REG - Empresaria Group PLC - Interim Results
11/08/2022 07:00
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RNS Number : 6318V Empresaria Group PLC 11 August 2022
11 August 2022
Empresaria Group plc ("Empresaria" or "Group")
Unaudited Interim Results for the six months ended 30 June 2022
Increase in adjusted operating profit and solid net fee income growth
Empresaria Group plc (AIM: EMR), the global specialist staffing group, is
pleased to announce its unaudited interim results for the six months ended 30
June 2022.
Overview of the half year
% change (constant currency)(2)
2022 2021 % change
Revenue £129.8m £129.8m +0% +1%
Net fee income £32.6m £28.4m +15% +15%
Adjusted operating profit(1) £4.5m £4.3m +5% +5%
Operating profit £3.8m £2.7m +41%
Adjusted profit before tax(1) £4.0m £4.0m +0%
Profit before tax £3.3m £2.4m +38%
Adjusted, diluted earnings per share(1) 3.7p 4.1p -10%
Diluted earnings per share 2.7p 1.6p +69%
· Solid net fee income growth with benefits from diversification by
geography and sector
o Up 15% year-on-year to £32.6m
o Offshore services up 94% year-on-year
o Permanent placement revenue up 23% year-on-year
o Strong growth in Professional across the UK and APAC
o Offset by the expected reduction in Healthcare after record 2021
· Adjusted operating profit up 5% against prior year reflecting ongoing
investment to drive future growth
· Adjusted, diluted earnings per share down 10% against prior year due
to stronger performances from operations with a higher proportion of
non-controlling interests
· Adjusted net debt reduced by £3.2m to £10.8m with headroom
increased to £14.8m
· Targeted investment in headcount - Offshore Services up 36%, the rest
of the Group up 5% compared to 31 December 2021
1 Adjusted to exclude amortisation of intangible assets identified in
business combinations, impairment of goodwill and other intangible assets,
exceptional items, fair value charge 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 report solid growth in net fee income and further progress
in growing our adjusted operating profit while continuing to invest in our
operations. We are seeing the benefits of the investments we have made in
our team, technology and broadening our service offerings, with early
successes from our RPO (Recruitment Process Outsourcing) offering in APAC.
These are key to our future growth and the delivery of our medium-term
adjusted operating profit target of £20m. In the second half of the year we
will invest further in headcount to capitalise on current market demand and we
will also expand our capacity in Offshore Services as we continue to see
significant growth potential.
We are optimistic about the year ahead as the demand for talent is strong
despite the global macroeconomic uncertainties. Given the diversified nature
of our business and the strength of our new senior leadership team, we are
confident we will continue to deliver on our strategic priorities and build on
the positive momentum we have seen in the first half. We expect profits for
the full year to be in line with market expectations."
Investor presentation
In line with Empresaria's commitment to ensuring appropriate communication
structures are in place for all shareholders, management will deliver an
online presentation, available to all existing and potential shareholders, on
the interim results for the six months ended 30 June 2022 via the Investor
Meet Company platform on Thursday 11 August 2022 at 4:30pm UK time.
Questions can be submitted pre-event through the platform or at any time
during the live presentation. Management may not be in a position to answer
every question it receives but will address those it can while remaining
within the confines of information already disclosed to the market.
Q&A responses will be published at the earliest opportunity on the
Investor Meet Company platform.
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)
. Those who have already registered and requested to meet the Company will
be automatically invited.
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 Broker) 020 7496 3000
Shaun Dobson / James Moat
Alma PR (Financial PR) 020 3405 0205
Sam Modlin
empresaria@almapr.com
Hilary Buchanan
The investor presentation of these results will be made available during the
course of today on Empresaria's website: www.empresaria.com.
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
www.empresaria.com.
