TIDMEMR
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
2023 2022 % change currency)(2)
----------------------------------- ---------- ---------- ----------- --------------
Revenue GBP125.7m GBP129.8m -3% -6%
Net fee income GBP29.7m GBP32.6m -9% -10%
Adjusted operating profit(1) GBP1.3m GBP4.5m -71% -71%
Operating profit GBP0.6m GBP3.8m -84%
Adjusted profit before tax(1) GBP0.5m GBP4.0m -88%
(Loss)/profit before tax GBP(0.2)m GBP3.3m -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 GBP29.7m 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 GBP1.3m 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 GBP8.7m (31 December
2022: GBP7.9m) with headroom increased to GBP18.4m
-- 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, w e 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
. 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)
Shaun Dobson / James Moat 020 7496 3000
Cenkos Securities plc (Joint Broker)
Katy Birkin / Charlie Combe (Corporate
Finance)
Michael Johnson / Jasper Berry (Sales) 020 7397 8900
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 GBP29.7m and adjusted operating profit reducing by 71% to
GBP1.3m. 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:
6 months 6 months
ended ended % change
30 June 30 June (constant
GBP'm 2023 2022 % change currency)
------------------------- --------- --------- --------- -----------
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
6 months 6 months
ended ended % change
30 June 30 June (constant
GBP'm 2023 2022 % change currency)
--------------------------- --------- --------- --------- -----------
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
6 months 6 months
ended ended % change
30 June 30 June (constant
GBP'm 2023 2022 % change currency)
---------------------------------- --------- --------- --------- -----------
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
6 months 6 months
ended ended % change
30 June 30 June (constant
GBP'm 2023 2022 % change currency)
---------------------------------- --------- --------- --------- -----------
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
6 months 6 months
ended ended % change
30 June 30 June (constant
GBP'm 2023 2022 % change currency)
--------------------------- --------- --------- --------- -----------
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 GBP0.8m (2022:
GBP0.5m) 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 GBP4.6m (2022:
GBP7.3m), while free cash flow, which excludes movements related to
pilot bonds and includes cash outflows on leases, was an inflow of
GBP2.0m (2022: GBP4.8m).
Capital expenditure in the first half of 2023 was GBP0.9m (2022:
GBP0.8m) and mainly reflected infrastructure investment to support
growth in Offshore Services. The Group's dividend to its
shareholders resulted in a GBP0.7m outflow (2022: GBP0.6m),
dividends to non-controlling interests were GBP0.4m (2022:
GBP0.4m), while a cash outflow of GBP0.1m (2022: GBP0.2m) is shown
for Empresaria shares purchased and transferred into the Employee
Benefit Trust.
Adjusted net debt (which excludes GBP0.5m cash held in respect
of pilot bonds and does not include lease liabilities recognised
under IFRS 16) was GBP8.7m as at 30 June 2023, an increase of
GBP0.8m from 31 December 2022. Average month end adjusted net debt
was GBP7.9m during the period (six months ended 30 June 2022:
GBP12.9m).
As at 30 June 2023, the Group had financing facilities totalling
GBP54.0m (31 December 2022: GBP54.8m). Excluding invoice financing,
undrawn facilities have increased to GBP18.4m (31 December 2022:
GBP17.9m) 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
Year
6 months 6 months ended 31
ended 30 ended 30 December
June 2023 June 2022 2022
Unaudited Unaudited
Notes GBPm GBPm GBPm
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 6 months Year
ended ended ended 31
30 June 30 June December
2023 2022 2022
Unaudited Unaudited
GBPm GBPm GBPm
(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 foreign
operations (0.2) 0.2 0.3
---------- ---------- ----------
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 30 June 31 December
2023 2022 2022
Unaudited Unaudited
Notes GBPm GBPm GBPm
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
Share premium Merger Retranslation Equity Other Retained Non-controlling Total
capital account reserve reserve reserve reserves earnings Total interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
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
GBPm GBPm GBPm
(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
combinations 0.6 0.7 1.4
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
GBP0.1m (30 June 2022:
GBPnil, 31 December 2022:
GBP0.1m)) 1.1 0.2 (3.5)
---------------------------- ---------------------------- ----------------------------
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 Adjusted operating
Revenue Net fee income profit/(loss)
GBPm GBPm GBPm
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 Adjusted operating
Revenue Net fee income profit/(loss)
GBPm GBPm GBPm
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 Adjusted operating
Revenue Net fee income profit/(loss)
GBPm GBPm GBPm
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
Finance income and
4 costs
Year
6 months ended 30 6 months ended 30 ended 31 December
June 2023 June 2022 2022
Unaudited Unaudited
GBPm GBPm GBPm
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
Year
6 months ended 30 6 months ended 30 ended 31 December
June 2023 June 2022 2022
Unaudited Unaudited
GBPm GBPm GBPm
(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 GBP0.1m (6 months ended 30 June
2022: GBP1.3m,
year ended 31 December 2022: GBP2.8m). 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 6 months Year ended
ended 30 ended 30 31 December
June 2023 June 2022 2022
Unaudited Unaudited
GBPm GBPm GBPm
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 30 June 31 December
2023 2022 2022
Unaudited Unaudited
GBPm GBPm GBPm
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 s ubsidiaries. 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
30 June 30 June 31 December
a) Adjusted net debt 2023 2022 2022
Unaudited Unaudited
GBPm GBPm GBPm
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.
6 months 6 months Year ended
ended 30 ended 30 31 December
b) Movement in adjusted net debt June 2023 June 2022 2022
Unaudited Unaudited
GBPm GBPm GBPm
At 1 January (7.9) (14.0) (14.0)
Net (decrease)/increase in cash
and cash equivalents per consolidated
cash flow statement (1.6) 1.3 0.5
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 30 June 31 December
2023 2022 2022
Unaudited Unaudited
GBPm GBPm GBPm
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 30 June 31 December
2023 2022 2022
Unaudited Unaudited
GBPm GBPm GBPm
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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END
IR BIGDIRDDDGXB
(END) Dow Jones Newswires
August 22, 2023 02:00 ET (06:00 GMT)
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