REG - Empresaria Group PLC - Final Results
28/03/2023 07:00
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RNS Number : 3799U Empresaria Group PLC 28 March 2023
28 March 2023
Empresaria Group plc
("Empresaria" or the "Group")
Results for the year ended 31 December 2022
Solid growth and building to deliver on our medium-term ambitions
Empresaria, the global specialist staffing group, reports its final results
for the year ended 31 December 2022.
Highlights
2022 2021 % change % change (constant currency)(2)
Revenue £261.3m £258.4m +1% +0%
Net fee income £65.4m £59.5m +10% +8%
Operating profit £8.8m £6.7m +31%
Adjusted operating profit(1) £10.2m £9.3m +10% +6%
Profit before tax £7.6m £6.0m +27%
Adjusted profit before tax(1) £9.0m £8.6m +5%
Diluted earnings per share 6.7p 4.5p +49%
Adjusted diluted earnings per share(1) 8.8p 8.6p +2%
· Solid growth in net fee income
o Up 10% year-on-year to £65.4m
o Year-on-year growth in every quarter, but softening as the second half
progressed
o Offshore Services up 75% year-on-year
o Strong growth in Professional across the UK and APAC
o Partially offset by the expected reduction in Healthcare after a record
2021
· Adjusted operating profit up 10% to £10.2m
· Adjusted profit before tax up 5% to £9.0m
· Adjusted, diluted earnings per share up 2% against prior year
reflecting weighting of performance towards operations with a higher
proportion of non-controlling interests
· Adjusted net debt of £7.9m, reduced by £6.1m from 31 December 2021
· Proposed dividend of 1.4p per share, an increase of 17% reflecting
the Board's confidence in the Group's prospects and its strong cash generation
· Targeted investment in headcount - Offshore Services up 27%, the rest
of the Group up 8% compared to 31 December 2021
· Increase in staff productivity - up 6% year-on-year
· Two new Non-Executive Directors, Steve Bellamy and Ranjit de Sousa,
appointed in January 2023 and February 2023 respectively
· Penny Freer appointed as Chair of the Board, having been Interim
Chair since June 2022
1 Adjusted to exclude amortisation of intangible assets identified in
business combinations, impairment of goodwill and other intangible assets,
exceptional items, fair value charges on acquisition of non-controlling shares
and, in the case of earnings, any related tax.
2 The constant currency movement is calculated by translating the 2021
results at the 2022 exchange rates.
Chief Executive Officer, Rhona Driggs, commented:
"We are pleased to have delivered solid growth in both net fee income and
profits against a rapidly changing economic backdrop which saw demand soften
in the second half of the year. We continue to see the benefits of our
diversification and are starting to see the positive results from the targeted
investments we have made in people, technology and process as evidenced by our
strong growth in Offshore Services, our early success in delivering
Recruitment Process Outsourcing in APAC, and an increase of 6% in staff
productivity.
We look forward to the year ahead with some caution given the ongoing global
economic uncertainty. We will continue to focus on executing on our Roadmap to
£20m to deliver on our medium-term ambition to double adjusted operating
profit."
Investor presentation
In line with Empresaria's commitment to ensuring appropriate communication
structures are in place for all sections of its shareholder base, management
will deliver an online results presentation open to all existing and potential
investors via the Investor Meet Company platform on Tuesday 28 March 2022 at
3:00pm UK time.
Investors can sign up for free
via: https://www.investormeetcompany.com/empresaria-group-plc/register-investor
(https://www.investormeetcompany.com/empresaria-group-plc/register-investor) .
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the UK version of the EU
Market Abuse Regulation (2014/596) which is part of UK law by virtue of the
European Union (Withdrawal) Act 2018, as amended and supplemented from time to
time.
- Ends -
Enquiries:
Empresaria Group plc via Alma PR
Rhona Driggs, Chief Executive Officer
Tim Anderson, Chief Financial Officer
Singer Capital Markets (Nominated Adviser and Joint Broker) 020 7614 3000
Shaun Dobson
James Moat
Cenkos Securities plc (Joint Broker) 020 7397 8900
Katy Birkin/Charlie Combe (Corporate Finance)
Michael Johnson/Jasper Berry (Sales)
Alma PR (Financial PR) 020 3405 0205
Sam Modlin
empresaria@almapr.com
Pippa Crabtree
Hilary Buchanan
Notes for editors:
§ Empresaria Group plc is a global specialist staffing group. We are driven
by our purpose to positively impact the lives of people, while delivering
exceptional talent to our clients globally. We offer temporary and contract
recruitment, permanent recruitment and offshore services across six sectors:
Professional, IT, Healthcare, Property, Construction & Engineering,
Commercial and Offshore Services.
§ Empresaria is structured in four regions (UK & Europe, APAC, Americas
and Offshore Services) and operates from locations across the world including
the four largest staffing markets of the US, Japan, UK and Germany along with
a strong presence elsewhere in Asia Pacific and Latin America.
§ Empresaria is listed on AIM under ticker EMR. For more information visit
empresaria.com.
Chair's statement
2022 performance
We are pleased to report our full-year results which have delivered solid
growth in net fee income and profits. The year has been characterised by two
phases. In the first half of the year, the ongoing recovery post COVID created
significant opportunities for the staffing market. However, as the second half
of the year progressed, the emergence of inflationary and recessionary
pressures saw this growth checked.
Despite the increased economic uncertainty, we delivered year-on-year growth
in net fee income in every quarter of 2022. Our diversity by sector and
geography has continued to benefit the Group, with strong performances in
Offshore Services, many of our businesses in APAC, Professional in the UK and
our logistics operation in Germany. These outweighed the expected drop in
Healthcare, challenging conditions for our temporary business in Germany, and
the impact of a fall in global IT demand in the second half of the year.
People
I want to acknowledge and thank our teams across the Group for their hard work
and dedication. Our results would not have been possible without their
contributions.
In June, Tony Martin CBE, our Chair of 18 years, retired. Tony played an
instrumental role on the Empresaria Board guiding the Group through
challenging times, helping to build the business, and supporting the strategic
changes that we have made in recent years. We thank him for his significant
contribution over the years.
We strengthened our senior leadership team in 2021 with the appointment of
regional leaders. Our leadership team has helped us to accelerate the
implementation of our strategy and is laying the foundations for our future
success.
I am pleased to welcome two new Non-Executive Directors to the Board. Steve
Bellamy was appointed in January 2023 and Ranjit de Sousa was appointed in
February 2023. Together they bring a wealth of experience to the Board and its
committees.
Dividend
The Board has reviewed the dividend in line with our progressive dividend
policy and for the year ended 31 December 2022 we are pleased to propose a
dividend of 1.4p per share, an increase of 17% on the prior year. This
increase reflects the growth in profits, and strong cash generation, in the
year and the Board's confidence in the Group's medium-term prospects. Subject
to shareholder approval at the Annual General Meeting, the dividend will be
paid on 15 June 2023, to shareholders on the register on 26 May 2023.
Outlook
The economic environment became more uncertain as 2022 progressed, with the
post-COVID recovery giving way to inflationary and recessionary concerns.