Cautionary statement regarding forward-looking statements
This document may contain forward-looking statements which are made in good
faith and are based on current expectations or beliefs, as well as assumptions
about future events. You can sometimes, but not always, identify these
statements by the use of a date in the future or such words as "will",
"anticipate", "estimate", "expect", "project", "intend", "plan", "should",
"may", "assume" and other similar words. By their nature, forward-looking
statements are inherently predictive and speculative and involve risk and
uncertainty because they relate to events and depend on circumstances that
will occur in the future. You should not place undue reliance on these
forward-looking statements, which are not a guarantee of future performance
and are subject to factors that could cause our actual results to differ
materially from those expressed or implied by these statements. Except as
required by applicable law or regulation, Empresaria undertakes no obligation
to update any forward-looking statements contained in this document, whether
as a result of new information, future events or otherwise.
Finance and operating review
The Group has delivered a 15% year-on-year increase in net fee income to
£32.6m in the first half of 2022, with adjusted operating profit growing by
5% to £4.5m. This performance has been driven by a number of factors as set
out below.
Excellent growth in Offshore Services
Our Offshore Services region has continued to go from strength to strength and
delivered the largest profit contribution of any of our regions in H1.
Headcount at 30 June 2022 increased by 36% compared to 31 December 2021 and is
now more than 2,700. Our Offshore Services operation has two locations in
India and a newly opened centre in the Philippines, with its client base
primarily in the US and the UK. In 2022 we have seen very strong growth from
our UK clients with billable headcount up by a third during H1. The pace of
our growth with US clients has slowed with a reduction from healthcare
recruitment clients offsetting growth elsewhere. However, our US pipeline
remains strong and we are seeing increasing demand for services out of our
Philippines location. In H2 we will be investing in our infrastructure in
India to further increase our headcount capacity to enable us to enter the
next phase of growth.
Ongoing benefits from diversification
Our diversification by geography and sector continues to deliver benefits to
the Group. As well as growth in Offshore Services we saw strong performances
across APAC in our Professional and IT operations, in the UK in our
Professional operations and in Germany in our logistics business. Demand in
many of our markets has been strong, particularly for permanent placements
where net fee income increased by 23% year-on-year.
These positive performances more than offset any challenges elsewhere. As
expected, Healthcare decreased compared to 2021 when our operations benefitted
from significant COVID-19 vaccination and testing related demand. More
challenging conditions were also experienced by our temporary staffing
operation in Germany, which has been impacted by client supply chain issues
alongside increased sickness levels which has reduced our margins.
Operational investments continue and are delivering benefits
As communicated in our annual report, we have been investing in growing our
sales and recruiting teams in operations where we see significant
opportunities for growth. Excluding Offshore Services, our headcount has
increased by 5% from 31 December 2021. Hiring in certain markets has proven to
be challenging due to the lack of available talent and increased salary
expectations for those willing to move, however we have seen a recent increase
in hiring particularly in APAC. In addition, we have made good progress in
supplementing our recruitment teams with our offshore resources.
We have continued with our technology investment with three further operations
going live on our front office system in H1. We are starting to realise
benefits from this investment as we continue to focus on adoption and
embedding improved operational processes. The roll-out will continue in H2
alongside parallel investments in complementary technology to help maximise
productivity.
We are also investing in expanding our service offering and have seen early
success in delivering RPO, particularly in our APAC region.
Outlook
We have made a solid start to 2022 and remain on track to deliver full year
results in line with market expectations.
Global macroeconomic uncertainties are increasing and the impact of growing
inflation in many of our markets is yet to be fully realised. However, we
have yet to see any significant adverse impact and demand from clients remains
strong.
We have set an ambitious target of delivering adjusted operating profit of
£20m in the medium term and we will be updating on our plans to achieve this
in due course.
Regional Performance
As announced in last year's annual report, following the appointment of
regional leaders during 2021 the Group has moved to a regional reporting
structure.
Adjusted operating profit by region:
£'m 6 months ended 6 months ended % change % change (constant currency)
30 June 30 June
2022 2021
UK & Europe 2.0 2.5 -20% -20%
APAC 0.5 0.5 +0% +0%
Americas 0.8 1.7 -53% -56%
Offshore Services 3.5 1.8 +94% +94%
Central costs (2.3) (2.2) +5% +5%
Total 4.5 4.3 +5% +5%
Performance in each of the regions is analysed below.
