REG - Empresaria Group PLC - Interim Results
22/08/2023 07:00
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RNS Number : 9911J Empresaria Group PLC 22 August 2023
22 August 2023
Empresaria Group plc ("Empresaria" or the "Group")
Unaudited interim results for the six months ended 30 June 2023
Challenging market conditions impacting results
Empresaria Group plc (AIM: EMR), the global specialist staffing group,
announces its unaudited interim results for the six months ended 30 June 2023.
Overview of the half year
% change (constant currency)(2)
2023 2022 % change
Revenue £125.7m £129.8m -3% -6%
Net fee income £29.7m £32.6m -9% -10%
Adjusted operating profit(1) £1.3m £4.5m -71% -71%
Operating profit £0.6m £3.8m -84%
Adjusted profit before tax(1) £0.5m £4.0m -88%
(Loss)/profit before tax £(0.2)m £3.3m -106%
Adjusted, diluted (loss)/earnings per share(1) (0.8)p 3.7p -122%
Diluted (loss)/earnings per share (2.0)p 2.7p -174%
· Challenging market conditions from H2 2022 continued into 2023
impacting net fee income
o Reduced by 9% year-on-year to £29.7m against a strong comparator
o Offshore services up 15%
o Permanent placement down 24%
o Temporary and contract down 8%
· Adjusted operating profit down 71% to £1.3m year-on-year reflecting
a higher cost base at the start of 2023 following 2022 investment and
inflationary pressures
· Measures to manage cost base taken in Q2 2023, with benefit due to be
seen in H2 2023
· Adjusted, diluted loss per share of 0.8p reflecting the strong
contribution from Offshore Services where there is 28% non-controlling
interest
· Adjusted net debt increased slightly to £8.7m (31 December 2022:
£7.9m) with headroom increased to £18.4m
· Adjusted profit before tax for the full year expected to be in line
with current market expectations
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 2022
results at the 2023 exchange rates.
Chief Executive Officer, Rhona Driggs, commented:
"The challenging market conditions that developed during the second half of
2022 remained through the first half of 2023. The market has yet to show any
significant or sustained signs of improvement as client and candidate
confidence remains at lower levels across the majority of our markets and
sectors.
Our cost base at the start of 2023 was elevated compared to the first half of
2022 reflecting inflationary pressures and targeted investments we made in
headcount during 2022 in response to client demand in the first half of that
year. As a result, the fall in net fee income has had a material impact on
our profits. We have taken action to make appropriate reductions to our cost
base which will benefit the second half of the year and we will continue cost
control measures until we see sustained signs of improvement.
While we are disappointed with the start to 2023, we are making progress on
our key strategic actions to deliver growth. Given current market conditions
we continue to review our operational and investment priorities to ensure the
Group is best placed to realise our medium-term ambition."
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 2023 via the Investor
Meet Company platform on Tuesday 22 August 2023 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 Joint Broker) 020 7496 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
Rebecca Sanders-Hewett
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 been impacted by challenging market conditions in the six months
ended 30 June 2023 with net fee income falling by 9% to £29.7m and adjusted
operating profit reducing by 71% to £1.3m. This performance has been driven
by a number of factors as set out below.
Challenging market conditions
The softening of demand and slowing of hiring decisions seen across the
Group's businesses in the second half of 2022 have continued into 2023.
These difficult market conditions have been experienced across the Group, but
particularly in the US where both IT and Healthcare have seen significant
declines. The greatest impact has been on permanent recruitment, with net
fee income down 24% year-on-year, with the greatest falls in the US and UK.
Temporary and contract was down 8% and, although this has been more resilient,
we have not seen the improvements we expected to see in this market.
Managing our cost base
In 2022, the Group made targeted investments in its teams in order to meet
customer demand in the first half of that year. This, combined with
inflationary impacts, meant that the Group started 2023 with a higher cost
based than in the first half of 2022. As market conditions developed and the
ongoing impact became clear, the Group implemented a number of targeted
measures to manage this cost base. As a result, headcount as at 30 June
2023, excluding our offshore services operation, has reduced by 5% from 31
December 2022, and the full benefit of these actions will be seen in the
second half of the year. We will maintain cost control measures while
ensuring that we have the resources in place to maximise opportunities as and
when market confidence returns.
