REG - Empresaria Group PLC - Results for the year ended 31 December 2023
26/03/2024 07:00
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RNS Number : 2351I Empresaria Group PLC 26 March 2024
26 March 2024
Empresaria Group plc
("Empresaria" or the "Group")
Results for the year ended 31 December 2023
Offshore Services demonstrates strength and resilience despite challenging
market conditions
Empresaria, the global specialist staffing group, reports its results for the
year ended 31 December 2023.
Highlights
2023 2022 % change % change (constant currency)(2)
Revenue £250.3m £261.3m -4% -4%
Net fee income £57.5m £65.4m -12% -11%
Adjusted operating profit(1) £5.1m £10.2m -50% -48%
Operating profit £1.7m £8.8m -80%
Adjusted profit before tax(1) £3.5m £9.0m -61%
Profit before tax £0.1m £7.6m -99%
Adjusted diluted earnings per share(1) 0.6p 8.8p -93%
Diluted (loss)/earnings per share (5.9)p 6.7p -188%
· Challenging market conditions throughout 2023 impacted net fee income
o Reduced by 12% year-on-year to £57.5m
o Permanent placement down 25%
o Temporary and contract down 10%
o Growth of 8% from our resilient offshore services offering
· Adjusted operating profit down 50% to £5.1m - reduction in net fee
income partially offset by cost reductions
· Adjusted profit before tax down 61% to £3.5m reflecting increased
interest costs
· Adjusted, diluted earnings per share reduced to 0.6p reflecting
relative strength of Offshore Services which has a 28% non-controlling
interest
· Adjusted net debt increased to £11.1m (31 December 2022: £7.9m)
with strong headroom of £17.8m
· Proposed dividend of 1.0p per share (2022: 1.4p) reflecting the
Board's confidence in the Group's medium-term prospects while acknowledging
the lower level of profit in 2023
· Actions taken to reduce cost, reduce complexity and sharpen focus on
our core sectors
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 2022
results at the 2023 exchange rates.
Chief Executive Officer, Rhona Driggs, commented:
"We experienced challenging market conditions throughout 2023 across all our
markets and sectors. In particular, our permanent placement business
declined significantly as client and candidate confidence remained low.
Against this backdrop I am pleased to report that our Offshore Services
operation proved their strength and resilience, delivering year-on-year
growth.
We continue to focus on simplifying our operations and have made substantial
progress in improving our operating models in our core sectors (Professional,
IT, Healthcare) in order to drive increased productivity and maximise
opportunities with our clients. We believe these changes will be key in
driving long-term value.
Challenging market conditions are expected to continue throughout the first
half of 2024, but I am confident in our ability to navigate through this
environment and we are well positioned to respond as the market recovers."
Investor presentation
Management will deliver an online results presentation open to all existing
and potential investors via the Investor Meet Company platform on Tuesday 26
March 2024 at 4:00pm 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.
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 / Alex Bond / Angus Campbell
Cavendish Capital Markets Limited (Joint Broker) 020 7220 0500
Katy Birkin (Corporate Finance)
Michael Johnson / Jasper Berry (Sales)
Alma Strategic Communications (Financial PR) 020 3405 0205
Sam Modlin / Rebecca Sanders-Hewett / Will Merison
empresaria@almastrategic.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 empresaria.com.
Chair's statement
2023 performance
2023 was a challenging year for the Group with adverse macroeconomic
conditions persisting throughout the year and impacting all our regions.
Despite this there were some positive performances; it was particularly
pleasing to see our Offshore Services operation continue to demonstrate its
strength and resilience, growing both net fee income and profits.
People
As a result of market conditions in 2023, we significantly reduced our costs
and, as part of this, our headcount across the Group.
I want to acknowledge and thank all of our teams for their hard work and
dedication during what has been a challenging period. Their perseverance and
determination stood out, and it is our people that will enable us to return to
growth and deliver on our potential.
Dividend
The Board has reviewed the dividend in line with the 2023 results and the
current trading environment. For the year ended 31 December 2023 we are
proposing a dividend of 1.0p per share, reduced from 1.4p in the prior year.
This reflects the Board's confidence in the Group's medium-term prospects
while acknowledging the lower level of profit in 2023. Subject to shareholder
approval at the Annual General Meeting, the dividend will be paid on 13 June
2024 to shareholders on the register on 24 May 2024.
Outlook
The challenging economic environment has continued into 2024 and the outlook
remains uncertain. We are, however, confident that the actions we have taken,
and continue to take, to simplify our leadership and operational structures
and create focus around our core operations, alongside the strength of our
Offshore Services offering, leave us well positioned to benefit as and when
market conditions improve and will enable us to realise the growth potential
of the Group.
Penny Freer
Chair
25 March 2024
Chief Executive's review
2023 performance overview
2023 was a challenging year as adverse market conditions persisted across the
staffing sector and, as a result, we experienced declining demand across all
of our regions.
The most significant impact was on permanent recruitment as clients deferred
hiring decisions and candidates were less confident about moving roles. The
slowing of the global IT staffing sector and Healthcare in the US also
affected our temporary and contract business.
Our Offshore Services sector delivered year-on-year growth despite the
challenging market conditions in the US which was more than offset by demand
in Healthcare in the UK.
I am proud of our team and the resilience they demonstrated in navigating
these difficult market conditions.
Throughout 2023 we took clear action to control costs and, as a result, our
headcount, excluding Offshore Services, reduced by 17% over the course of the
year. We are focussed on simplifying how we operate to reduce complexity,
creating greater opportunities for cross selling across our core sectors. We
have streamlined our leadership structure and brought our core sector
businesses under a single leader in key markets such as the UK and the US.
This will allow us to maximise our opportunities for cross selling across our
core sectors and we have also been able to reduce the size of our senior
management team, without impacting collaboration across the Group.