UK & Europe
£'m 6 months ended 6 months ended % change % change (constant currency)
30 June 30 June
2022 2021
Revenue 63.2 67.9 -7% -5%
Net fee income 14.5 14.1 +3% +4%
Adjusted operating profit 2.0 2.5 -20% -20%
% of Group net fee income 44% 49%
UK & Europe saw mixed performances in H1 with total net fee income
increasing by 3% (4% in constant currency) but profits down by 20%.
Operations in the UK generally performed well, with NFI increasing by 12%
reflecting strong performances in our Professional operations. Results from
our UK IT operation have continued to be disappointing with NFI falling
year-on-year and we are taking action to address this. In our Commercial
operations in Germany, our logistics operation has performed well, returning
to growth after a challenging 2021, however our temporary business has been
impacted by clients' ongoing supply chain issues alongside increased illness
rates from COVID-19 which have impacted margins. Public sector healthcare in
Finland is facing significant change and this, alongside the fall in COVID-19
related demand, has had an adverse impact on our operation there.
APAC
£'m 6 months ended 6 months ended % change % change (constant currency)
30 June 30 June
2022 2021
Revenue 23.0 19.3 +19% +22%
Net fee income 7.9 6.6 +20% +22%
Adjusted operating profit 0.5 0.5 +0% +0%
% of Group net fee income 24% 23%
In APAC (which excludes our Offshore Services operations in India and
Philippines), net fee income increased by 20% (22% in constant currency) with
strong growth in most countries including record H1 net fee income levels in
Indonesia, Philippines, Thailand and Japan. Profits were in line with prior
year reflecting a full period of the regional overheads along with some
challenges in Australia, where high competition for talent is resulting in
significant levels of counter-offers. Net fee income growth has been
supplemented by our new RPO service offering in the region and this has seen
good early success. Aviation continues to be a challenge, particularly in
our core Asia market where airlines have not seen the levels of recovery
experienced in the US or Europe and are recalling pilots rather than turning
to agencies for new resources.
Americas
£'m 6 months ended 6 months ended % change % change (constant currency)
30 June 30 June
2022 2021
Revenue 32.7 36.7 -11% -11%
Net fee income 4.6 5.0 -8% -12%
Adjusted operating profit 0.8 1.7 -53% -56%
% of Group net fee income 14% 17%
In the Americas, net fee income fell by 8% (12% in constant currency), with
operating profit down by 53%. The main driver of these results was the
expected reduction in Healthcare following an extremely strong 2021 that was
driven by COVID-19 vaccination and testing related demand for a high volume of
similar roles which we were able to deliver more efficiently. Our US IT
operation delivered a small year-on-year fall in net fee income against a
strong 2021 comparator and in an extremely competitive market where
counter-offers have become the norm. In LATAM our operations showed a small
fall in net fee income due to a large election project in Chile last year and
a slow recovery from COVID-19 in Peru.
Offshore Services
£'m 6 months ended 6 months ended % change % change (constant currency)
30 June 30 June
2022 2021
Revenue 11.7 6.4 +83% +77%
Net fee income 6.1 3.2 +91% +85%
Adjusted operating profit 3.5 1.8 +94% +94%
% of Group net fee income 18% 11%
Offshore Services has carried its strong momentum from 2021 into 2022 with
year-on-year net fee income growth of 91% (85% in constant currency) and
profit growth of 94%. The UK operation has continued to grow significantly
with the number of billable seats increasing by a third from the end of
2021. Our progress in the US market has slowed in the first half of the year
with new growth offset by a reduction in demand from healthcare staffing
clients. We will be investing in the second half of the year to increase
capacity and enable us to enter the next phase of our growth.
Financing
Net finance costs remain low at £0.5m (2021: £0.3m) with the increase due to
higher interest rates and margins along with the inclusion of an interest
credit in 2021 on settlement of tax liabilities.
