REG - Empresaria Group PLC - Interim Results
20/08/2024 07:00
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RNS Number : 9906A Empresaria Group PLC 20 August 2024
20 August 2024
Empresaria Group plc ("Empresaria" or the "Group")
Unaudited interim results for the six months ended 30 June 2024
Encouraging resilience in temporary and contract despite ongoing challenging
market conditions
Empresaria Group plc (AIM: EMR), the global specialist staffing group,
announces its unaudited interim results for the six months ended 30 June 2024.
Overview of the half year
% change (CC LFL)(2)
H1 2024 H1 2023 % change
Revenue £121.8m £125.7m -3% +4%
Net fee income £25.3m £29.7m -15% -9%
Adjusted operating profit(1) £1.0m £1.3m -23% -8%
Operating (loss)/profit £(3.6)m £0.6m
Adjusted profit before tax(1) £0.2m £0.5m -60%
Loss before tax £(4.4)m £(0.2)m
Adjusted, diluted loss per share(1) (1.2)p (0.8)p -50%
· Challenging market conditions continued throughout the first half of
2024 which impacted net fee income:
o Overall reduction of 9% CC LFL to £25.3m
o Permanent placement reduced by 21% CC LFL
o Temporary and contract reduced by 1% CC LFL
o Offshore Services reduced by 10% CC
· Adjusted operating profit down 8% CC LFL, with reported figure down
23% to £1.0m, reflecting the impact of the reduction in net fee income,
offset by the ongoing benefits of our continued focus on costs which delivered
year-on-year reductions of £2.3m CC LFL
· Adjusted, diluted loss per share of 1.2p reflecting the reduction in
profit and the allocation of earnings to non-controlling interests
· Adjusted net debt increased to £13.5m (31 December 2022: £11.1m)
with headroom of £10.5m
· Full year adjusted results are expected to be broadly in line with
current market expectations(3) although market conditions remain challenging
1 Adjusted to exclude amortisation of intangible assets identified in
business combinations, impairment of goodwill and other intangible assets,
loss on sale of subsidiaries, exceptional items, fair value charge on
acquisition of non-controlling shares and, in the case of earnings, any
related tax.
2 CC LFL - Constant currency and excluding exited operations.
Calculated by translating the 2023 results at the 2024 exchange rates and
excluding the results of exited operations in Vietnam, China and Finland from
both years.
3 The company understands that market consensus for adjusted profit
before tax is £4.3m and for adjusted EPS is 1.65p
Chief Executive Officer, Rhona Driggs, commented:
"Challenging conditions have continued to impact recruitment demand in the
first half of 2024. Permanent recruitment continues to see the greatest
impact while our temporary and contract business remained broadly stable,
showing more resilient year-on-year net fee income performance.
We continue to prioritise our strategic initiatives and have made significant
progress in building a more scalable and resilient business while reducing
complexity across the Group. Our focus remains on positioning the business
to capture new growth opportunities, strengthening our sales capabilities,
maximising our cross-selling efforts and diversifying our service offering,
while maintaining rigorous cost control.
I am confident in our ability to navigate the current environment effectively
and optimistic about our ability to rebound quickly when the market improves."
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 2024 via the Investor
Meet Company platform on Tuesday 20 August 2024 at 12:00pm UK time.
Questions can be submitted pre-event through the platform or at any time
during the live presentation. Management may not be in a position to answer
every question it receives but will address those it can while remaining
within the confines of information already disclosed to the market.
Q&A responses will be published at the earliest opportunity on the
Investor Meet Company platform.
Investors can sign up for free via:
https://www.investormeetcompany.com/empresaria-group-plc/register-investor
(https://www.investormeetcompany.com/empresaria-group-plc/register-investor)
. Those who have already registered and requested to meet the Company will
be automatically invited.
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the UK version of the EU
Market Abuse Regulation (2014/596) which is part of UK law by virtue of the
European Union (Withdrawal) Act 2018, as amended and supplemented from time to
time.