We also accelerated the roll out of our '180 operating model', in markets that
had not already adopted it, separating our sales and delivery functions into
specialised teams. This model creates greater focus for both our clients and
candidates and will improve productivity, enhance the candidate and client
experience, and create greater career opportunities for our staff. This
transition is largely complete in our core sectors and markets.
As part of our focus on core sectors and markets, we took steps to streamline
some of our operations to offer a more succinct go to market proposition for
our clients. We merged our UK marketing brand into our lead Professional brand
enabling us to offer marketing recruitment services seamlessly across a wider
client base. We also took the decision to close our loss-making Vietnam
operation. We are continuing to review the sub-sectors and markets in which
the Group operates. We have identified four of our smaller operations, in
either markets or sectors where we do not plan to invest, that we will exit
during 2024. These would not have a material impact on the net fee income or
profits of the Group but would continue the process of simplification and
focus.
Delivering on our strategy
We have been on a transformative journey, transitioning from a large
collection of disconnected brands to a more cohesive group with a common
purpose, strategy, and values, supported by centralised functions.
Over the past year we have made good progress on our three key pillars for
growth.
Our first pillar is focussed on our core sectors of Professional, IT and
Healthcare in key markets where we see the greatest opportunity for growth. As
mentioned, we have brought these core sectors under a single leader in each
country to ensure we are positioned to capitalise when the market recovers.
These changes will help accelerate our growth, cross sell our services more
effectively to our existing client base, and create a greater value
proposition for new clients.
Our growth ambition is largely built on organic activity. We recently launched
our lead Professional recruitment brand in the US enabling us to provide a
wider range of services to our well established client base in IT and
Healthcare. We continue to review acquisition opportunities as they arise but
will only consider future acquisitions in our core sectors and key markets,
and only when timing and circumstances are right.
In our second pillar we are focussed on diversifying our service offering to
clients, building strategic partnerships and cross selling our recruitment
services to our client base. We have seen good progress with offering RPO
solutions to our clients in Asia, in particular the Philippines, and in the UK
we became strategic partners to several large MSP programmes for which we are
leveraging our offshore delivery engine.
Our third pillar is to deliver continued growth in Offshore Services. We are
pleased to have been able to deliver growth in both net fee income and profits
in 2023, despite the adverse market conditions. We have also made good
progress in increasing penetration of our clients through our diversified
service offering. Accounting and finance support services are now 10% of our
net fee income and we have had a good initial response to our marketing
solutions offering.
Our strategy is underpinned by investment in technology, people and process.
We have continued to enhance our technology platforms with all but one of our
core sector businesses now on our global front office system. Our global
database gives our delivery teams access to a wider set of candidates and
allows our sales teams to more effectively identify cross selling
opportunities. In 2023 we piloted a data analytics tool which will further
drive productivity and we rolled this out across our core sectors at the start
of 2024. In addition, our use of automation to support our candidate
communications and compliance has meant that we have replaced 84,000 hours of
manual tasks, reducing the administrative burden on our consultants while
enhancing the candidate experience.
Our people are our most important asset, and we continue to invest in their
development. Last year we launched our leadership development programme to
equip our leaders with the skills and knowledge to drive growth and create a
more sustainable business model for the future. We have also expanded our Top
Talent Programme that was launched in Asia in 2022 to include the UK and
Europe and this will be expanded further in 2024.
Update on roadmap to £20m
In October 2022, we laid out the roadmap to deliver our ambition of achieving
£20m of operating profit in the medium term. Despite the setback from market
conditions in 2023, we continue to believe this is an achievable goal and we
have made good progress on our key pillars for growth. As we progress through
2024, we will have a clearer picture of how the market is recovering and will
provide updates on our progress.
Outlook
Market conditions remain challenging and are expected to continue to be
throughout the first half of 2024. We are cautiously optimistic that we will
see an improvement in market sentiment in the second half of the year. We are
seeing some positive movement in overall activity levels with our more
focussed approach to sales and delivery. We are confident that alongside this,
the actions we have taken, and continue to take, to streamline our operations
and focus on our core sectors will enable us to execute our strategy more
quickly and effectively and realise our growth ambitions.
Rhona Driggs
Chief Executive Officer
25 March 2024
Operating review
UK & Europe
£m 2023 2022
Revenue 116.8 124.9
Net fee income 24.9 28.4
Adjusted operating profit 3.0 4.7
% of Group net fee income 43% 43%
Average number of staff 247 272
In UK & Europe, revenue reduced by 6% (8% in constant currency), net fee
income reduced by 12% (13% in constant currency) and adjusted operating profit
was down by 36% (38% in constant currency).
In the UK, net fee income reduced by 21% year-on-year with operating profit
down by two-thirds. The fall in net fee income was primarily driven by a
reduction in permanent hiring, which was down 30%, while temporary and
contract net fee income was down 9%. Our largest sectors in the UK are IT and
Professional and both saw significant reductions in net fee income with falls
in demand seen across our client base. Towards the end of 2023 we brought our
core operations in the UK under a single leader with a single management
structure and we expect this to deliver significant benefits including through
improving efficiency and increasing cross selling.
In Finland, our Healthcare business showed some improvements after a
challenging 2022 with net fee income up 12% year on year. The operation
recorded a small loss in the year but this was much reduced from the prior
year.
In Germany, where our operations are focussed on the Commercial sector, we
delivered a 2% decrease in net fee income with profits down 8%. Our best
performance came from our operation that supports maintenance activity for
businesses associated with the automotive industry, which delivered strong
growth in both net fee income and profits. Our logistics operation delivered
3% growth in net fee income, but a 6% fall in profits reflecting inflationary
pressures on its cost base. Our temporary staffing business has continued to
deliver weaker results with falls in both net fee income and profits and a
significant impact from strike actions at key clients in the latter part of
the year.