Net cash inflow from operating activities was £7.3m (2021: £2.0m). Free
cash flow, which excludes movements related to pilot bonds and includes cash
outflows on leases, was an inflow of £4.8m (2021: outflow of £0.8m). This
reflects the reduced working capital requirements from our temporary and
contract business, offset by an increase from permanent placements and
offshore services. 2021 cash flows reflected a significant increase in
working capital as trading levels recovered post COVID-19.
Capital expenditure in the first half of 2022 was £0.8m and included
expenditure on increasing our office capacity in Japan and supporting
headcount increases in India alongside the investment in our core technology
platform. The Group's dividend results in a £0.6m outflow (2021: £0.5m),
while a cash outflow of £0.2m (2021: £0.2m) is shown for Empresaria shares
purchased and transferred into the Employee Benefit Trust.
Adjusted net debt (which excludes £0.7m cash held in respect of pilot bonds
and does not include lease liabilities recognised under IFRS 16) was £10.8m
as at 30 June 2022, a reduction of £3.2m from 31 December 2021.
As 30 June 2022, the Group had financing facilities totalling £54.0m (31
December 2021: £55.5m). Excluding invoice financing, undrawn facilities
have increased to £14.8m (31 December 2021: £12.9m) reflecting the reduction
in the overall net debt position.
The Group's revolving credit facility covenants are tested on a quarterly
basis. The covenants, and our performance against them as at 30 June 2022,
are as follows:
Measure Target Actual
Net debt to EBITDA < 3.0 times 1.0 times
Interest cover > 4.0 times 12.6 times
Debtor coverage > 1.75 times 4.7 times
Dividend
In line with prior years, the Board is not recommending the payment of an
interim dividend for 2022 (2021: nil).
11 August 2022
Condensed consolidated income statement
Six months ended 30 June 2022
6 months ended 30 June 2022 6 months ended 30 June 2021 Year
ended 31 December 2021
Unaudited Unaudited
Notes £m £m £m
Revenue 3 129.8 129.8 258.4
Cost of sales (97.2) (101.4) (198.9)
Net fee income 3 32.6 28.4 59.5
Administrative costs (28.1) (24.1) (50.2)
Adjusted operating profit 3 4.5 4.3 9.3
Impairment of goodwill - (0.6) (0.9)
Impairment of other intangible assets - (0.3) (0.3)
Amortisation of intangible assets identified in business combinations (0.7) (0.7) (1.4)
Operating profit 3.8 2.7 6.7
Finance income 4 0.1 0.1 0.3
Finance costs 4 (0.6) (0.4) (1.0)
Net finance costs 4 (0.5) (0.3) (0.7)
Profit before tax 3.3 2.4 6.0
Taxation 6 (1.3) (1.4) (3.1)
Profit for the period 2.0 1.0 2.9
Attributable to:
Owners of Empresaria Group plc 1.4 0.8 2.3
Non-controlling interests 0.6 0.2 0.6
2.0 1.0 2.9
Pence Pence Pence
Unaudited Unaudited
Earnings per share
Basic 7 2.8 1.6 4.6
Diluted 7 2.7 1.6 4.5
Details of adjusted earnings per share are shown in note 7.