Continued strength in Offshore Services
Our Offshore Services operation delivered year-on-year net fee income growth
of 15% against the first half of 2022. Our sales to US clients, the majority
of which support the IT sector, have been impacted by the wider market
conditions in the US and the fall in client demand seen in the second half of
2022 has continued into 2023. Growth in sales to our UK clients, the
majority of which are in Healthcare, remains strong and we have not seen the
same challenges in UK Healthcare as have been seen in the US. As a result,
adjusted operating profit has increased by 6% year-on-year and headcount has
grown by 4% in the period. We continue to see strong growth opportunities
and are investing in the future of this business, including in the
infrastructure to support ongoing growth.
Continuing to deliver on strategic initiatives
Despite overall market conditions we continue to be focussed on delivering on
our strategic initiatives. We have now officially launched our Professional
operation in the US, under our lead Professional brand, LMA Recruitment. As
part of this launch, we took the opportunity to refresh the positioning and
identity of this brand which will also benefit operations elsewhere in the
Group. In line with our strategy, we are focussed on leveraging our existing
US client base and are already seeing some good early success from this.
Our other key strategic priority for 2023 is Empresaria Solutions, focussed on
delivering a wider breadth of services to our clients as well as leveraging
our expertise in delivering to MSP clients, across multiple disciplines and
locations. We are continuing to make progress on developing this solution
and expect a soft launch by the end of the year.
Outlook
The first half of 2023 has been challenging and we expect the current market
conditions to continue to impact through the rest of the year. Underlying
drivers, such as relatively low levels of unemployment and skills shortages,
remain across our markets, and we expect these to underpin and accelerate
recovery as and when confidence returns.
Regional Performance
Net fee income by region:
£'m 6 months ended 6 months ended % change % change (constant currency)
30 June 30 June
2023 2022
UK & Europe 12.6 14.5 -13% -15%
APAC 7.3 7.9 -8% -8%
Americas 3.4 4.6 -26% -31%
Offshore Services 7.0 6.1 +15% +17%
Intragroup eliminations (0.6) (0.5)
Total 29.7 32.6 -9% -10%
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
2023 2022
Revenue 58.7 63.2 -7% -10%
Net fee income 12.6 14.5 -13% -15%
Adjusted operating profit 0.9 2.0 -55% -55%
% of Group net fee income 42% 44%
In UK & Europe revenue was down 7%, with net fee income down 13%
reflecting a greater decline in permanent placements compared to temporary and
contract. Adjusted operating profit was down 55%.
The UK saw the weakest results with net fee income down 25%, driven by
reductions in permanent hiring. The impact was across all of our UK
operations with our Professional and IT sectors seeing the most significant
reductions in demand.
The performance in Germany was more solid with net fee income down just 1%
reflecting year-on-year growth in our logistics business which partially
offset reductions elsewhere.
APAC
£'m 6 months ended 6 months ended % change % change (constant currency)
30 June 30 June
2023 2022
Revenue 26.0 23.0 +13% +15%
Net fee income 7.3 7.9 -8% -8%
Adjusted operating (loss)/profit (0.6) 0.5 -220% -220%
% of Group net fee income 24% 24%
In APAC, revenues increased by 13% reflecting revenue growth in our aviation
business. However, this is lower margin business and net fee income for the
region was down 8% reflecting performances elsewhere. There were pockets of
net fee income growth with aviation, China and Philippines all showing strong
year-on-year increases. However, in Japan IT demand fell sharply at the
start of the year and in Thailand political uncertainty has significantly
impacted client confidence while Singapore also performed poorly during the
first half of the year. Our performance in Australia continues to be of
concern with net fee income down significantly on the prior year and stringent
actions have been taken on cost to stabilise the business.
Overall, the region has made a loss in the first half of the year reflecting
results in Australia, Singapore and ongoing losses in aviation. We believe
that the right actions are in place to address these and bring those
operations back to profitability.
Americas
£'m 6 months ended 6 months ended % change % change (constant currency)
30 June 30 June
2023 2022
Revenue 28.4 32.7 -13% -19%
Net fee income 3.4 4.6 -26% -31%
Adjusted operating (loss)/profit (0.3) 0.8 -138% -133%
% of Group net fee income 11% 14%
In the Americas, revenue was down 13%, with a sharp drop in permanent hiring
reflected in a 26% reduction in net fee income. The region generated an
adjusted operating loss, driven by the performance in the US.