- Ends -
Enquiries:
Empresaria Group plc via Alma PR
Rhona Driggs, Chief Executive Officer
Tim Anderson, Chief Financial Officer
Singer Capital Markets (Nominated Adviser and Joint Broker) 020 7496 3000
Shaun Dobson / Alex Bond
Cavendish Capital Markets Limited (Joint Broker) 020 7220 0500
Katy Birkin (Corporate Finance)
Michael Johson / Jasper Berry (Sales)
Alma PR (Financial PR) 020 3405 0205
Sam Modlin / Rebecca Sanders-Hewett / Will Merison
empresaria@almastrategic.com
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 announcement 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
For the six months ended 30 June 2024, net fee income was down 15% on prior
year on a reported basis and 9% down in constant currency and excluding exited
operations ("CC LFL"). Adjusted operating profit was £1.0m, down £0.3m
from prior year (down 8% CC LFL) reflecting the benefits of cost actions taken
in 2023 and ongoing tight control over costs.
Challenging market conditions remain
The industry-wide weakness in demand and slow hiring decisions that we
experienced in late 2022 and throughout 2023 has continued through the first
half of 2024. This impacted results across the Group with all of our regions
showing a year-on-year reduction in net fee income. Permanent recruitment
has been most heavily impacted with net fee income down 21% CC LFL (reported
figure down 27%). Temporary and contract showed resilience with net fee
income down 1% CC LFL (reported figure down 8%), while in Offshore Services,
which delivered a record year in 2023, net fee income reduced by 10% CC
(reported figure down 14%).
Our IT sector continues to be most significantly impacted reducing from 17% of
our total net fee income in the first half of 2023 to 13% in the first half of
2024. We are seeing this reduction across all of our regions and while the
US and UK were hardest hit for much of 2023, Asia has also been significantly
impacted in 2024.
Within our Professional sector we have seen mixed results. Our aviation
operation has delivered solid growth as we diversify out of our traditional
pilot contracting offering, while others have seen net fee income decline in
line with the wider market.
Our Commercial operations in Germany and South America, where many of our
clients operate in the supermarket industry supply chain, have performed
solidly during the period and continue to be a strong profit generator for the
Group. Our Commercial operation in Germany was significantly impacted by a
bad debt provision of £3.0m (excluding recoverable sales taxes) with a single
client which is described in more detail in the regional commentary below and
has been treated as an exceptional item in the interim results.
Managing our cost base
We continue to maintain tight control of our cost base, with administrative
costs for the first half of 2024 down £2.3m CC LFL on the prior year, largely
reflecting the run rate benefit of actions taken in 2023. We are making
limited investments in our sales teams and protecting our core consultant base
to ensure we are well positioned for market recovery. We continue to keep
costs under tight control, but do not anticipate making any significant
headcount reductions unless the market deteriorates further.
Continuing to deliver on strategic initiatives
We announced in March our intention to exit four of our smaller operations in
markets or sub-sectors where we do not plan to invest as part of our focus on
scaling our core sectors of Professional, IT and Healthcare, and reducing the
complexity of the Group. In the first half of 2024 we sold our loss-making
Healthcare operation in Finland and closed our Professional operation in
China. We expect to complete the remaining two exits in the second half of
the year.
We have streamlined our operating structures, including the consolidation of
management structures to create greater sales and cost synergies and have
completed the move to a more scalable and efficient model in our core sectors
with dedicated sales and delivery teams. In addition, we have rolled out
enhancements to our common front office technology platform that are targeted
at improving productivity across the Group.
Outlook
We expect weak hiring trends to continue in the second half of 2024 although
we believe we have seen the bottom of the market and are starting to see some
cautious positive movement in demand in some areas. Our focus is on
positioning the business to capture new growth opportunities and market share
while keeping tight controls on costs and are confident in our ability to
rebound quickly when the market improves.