Our operation in Austria is similar in nature to our temporary business in
Germany and delivered solid results in the year with net fee income down 3%,
but profits up 12%.
At the start of 2024 we brought our Commercial operations in Germany and
Austria together under a single leader. This will create a more efficient
structure and improve our ability to cross sell within and between these
countries.
APAC
£m 2023 2022
Revenue 51.9 49.9
Net fee income 13.6 15.8
Adjusted operating (loss)/profit (0.8) 0.8
% of Group net fee income 23% 24%
Average number of staff 304 292
In our APAC region revenue increased by 4% (9% in constant currency) and net
fee income reduced by 14% (10% in constant currency). Overall, the region
delivered a loss of £0.8m.
Our IT operations were impacted by the global fall in IT demand and Japan, our
largest contributor in the region, saw net fee income fall by almost a fifth.
Reductions were seen across both permanent, and temporary and contract hiring
with key clients significantly reducing hiring requirements and contractor
headcount at the end of 2022.
In Australia, our operation is focussed on digital and creative roles within
our Professional sector. Results in 2023 continued to be disappointing after a
poor 2022, with further falls in net fee income and an increase in the level
of losses. Further action has been taken on the cost base of this operation in
order to look to eliminate these losses.
The Philippines performed strongly in the year delivering net fee income
growth of 20%. We achieved a new record level of net fee income and had
ongoing success from our project RPO offering which accounted for more than
40% of net fee income in the year. We are looking to replicate this RPO
success across the region.
Our aviation operation, which has offices in New Zealand, Singapore and
Sweden, started to show improvement in trading, particularly in the second
half of the year, with net fee income up by a third on 2022. We have seen
success in expanding our operation into other roles in the industry and in
growing permanent placements alongside our traditional pilot leasing offering.
Although this operation continues to generate losses, we are pleased to see
these improvements in trading.
In Thailand, the election in the year created significant political
uncertainty. This led to a significant drop in demand, particularly from our
international clients, as they adopted a wait and see approach to hiring. As a
result, both net fee income and profits fell significantly compared to 2022.
In Singapore, which generated a record level of net fee income in 2022, we had
a much more challenging year. Net fee income was down a quarter with permanent
placement down significantly, partially offset by some promising improvements
in temporary and contract. With the strong 2022 performance, significant
investment in headcount had been made in that year and despite actions taken
in 2023, the higher cost base at the start of the year meant that this
operation delivered a loss.
Elsewhere in the region, Indonesia and Malaysia saw significant reductions in
demand and as a result net fee income and profits reduced year-on-year. We
took the decision to close our loss-making Vietnam operation in October 2023
in line with our strategy of focussing on markets where we see the greatest
opportunity for growth.
Americas
£m 2023 2022
Revenue 55.9 62.7
Net fee income 6.1 8.7
Adjusted operating (loss)/profit (0.9) 1.5
% of Group net fee income 10% 13%
Average number of staff 131 160
In the Americas, revenue fell by 11% (12% in constant currency) and net fee
income fell by 30% (31% in constant currency). Overall, the region delivered a
loss of £0.9m.
Our US operations were the main driver of these results with net fee income
reducing by half from 2022. In the US we operate primarily in the IT and
Healthcare sectors, both of which saw sharp falls in demand during the year.
In IT we were impacted by a combination of the general decline in IT staffing
demand, particularly for permanent staff, alongside the collapse of Silicon
Valley Bank which impacted a large number of our clients. While we have made
good progress in broadening our client base and expanding our temporary and
contract opportunities, demand remains extremely subdued. Healthcare demand
has also dropped significantly, with the elevated pay levels seen in the last
few years also dropping back. In August 2023, we launched our lead
Professional brand in the US, targeting our existing client base, and enabling
us to deliver to all of our core sectors in one of our key markets. It is
early days for this new offering and, as expected, it contributed a loss in
its first months of trading.
Our operations in Chile, which are focussed on the Commercial sector, had a
strong year with net fee income up by 11% and profits up by a quarter. We have
seen good success in offering multiple services to our clients in order to
increase client penetration.
In Peru, we have seen ongoing disruption following recent changes to
outsourcing laws. As a result, net fee income and profits fell year-on-year.
We are confident that these have now settled down and that this operation is
well positioned to return to growth.
Offshore Services
£m 2023 2022
Revenue 26.9 25.3
Net fee income 14.0 13.5
Adjusted operating profit 7.5 7.1
% of Group net fee income 24% 20%
Average number of staff 2,565 2,481
Offshore Services had a strong 2023, delivering year-on-year growth despite
the wider market conditions. Revenue increased by 6% (13% in constant
currency), net fee income increased by 4% (9% in constant currency) and
profits were up 6% (12% in constant currency). 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, finance and
accounting, and other services. Clients are predominantly third-party staffing
companies, but this operation also plays an important role in supporting
activity across the Group. We operate from two locations in India and one in
the Philippines.
In the UK, demand from our healthcare clients remained strong for the majority
of the year, albeit not showing the significant growth we have seen in the
last two years. Towards the end of 2023 we saw some reduction as clients
adjusted to lower demand from the NHS as it looks to manage its approach to
agency spend.
In the US, in the first half of 2023 we saw a continuation of the reduction in
demand that started in 2022. This was driven by the general weakness in US
staffing, and particularly from IT recruiters which are the majority of our US
clients. This stabilised in the second half of the year but has yet to show
significant signs of a return to sustained growth. We remain confident that as
and when conditions improve we will see an increase in demand and a return to
growth.