Although this uncertainty is expected to continue, we have proven our ability
to successfully navigate difficult periods and take advantage of opportunities
as they arise. We therefore look forward with cautious optimism and are
focused on delivering on our Roadmap to £20m.
Penny Freer
Chair
27 March 2023
Chief Executive's review
2022 performance overview
We continued to make good financial, strategic and operational progress in
2022 which underpinned our overall performance.
Our Offshore Services operation continued to perform well and delivered a
record year with significant net fee income growth of 75%. We also saw record
net fee income from our operations in Japan, Indonesia, Singapore, Thailand
and the Philippines and strong performances from our Professional operations
in the UK and our logistics business in Germany. These stronger results helped
to outweigh those in markets that had more challenging trading environments
and performances.
Throughout 2022, we maintained our strategic focus and continued to invest in
our growth, adding significant headcount in both our Offshore Services and
APAC regions. We ended 2022 with our global headcount up 22% year-on-year.
We made good progress on our key strategic objectives following the
appointment of our new regional leadership team in 2021, strengthening our
foundation for success.
We have made progress in launching our enhanced Recruitment Process
Outsourcing ('RPO') solutions and this has already proven successful with the
delivery of several RPO projects in APAC and UK & Europe.
Our staff productivity increased 6% year-on-year following the continued
rollout of our common front office
technology. In addition, our ongoing shift away from a 360 recruitment model
to an operating model that has dedicated sales and delivery teams has allowed
us to focus our expertise in these areas and scale more effectively and
leverage our Offshore Services resources.
Roadmap to £20m
While we expect to see organic growth across all our sectors, our Roadmap to
£20m focuses on the three key pillars that we have identified to accelerate
our growth.
Our first pillar is to build scale and accelerate growth in high potential
sectors, capitalising on our core expertise in Professional, IT and
Healthcare. We currently offer Professional recruitment services in just two
of the six largest staffing markets globally despite having operations in five
of these. We will leverage our existing footprint, client base and expertise,
and expand our Professional services into US, Japan and Germany, with the US
launch planned for 2023.
We will expand our IT offering by scaling existing locations, leveraging our
footprint to enter new locations while focusing on increasing our temporary
and contract business.
Lastly, we will focus on growing our Healthcare business in the US where it is
projected that demand for healthcare workers will outpace supply by 2025.
Our second pillar will see us continue to diversify our client offering beyond
the more traditional temporary and permanent recruitment services. Through
Empresaria Solutions we will provide clients with regional and global services
as well as additional value-added solutions like RPO.
And finally, our third pillar is continued growth in Offshore Services. We
will build scale and grow our client base by strengthening our sales teams and
accelerating their efforts. We will continue to look at options to diversify
our offering to our staffing industry clients such as expanding our back
office services and introducing new services such as outsourced marketing. We
will also further expand our delivery capacity in the Philippines in order to
provide our clients with an additional option outside of India and to expand
our access to talent.
Investment priorities for 2023
Looking to 2023, we will focus on actions to deliver our Roadmap to £20m.
In the first half of 2023 we will launch a new operation in the US focused on
providing temporary, contract and
permanent staffing in the Professional sector. We will seek to leverage our
existing client base in the Healthcare and IT sectors where we have a proven
track record of delivery, while providing our clients with more options to use
our services across their businesses.
We will continue to execute on our strategy to broaden our service offering
and enhance our regional and global sales capabilities under the Empresaria
Solutions umbrella. We will invest in strengthening our sales and delivery
teams to target areas where we see opportunities for success.
Our people are key to the success of our business. We will continue to focus
on developing and retaining our talent. We will be launching our Top Talent
Programme in the UK & Europe following the successful 2022 programme in
APAC. This programme is aimed at engaging and developing the future leaders of
our organisation.
To further drive productivity, speed to market and collaboration, we will
continue to implement our core common technology platform across the Group. We
will also commence the second phase of our technology roll out which is
focused on increasing productivity through bolt-on technologies such as
onboarding and reporting. We will complement this with increased automation
capabilities to build talent communities and long- term engagement.
Global economic and geopolitical uncertainty
Our agility and diversification by geography and sector, improves our
resilience and we have proven that we can successfully adapt to changing
market conditions. The transformation of the Group in recent years has created
a strong foundation to capitalise on the opportunities these changes present.
Ongoing skill shortages combined with low unemployment rates have made the
staffing market more resilient than normal to the global economic uncertainty.
While 2022 was dominated by strong demand for permanent employees, market
forecasts suggest a shift to increased temporary recruitment as employers
demand more flexibility from their workforce. We therefore expect our mix of
temporary to permanent placements to adjust to reflect this, and we are well
positioned to support this change.
Outlook
The uncertainty in the wider economic environment resulted in a softening of
demand as the second half of 2022 progressed, and this has continued with a
slower start to 2023, however, across our markets, the overall number of
vacancies remains above pre-COVID levels.
The strengthening of our leadership team and our progress in investing in
technology, people and process, leaves us well placed to weather economic
challenges and gives us confidence to stay the course in executing our
strategy and delivering on our Roadmap to £20m.
Rhona Driggs
Chief Executive Officer
27 March 2023
Operating review
UK & Europe
£m 2022 2021
Revenue 124.9 133.1
Net fee income 28.4 29.0
Adjusted operating profit 4.7 5.3
% of Group net fee income 43% 49%
Average number of staff 272 282
The UK & Europe region saw mixed performances in 2022 with net fee income
reducing by 2% (2% in constant currency) and adjusted operating profit falling
by 11% (11% in constant currency). Revenue fell by 6% (6% in constant
currency) reflecting the change in the temp to perm mix.
In the UK, net fee income grew by 3% year-on-year with double digit percentage
growth in profit. Net fee income from the Professional sector grew 6%
year-on-year, driven by permanent placement activity which increased
significantly, particularly in the first half of the year. Net fee income from
IT fell by 18% compared to 2021 reflecting ongoing operational challenges.
Corrective actions are in place to improve this performance including
accelerating the focus on growth in the UK market as the majority of activity
in our UK based operation is with clients throughout mainland Europe. In the
second half of the year we moved a number of brands into a single location
which is driving collaboration and cross-selling as well as improving
operational efficiency.
In Finland, our Healthcare business had a challenging year as net fee income
fell by 35% and the business generated a loss. This performance was in part
driven by significant changes in public sector healthcare in Finland,
alongside the expected drop in COVID-19 related demand.
In Germany, our operations focused on the Commercial sector delivered
contrasting results leaving overall net fee income and profits in line with
prior year. Our logistics operation saw a good recovery with strong growth in
both net fee income and profits. However, our temporary staffing business has
been adversely affected by a number of factors including demand from key
clients operating in the troubled automotive industry, and an ongoing increase
in sickness rates due to COVID-19 which has impacted margins.
Our operation in Austria is similar to our temporary business in Germany and
was impacted by the same factors outlined above. As a result, net fee income
fell by over 20% and profits fell by two-thirds.