Condensed consolidated statement of comprehensive income
Six months ended 30 June 2022
6 months ended 30 June 2022 6 months ended 30 June 2021 Year
ended 31 December 2021
Unaudited Unaudited
£m £m £m
Profit for the period 2.0 1.0 2.9
Other comprehensive income
Items that may be reclassified subsequently to the income statement:
Exchange differences on translation of foreign operations 2.2 (1.4) (1.7)
Items that will not be reclassified to the income statement:
Exchange differences on translation of non-controlling interests in 0.2 (0.3) (0.6)
foreign operations
Other comprehensive income/(loss) for the period 2.4 (1.7) (2.3)
Total comprehensive income/(loss) for the period 4.4 (0.7) 0.6
Attributable to:
Owners of Empresaria Group plc 3.6 (0.6) 0.6
Non-controlling interests 0.8 (0.1) -
4.4 (0.7) 0.6
Condensed consolidated balance sheet
As at 30 June 2022
30 June 2022 30 June 2021 31 December 2021
Unaudited Unaudited
Notes £m £m £m
Non-current assets
Property, plant and equipment 2.2 1.6 1.6
Right-of-use assets 6.7 8.1 7.5
Goodwill 31.3 31.1 30.5
Other intangible assets 8.7 9.6 9.3
Deferred tax assets 4.2 3.2 3.4
53.1 53.6 52.3
Current assets
Trade and other receivables 10 48.8 49.9 50.5
Cash and cash equivalents 9 23.1 21.4 21.1
71.9 71.3 71.6
Total assets 125.0 124.9 123.9
Current liabilities
Trade and other payables 11 35.0 33.6 34.8
Current tax liabilities 1.6 1.9 1.9
Borrowings 8 22.7 26.2 23.2
Lease liabilities 3.3 4.7 4.6
62.6 66.4 64.5
Non-current liabilities
Borrowings 8 10.5 11.0 11.2
Lease liabilities 3.7 3.7 3.3
Deferred tax liabilities 2.5 2.5 2.6
16.7 17.2 17.1
Total liabilities 79.3 83.6 81.6
Net assets 45.7 41.3 42.3
Equity
Share capital 2.5 2.5 2.5
Share premium account 22.4 22.4 22.4
Merger reserve 0.9 0.9 0.9
Retranslation reserve 4.7 2.8 2.5
Equity reserve (10.2) (10.2) (10.2)
Other reserves (0.4) (0.5) (0.6)
Retained earnings 20.5 18.3 19.9
Equity attributable to owners of Empresaria Group plc 40.4 36.2 37.4
Non-controlling interests 5.3 5.1 4.9
Total equity 45.7 41.3 42.3
Condensed consolidated statement of changes in equity
Six months ended 30 June 2022
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 period - - - - - - 0.8 0.8 0.2 1.0
Exchange differences on translation of foreign operations - - - (1.4) - - - (1.4) (0.3) (1.7)
Total comprehensive (loss)/income for the period - - - (1.4) - - 0.8 (0.6) (0.1) (0.7)
Dividend paid to owners of Empresaria Group plc - - - - - - (0.5) (0.5) - (0.5)
Purchase of own shares in Employee Benefit Trust - - - - - - (0.2) (0.2) - (0.2)
Exercise of share options 0.1 - - - - (0.1) 0.1 0.1 - 0.1
Share-based payments - - - - - 0.2 - 0.2 - 0.2
At 30 June 2021 (Unaudited) 2.5 22.4 0.9 2.8 (10.2) (0.5) 18.3 36.2 5.1 41.3
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 - - - - - - (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 period - - - - - - 1.4 1.4 0.6 2.0
Exchange differences on translation of foreign operations - - - 2.2 - - - 2.2 0.2 2.4
Total comprehensive income for the period - - - 2.2 - - 1.4 3.6 0.8 4.4
Dividend paid to owners of Empresaria Group plc - - - - - - (0.6) (0.6) - (0.6)
Dividend paid to non-controlling interests - - - - - - - - (0.4) (0.4)
Purchase of own shares in Employee Benefit Trust - - - - - - (0.2) (0.2) - (0.2)
Share-based payments - - - - - 0.2 - 0.2 - 0.2
At 30 June 2022 (Unaudited) 2.5 22.4 0.9 4.7 (10.2) (0.4) 20.5 40.4 5.3 45.7
Condensed consolidated cash flow statement
Six months ended 30 June 2022
6 months ended 30 June 2022 6 months ended 30 June 2021 Year ended 31 December 2021
Unaudited Unaudited
£m £m £m
Profit for the period 2.0 1.0 2.9
Adjustments for:
Depreciation and software amortisation 0.5 0.4 1.0
Depreciation of right-of-use assets 2.6 2.9 5.3
Impairment of goodwill - 0.6 0.9
Impairment of other intangible assets - 0.3 0.3