Sector summary
Revenue Net fee income
£m 2023 2022 2023 2022
Professional 59.7 56.5 14.6 18.7
IT 29.7 34.1 9.7 12.6
Healthcare 9.2 17.6 2.1 3.2
Property, Construction & Engineering 9.4 9.2 2.0 2.2
Commercial 117.4 120.5 16.2 16.6
Offshore Services 26.1 24.9 14.0 13.1
Intragroup eliminations (1.2) (1.5) (1.1) (1.0)
Total 250.3 261.3 57.5 65.4
Professional saw good growth in temporary and contract revenue, particularly
from our lower margin aviation contracts, which drove an overall increase in
revenue of 6%. The significant fall in permanent placement activity,
particularly across APAC and the UK, meant that overall net fee income was
down 22% year-on-year.
In IT, revenue was down 13% and net fee income was down 23% reflecting the
significant fall in global IT staffing demand.
Healthcare revenue was down 48%, with net fee income down 34%, driven by our
US Healthcare operations.
Property, Construction & Engineering, showed a small improvement in
revenue which was up 2% year-on-year with net fee income down 9%.
Our Commercial sector showed itself to be fairly resilient with revenue down
3% and net fee income down 2% with a strong performance in Chile partially
offsetting weaker ones elsewhere.
Offshore Services performed strongly despite the market conditions.
Finance review
Overview
The Group's 2023 results reflect tough market conditions with revenue down 4%,
net fee income down 12% and adjusted operating profit down by 50%. Higher net
interest costs due to the continued increase in base rates during the year are
reflected in a 61% decrease in adjusted profit before tax and, when combined
with a greater weighting of profit towards our non-controlling interests, a
93% decrease in adjusted, diluted earnings per share.
Our adjusted net debt has increased during the year to £11.1m (2022: £7.9m).
This increase was driven by adverse foreign exchange movements, a higher
proportion of tax cash payments reflecting the impact of loss-making
subsidiaries, and cash outflows in other areas such as capital expenditure and
dividends. The reduction in net fee income did not result in a significant net
working capital inflow in 2023 as working capital is primarily driven by
revenue which fell by just 4% and much of the working capital impact of this
reduction was realised at the end of 2022. The Group continues to have
significant headroom in its financing facilities with £17.8m of headroom
(excluding invoice financing) at 31 December 2023.
Income statement
2023 2022 % change
£m £m % change constant currency(2)
Revenue 250.3 261.3 -4% -4%
Net fee income 57.5 65.4 -12% -11%
Operating profit 1.7 8.8 -80%
Adjusted operating profit(1) 5.1 10.2 -50% -48%
Profit before tax 0.1 7.6 -99%
Adjusted profit before tax(1) 3.5 9.0 -61%
Diluted (loss)/earnings per share (5.9)p 6.7p -188%
Adjusted, diluted earnings per share(1) 0.6p 8.8p -93%
(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 6 for a reconciliation
between profit before tax and adjusted profit before tax.
(2) The constant currency movement is calculated by translating the 2022
results at the 2023 exchange rates.
Revenue decreased by 4% (4% in constant currency) with net fee income
decreasing by 12% (11% in constant currency). The fall in net fee income
reflects the revenue mix with net fee income from permanent placement down 25%
and temporary and contract down 10% partially offset by a strong performance
in offshore services which grew 8%. Staff productivity was impacted by the
market conditions and although significant actions were taken to reduce costs,
adjusted operating profit was down 50% from 2022.
A detailed analysis of the results by region is provided in the operating
review. Central costs reduced slightly to £3.7m (2022: £3.9m).
Adjusted profit before tax decreased by 61% to £3.5m reflecting the reduction
in adjusted operating profit and an increased net interest cost due to the
impact of higher interest rates. The reported profit before tax of £0.1m
(2022: £7.6m) additionally reflects amortisation of intangible assets
identified in business combinations of £1.2m (2022: £1.4m), a charge for
impairment of goodwill of £1.5m (2022: £nil), exceptional items of £0.6m
(2022: £nil) and a fair value charge on acquisition of non-controlling shares
of £0.1m (2022: £nil).
The impairment of goodwill was in our UK & Europe region and reflects
recent poor results in our operations in the Healthcare, and Property,
Construction & Engineering sectors and a more pessimistic view on the time
frame for these to improve. Further details are provided in note 8.
Exceptional items reflect the costs of closing our Vietnam operation in the
second half of 2023 (£0.3m), along with the costs associated with making
changes to the Group's senior management (£0.3m) as discussed in more detail
in the Chief Executive's review.
The total tax charge for the year is £1.4m (2022: £2.8m) which, due to the
low level of profit before tax, does not result in a meaningful effective tax
rate (2022: 37%). On an adjusted basis, the effective rate is 46% (2022: 34%).
The effective tax rate is higher than the underlying tax rates due to a number
of factors, including:
• expenses not deductible for tax purposes (£0.1m);
• withholding taxes, dividend taxes, and deferred tax liabilities on
unremitted earnings in respect of our overseas operations (£0.4m); and
• deferred tax assets not recognised for certain tax losses around
the Group (£0.9m),
partially offset by:
• expenses with enhanced deductions for tax purposes (£0.1m); and
• the recognition of prior year losses (£0.3m).
Adjusted, diluted earnings per share decreased by 93% to 0.6p. This reflects
the decrease in adjusted profit before tax and 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 decreased to a
loss of 5.9p reflecting the above and the impact of impairment charges and
exceptional items in the year.
Balance sheet
2023 2022
£m £m
Goodwill and other intangible assets 36.6 40.1
Trade and other receivables 44.7 46.7
Cash and cash equivalents 17.1 22.3
Right-of-use assets 6.4 7.5
Other assets 8.1 7.2
Total assets 112.9 123.8
Trade and other payables (31.5) (33.3)
Borrowings (27.9) (29.6)
Lease liabilities (6.9) (7.9)
Other liabilities (3.7) (4.0)
Total liabilities (70.0) (74.8)
Net assets 42.9 49.0
Goodwill and other intangible assets arise from the investments and
acquisitions the Group has made. At 31 December 2023 the balance was £36.6m
(2022: £40.1m) with the movement in 2023 due to £1.4m of amortisation of
intangible assets (2022: £1.6m), foreign exchange losses of £1.0m (2022:
gains of £1.8m), impairment charges of £1.5m (2022: £nil) and additions of
£0.4m (2022: £0.1m).