APAC
£m 2022 2021
Revenue 49.9 40.3
Net fee income 15.8 14.1
Adjusted operating profit 0.8 1.4
% of Group net fee income 24% 23%
Average number of staff 292 233
In our APAC region we saw strong growth in revenue, which was up 24%
year-on-year (26% in constant currency), and in net fee income, which grew by
12% (12% in constant currency). Profits fell, reflecting investment in our
regional team along with significant challenges in a couple of locations.
Japan is our largest country in the region and we are primarily focused on the
IT sector. Our operations delivered solid results with single digit percentage
growth in both net fee income and profit. Growth was stronger in the first
half of the year and driven by permanent placement revenues which saw high
demand. In the second half of the year we were impacted by a few key clients
significantly reducing hiring requirements and contractor headcount. Despite
the weaker close to the year, this was a record year for both net fee income
and profit.
In Australia, our operation is focused on digital and creative roles within
our Professional sector. Results in 2022 were extremely disappointing with net
fee income down 14% year-on-year driven by a fall in temporary and contract
activity. Investments in staff have not proved successful and the operation
delivered a loss in the year. A significant restructuring of this operation
has been undertaken at the start of 2023 in order to bring this operation back
to profitability.
Vietnam and China both saw year-on-year falls in net fee income. In China this
reflected the challenges of local lockdowns which continued to impact our
Shanghai based operation throughout 2022. In Vietnam high staff turnover at
the start of the year disrupted the strong progress made in 2021.
Elsewhere in the region a number of countries delivered record levels of net
fee income with Singapore, Indonesia, Philippines and Thailand all beating
their previous highs and delivering strong growth in profits. Our operations
in these countries are predominantly permanent placement focused and showed
strong growth across the Professional and IT sectors in the year.
Our aviation operation, which has offices in New Zealand, Singapore and
Sweden, did not show any significant improvement in 2022. Aviation recovery in
our core Asia market has lagged behind that in the US and Europe reflecting
the continued closure of China throughout 2022 and significant restrictions on
travel to Japan. As these restrictions ease in 2023 we expect to see demand
improve and for this operation to move back towards profitability.
Americas
£m 2022 2021
Revenue 62.7 71.0
Net fee income 8.7 9.9
Adjusted operating profit 1.5 2.8
% of Group net fee income 13% 16%
Average number of staff 160 151
In the Americas, revenue fell by 12% (16% in constant currency), net fee
income fell by 12% (19% in constant currency) and profits reduced by 46% to
£1.5m.
In the US, net fee income dropped by 20%, and profits by half, with reductions
in both of our operations. In Healthcare we had a record year in 2021 driven
by COVID-19 related demand which reduced as expected in 2022. In IT, we saw a
significant impact in the second half of 2022 from a drop in demand from key
clients. We are focused on diversifying our client base to create more
opportunity and stability. Temporary and contract growth in IT was
disappointing and is a key focus for us in the US. We are investing in our
sales team in order to drive this forward in 2023.
In Chile, net fee income was in line with 2021 although profits fell back
reflecting increases in the cost base. Our core strength lies in our
outsourcing operation, focused on the Commercial sector, which has continued
to grow strongly year-on-year. However, permanent and temporary recruitment
activity has dropped significantly from pre-COVID levels and rebuilding these
is now a key focus.
In Peru, changes to outsourcing laws and political instability have adversely
impacted our operations in 2022. Despite this, net fee income grew strongly
reflecting recovery from 2021 which was still being heavily impacted by
COVID-19. Profits fell slightly as we invested in ensuring we have the right
team and structure to rebuild the business to previous levels.
Offshore Services
£m 2022 2021
Revenue 25.3 15.3
Net fee income 13.5 7.7
Adjusted operating profit 7.1 4.1
% of Group net fee income 20% 12%
Average number of staff 2,481 1,578
Offshore Services delivered an extremely strong 2022 with revenue up 65% (57%
in constant currency), net fee income up 75% (67% in constant currency) and
adjusted operating profit up 73%. These results reflect the strong momentum
and growth which built through 2021 and carried over into 2022. Average
headcount in 2022 was up 57% year-on-year with headcount at 31 December 2022
27% higher than a year earlier.
Our operations support the staffing sector, principally in the US and the UK,
and provide any aspect of the end-
to-end recruitment process alongside compliance, and finance and accounting
services. Clients are predominantly third-party staffing companies but this
operation also plays an important role in supporting activity across the
Group.
Our Philippines hub, which we opened in January 2021, is now well established
with a headcount of 105 primarily supporting our US clients. We have started
to expand our capabilities and now offer services to our UK and Australian
clients from this location as well.
Demand in 2022 has been extremely strong from our UK clients, particularly in
the healthcare sector. As a result, the number of billable seats supporting
the UK closed the year up two-thirds compared to 31 December 2021 and now
exceeds those supporting the US. Growth was from both existing and new clients
with the number of clients growing by 40% in the year.
In the US, demand has been more muted. While we saw some growth in the first
half of the year, the challenges in global IT have fed through to our clients
that support this sector. As a result, the number of billable seats dropped
back during the second half of the year and closed the year 6% down on 31
December 2021. These reductions have been driven by existing clients reducing
their requirements, not from the loss of clients, and the number of clients we
work with grew by 20% in the year. We expect this reduction to be temporary
and that as the IT sector returns to an equilibrium we will be able to return
to growth. We are also focused on diversifying our US client base to build a
greater presence in other sectors such as healthcare.
While the vast majority of our net fee income is derived from recruitment and
related compliance services, we are delivering finance and accounting support
to an increasing number of our clients. This now accounts for 8% of our net
fee income and continues to be a focus area for growth.
Sector summary
Revenue Net fee income
£m 2022 2021 2022 2021
Professional 56.5 57.5 18.7 17.3
IT 34.1 37.6 12.6 13.5
Healthcare 17.6 27.4 3.2 4.3
Property, Construction & Engineering 9.2 8.1 2.2 1.7
Commercial 120.5 114.8 16.6 16.3
Offshore Services 24.9 14.5 13.1 7.6
Intragroup eliminations (1.5) (1.4) (1.0) (1.2)
Total 261.3 258.5 65.4 59.5
The greatest growth in 2022 was from Offshore Services as described in more
detail in the Offshore Services operating review.
Professional saw good growth in net fee income (up 8%) driven by permanent
placement activity across the UK and APAC. Revenue fell slightly reflecting
this change in mix.
IT net fee income fell 7% with good growth in APAC, more than offset by the
challenges in our UK operation and the adverse second half impact in the US as
discussed in more detail in the Americas operating review.
Healthcare net fee income fell by 26% year-on-year, as expected, given the
record performance in 2021 which was driven by COVID-19 related demand.
Property, Construction and Engineering saw some good recovery in net fee
income which was up 29% with the largest growth coming from APAC.
Commercial net fee income grew by 2%. Our largest operations delivering to
this sector are in Germany where we saw mixed performances with overall net
fee income flat as described in more detail in the UK & Europe operating
review.
Finance review
Overview
The Group's results for 2022 reflect a solid performance with net fee income
and adjusted operating profit increasing by 10%. Higher net interest costs due
to the increase in base rates are reflected in a 5% increase in adjusted
profit before tax and a 2% increase in adjusted, diluted earnings per share.