Amortisation of intangible assets identified in business 0.7 0.7 1.4
combinations
Share-based payments 0.2 0.2 0.3
Net finance costs 0.5 0.3 0.7
Taxation 1.3 1.4 3.1
7.8 7.8 15.9
Decrease/(increase) in trade and other receivables 1.9 (6.3) (8.2)
Increase in trade and other payables (including pilot bonds outflow of £nil 0.2 2.2 3.5
(30 June 2021: £0.3m, 31 December 2021: £0.3m))
Cash generated from operations 9.9 3.7 11.2
Interest paid (0.5) (0.5) (0.9)
Income taxes paid (2.1) (1.2) (2.7)
Net cash inflow from operating activities 7.3 2.0 7.6
Cash flows from investing activities
Purchase of property, plant and equipment, and software (0.8) (0.7) (1.7)
Finance income 0.1 0.1 0.3
Net cash outflow from investing activities (0.7) (0.6) (1.4)
Cash flows from financing activities
Decrease in overdrafts (0.8) (1.0) (3.3)
Proceeds from bank loans - 5.0 5.5
Repayment of bank loans (0.7) - (0.2)
(Decrease)/increase in invoice financing (0.1) 0.4 -
Payment of obligations under leases (2.5) (3.1) (5.3)
Purchase of shares in existing subsidiaries - (0.6) (0.6)
Purchase of own shares in Employee Benefit Trust (0.2) (0.2) (0.3)
Dividends paid to owners of Empresaria Group plc (0.6) (0.5) (0.5)
Dividends paid to non-controlling interests (0.4) - (0.3)
Net cash outflow from financing activities (5.3) - (5.0)
Net increase in cash and cash equivalents 1.3 1.4 1.2
Foreign exchange movements 0.7 (0.8) (0.9)
Cash and cash equivalents at beginning of the period 21.1 20.8 20.8
Cash and cash equivalents at end of the period 23.1 21.4 21.1
Bank overdrafts at beginning of the period (18.2) (22.1) (22.1)
Decrease in the period 0.8 1.0 3.3
Foreign exchange movements (0.3) 0.5 0.6
Bank overdrafts at end of the period (17.7) (20.6) (18.2)
Cash, cash equivalents and bank overdrafts at period end 5.4 0.8 2.9
Notes to the interim financial statements
Six months ended 30 June 2022
1 Basis of preparation and general information
Empresaria Group plc is the Group's ultimate parent company. It is
incorporated and domiciled in England and its registered office address is Old
Church House, Sandy Lane, Crawley Down, Crawley, West Sussex, RH10 4HS, United
Kingdom, its company registration number is 03743194 and its shares are listed
on AIM, a market of London Stock Exchange plc.
The condensed set of financial statements have been prepared using accounting
policies consistent with UK-adopted International Accounting Standards. The
same accounting policies, presentation and methods of computation are followed
in the condensed set of financial statements as applied in the Group's latest
annual audited financial. The Group does not anticipate any change in these
accounting policies for the year ended 31 December 2022. While the financial
information included in these interim financial statements has been prepared
in accordance with UK-adopted International Accounting Standards applicable to
interim periods, these interim financial statements do not contain sufficient
information to constitute an interim financial report as that term is defined
in IAS 34.
The information for the year ended 31 December 2021 has been derived from
audited statutory accounts for the year ended 31 December 2021. The
information for the year ended 31 December 2021 included herein does not
constitute statutory accounts as defined in section 434 of the Companies Act
2006. A copy of the statutory accounts for that year has been delivered to
the Registrar of Companies. The auditors reported on those accounts: their
report was unqualified, did not draw attention to any matters by way of
emphasis and did not contain a statement under section 498(2) or (3) of the
Companies Act 2006. The interim financial information for 2022 and 2021 has
been neither audited nor reviewed.