Trade and other receivables include trade receivables of £31.0m (2022:
£33.3m) with the decrease from 2022 reflecting the trading performance and
mix. Average debtor days for the Group in 2023 reduced to 41 (2022: 45), with
debtor days at 31 December 2023 of 41 (2022: 43). The income statement
includes a charge of £0.3m (2022: £nil) 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.
2023 2022
£m £m
Net cash inflow from operating activities 5.5 14.7
per cash flow statement
Remove cash flows related to pilot bonds 0.3 0.1
Deduct payments under lease agreements (5.4) (5.3)
Free cash flow 0.4 9.5
Taxation 3.2 4.2
Free cash flow (pre-tax) 3.6 13.7
Free cash flow in 2023 was significantly lower than 2022, with the largest
drivers being the reduction in profits and a large working capital inflow of
£3.5m in 2022 compared to a £0.1m working capital inflow in 2023 (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.
The Group utilised its free cash flow as follows:
2023 2022
£m £m
Free cash flow 0.4 9.5
Purchase of shares in existing subsidiaries (0.1) (0.1)
Purchase of property, plant and equipment, and software (1.4) (2.1)
Dividends paid to owners of Empresaria Group plc (0.7) (0.6)
Dividends paid to non-controlling interests (0.9) (0.4)
Purchase of own shares in Employee Benefit Trust (0.3) (0.3)
Other items (0.2) 0.1
(Increase)/decrease in adjusted net debt (3.2) 6.1
Purchase of property, plant and equipment, and software of £1.4m includes
ongoing investments in the office, IT and infrastructure of our Offshore
Services operation. Spend is much reduced from 2022 reflecting the lower
levels of headcount growth. Dividends paid to our shareholders were £0.7m
(2022: £0.6m) 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 2023 (2022: £0.3m). Dividends paid to
non-controlling interests were £0.9m (2022: £0.4m) with the increase
reflecting the growth of Offshore Services.
Financing
The Group's treasury function is managed centrally and the Group's financial
risk management policies are set out in note 23 of the annual report.
2023 2022
£m £m
Cash and cash equivalents 17.1 22.3
Pilot bonds (0.3) (0.6)
Adjusted cash 16.8 21.7
Overdrafts (15.2) (17.1)
Invoice financing (3.2) (3.5)
Bank loans (9.5) (9.0)
Total borrowings (27.9) (29.6)
Adjusted net debt (11.1) (7.9)
Adjusted net debt at 31 December 2023 increased to £11.1m (2022: £7.9m)
reflecting the cash flows discussed above. Adjusted net debt excludes cash of
£0.3m (2022: £0.6m) 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 2023, the month-end average adjusted net debt position was £8.3m
(2022: £11.0m) with a month end high of £11.1m at 31 December (2022: £16.1m
at 28 February) and a month end low of £6.2m at 31 January (2022: £7.9m at
31 December).
Our debt to debtors ratio (adjusted net debt as a percentage of trade
receivables) has increased to 36% (2022: 24%) reflecting the increase in
adjusted net debt. We continue to target a sustained debt to debtors position
of 25%.
Total borrowings were £27.9m (2022: £29.6m) being bank overdrafts of £15.2m
(2022: £17.1m), invoice financing of £3.2m (2022: £3.5m) and bank loans of
£9.5m (2022: £9.0m). The Group's borrowings are principally held to fund
working capital requirements and are mainly due within one year. As at 31
December 2023, £9.2m of borrowings are shown as non-current (2022: £0.5m)
with the increase reflecting the revolving credit facility which was
refinanced in March 2023 (see note 12).
The Group maintains a range of facilities to manage its working capital and
financing requirements. At 31 December 2023 the Group had facilities totalling
£50.8m (2022: £54.8m).
2023 2022
£m £m
UK facilities
Overdrafts 10.0 10.0
Revolving credit facility 15.0 15.0
Invoice financing facility 7.5 10.0
Total UK facilities 32.5 35.0
Continental Europe facilities 12.1 12.4
APAC facilities 1.8 2.3
Americas facilities 4.4 5.1
50.8 54.8
Undrawn facilities (excluding invoice financing) 17.8 17.9
Undrawn facilities have remained at a high level with improved cash efficiency
offsetting the increase in adjusted net debt.
Covenants are tested on a quarterly basis in respect of the revolving credit
facility and all covenants were met during the year. The covenants, and our
performance against them at 31 December 2023, are as follows:
Covenant Target Actual
Net debt: EBITDA <2.5 times 1.2
Interest cover >4.0 times 5.2
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.
There is no legal obligation on the Group to acquire the shares held by
management at any time. Further information is provided in note 27 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 1.4p per share in respect of the
year ended 31 December 2022. For the year ended 31 December 2023, the Board is
proposing a dividend of 1.0p per share. Subject to shareholder approval at the
Annual General Meeting, the dividend will be paid on 13 June 2024 to
shareholders on the register on 24 May 2024.