Our adjusted net debt has reduced significantly to £7.9 million (2021:
£14.0m) and is at its lowest year end level since 2015. This reduction was
driven by the profits for the year, along with a working capital inflow
generated despite the increase in net fee income. We have seen an increase in
permanent placement activity, which has a lower working capital requirement,
but a reduction in temporary and contract revenues, which are more
working capital intensive. As a result of the reduction in net debt, our debt
to debtors ratio has fallen to 24%, below our 25% target level. In the current
economic environment we expect the mix to shift back towards temporary and
contract placements which may result in an increased working capital
requirement.
Income statement
2022 2021 % change
£m £m % change constant currency(2)
Revenue 261.3 258.4 +1% +0%
Net fee income 65.4 59.5 +10% +8%
Operating profit 8.8 6.7 +31%
Adjusted operating profit(1) 10.2 9.3 +10% +6%
Profit before tax 7.6 6.0 +27%
Adjusted profit before tax(1) 9.0 8.6 +5%
Diluted earnings per share 6.7p 4.5p +49%
Adjusted, diluted earnings per share(1) 8.8p 8.6p +2%
(1) Adjusted to exclude amortisation of intangible assets identified in
business combinations, impairment of goodwill and other intangible assets,
exceptional items, fair value charges on acquisition of non-controlling shares
and, in the case of earnings, any related tax. See note 5 for a reconciliation
between profit before tax and adjusted profit before tax.
(2) The constant currency movement is calculated by translating the 2021
results at the 2022 exchange rates.
Revenue increased by 1% (nil% in constant currency) with net fee income
increasing by 10% (8% in constant currency). The growth in net fee income
reflects strong growth in both permanent placement (up 9% year-on-year) and
offshore services (up 73% year-on-year), offset by a reduction in temporary
and contract (down 5% year-on-year). This growth in net fee income is
reflected in a 10% year-on-year increase in adjusted operating profit (6%
increase in constant currency) with improved staff productivity offset by
investments including in technology.
Following the appointment of regional leaders during 2021, the Group has moved
to a regional reporting structure. As a result, with effect from 2022, the
Group's operating segmental analysis is presented by region. 2021 financial
information has been re-presented on this basis. A detailed analysis by region
is provided in the operating review. Central costs have reduced to £3.9m
(2021: £4.3m) reflecting reduced costs for bonuses and share schemes.
Adjusted profit before tax has increased by 5% to £9.0m reflecting the
increase in adjusted operating profit and an increased net interest cost due
to the impact of higher interest rates and 2021 interest credits following the
settlement of tax audits. The reported profit before tax reflects amortisation
of intangible assets identified in business combinations of £1.4m. There were
no charges for impairment in 2022 (2021: £1.2m) and as a result reported
profit before tax increased by 27% year-on-year to £7.6m.
The total tax charge for the year is £2.8m (2021: £3.1m), resulting in an
effective tax rate of 37% (2021: 52%). On an adjusted basis, the effective
rate is 34% (2021: 40%). The effective tax rate is higher than the underlying
tax rates due to a number of factors, including:
· expenses not deductible for tax purposes (£0.3m);
· withholding taxes, dividend taxes, and deferred tax liabilities
on unremitted earnings in respect of our overseas operations (£0.3m);
· deferred tax assets not recognised for certain tax losses around
the Group, (£0.4m); partially offset by
· expenses with enhanced deductions for tax purposes (£0.2m).
Adjusted, diluted earnings per share increased by 2% to 8.8p. This reflects
the increase in adjusted profit before tax partially offset by an increase in
the proportion of profits allocated to non-controlling interests due to the
strong performance in our Offshore Services operation where there is a 28%
non-controlling interest. Reported diluted earnings per share increased by 49%
to 6.7p reflecting the above and the £1.2m of impairment charges in the prior
year.
Balance sheet
2022 2021
£m £m
Goodwill and other intangible assets 40.1 39.8
Trade and other receivables 46.7 50.5
Cash and cash equivalents 22.3 21.1
Right-of-use assets 7.5 7.5
Other assets 7.2 5.0
Assets 123.8 123.9
Trade and other payables (33.3) (34.8)
Borrowings (29.6) (34.4)
Lease liabilities (7.9) (7.9)
Other liabilities (4.0) (4.5)
Liabilities (74.8) (81.6)
Net assets 49.0 42.3
Goodwill and other intangible assets arise from the investments and
acquisitions the Group has made. At 31 December 2022 the balance was £40.1m
(2021: £39.8m) with the movement in 2022 due to £1.6m of amortisation of
intangible assets (2021: £1.6m), foreign exchange gains of £1.8m (2021:
losses of £1.1m), impairment charges of £nil (2021: £1.2m) and additions of
£0.1m (2021: £0.7m).
Trade and other receivables include trade receivables of £33.3m (2021:
£39.5m) with the decrease from 2021 reflecting a change in mix with an
increase in permanent placement revenue and a reduction in temporary and
contract revenue. Average debtor days for the Group in 2022 reduced to 45
(2021: 48), with debtor days at 31 December 2022 of 43 (2021: 47). The income
statement includes a charge of £nil (2021: £0.3m) in respect of impairment
losses on trade receivables.
Cash and borrowings are discussed in the financing section below.
Cash flow
The Group is typically highly cash generative with an historically strong
correlation between pre-tax profits and cash flows. The Group measures its
free cash flow as a key performance indicator and defines this as net cash
from operating activities per the cash flow statement excluding cash flows
related to pilot bond liabilities (see financing section below) and after
deducting payments made under lease agreements.
2022 2021
£m £m
Net cash inflow from operating activities 14.7 7.6
per cash flow statement
Cash flows related to pilot bonds 0.1 0.3
Payments under lease agreements (5.3) (5.3)
Free cash flow 9.5 2.6
Taxation 4.2 2.7
Free cash flow (pre-tax) 13.7 5.3
Free cash flow in 2022 was significantly higher than 2021, with the largest
driver being working capital which showed an inflow of £3.5m in 2022 compared
to an outflow of £4.4m in 2021 (both excluding pilot bonds). The Group also
presents a pre-tax free cash flow measure as tax payments in a global business
can be volatile.
In 2022 the Group utilised its free cash flow as follows:
2022 2021
£m £m
Free cash flow 9.5 2.6
Purchase of shares in existing subsidiaries (0.1) (0.6)
Purchase of property, plant and equipment and software (2.1) (1.7)
Dividends paid to owners of Empresaria Group plc (0.6) (0.5)
Dividends paid to non-controlling interests (0.4) (0.3)
Purchase of own shares in Employee Benefit Trust (0.3) (0.3)
Other 0.1 0.4
Decrease/(increase) in adjusted net debt 6.1 (0.4)
The purchase of shares in existing subsidiaries in the 2021 cash flow mainly
related to the final payment in respect of the acquisition of shares in ConSol
Partners in 2020.