In the US we operate primarily in the Healthcare and IT sectors, both of which
experienced sharp declines in demand in the period. In IT, we were impacted
by a combination of the general decline in permanent IT demand, alongside the
collapse of Silicon Valley Bank which impacted a large number of our
clients. Healthcare has also dropped significantly from the high levels
during COVID, with demand, particularly for travel nurses, dropping
significantly and pay rates, which had been at elevated levels, also falling.
In LATAM, we delivered solid increases in both net fee income and adjusted
operating profit with demand for our retail outsourcing services remaining
strong.
Offshore Services
£'m 6 months ended 6 months ended % change % change (constant currency)
30 June 30 June
2023 2022
Revenue 13.2 11.7 +13% +16%
Net fee income 7.0 6.1 +15% +17%
Adjusted operating profit 3.7 3.5 +6% +9%
% of Group net fee income 23% 18%
Offshore Services delivered solid growth with revenue up 13% and net fee
income up 15%. Investment in infrastructure is reflected in the 6% growth in
adjusted operating profit.
The first half of 2023 has continued in the same vein as the second half of
2022 with sales to our UK Healthcare clients remaining the main driver of
growth with the number of billable seats increasing by 17% compared to 31
December 2022. Sales to our US clients, who mainly operate in the IT sector,
have continued to be impacted by weak demand resulting in an 11% fall in
billable seat numbers compared to 31 December 2022. We have continued to
invest in the infrastructure of the business to ensure it remains well
positioned for future growth.
Financing
Net finance costs have increased significantly to £0.8m (2022: £0.5m)
reflecting higher interest rates across the Group's facilities offset by lower
average levels of borrowings and the benefit of actions taken to improve cash
efficiency.
Net cash inflow from operating activities was £4.6m (2022: £7.3m), while
free cash flow, which excludes movements related to pilot bonds and includes
cash outflows on leases, was an inflow of £2.0m (2022: £4.8m).
Capital expenditure in the first half of 2023 was £0.9m (2022: £0.8m) and
mainly reflected infrastructure investment to support growth in Offshore
Services. The Group's dividend to its shareholders resulted in a £0.7m
outflow (2022: £0.6m), dividends to non-controlling interests were £0.4m
(2022: £0.4m), while a cash outflow of £0.1m (2022: £0.2m) is shown for
Empresaria shares purchased and transferred into the Employee Benefit Trust.
Adjusted net debt (which excludes £0.5m cash held in respect of pilot bonds
and does not include lease liabilities recognised under IFRS 16) was £8.7m as
at 30 June 2023, an increase of £0.8m from 31 December 2022. Average month
end adjusted net debt was £7.9m during the period (six months ended 30 June
2022: £12.9m).
As at 30 June 2023, the Group had financing facilities totalling £54.0m (31
December 2022: £54.8m). Excluding invoice financing, undrawn facilities
have increased to £18.4m (31 December 2022: £17.9m) reflecting the small
increase in the overall net debt position being more than offset by
improvements in cash management.
The Group's revolving credit facility covenants are tested on a quarterly
basis. The covenants, and our performance against them as at 30 June 2023,
are as follows:
Measure Target Actual
Net debt to EBITDA < 2.5 times 0.6 times
Interest cover > 4.0 times 6.6 times
Dividend
In line with prior years, the Board is not recommending the payment of an
interim dividend for 2023 (2022: nil).
22 August 2023
Condensed consolidated income statement
Six months ended 30 June 2023
6 months ended 30 June 2023 6 months ended 30 June 2022 Year
ended 31 December 2022
Unaudited Unaudited
Notes £m £m £m
Revenue 3 125.7 129.8 261.3
Cost of sales (96.0) (97.2) (195.9)
Net fee income 3 29.7 32.6 65.4
Administrative costs (28.4) (28.1) (55.2)
Adjusted operating profit 3 1.3 4.5 10.2
Fair value charge on acquisition of non-controlling shares (0.1) - -
Amortisation of intangible assets identified in business combinations (0.6) (0.7) (1.4)
Operating profit 0.6 3.8 8.8
Finance income 4 0.2 0.1 0.3
Finance costs 4 (1.0) (0.6) (1.5)
Net finance costs 4 (0.8) (0.5) (1.2)
(Loss)/profit before tax (0.2) 3.3 7.6
Taxation 6 (0.1) (1.3) (2.8)
(Loss)/profit for the period (0.3) 2.0 4.8
Attributable to:
Owners of Empresaria Group plc (1.0) 1.4 3.4
Non-controlling interests 0.7 0.6 1.4
(0.3) 2.0 4.8
Pence Pence Pence
Unaudited Unaudited
Earnings per share
Basic 7 (2.0) 2.8 6.9
Diluted 7 (2.0) 2.7 6.7
Details of adjusted earnings per share are shown in note 7.