Going concern
The Group's activities are funded by a combination of long-term equity
capital, revolving credit facilities, term loans, short-term invoice financing
and bank overdraft facilities. The day to day operations are funded by cash
generated from trading, invoice financing and overdraft facilities. The Board
has reviewed the Group's profit and cash flow projections and applied
sensitivities to the underlying assumptions. These projections suggest that
the Group will meet its obligations as they fall due with the use of existing
facilities.
The majority of the Group's overdraft facilities fall due for renewal at the
end of January each year and, based on informal discussions the Board has had
with its lenders, has no reason to believe that these facilities will not
continue to be available to the Group for the foreseeable future. As a
result, the going concern basis continues to be appropriate in preparing the
financial statements.
2 Accounting estimates and judgements
The preparation of interim financial statements requires management to make
judgements, estimates and assumptions that affect the application of
accounting policies and the reported amount of income, expense, assets and
liabilities. The significant estimates and judgements made by management were
consistent with those applied to the consolidated financial statements for the
year ended 31 December 2021.
Notes to the interim financial statements
Six months ended 30 June 2022
3 Segment 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 information presented in these interim financial statements 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 business by region is set out below:
Six months to 30 June 2022 Revenue Net fee income Adjusted operating profit/(loss)
£m £m £m
UK & Europe 63.2 14.5 2.0
APAC 23.0 7.9 0.5
Americas 32.7 4.6 0.8
Offshore Services 11.7 6.1 3.5
Central costs - - (2.3)
Intragroup eliminations (0.8) (0.5) -
129.8 32.6 4.5
Six months to 30 June 2021 Revenue Net fee income Adjusted operating profit/(loss)
£m £m £m
UK & Europe 67.9 14.1 2.5
APAC 19.3 6.6 0.5
Americas 36.7 5.0 1.7
Offshore Services 6.4 3.2 1.8
Central costs - - (2.2)
Intragroup eliminations (0.5) (0.5) -
129.8 28.4 4.3
Notes to the interim financial statements
Six months ended 30 June 2022
3 Segment analysis (continued)
Year ended 31 December 2021 Revenue Net fee income Adjusted operating profit/(loss)
£m £m £m
UK & Europe 133.1 29.0 5.3
APAC 40.3 14.1 1.4
Americas 71.0 9.9 2.8
Offshore Services 15.3 7.7 4.1
Central costs - - (4.3)
Intragroup eliminations (1.3) (1.2) -
258.4 59.5 9.3
4 Finance income and costs
6 months ended 30 June 2022 6 months ended 30 June 2021 Year
ended 31 December 2021
Unaudited Unaudited
£m £m £m
Finance income
Bank interest receivable 0.1 0.1 0.3
0.1 0.1 0.3
Finance costs
Invoice financing - - (0.1)
Bank loans and overdrafts (0.4) (0.3) (0.7)
Interest on lease liabilities (0.2) (0.2) (0.3)
Interest on tax payments - 0.1 0.1
(0.6) (0.4) (1.0)
Net finance costs (0.5) (0.3) 0.7
5 Reconciliation of profit before tax to adjusted profit before tax
6 months ended 30 June 2022 6 months ended 30 June 2021 Year
ended 31 December 2021
Unaudited Unaudited
£m £m £m
Profit before tax 3.3 2.4 6.0
Impairment of goodwill - 0.6 0.9
Impairment of other intangible assets - 0.3 0.3
Amortisation of intangible assets identified in business combinations 0.7 0.7 1.4
Adjusted profit before tax 4.0 4.0 8.6
Notes to the interim financial statements
Six months ended 30 June 2022
6 Taxation
The tax charge for the six month period is £1.3m (6 months ended 30 June
2021: £1.4m, year ended 31 December 2021: £3.1m). On an adjusted basis
(excluding adjusting items as set out in note 5 and their tax effect), the
effective tax rate is 38% (6 months ended 30 June 2021: 38%). The tax charge
for the period is assessed using the best estimate of the effective tax rates
expected to be applicable for the full year, applied to the pre-tax income of
the six month period.
7 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.