Purchase of property, plant and equipment, and software of £2.1m reflects
ongoing investments in the office, IT and infrastructure of our Offshore
Services operation to support its growth and the ongoing investment in a
common front office system. Dividends paid to our shareholders were £0.6m
(2021: £0.5m) reflecting the increased dividend paid in the year. The Group
has continued to purchase Empresaria shares, transferring these into the
Employee Benefit Trust to satisfy future share option exercises, and these
purchases totalled £0.3m in 2022 (2021: £0.3m). Dividends paid to
non-controlling interests were £0.4m (2021: £0.3m).
Financing
The Group's treasury function is managed centrally and the Group's financial
risk management policies are set out in note 22 of the annual report.
2022 2021
£m £m
Cash and cash equivalents 22.3 21.1
Pilot bonds (0.6) (0.7)
Adjusted cash 21.7 20.4
Overdraft facilities (17.1) (18.2)
Invoice financing (3.5) (4.6)
Bank loans (9.0) (11.6)
Total borrowings (29.6) (34.4)
Adjusted net debt (7.9) (14.0)
Adjusted net debt at 31 December 2022 decreased significantly to £7.9m (2021:
£14.0m) reflecting the cash flows discussed above. Adjusted net debt excludes
cash of £0.6m (2021: £0.7m) held to match pilot bonds within our aviation
business. Where required by the client, pilot bonds are taken at the start of
the pilot's contract and are repayable to the pilot or the client during the
course of the contract or if it ends early. There is no legal restriction over
this cash, but given the requirement to repay it over a three-year period and
that to hold these is a client requirement, we exclude cash equal to the
amount of the bonds when calculating our adjusted net debt measure. Movements
in the level of bonds have no impact on our adjusted net debt measure.
During 2022, the month-end average adjusted net debt position was £11.0m
(2021: £14.8m) with a month end high of £16.1m at 28 February (2021: £19.1m
at 31 May) and a month end low of £7.9m at 31 December (2021: £11.1m at 30
September).
Our debt to debtors ratio (adjusted net debt as a percentage of trade
receivables) has reduced to 24% (2021: 35%) with the significant reduction in
adjusted net debt partly offset by a reduction in trade receivables. This has
brought us below our debt to debtors target of 25% for the first time since
2015.
Total borrowings were £29.6m (2021: £34.4m) being bank overdrafts of £17.1m
(2021: £18.2m), invoice financing of £3.5m (2021: £4.6m) and bank loans of
£9.0m (2021: £11.6m). The Group's borrowings are principally held to fund
working capital requirements and are mainly due within one year. As at 31
December 2022, £0.5m of borrowings are shown as non-current (2021: £11.2m)
with the reduction reflecting the revolving credit facility which as at 31
December 2022 was due within one year. Subsequent to the reporting date, in
March 2023, this facility has been refinanced for a further 3 years (see note
11).
The Group maintains a range of facilities to manage its working capital and
financing requirements. At 31 December 2022 the Group had facilities totalling
£54.8m (2021: £55.5m).
2022 2021
£m £m
UK facilities
Overdrafts 10.0 10.0
Revolving credit facility 15.0 15.0
Invoice financing facility 10.0 10.0
Total UK facilities 35.0 35.0
Continental Europe facilities 12.4 11.8
Asia Pacific facilities 2.3 2.4
Americas facilities 5.1 6.3
54.8 55.5
Undrawn facilities (excluding invoice financing) 17.9 12.9
Undrawn facilities have increased significantly during the year, reflecting
the strong cash flows and the reduction in adjusted net debt.
Covenants are tested on a quarterly basis in respect of the revolving credit
facility and all covenants have been met during the year. The covenants, and
our performance against them at 31 December 2022, are as follows:
Covenant Target Actual
Net debt: EBITDA < 3.0 times 0.7
Interest cover > 4.0 times 9.7
Debtor coverage > 1.75 times 7.1
Subsequent to the reporting date, in March 2023, the revolving credit facility
has been refinanced. The facility continues to be for £15.0m and has a 3 year
term to March 2026. For more details see note 11.
Management equity
As highlighted in previous annual reports, the Group has moved away from
issuing second generation equity schemes for incoming subsidiary management
and has put in place appropriate alternative incentive schemes. Existing
shareholdings and commitments remain in place and continue to be reflected in
these accounts.
Based on results for the year ended 31 December 2022, and using applicable
valuation mechanisms in shareholders' agreements but ignoring any holding
period requirements, the payment to acquire all those second generation shares
not held by the Group would be approximately £0.4m were the maximum valuation
multiples to apply. First generation shares are accounted for as
non-controlling interests in the consolidated financial statements and in some
cases do not include defined valuation mechanisms. Based on results for the
year ended 31 December 2022, and using applicable valuation mechanisms in
shareholders' agreements where these exist or applying these same valuation
mechanisms where they do not, the payment to acquire all those first
generation shares not held by the Group would be approximately £10.4m.
There is no legal obligation on the Group to acquire the shares held by
management at any time. Further information is provided in note 26 of the
annual report.
During the year the Group acquired shares from management for total
consideration of £0.1m.
Dividend
During the year, the Group paid a dividend of 1.2p per share in respect of the
year ended 31 December 2021. For the year ended 31 December 2022, the Board is
proposing a dividend of 1.4p per share, an increase of 17%. Subject to
shareholder approval at the Annual General Meeting, the dividend will be paid
on 15 June 2023 to shareholders on the register on 26 May 2023.
Going concern
The Board has undertaken a recent and thorough review of the Group's budget,
forecasts and associated risks and sensitivities. Given the latest forecasts
and early trading performance, the Group is expected to be able to continue in
operational existence for the foreseeable future, being a period of at least
12 months from the date of approval of the accounts. As a result, the going
concern basis continues to be appropriate in preparing the financial
statements. Further details on going concern are found in note 1 of the annual
report.
Tim Anderson
Chief Financial Officer
27 March 2023
Consolidated income statement
2022 2021
Note £m £m
Revenue 2 261.3 258.4
Cost of sales (195.9) (198.9)
Net fee income 2 65.4 59.5
Administrative costs (including £nil (2021: £0.3m) in respect of trade (55.2) (50.2)
receivable impairment losses)
Adjusted operating profit 2 10.2 9.3
Impairment of goodwill 7 - (0.9)
Impairment of other intangible assets 8 - (0.3)
Amortisation of intangible assets identified in business combinations 8 (1.4) (1.4)
Operating profit 8.8 6.7
Finance income 3 0.3 0.3
Finance costs 3 (1.5) (1.0)
Net finance costs 3 (1.2) (0.7)
Profit before tax 7.6 6.0
Taxation 4 (2.8) (3.1)
Profit for the year 4.8 2.9
Attributable to:
Owners of Empresaria Group plc 3.4 2.3
Non-controlling interests 1.4 0.6
4.8 2.9
Pence Pence
Earnings per share
Basic 6 6.9 4.6
Diluted 6 6.7 4.5
Details of adjusted earnings per share are shown in note 6.