Condensed consolidated statement of comprehensive income
Six months ended 30 June 2023
6 months ended 30 June 2023 6 months ended 30 June 2022 Year
ended 31 December 2022
Unaudited Unaudited
£m £m £m
(Loss)/profit for the period (0.3) 2.0 4.8
Other comprehensive income
Items that may be reclassified subsequently to the income statement:
Exchange differences on translation of foreign operations (2.0) 2.2 2.6
Items that will not be reclassified to the income statement:
Exchange differences on translation of non-controlling interests in (0.2) 0.2 0.3
foreign operations
Other comprehensive (loss)/income for the period (2.2) 2.4 2.9
Total comprehensive (loss)/income for the period (2.5) 4.4 7.7
Attributable to:
Owners of Empresaria Group plc (3.0) 3.6 6.0
Non-controlling interests 0.5 0.8 1.7
(2.5) 4.4 7.7
Condensed consolidated balance sheet
As at 30 June 2023
30 June 2023 30 June 2022 31 December 2022
Unaudited Unaudited
Notes £m £m £m
Non-current assets
Property, plant and equipment 2.8 2.2 2.8
Right-of-use assets 5.2 6.7 7.5
Goodwill 31.1 31.3 31.9
Other intangible assets 7.5 8.7 8.2
Deferred tax assets 5.2 4.2 4.4
51.8 53.1 54.8
Current assets
Trade and other receivables 10 44.4 48.8 46.7
Cash and cash equivalents 9 19.6 23.1 22.3
64.0 71.9 69.0
Total assets 115.8 125.0 123.8
Current liabilities
Trade and other payables 11 33.2 35.0 33.3
Current tax liabilities 1.2 1.6 1.5
Borrowings 8 18.8 22.7 29.1
Lease liabilities 2.2 3.3 5.3
55.4 62.6 69.2
Non-current liabilities
Borrowings 8 9.0 10.5 0.5
Lease liabilities 3.4 3.7 2.6
Deferred tax liabilities 2.5 2.5 2.5
14.9 16.7 5.6
Total liabilities 70.3 79.3 74.8
Net assets 45.5 45.7 49.0
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 2.9 4.7 5.1
Equity reserve (10.2) (10.2) (10.2)
Other reserves 0.1 (0.4) (0.3)
Retained earnings 20.6 20.5 22.4
Equity attributable to owners of Empresaria Group plc 39.2 40.4 42.8
Non-controlling interests 6.3 5.3 6.2
Total equity 45.5 45.7 49.0
Condensed consolidated statement of changes in equity
Six months ended 30 June 2023
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 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
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 - - - - - - (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
(Loss)/profit for the period - - - - - - (1.0) (1.0) 0.7 (0.3)
Exchange differences on translation of foreign operations - - - (2.2) - 0.2 - (2.0) (0.2) (2.2)
Total comprehensive (loss)/income for the period - - - (2.2) - 0.2 (1.0) (3.0) 0.5 (2.5)
Dividend paid to owners of Empresaria Group plc - - - - - - (0.7) (0.7) - (0.7)
Dividend paid to non-controlling interests - - - - - - - - (0.4) (0.4)
Purchase of own shares in Employee Benefit Trust - - - - - - (0.1) (0.1) - (0.1)
Share-based payments - - - - - 0.2 - 0.2 - 0.2
At 30 June 2023 (Unaudited) 2.5 22.4 0.9 2.9 (10.2) 0.1 20.6 39.2 6.3 45.5
Condensed consolidated cash flow statement
Six months ended 30 June 2023
6 months ended 30 June 2023 6 months ended 30 June 2022 Year ended 31 December 2022
Unaudited Unaudited
£m £m £m
(Loss)/profit for the period (0.3) 2.0 4.8
Adjustments for:
Depreciation and software amortisation 0.7 0.5 1.1
Depreciation of right-of-use assets 2.7 2.6 5.4
Fair value charge on acquisition of non-controlling shares 0.1 - -
Amortisation of intangible assets identified in business 0.6 0.7 1.4
combinations
Share-based payments 0.2 0.2 0.3
Net finance costs 0.8 0.5 1.2
Taxation 0.1 1.3 2.8
4.9 7.8 17.0
Decrease in trade and other receivables 0.6 1.9 6.9
Increase in trade and other payables (including pilot bonds outflow of £0.1m 1.1 0.2 (3.5)
(30 June 2022: £nil, 31 December 2022: £0.1m))
Cash generated from operations 6.6 9.9 20.4
Interest paid (1.0) (0.5) (1.5)
Income taxes paid (1.0) (2.1) (4.2)
Net cash inflow from operating activities 4.6 7.3 14.7
Cash flows from investing activities
Purchase of property, plant and equipment, and software (0.9) (0.8) (2.1)
Finance income 0.2 0.1 0.3
Net cash outflow from investing activities (0.7) (0.7) (1.8)