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 these 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
25 March 2024
Consolidated income statement
for the year ended 31 December 2023
2023 2022
Note £m £m
Revenue 2 250.3 261.3
Cost of sales (192.8) (195.9)
Net fee income 2 57.5 65.4
Administrative costs (52.4) (55.2)
Adjusted operating profit 2 5.1 10.2
Exceptional items 3 (0.6) -
Fair value on acquisition of non-controlling shares (0.1) -
Impairment of goodwill 8 (1.5) -
Amortisation of intangible assets identified in business combinations 9 (1.2) (1.4)
Operating profit 1.7 8.8
Finance income 4 0.6 0.3
Finance costs 4 (2.2) (1.5)
Net finance costs 4 (1.6) (1.2)
Profit before tax 0.1 7.6
Taxation 5 (1.4) (2.8)
(Loss)/profit for the year (1.3) 4.8
Attributable to:
Owners of Empresaria Group plc (2.9) 3.4
Non-controlling interests 1.6 1.4
(1.3) 4.8
Pence Pence
Earnings per share
Basic 7 (5.9) 6.9
Diluted 7 (5.9) 6.7
Details of adjusted earnings per share are shown in note 7.
Consolidated statement of comprehensive income
for the year ended 31 December 2023
2023 2022
£m £m
(Loss)/profit for the year (1.3) 4.8
Other comprehensive income
Items that may be reclassified subsequently to the income statement:
Exchange differences on translation of foreign operations (2.2) 2.6
Items that will not be reclassified to the income statement:
Exchange differences on translation of non-controlling interests in foreign (0.4) 0.3
operations
Other comprehensive (loss)/income for the year (2.6) 2.9
Total comprehensive (loss)/income for the year (3.9) 7.7
Attributable to:
Owners of Empresaria Group plc (5.1) 6.0
Non-controlling interests 1.2 1.7
(3.9) 7.7
Consolidated balance sheet
as at 31 December 2023
2023 2022
Note £m £m
Non-current assets
Property, plant and equipment 2.4 2.8
Right-of-use assets 6.4 7.5
Goodwill 8 29.7 31.9
Other intangible assets 9 6.9 8.2
Deferred tax assets 5.7 4.4
51.1 54.8
Current assets
Trade and other receivables 10 44.7 46.7
Cash and cash equivalents 17.1 22.3
61.8 69.0
Total assets 112.9 123.8
Current liabilities
Trade and other payables 11 31.5 33.3
Current tax liabilities 1.3 1.5
Borrowings 12 18.7 29.1
Lease liabilities 4.3 5.3
55.8 69.2
Non-current liabilities
Borrowings 12 9.2 0.5
Lease liabilities 2.6 2.6
Deferred tax liabilities 2.4 2.5
14.2 5.6
Total liabilities 70.0 74.8
Net assets 42.9 49.0
Equity
Share capital 2.5 2.5
Share premium account 22.4 22.4
Merger reserve 0.9 0.9
Equity reserve (10.2) (10.2)
Translation reserve 1.6 3.8
Retained earnings 19.2 23.4
Equity attributable to owners of Empresaria Group plc 36.4 42.8
Non-controlling interests 6.5 6.2
Total equity 42.9 49.0
Consolidated statement of changes in equity
for the year ended 31 December 2023
Equity attributable to owners of Empresaria Group plc
Share capital Share premium account Merger reserve Equity reserve Translation reserve(1) Retained earnings(1) Total Non-controlling interests Total equity
£m £m £m £m £m £m £m £m £m
At 31 December 2021 2.5 22.4 0.9 (10.2) 1.2 20.6 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
Dividends paid to owners of Empresaria Group plc (see note 14) - - - - - (0.6) (0.6) - (0.6)
Dividends 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 (10.2) 3.8 23.4 42.8 6.2 49.0
(Loss)/profit for the year - - - - - (2.9) (2.9) 1.6 (1.3)
Exchange differences on translation of foreign operations - - - - (2.2) - (2.2) (0.4) (2.6)
Total comprehensive (loss)/income for the year - - - - (2.2) (2.9) (5.1) 1.2 (3.9)
Dividends paid to owners of Empresaria Group plc (see note 14) - - - - - (0.7) (0.7) - (0.7)
Dividends paid to non-controlling interests - - - - - - - (0.9) (0.9)
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 2023 2.5 22.4 0.9 (10.2) 1.6 19.2 36.4 6.5 42.9
1 The Group has amended its presentation of reserves compared to previous
years as is explained further in note 1.
Consolidated cash flow statement
for the year ended 31 December 2023
2023 2022
£m £m
(Loss)/profit for the year (1.3) 4.8
Adjustments for:
Depreciation of property, plant and equipment, and software amortisation 1.5 1.1
Depreciation of right-of-use assets 5.4 5.4
Fair value charge on acquisition of non-controlling shares 0.1 -
Impairment of goodwill 1.5 -
Amortisation of intangible assets identified in business combinations 1.2 1.4
Share-based payments (0.3) 0.3
Net finance costs 1.6 1.2
Taxation 1.4 2.8
11.1 17.0
Decrease in trade and other receivables 0.2 6.9
Decrease in trade and other payables (including pilot bonds outflow of £0.3m (0.4) (3.5)
(2022: outflow of £0.1m))
Cash generated from operations 10.9 20.4
Finance costs paid (2.2) (1.5)
Income taxes paid (3.2) (4.2)
Net cash inflow from operating activities 5.5 14.7
Cash flows from investing activities
Purchase of property, plant and equipment, and software (1.4) (2.1)
Finance income received 0.6 0.3
Net cash outflow from investing activities (0.8) (1.8)
Cash flows from financing activities
Decrease in overdrafts (1.7) (1.8)
Proceeds from bank loans 1.0 -
Repayment of bank loans (0.4) (2.7)
Decrease in invoice financing (0.3) (1.2)
Payment of obligations under leases (5.4) (5.3)
Purchase of shares in existing subsidiaries (0.1) (0.1)
Purchase of own shares in Employee Benefit Trust (0.3) (0.3)
Dividends paid to owners of Empresaria Group plc (0.7) (0.6)
Dividends paid to non-controlling interests (0.9) (0.4)
Net cash outflow from financing activities (8.8) (12.4)
Net (decrease)/increase in cash and cash equivalents (4.1) 0.5
Foreign exchange movements (1.1) 0.7
Cash and cash equivalents at beginning of the year 22.3 21.1
Cash and cash equivalents at end of the year 17.1 22.3
2023 2022
£m £m
Bank overdrafts at beginning of the year (17.1) (18.2)
Decrease in the year 1.7 1.8
Foreign exchange movements 0.2 (0.7)
Bank overdrafts at end of the year (15.2) (17.1)
Cash, cash equivalents and bank overdrafts at end of the year 1.9 5.2
1 Basis of preparation and general information
The financial information has been abridged from the audited financial
information for the year ended 31 December 2023.