Consolidated statement of comprehensive income
2022 2021
£m £m
Profit for the year 4.8 2.9
Other comprehensive income
Items that may be reclassified subsequently to the income statement:
Exchange differences on translation of foreign operations 2.6 (1.7)
Items that will not be reclassified to the income statement:
Exchange differences on translation of non-controlling interests in foreign 0.3 (0.6)
operations
Other comprehensive income/(loss) for the year 2.9 (2.3)
Total comprehensive income for the year 7.7 0.6
Attributable to:
Owners of Empresaria Group plc 6.0 0.6
Non-controlling interests 1.7 -
7.7 0.6
Consolidated balance sheet
2022 2021
Note £m £m
Non-current assets
Property, plant and equipment 2.8 1.6
Right-of-use assets 7.5 7.5
Goodwill 7 31.9 30.5
Other intangible assets 8 8.2 9.3
Deferred tax assets 4.4 3.4
54.8 52.3
Current assets
Trade and other receivables 9 46.7 50.5
Cash and cash equivalents 22.3 21.1
69.0 71.6
Total assets 123.8 123.9
Current liabilities
Trade and other payables 10 33.3 34.8
Current tax liabilities 1.5 1.9
Borrowings 11 29.1 23.2
Lease liabilities 5.3 4.6
69.2 64.5
Non-current liabilities
Borrowings 11 0.5 11.2
Lease liabilities 2.6 3.3
Deferred tax liabilities 2.5 2.6
5.6 17.1
Total liabilities 74.8 81.6
Net assets 49.0 42.3
Equity
Share capital 2.5 2.5
Share premium account 22.4 22.4
Merger reserve 0.9 0.9
Retranslation reserve 5.1 2.5
Equity reserve (10.2) (10.2)
Other reserves (0.3) (0.6)
Retained earnings 22.4 19.9
Equity attributable to owners of Empresaria Group plc 42.8 37.4
Non-controlling interests 6.2 4.9
Total equity 49.0 42.3
Consolidated statement of changes in equity
Equity attributable to owners of Empresaria Group plc
Share capital Share premium account Merger reserve Retranslation reserve Equity reserve Other reserves Retained earnings Total Non-controlling interests Total equity
£m £m £m £m £m £m £m £m £m £m
At 31 December 2020 2.4 22.4 0.9 4.2 (10.2) (0.6) 18.1 37.2 5.2 42.4
Profit for the year - - - - - - 2.3 2.3 0.6 2.9
Exchange differences on translation of foreign operations - - - (1.7) - - - (1.7) (0.6) (2.3)
Total comprehensive income for the year - - - (1.7) - - 2.3 0.6 - 0.6
Dividend paid to owners of Empresaria Group plc (see note 13) - - - - - - (0.5) (0.5) - (0.5)
Dividend paid to non-controlling interests - - - - - - - - (0.3) (0.3)
Purchase of own shares in Employee Benefit Trust - - - - - - (0.3) (0.3) - (0.3)
Exercise of share options 0.1 - - - - (0.3) 0.3 0.1 - 0.1
Share-based payments - - - - - 0.3 - 0.3 - 0.3
At 31 December 2021 2.5 22.4 0.9 2.5 (10.2) (0.6) 19.9 37.4 4.9 42.3
Profit for the year - - - - - - 3.4 3.4 1.4 4.8
Exchange differences on translation of foreign operations - - - 2.6 - - - 2.6 0.3 2.9
Total comprehensive income for the year - - - 2.6 - - 3.4 6.0 1.7 7.7
Dividend paid to owners of Empresaria Group plc (see note 13) - - - - - - (0.6) (0.6) - (0.6)
Dividend paid to non-controlling interests - - - - - - - - (0.4) (0.4)
Purchase of own shares in Employee Benefit Trust - - - - - - (0.3) (0.3) - (0.3)
Share-based payments - - - - - 0.3 - 0.3 - 0.3
At 31 December 2022 2.5 22.4 0.9 5.1 (10.2) (0.3) 22.4 42.8 6.2 49.0
Consolidated cash flow statement
2022 2021
£m £m
Profit for the year 4.8 2.9
Adjustments for:
Depreciation of property, plant and equipment, and software amortisation 1.1 1.0
Depreciation of right-of-use assets 5.4 5.3
Impairment of goodwill - 0.9
Impairment of other intangible assets - 0.3
Amortisation of intangible assets identified in business combinations 1.4 1.4
Share-based payments 0.3 0.3
Net finance costs 1.2 0.7
Taxation 2.8 3.1
17.0 15.9
Decrease/(increase) in trade and other receivables 6.9 (8.2)
(Decrease)/increase in trade and other payables (including pilot bonds outflow (3.5) 3.5
of £0.1m (2021: outflow of £0.3m))
Cash generated from operations 20.4 11.2
Interest paid (1.5) (0.9)
Income taxes paid (4.2) (2.7)
Net cash inflow from operating activities 14.7 7.6
Cash flows from investing activities
Purchase of property, plant and equipment, and software (2.1) (1.7)
Finance income 0.3 0.3
Net cash outflow from investing activities (1.8) (1.4)
Cash flows from financing activities
Decrease in overdrafts (1.8) (3.3)
Proceeds from bank loans - 5.5
Repayment of bank loans (2.7) (0.2)
Decrease in invoice financing (1.2) -
Payment of obligations under leases (5.3) (5.3)
Purchase of shares in existing subsidiaries (0.1) (0.6)
Purchase of own shares in Employee Benefit Trust (0.3) (0.3)
Dividends paid to owners of Empresaria Group plc (0.6) (0.5)
Dividends paid to non-controlling interests (0.4) (0.3)
Net cash outflow from financing activities (12.4) (5.0)
Net increase in cash and cash equivalents 0.5 1.2
Foreign exchange movements 0.7 (0.9)
Cash and cash equivalents at beginning of the year 21.1 20.8
Cash and cash equivalents at end of the year 22.3 21.1
2022 2021
£m £m
Bank overdrafts at beginning of the year (18.2) (22.1)
Decrease in the year 1.8 3.3
Foreign exchange movements (0.7) 0.6
Bank overdrafts at end of the year (17.1) (18.2)
Cash, cash equivalents and bank overdrafts at end of the year 5.2 2.9
1 Basis of preparation and general information
The financial information has been abridged from the audited financial
information for the year ended 31 December 2022.
The financial information set out above does not constitute the Company's
consolidated statutory accounts for the years ended 31 December 2022 or 2021,
but is derived from those accounts. Statutory accounts for 2021 have been
delivered to the Registrar of Companies and those for 2022 will be delivered
following the Company's Annual General Meeting. The Auditors have reported on
those accounts; their reports were unqualified, did not draw attention to any
matters by way of emphasis without qualifying their reports and did not
contain statements under s498(2) or (3) Companies Act 2006 or equivalent
preceding legislation.
Accounting policies have been applied consistently with those set out in the
2021 financial statements, as amended when relevant to reflect the adoption of
new standards, amendments and interpretations which became effective in the
year. During 2022 no new standards, amendments or interpretations had a
significant impact on the financial statements.