6 months ended 30 June 2022 6 months ended 30 June 2021 Year ended 31 December 2021
Unaudited Unaudited
£m £m £m
Earnings
Earnings attributable to owners of Empresaria Group plc 1.4 0.8 2.3
Adjustments:
Impairment of goodwill - 0.6 0.9
Impairment of other intangible assets - 0.3 0.3
Amortisation of intangible assets identified in business combinations 0.7 0.7 1.4
Tax on the above (0.2) (0.1) (0.3)
Non-controlling interests in respect of the above - (0.2) (0.2)
Adjusted earnings 1.9 2.1 4.4
Number of shares Millions Millions Millions
Weighted average number of shares - basic 49.5 50.0 49.8
Dilution effect of share options 1.9 1.2 1.6
Weighted average number of shares - diluted 51.4 51.2 51.4
Earnings per share Pence Pence Pence
Basic 2.8 1.6 4.6
Dilution effect of share options (0.1) - (0.1)
Diluted 2.7 1.6 4.5
Adjusted earnings per share Pence Pence Pence
Basic 3.8 4.2 8.8
Dilution effect of share options (0.1) (0.1) (0.2)
Diluted 3.7 4.1 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 weighted
average 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.
Notes to the interim financial statements
Six months ended 30 June 2022
8 Borrowings
30 June 2022 30 June 2021 31 December 2021
Unaudited Unaudited
£m £m £m
Current
Bank overdrafts 17.7 20.6 18.2
Invoice financing 4.5 5.2 4.6
Bank loans 0.5 0.4 0.4
22.7 26.2 23.2
Non-current
Bank loans 10.5 11.0 11.2
10.5 11.0 11.2
Borrowings 33.2 37.2 34.4
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 financing review. The UK invoice financing facility is
also secured by a fixed and floating charge over trade receivables.
Notes to the interim financial statements
Six months ended 30 June 2022
9 Adjusted net debt
a) Adjusted net debt 30 June 2022 30 June 2021 31 December 2021
Unaudited Unaudited
£m £m £m
Cash and cash equivalents 23.1 21.4 21.1
Less cash held in respect of pilot bonds (0.7) (0.7) (0.7)
Adjusted cash 22.4 20.7 20.4
Borrowings (33.2) (37.2) (34.4)
Adjusted net debt (10.8) (16.5) (14.0)
The Group presents adjusted net debt as its principle debt measure. Adjusted
net debt excludes 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.
b) Movement in adjusted net debt 6 months ended 30 June 2022 6 months ended 30 June 2021 Year ended 31 December 2021
Unaudited Unaudited
£m £m £m
At 1 January (14.0) (13.6) (13.6)
Net increase in cash and cash equivalents per consolidated cash flow statement 1.3 1.4 1.2
Net decrease/(increase) in overdrafts and loans 1.5 (4.0) (2.0)
Decrease/(increase) in invoice financing 0.1 (0.4) -
Foreign exchange movements 0.3 (0.2) 0.1
Adjusted for decrease in cash held in respect of pilot bonds - 0.3 0.3
(10.8) (16.5) (14.0)
Notes to the interim financial statements
Six months ended 30 June 2022
10 Trade and other receivables
30 June 2022 30 June 2021 31 December 2021
Unaudited Unaudited
£m £m £m
Gross trade receivables 36.2 42.3 40.4
Less provision for impairment of trade receivables (1.1) (1.0) (0.9)
Trade receivables 35.1 41.3 39.5
Prepayments 2.4 1.5 1.7
Accrued income 7.3 4.1 5.0
Corporation tax receivable 1.1 1.2 0.9
Other receivables 2.9 1.8 3.4
48.8 49.9 50.5
11 Trade and other payables
30 June 2022 30 June 2021 31 December 2021
Unaudited Unaudited
£m £m £m
Current
Trade payables 2.4 1.5 2.0
Other tax and social security 6.1 7.0 7.1
Pilot bonds 0.7 0.7 0.7
Client deposits 0.4 0.5 0.5
Other payables 5.3 5.8 4.5
Accruals 20.1 18.1 20.0
35.0 33.6 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 three 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.
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