Australian recruitment firm Chandler MacLeod Group (CMG: ASX) reported revenue for the year ending 30 June 2014 of AUD 1.4 billion (USD 1.3 billion), a decrease of -9.4% compared with AUD 1.5 billion (USD 1.4 billion) a year ago.

The company attributed the decline in revenue to a fall in contractor hours worked, margin reduction, and a continuation of the slowdown in permanent recruitment activity.

The company achieved a net profit before tax of AUD 17.4 million (USD 16.2 million), an increase of +13.2% from AUD 15.3 million (USD 14.3 million) in 2013. Net profit for the year rose by +25.8%, year-on-year, to AUD 13.5 million (USD 12.6 million) compared with AUD 10.7 million (USD 10 million) last year.

Cameron Judson, Managing Director of Chandler MacLeod, commented: “It is pleasing to have achieved this stronger second half result, particularly given the conclusion of the Qantas Avalon contract and the impact of seasonality in Staffing Services. This demonstrates the momentum we have built in the business.”

“We have seen a healthy recovery in Staffing Services following the Christmas shut down. Hours worked have returned to [previous corresponding period] levels and we are confident this trend will continue. AHS (Hospitality) continues to grow and Vivir (Rehabilitations Services for the elderly) had a strong fourth quarter with expansion in both New South Wales and Queensland, providing further impetus into 2015. The switch in focus of the Aurion business to outsourced payroll processing delivered a stronger result in 2014 and a more resilient revenue base for 2015,” he added. 

In July 2013, Chandler MacLeod acquired a 40% interest in Cornerstone Global Partners, a recruitment solutions business with offices in Beijing and Shanghai. In August 2013, the group acquired a 73.7% stake in Grafton Consulting, a New Zealand based company that provides a broad range of human resource consulting services.    

In December 2013, the group completed a capital raising for AUD 24.7 million (USD 23 million) that resulted in reduced debt levels at year end.

Broken down into business segments, Chandler MacLeod’s Staffing Services reported revenue during the year of AUD 1.1 billion (USD 1 billion), a decline of -8.3% compared with AUD 1.2 billion (USD 1.1 billion) in 2013. The company’s Staffing Services segment is responsible for its workforce and recruitment operations.

The company’s Managed Service segment reported revenue growth of +1% to AUD 233.2 million (USD 217.3 million), compared with AUD 231.6 million (USD 215.8 million) last year. This segment provides managed training solutions, BPO services, and the company’s AHS and Vivir businesses.

The Specialist Products segment, which includes consulting, payroll outsourcing and payroll software services, reported revenue of AUD 35.1 million (USD 32.7 million) during 2014, a decrease of -7.6% from AUD 37.9 million (USD 35.3 million) a year ago.

Revenue from the company’s International operations increased by +8.9% to AUD 81.1 million (USD 75.6 million) from AUD 74.5 million (USD 69.4 million) in 2013. Chandler MacLeod operates in Hong Kong, China, Singapore, Indonesia, New Zealand, and the UK.

Looking forward, Mr Judson stated: “The second half of the financial year saw a steady improvement in the demand for our services, reversing the effects of the election lull evident in the first half. Our businesses have developed good momentum during the second half. Aurion, AHS, and Vivir have very strong pipelines. Staffing Services is benefitting from increasing demand and a much stronger focus on profitability following the roll out of our new management information system.”

“We are continuing to reengineer the Staffing Services business and expect to achieve significant efficiencies over the course of the 2015 and 2016 financial years. Our strategy to change our business mix continues to improve the sustainability and growth of earnings. We are confident the improvement we have seen in the second half of 2014 will continue into the new financial year and beyond,” he added.

In a separate announcement, Chandler MacLeod announced a share buy-back programme aimed at purchasing up to 5% of the company’s issued capital over the remainder of this financial year. At the current share price, the estimated cost of this programme would be less than AUD 9 million (USD 8.4 million).

Investors responded positively to the company’s financial results, with the share price today closing up by +16.9% at AUD 0.38 (USD 0.35), a decrease of +14.2% compared with a year ago. Based on its current share price, the company has a market value of AUD 208.2 million (USD 194 million).