While the financial information included in this preliminary announcement has
been prepared in accordance with the recognition and measurement criteria of
UK-adopted international Accounting Standards, this announcement does not
itself contain sufficient financial information to comply with UK-adopted
international Accounting Standards. The Group will be publishing full
financial statements that comply with UK-adopted international Accounting
Standards in April 2023.
2 Segment and revenue analysis
From 1 January 2022, following the appointment of regional leaders in 2021,
information reported to the Group's Executive Committee, considered to be the
chief operating decision maker of the Group for the purpose of resource
allocation and assessment of segment performance, is based on the Group's four
regions. The segmental information is therefore now presented by region, which
represents a change from the prior year which was reported by operating
sector. Prior period information is re-presented by region.
The Group has one principal activity, the provision of staffing and
recruitment services, delivered across a number of service lines, being
permanent placement, temporary and contract placement, and offshore services.
The analysis of the Group's results by region is set out below:
2022 2021
Revenue Net fee income Adjusted operating profit Revenue Net fee income Adjusted operating profit
UK & Europe 124.9 28.4 4.7 133.1 29.0 5.3
APAC 49.9 15.8 0.8 40.3 14.1 1.4
Americas 62.7 8.7 1.5 71.0 9.9 2.8
Offshore Services 25.3 13.5 7.1 15.3 7.7 4.1
Central costs - - (3.9) - - (4.3)
Intragroup eliminations (1.5) (1.0) - (1.3) (1.2) -
261.3 65.4 10.2 258.4 59.5 9.3
3 Finance income and costs
2022 2021
£m £m
Finance income
Bank interest receivable 0.3 0.3
0.3 0.3
Finance costs
Invoice financing (0.1) (0.1)
Bank loans and overdrafts (1.1) (0.7)
Interest on lease liabilities (0.3) (0.3)
Interest on tax payments - 0.1
(1.5) (1.0)
Net finance costs (1.2) (0.7)
4 Taxation
The tax expense for the year is as follows:
2022 2021
£m £m
Current tax
Current year income tax expense 3.9 3.7
Adjustments in respect of prior years (0.1) (0.1)
Total current tax expense 3.8 3.6
Deferred tax
Deferred tax credit - on origination and reversal of temporary differences (1.0) (0.5)
Total income tax expense in the income statement 2.8 3.1
5 Reconciliation of adjusted profit before tax to profit before tax
2022 2021
£m £m
Profit before tax 7.6 6.0
Impairment of goodwill - 0.9
Impairment of other intangible assets - 0.3
Amortisation of intangible assets identified in business combinations 1.4 1.4
Adjusted profit before tax 9.0 8.6
6 Earnings per share
Basic earnings per share is assessed by dividing the earnings attributable to
the owners of Empresaria Group plc by the weighted average number of shares in
issue during the year. Diluted earnings per share is calculated as for basic
earnings per share but adjusting the weighted average number of shares for the
diluting impact of shares that could potentially be issued. For 2022 and 2021
these are all related to share options. Reconciliations between basic and
diluted measures are given below.
The Group also presents adjusted earnings per share which it considers to be a
key measure of the Group's performance. A reconciliation of earnings to
adjusted earnings is provided below.
2022 2021
£m £m
Earnings attributable to owners of Empresaria Group plc 3.4 2.3
Adjustments:
Impairment of goodwill - 0.9
Impairment of other intangible assets - 0.3
Amortisation of intangible assets identified in business combinations 1.4 1.4
Tax on the above (0.3) (0.3)
Non-controlling interests in respect of the above - (0.2)
Adjusted earnings 4.5 4.4
Number of shares Millions Millions
Weighted average number of shares - basic 49.4 49.8
Dilution effect of share options 1.5 1.6
Weighted average number of shares - diluted 50.9 51.4
Earnings per share Pence Pence
Basic 6.9 4.6
Dilution effect of share options (0.2) (0.1)
Diluted 6.7 4.5
Adjusted earnings per share Pence Pence
Basic 9.1 8.8
Dilution effect of share options (0.3) (0.2)
Diluted 8.8 8.6
The weighted average number of shares (basic) has been calculated as the
weighted average number of shares in issue during the year plus the number of
share options already vested less the weighted average number of shares held
by the Empresaria Employee Benefit Trust. The Trustees have waived their
rights to dividends on the shares held by the Empresaria Employee Benefit
Trust.
7 Goodwill
2022 2021
£m £m
At 1 January 30.5 32.5
Impairment charge - (0.9)
Foreign exchange movements 1.4 (1.1)
At 31 December 31.9 30.5
Goodwill is reviewed and tested for impairment on an annual basis or more
frequently if there is an indication that goodwill might be impaired. Goodwill
has been tested for impairment by comparing the carrying amount of the group
of cash-generating units ('CGUs') the goodwill has been allocated to, with the
recoverable amount of those CGUs. The recoverable amount of each group of CGUs
is considered to be its value in use. The key assumptions in assessing value
in use are as follows:
Operating profit and pre-tax cash flows
The operating profit and pre-tax cash flows are based on the 2023 budgets
approved by the Group's Board. These budgets are extrapolated using short-term
growth rate forecasts over four years and long-term growth rates and margins
that are consistent with the business plans approved by the Group's Board.
These cash flows are discounted to present value to assess the value in use.
Discount rates
The pre-tax, country-specific rates used to discount the forecast cash flows
range from 13.0% to 18.9% (2021: 10.4% to 18.4%) reflecting current local
market assessments of the time value of money and the risks specific to the
relevant business. These discount rates reflect the estimated industry
weighted average cost of capital in each market and are based on the Group's
weighted average cost of capital adjusted for local factors.
Pre-tax discount rates used by region are as follows:
UK & Europe: 13.0% to 18.0% (2021: 10.4% to 12.7%)
APAC: 13.8% to 18.9% (2021: 11.6% to 17.6%)
Americas: 13.3% to 16.0% (2021: 12.9% to 18.4%)
Offshore Services: 15.8% (2021: 17.3%)
Growth rates
The growth rates used to extrapolate beyond the most recent budgets and
forecasts and to determine terminal values are based upon IMF GDP growth
forecasts for the specific market. Longer-term growth rates ranged from 0.4%
to 6.2%. GDP growth is a key driver of our business and is therefore an
appropriate assumption in developing long-term forecasts.
Long-term growth rates used by region are as follows:
UK & Europe: 1.3% to 1.5% (2021: 1.1% to 1.5%)
APAC: 0.4% to 5.1% (2021: 0.5% to 5.2%)
Americas: 1.9% to 3.0% (2021: 1.7% to 3.2%)
Offshore Services: 6.2% (2021: 6.0%)
In 2022 no impairment of goodwill has been recognised.
In 2021, an impairment charge of £0.6m was recognised in respect of a
business in the APAC region. This business supplies the aviation industry
which had not recovered from the severe impact of COVID-19 as quickly as was
previously anticipated. As a result, an impairment review was carried out at
30 June 2021 and an impairment charge booked. Before the impairment charge was
recognised, the carrying value of the goodwill was £2.0m and the recoverable
amount, based on value in use, was assessed as £1.4m. A further impairment
review was carried out on this operation at 31 December 2021 and no additional
impairment was identified. An impairment charge of £0.3m was also recognised
in respect of another business in the APAC region.