Cash flows from financing activities
Decrease in overdrafts (2.0) (0.8) (1.8)
Proceeds from bank loans 0.7 - -
Repayment of bank loans - (0.7) (2.7)
Decrease in invoice financing (0.2) (0.1) (1.2)
Payment of obligations under leases (2.7) (2.5) (5.3)
Purchase of shares in existing subsidiaries (0.1) - (0.1)
Purchase of own shares in Employee Benefit Trust (0.1) (0.2) (0.3)
Dividends paid to owners of Empresaria Group plc (0.7) (0.6) (0.6)
Dividends paid to non-controlling interests (0.4) (0.4) (0.4)
Net cash outflow from financing activities (5.5) (5.3) (12.4)
Net (decrease)/increase in cash and cash equivalents (1.6) 1.3 0.5
Foreign exchange movements (1.1) 0.7 0.7
Cash and cash equivalents at beginning of the period 22.3 21.1 21.1
Cash and cash equivalents at end of the period 19.6 23.1 22.3
Bank overdrafts at beginning of the period (17.1) (18.2) (18.2)
Decrease in the period 2.0 0.8 1.8
Foreign exchange movements 0.2 (0.3) (0.7)
Bank overdrafts at end of the period (14.9) (17.7) (17.1)
Cash, cash equivalents and bank overdrafts at period end 4.7 5.4 5.2
Notes to the interim financial statements
Six months ended 30 June 2023
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 this condensed set of financial statements as applied in the Group's latest
annual audited financial statements. The Group does not anticipate any
change in these accounting policies for the year ended 31 December 2023.
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 2022 has been derived from
audited statutory accounts for the year ended 31 December 2022. The
information for the year ended 31 December 2022 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 2023 and 2022 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, 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 terms of the Group's principal overdraft facilities are reviewed on an
annual basis, and based on informal discussions the Board has had with its
lenders, has no reason to believe that sufficient 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 2022.
Notes to the interim financial statements
Six months ended 30 June 2023
3 Segment analysis
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 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 2023 Revenue Net fee income Adjusted operating profit/(loss)
£m £m £m
UK & Europe 58.7 12.6 0.9
APAC 26.0 7.3 (0.6)
Americas 28.4 3.4 (0.3)
Offshore Services 13.2 7.0 3.7
Central costs - - (2.4)
Intragroup eliminations (0.6) (0.6) -
125.7 29.7 1.3
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
Year ended 31 December 2022 Revenue Net fee income Adjusted operating profit/(loss)
£m £m £m
UK & Europe 124.9 28.4 4.7
APAC 49.9 15.8 0.8
Americas 62.7 8.7 1.5
Offshore Services 25.3 13.5 7.1
Central costs - - (3.9)
Intragroup eliminations (1.5) (1.0) -
261.3 65.4 10.2
Notes to the interim financial statements
Six months ended 30 June 2023
4 Finance income and costs
6 months ended 30 June 2023 6 months ended 30 June 2022 Year
ended 31 December 2022
Unaudited Unaudited
£m £m £m
Finance income
Bank interest receivable 0.2 0.1 0.3
0.2 0.1 0.3
Finance costs
Invoice financing (0.1) - (0.1)
Bank loans and overdrafts (0.7) (0.4) (1.1)
Interest on lease liabilities (0.2) (0.2) (0.3)
(1.0) (0.6) (1.5)
Net finance costs (0.8) (0.5) (1.2)
5 Reconciliation of profit before tax to adjusted profit before tax
6 months ended 30 June 2023 6 months ended 30 June 2022 Year
ended 31 December 2022
Unaudited Unaudited
£m £m £m
(Loss)/profit before tax (0.2) 3.3 7.6
Fair value charge on acquisition of non-controlling shares 0.1 - -
Amortisation of intangible assets identified in business combinations 0.6 0.7 1.4
Adjusted profit before tax 0.5 4.0 9.0
6 Taxation
The tax charge for the six month period is £0.1m (6 months ended 30 June
2022: £1.3m, year ended 31 December 2022: £2.8m). On an adjusted basis
(excluding adjusting items as set out in note 5 and their tax effect), the
effective tax rate is 40% (6 months ended 30 June 2022: 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.
