recurring internationally with market downturns exposure returning surplus revenue base with customers • Blue chip client base capital over 50% contracted 12
Track Record of Consistent Growth Excellent 10 year CAGR in earnings and dividends DPS GROWTH EPS GROWTH 19.0 77.3 13.5 56.6 11.0 11.5 10.0 9.8 9.8 40.7 40.2 43.9 43.7 42.9 8.5 35.0 6.5 25.6 5.0 19.2 4.0 12.2 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 H1 H1 13
Share price and Total Shareholder Return since IPO 14% Total Shareholder Return CAGR since IPO 14 12 10 share price € 8 6 4 2 0 Jun 99 Jan 01 Aug 02 Mar 04 Oct 05 May 07 Dec 08 Jul 10 Feb 12 Sep 13 Apr 15 Nov 16 Jun 18 Jan 20 Share Price Total Return Source: Bloomberg Data 14
Outlook • Favourable market conditions exist – with high demand for talent and low unemployment rates in key markets • Positive trends of employers and employees seeking flexible talent solutions • Continued FDI into key sectors in Ireland including technology, pharma and financial services • Full impact of Brexit remains unclear – closely monitoring uncertainty and implications for our business 15
Appendix
Condensed Group Income Statement 6 months to 31 Dec 2019 €m 2018 €m % Change Revenue 291.4 278.6 5% Gross profit 51.1 46.4 10% Gross profit % 17.5% 16.7% 1% Adjusted operating profit 14.4 11.6 24% LTIP & FX charge (0.6) (0.5) (20%) Net financial expense (0.2) (0.1) (100%) Profit before tax 13.6 11.0 24% Earnings per share 42.9 cent 34.9 cent 23% Dividend per share 10.0 cent 8.0 cent 25% IFRS 16: The net impact on the Income Statement from the adoption of IFRS 16 in H1 FY20 is less than €8k in the period 17
Condensed Group Balance Sheet 6 months to 31 Dec 2019 €m 2018 €m Tangible assets 7.7 2.2 Intangible assets 26.3 25.8 Net cash 47.1 30.2 Trade & other receivables 125.2 106.2 Deferred tax asset 1.0 1.0 Provisions (1.0) (1.1) Trade & other payables (86.4) (64.0) Net assets before equity & reserves 119.9 100.3 IFRS 16: As a result of the adoption of IFRS 16 in H1 FY20, the Group has recognised a right of use asset and a corresponding le ase liability of €5.1m and €5.3m, respectively 18
Condensed Group Cashflow Statement 6 months to 31 Dec 2019 €m 2018 €m Operating cashflow 16.1 12.2 Movement in working capital (3.2) (3.8) Cash generated from operations 12.9 8.4 Net interest paid (0.1) (0.1) Income tax (paid)/received (1.0) 0.2 Dividends paid (3.0) (1.9) Purchase of tangible and intangible assets (1.0) (0.6) Acquisition of non – controlling interests (0.8) 0.0 Net increase in cash and cash equivalents 7.0 6.0 Net cash at beginning of period 40.1 24.2 Net cash at period end 47.1 30.2 19
Macro Economic Data Real GDP % 2016A 2017A 2018A 2019F 2020F 2021F Ireland 3.7% 8.1% 8.4% 5.4% 2.7% 2.6% UK 1.9% 1.9% 1.3% 1.3% 1.1% 1.5% Eurozone 1.9% 2.5% 1.9% 1.2% 1.0% 1.3% U.S. 1.6% 2.4% 2.9% 2.3% 1.8% 1.9% Unemployment % 2016A 2017A 2018A 2019F 2020F 2021F Ireland 7.9% 6.4% 5.6% 5.0% 5.0% 4.9% UK 4.9% 4.4% 4.1% 3.9% 4.0% 4.0% Eurozone 10.0% 9.1% 8.2% 7.6% 7.5% 7.5% U.S. 4.9% 4.3% 3.9% 3.7% 3.6% 3.7% Source: Bloomberg Data 20
Thank you Investor Relations Contact David Marshall, Head of Corporate Development David.Marshall@cpl.ie +353 1 614 6000
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