The financial information set out above does not constitute the Company's
consolidated statutory accounts for the years ended 31 December 2023 or 2022,
but is derived from those accounts. Statutory accounts for 2022 have been
delivered to the Registrar of Companies and those for 2023 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
2022 financial statements, as amended when relevant to reflect the adoption of
new standards, amendments and interpretations which became effective in the
year. During 2023 no new standards, amendments or interpretations had a
significant impact on the financial statements.
In 2023, the Group has chosen to make some changes to its presentation of the
components of equity. The Group's other reserves (31 December 2022: £(0.3)m,
31 December 2021: £(0.6)m), which included the share-based payment reserve
(31 December 2022: £1.0m, 31 December 2021: £0.6m) and the exchange
differences on intercompany amounts treated as a net investment in foreign
operations (31 December 2022: £(1.3)m, 31 December 2021: £(1.2)m), has been
combined into other components of equity. The share-based payment reserve has
been combined into retained earnings and the foreign exchange element has been
combined with the retranslation reserve into a single translation reserve. The
Group believes this provides a clearer and simpler presentation of its equity
components. These changes have been reflected in the information presented for
2023, 2022 and 2021.
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 2024.
2 Segment and revenue 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 results by region is set out below:
2023 2022
Revenue Net fee income Adjusted operating profit/ (loss) Revenue Net fee income Adjusted operating profit/
(loss)
UK & Europe 116.8 24.9 3.0 124.9 28.4 4.7
APAC 51.9 13.6 (0.8) 49.9 15.8 0.8
Americas 55.9 6.1 (0.9) 62.7 8.7 1.5
Offshore Services 26.9 14.0 7.5 25.3 13.5 7.1
Central costs - - (3.7) - - (3.9)
Intragroup eliminations (1.2) (1.1) - (1.5) (1.0) -
250.3 57.5 5.1 261.3 65.4 10.2
3 Exceptional items
Exceptional items are those items that in the Directors' view are required to
be separately disclosed by virtue of their size, nature or incidence. Adjusted
operating profit, adjusted profit before tax and adjusted earnings per share
are considered to be key measures in understanding the Group's financial
performance and exclude exceptional items.
2023 2022
£m £m
Closure of Vietnam Operation 0.3 -
Restructure of senior management 0.3 -
0.6 0.3
4 Finance income and costs
2023 2022
£m £m
Finance income
Bank interest receivable 0.6 0.3
0.6 0.3
Finance costs
Invoice financing (0.3) (0.1)
Bank loans and overdrafts (1.6) (1.1)
Interest on lease liabilities (0.3) (0.3)
(2.2) (1.5)
Net finance costs (1.6) (1.2)
5 Taxation
The tax expense for the year is as follows:
2023 2022
£m £m
Current tax
Current year income tax expense 2.9 3.9
Adjustments in respect of prior years - (0.1)
Total current tax expense 2.9 3.8
Deferred tax
On origination and reversal of temporary differences (1.1) (1.0)
Relating to changes in tax rates (0.1) -
Recognition of previously unrecognised tax losses (0.3) -
Total deferred tax credit (1.5) (1.0)
Total income tax expense in the income statement 1.4 2.8
6 Reconciliation of adjusted profit before tax to profit before tax
2023 2022
£m £m
Profit before tax 0.1 7.6
Exceptional items 0.6 -
Fair value charge on acquisition of non-controlling shares 0.1 -
Impairment of goodwill 1.5 -
Amortisation of intangible assets identified in business combinations 1.2 1.4
Adjusted profit before tax 3.5 9.0
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.
2023 2022
£m £m
Earnings attributable to owners of Empresaria Group plc (2.9) 3.4
Adjustments:
Exceptional items 0.6 -
Fair value charge on acquisition of non-controlling shares 0.1 -
Impairment of goodwill 1.5 -
Amortisation of intangible assets identified in business combinations 1.2 1.4
Tax on the above (0.2) (0.3)
Adjusted earnings 0.3 4.5
Number of shares Millions Millions
Weighted average number of shares - basic 49.1 49.4
Dilution effect of share options 0.7 1.5
Weighted average number of shares - diluted 49.8 50.9
Earnings per share Pence Pence
Basic (5.9) 6.9
Dilution effect of share options - (0.2)
Diluted (5.9) 6.7
Adjusted earnings per share Pence Pence
Basic 0.6 9.1
Dilution effect of share options - (0.3)
Diluted 0.6 8.8
In 2023, all share options were antidilutive for the purpose of assessing
diluted earnings per share in accordance with IAS 33 Earnings Per Share. As
such, diluted earnings per share and basic earnings per share were equal. As
these options are nil-cost options these were reflected as dilutive in
assessing adjusted, diluted earnings per share presented above.
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.