Notes to the interim financial statements
Six months ended 30 June 2023
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 2023 and
2022 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 2023 6 months ended 30 June 2022 Year ended 31 December 2022
Unaudited Unaudited
£m £m £m
Earnings
Earnings attributable to owners of Empresaria Group plc (1.0) 1.4 3.4
Adjustments:
Fair value charge on acquisition of non-controlling shares 0.1 - -
Amortisation of intangible assets identified in business combinations 0.6 0.7 1.4
Tax on the above (0.1) (0.2) (0.3)
Adjusted earnings (0.4) 1.9 4.5
Number of shares Millions Millions Millions
Weighted average number of shares - basic 49.5 49.5 49.4
Dilution effect of share options 1.4 1.9 1.5
Weighted average number of shares - diluted 50.9 51.4 50.9
Earnings per share Pence Pence Pence
Basic (2.0) 2.8 6.9
Dilution effect of share options - (0.1) (0.2)
Diluted (2.0) 2.7 6.7
Adjusted earnings per share Pence Pence Pence
Basic (0.8) 3.8 9.1
Dilution effect of share options - (0.1) (0.3)
Diluted (0.8) 3.7 8.8
For the six months ended 30 June 2023, all share options are anti-dilutive for
the purpose of assessing diluted earnings per share in accordance with IAS 33
Earnings Per Share. As a result, diluted earnings per share and basic
earnings per share are equal.
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 2023
8 Borrowings
30 June 2023 30 June 2022 31 December 2022
Unaudited Unaudited
£m £m £m
Current
Bank overdrafts 14.9 17.7 17.1
Invoice financing 3.4 4.5 3.5
Bank loans 0.5 0.5 8.5
18.8 22.7 29.1
Non-current
Bank loans 9.0 10.5 0.5
9.0 10.5 0.5
Borrowings 27.8 33.2 29.6
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 subsidiaries. It
is also subject to financial covenants and these are disclosed in the finance
and operating 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 2023
9 Adjusted net debt
a) Adjusted net debt 30 June 2023 30 June 2022 31 December 2022
Unaudited Unaudited
£m £m £m
Cash and cash equivalents 19.6 23.1 22.3
Less cash held in respect of pilot bonds (0.5) (0.7) (0.6)
Adjusted cash 19.1 22.4 21.7
Borrowings (27.8) (33.2) (29.6)
Adjusted net debt (8.7) (10.8) (7.9)
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 2023 6 months ended 30 June 2022 Year ended 31 December 2022
Unaudited Unaudited
£m £m £m
At 1 January (7.9) (14.0) (14.0)
Net (decrease)/increase in cash and cash equivalents per consolidated cash (1.6) 1.3 0.5
flow statement
Net decrease in overdrafts and loans 1.3 1.5 4.5
Decrease in invoice financing 0.2 0.1 1.2
Foreign exchange movements (0.8) 0.3 (0.2)
Adjusted for decrease in cash held in respect of pilot bonds 0.1 - 0.1
(8.7) (10.8) (7.9)
Notes to the interim financial statements
Six months ended 30 June 2023
10 Trade and other receivables
30 June 2023 30 June 2022 31 December 2022
Unaudited Unaudited
£m £m £m
Gross trade receivables 32.0 36.2 34.1
Less provision for impairment of trade receivables (0.7) (1.1) (0.8)
Trade receivables 31.3 35.1 33.3
Prepayments 3.5 2.4 2.4
Accrued income 6.3 7.3 7.4
Corporation tax receivable 0.7 1.1 0.9
Other receivables 2.6 2.9 2.7
44.4 48.8 46.7
11 Trade and other payables
30 June 2023 30 June 2022 31 December 2022
Unaudited Unaudited
£m £m £m
Current
Trade payables 2.4 2.4 2.4
Other tax and social security 5.5 6.1 5.1
Pilot bonds 0.5 0.7 0.6
Client deposits 0.3 0.4 0.4
Other payables 5.2 5.3 5.0
Accruals 19.3 20.1 19.8
33.2 35.0 33.3
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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