As part of the impairment review, reasonably possible changes in the growth
rate and discount rate assumptions have been considered to assess the impact
on the recoverable amount of each business. Were the long-term growth rate to
reduce to nil an impairment charge of £0.2m (2021: £nil) would be recorded
in respect £0.1m for one business in our APAC region and £0.1m for one
business in our Americas region. If the discount rate were to increase by 2%
an impairment charge of £0.2m (2021: £nil) would be recorded in respect
£0.1m for one business in our APAC region and £0.1m for one business in our
Americas region.
8 Other intangible assets
Intangible assets identified in business combinations
2022 Customer relationships Trade names & marks Sub total Software Total
£m £m £m £m £m
Cost
At 1 January 13.9 8.8 22.7 1.8 24.5
Additions - - - 0.1 0.1
Foreign exchange movements 1.0 0.5 1.5 0.1 1.6
At 31 December 14.9 9.3 24.2 2.0 26.2
Accumulated amortisation
At 1 January 10.2 3.9 14.1 1.1 15.2
Charge for the year 0.9 0.5 1.4 0.2 1.6
Foreign exchange movements 0.8 0.3 1.1 0.1 1.2
At 31 December 11.9 4.7 16.6 1.4 18.0
Net book value
At 31 December 2021 3.7 4.9 8.6 0.7 9.3
At 31 December 2022 3.0 4.6 7.6 0.6 8.2
As required under IFRS, the Group reviewed its assets for indications of
impairment as at 31 December 2022. Following this review, no impairment
charges have been reflected.
9 Trade and other receivables
2022 2021
£m £m
Current
Gross trade receivables 34.1 40.4
Less provision for impairment of trade receivables (0.8) (0.9)
Trade receivables 33.3 39.5
Prepayments 2.4 1.7
Accrued income 7.4 5.0
Corporation tax receivable 0.9 0.9
Other receivables 2.7 3.4
46.7 50.5
Trade receivables include £20.1m (2021: £21.6m) on which security has been
given under bank facilities.
10 Trade and other payables
2022 2021
£m £m
Current
Trade payables 2.4 2.0
Other tax and social security 5.1 7.1
Pilot bonds 0.6 0.7
Client deposits 0.4 0.5
Temporary recruitment worker wages 3.4 3.3
Other payables 1.6 1.2
Accruals 19.8 20.0
33.3 34.8
Pilot bonds represent unrestricted funds held by our aviation business at the
request of clients that are repayable to the pilot over the course of a
contract, typically between three and five years. If the pilot terminates
their contract early, the outstanding bond is payable to the client. For this
reason the bonds are shown as a current liability. As at 31 December 2022, if
the bonds were to be repaid in line with existing contracts, £0.3m (2021:
£0.3m) would be repayable in more than one year.
11 Borrowings
2022 2021
£m £m
Current
Bank overdrafts 17.1 18.2
Invoice financing 3.5 4.6
Bank loans 8.5 0.4
29.1 23.2
Non-current
Bank loans 0.5 11.2
0.5 11.2
Borrowings 29.6 34.4
The following key bank facilities are in place at 31 December 2022:
Facility limit Outstanding
2022 2021 2022 2021
Currency Maturity Interest rate £m £m £m £m
Bank overdrafts
UK(1) GBP(2) On demand with annual review 1% above applicable currency base rates 10.0 10.0 6.3 6.9
Germany EUR On demand with annual review EURIBOR + 3.0% 11.5 10.9 8.7 8.4
USA USD On demand with annual review LIBOR + 2% 1.7 1.5 - 1.5
New Zealand NZD On demand with annual review New Zealand Base Lending Rate + 2% 0.5 0.5 - -
Invoice financing
UK GBP On demand with annual review UK base rate + 1.82% 10.0 10.0 2.0 3.0
Chile CLP On demand with annual review Weighted average rate 15.7% (2021: 5.5%) 2.9 4.2 1.5 1.6
Bank loans
UK - Revolving Credit Facility GBP 2023 SONIA + 2% to 3% 15.0 15.0 8.0 10.5
Japan JPY 2025-2028 Weighted average rate 0.6% (2021: 0.5%) 0.7 0.9 0.7 0.9
1 The UK overdraft is a net overdraft arrangement across a number of UK
entities. For facility utilisation purposes these amounts are presented net in
the table above, but for accounting purposes cash and overdrawn balances are
presented gross in the balance sheet. The utilisation amount in the table is
net of £1.9m of cash shown within cash and cash equivalents in the balance
sheet (2021: £1.2m).
2 The UK overdraft can be drawn in a number of different currencies with the
overall facility limit expressed in GBP.
The UK revolving credit facility is secured by a first fixed charge over all
book and other debts given by the Company and certain of its UK, German and
New Zealand subsidiaries. It is also subject to financial covenants and these
are disclosed in the finance review. The UK invoice financing facility is also
secured by a fixed and floating charge over trade receivables.
The UK revolving credit facility was refinanced in March 2023 for three years
with the same facility limit of £15.0m. The interest rate margin continues
to vary based on the Group's net debt to EBITDA ratio and ranges from 2.0% to
2.75%.
12 Net debt
a) Net debt
2022 2021
£m £m
Cash and cash equivalents 22.3 21.1
Borrowings (29.6) (34.4)
Net debt (7.3) (13.3)
b) Adjusted net debt
2022 2021
£m £m
Cash and cash equivalents 22.3 21.1
Less cash held in respect of pilot bonds (0.6) (0.7)
Adjusted cash 21.7 20.4
Borrowings (29.6) (34.4)
Adjusted net debt (7.9) (14.0)
The Group presents adjusted net debt as its principal debt measure. Adjusted
net debt is equal to net debt excluding cash held in respect of pilot bonds
within our aviation business. Where required by the client, pilot bonds are
taken at the start of the pilot's contract and are repayable to the pilot or
the client during the course of the contract or if it ends early. There is no
legal restriction over this cash, but given the requirement to repay it over a
three-year period, and that to hold these is a client requirement, cash equal
to the amount of the bonds is excluded in calculating adjusted net debt.
c) Movement in adjusted net debt
2022 2021
£m £m
At 1 January (14.0) (13.6)
Net increase in cash and cash equivalents per consolidated cash flow statement 0.5 1.2
Decrease/(increase) in overdrafts and loans 4.5 (2.0)
Decrease in invoice financing 1.2 -
Foreign exchange movement (0.2) 0.1
Adjusted for decrease in cash held in respect of pilot bonds 0.1 0.3
At 31 December (7.9) (14.0)
13 Dividends
2022 2021
£m £m
Amount recognised as distribution to equity holders in the year:
Final dividend for the year ended 31 December 2021 of 1.2p (2020: 1.0p) per 0.6 0.5
share
Proposed final dividend for the year ended 31 December 2022 of 1.4p (2021: 0.7 0.6
1.2p) per share
The proposed final dividend for the year ended 31 December 2022 is subject to
approval by shareholders at the Annual General Meeting and has not been
included as a liability in these financial statements.
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