8 Goodwill
2023 2022
£m £m
At 1 January 31.9 30.5
Impairment charge (1.5) -
Foreign exchange movements (0.7) 1.4
At 31 December 29.7 31.9
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 2024 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 18.5% (2022: 13.0% to 18.9%) 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 17.9% (2022: 13.0% to 18.0%)
APAC: 14.8% to 18.5% (2022: 13.8% to 18.9%)
Americas: 14.4% to 15.5% (2022: 13.3% to 16.0%)
Offshore Services: 15.1% (2022: 15.8%)
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 6.3%. 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: 0.9% to 1.6% (2022: 1.3% to 1.5%)
APAC: 0.4% to 5.0% (2022: 0.4% to 5.1%)
Americas: 2.1% to 3.0% (2022: 1.9% to 3.0%)
Offshore Services: 6.3% (2022: 6.2%)
In 2023, an impairment charge of £1.5m was recognised in respect of two
businesses in the UK & Europe region. Both businesses have performed more
weakly in recent years and have not yet recovered to previous performance
levels and as a result impairment charges have been booked. Before the
impairment charge was recognised the carrying value of the goodwill was £2.5m
and the recoverable amount was assessed as £1.0m.
In 2022, no impairment of goodwill was recognised.
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 £0.7m would be recorded in respect of
two businesses in our Americas region (2022: £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 £0.6m (2022:
£0.2m) would be recorded in respect of two businesses in our Americas region
(2022: £0.1m for one business in our APAC region and £0.1m for one business
in our Americas region).
9 Other intangible assets
Intangible assets identified in business combinations
2023 Customer relationships Trade names & marks Sub total Software Total
£m £m £m £m £m
Cost
At 1 January 14.9 9.3 24.2 2.0 26.2
Additions - - - 0.4 0.4
Disposals - - - (0.1) (0.1)
Foreign exchange movements (0.8) (0.4) (1.2) (0.1) (1.3)
At 31 December 14.1 8.9 23.0 2.2 25.2
Accumulated amortisation
At 1 January 11.9 4.7 16.6 1.4 18.0
Charge for the year 0.6 0.6 1.2 0.2 1.4
Disposals - - - (0.1) (0.1)
Foreign exchange movements (0.7) (0.3) (1.0) - (1.0)
At 31 December 11.8 5.0 16.8 1.5 18.3
Net book value
At 31 December 2022 3.0 4.6 7.6 0.6 8.2
At 31 December 2023 2.3 3.9 6.2 0.7 6.9
As required under IFRS, the Group reviewed these assets for indications of
impairment as at 31 December 2023. Following this review, no impairment
charges have been reflected.
10 Trade and other receivables
2023 2022
£m £m
Current
Gross trade receivables 31.8 34.1
Less provision for impairment of trade receivables (0.8) (0.8)
Trade receivables 31.0 33.3
Prepayments 2.0 2.4
Accrued income 7.5 7.4
Corporation tax receivable 1.2 0.9
Other receivables 3.0 2.7
44.7 46.7
Trade receivables include £18.1m (2022: £20.1m) on which security has been
given under bank facilities.
11 Trade and other payables
2023 2022
£m £m
Current
Trade payables 2.0 2.4
Other tax and social security 5.7 5.1
Pilot bonds 0.3 0.6
Client deposits 0.3 0.4
Temporary recruitment worker wages 3.3 3.4
Other payables 1.9 1.6
Accruals 18.0 19.8
31.5 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 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 2023, if
the bonds were to be repaid in line with existing contracts, £nil (2022:
£0.3m) would be repayable in more than one year.
12 Borrowings
2023 2022
£m £m
Current
Bank overdrafts 15.2 17.1
Invoice financing 3.2 3.5
Bank loans 0.3 8.5
18.7 29.1
Non-current
Bank loans 9.2 0.5
9.2 0.5
Borrowings 27.9 29.6
The following key bank facilities are in place at 31 December 2023:
Facility limit Outstanding
2023 2022 2023 2022
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 8.0 6.3
Germany EUR On demand with annual review EURIBOR + 3.0% 11.3 11.5 5.5 8.7
USA USD On demand with annual review LIBOR + 2% 1.6 1.7 - -
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 + 1.47% 7.5 10.0 2.0 2.0
Chile CLP On demand with annual review Weighted average rate 12.8% (2022: 15.7%) 2.4 2.9 1.2 1.5
Bank loans
UK - Revolving Credit Facility GBP 2026 SONIA + 2% to 2.75% 15.0 15.0 9.0 8.0
Japan JPY 2025-2028 Weighted average rate 0.6% (2022: 0.6%) 0.4 0.7 0.4 0.7
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 £1.5m of cash shown within cash and cash equivalents in the balance
sheet (2022: £1.9m).
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, US
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.
13 Net debt
a) Net debt
2023 2022
£m £m
Cash and cash equivalents 17.1 22.3
Borrowings (27.9) (29.6)
Net debt (10.8) (7.3)
b) Adjusted net debt
2023 2022
£m £m
Cash and cash equivalents 17.1 22.3
Less cash held in respect of pilot bonds (0.3) (0.6)
Adjusted cash 16.8 21.7
Borrowings (27.9) (29.6)
Adjusted net debt (11.1) (7.9)
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
2023 2022
£m £m
At 1 January (7.9) (14.0)
Net (decrease)/increase in cash and cash equivalents per consolidated cash (4.1) 0.5
flow statement
Net decrease in overdrafts and loans 1.1 4.5
Decrease in invoice financing 0.3 1.2
Foreign exchange movement (0.8) (0.2)
Adjusted for decrease in cash held in respect of pilot bonds 0.3 0.1
At 31 December (11.1) (7.9)
14 Dividends
2023 2022
£m £m
Amount recognised as distribution to equity holders in the year:
Final dividend for the year ended 31 December 2022 of 1.4p (2021: 1.2p) per 0.7 0.6
share
Proposed final dividend for the year ended 31 December 2023 of 1.0p (2022: 0.5 0.7
1.4p) per share
The proposed final dividend for the year ended 31 December 2023 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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