Full year adjusted results for 2024 are expected to be broadly in line with
current market expectations although market conditions remain challenging.
Regional Performance
Net fee income by region:
£m 6 months ended 6 months ended % change % change (CC LFL)
30 June 30 June
2024 2023
UK & Europe 11.6 12.6 -8% -5%
APAC 5.5 7.3 -25% -12%
Americas 2.6 3.4 -24% -16%
Offshore Services 6.1 7.0 -13% -9%
Intragroup eliminations (0.5) (0.6)
Total 25.3 29.7 -15% -9%
Performance in each of our regions is analysed below.
UK & Europe
£m 6 months ended 6 months ended % change % change (CC LFL)
30 June 30 June
2024 2023
Revenue 58.3 58.7 -1% +3%
Net fee income 11.6 12.6 -8% -5%
Adjusted operating profit 1.3 0.9 +44% +30%
% of Group net fee income 46% 42%
In UK & Europe, revenue was down 1% on a reported basis, but up 3% CC LFL,
with net fee income down 8% on a reported basis and down 5% CC LFL. These
results reflect a greater fall in permanent placements compared to a more
resilient performance in temporary and contract. Adjusted operating profit
was up 44% primarily due to reductions in costs.
The UK continues to see subdued demand, particularly in our IT and
Professional operations, and this is reflected in a 2% fall in revenue and a
9% drop in net fee income. Permanent placement is the main driver of these
reductions while temporary and contract has been more resilient.
In Germany and Austria, net fee income was in line with prior year as growth
in our logistics business offset reductions elsewhere. In January, we
brought our operations in Germany and Austria under a single leader as part of
our strategy to simplify our operating structures and to improve cross-sell
and create synergies across these businesses.
During the period the Group sold its loss-making Healthcare operation in
Finland and the results of this operation are excluded in the CC LFL measures
presented.
In July 2024, weLOG, a significant client of our operations in Germany, went
into provisional self-administration. We remain in discussions with weLOG
regarding the recoverability of outstanding amounts, which at 30 June 2024
totalled £3.0m (net of recoverable sales taxes) with a further £0.2m (net of
recoverable sales taxes) in July 2024. Under IAS 10 (Events after the
Reporting Period) this is considered to be an adjusting post balance sheet
event, and so, in the absence of any definitive information on recoverability,
a provision for the full amount has been reflected in these interims and is
presented in the income statement as an exceptional item.
APAC
£m 6 months ended 6 months ended % change % change (CC LFL)
30 June 30 June
2024 2023
Revenue 23.8 26.0 -8% +1%
Net fee income 5.5 7.3 -25% -12%
Adjusted operating loss (0.4) (0.6) +33% +57%
% of Group net fee income 21% 24%
In APAC, revenues reduced by 8% on a reported basis but increased by 1% CC LFL
with net fee income down 25% on a reported basis and down 12% CC LFL. The
operating loss reduced from prior year predominantly due to cost actions.
Revenues and net fee income fell across the region reflecting the challenging
market conditions. The most notable exception to this was our aviation
operation which delivered net fee income growth of more than 20% in constant
currency reflecting success in diversifying revenue streams outside of our
core pilot leasing offering and into engineering and permanent placement.
Elsewhere, our IT sector was the most significantly impacted with falls in
both permanent, and temporary and contract net fee income. Japan was most
significantly impacted, with net fee income down more than 20% in constant
currency, while reductions were also seen in Singapore and the Philippines.
The region continued to deliver an operating loss, although this was reduced
from prior year reflecting cost actions that offset net fee income reductions
as well as significant reductions in losses reported in aviation and
Australia.
During the year we closed our small Professional operation in China and these
results are excluded from the CC LFL measures presented.
Americas
£m 6 months ended 6 months ended % change % change (CC LFL)
30 June 30 June
2024 2023
Revenue 27.1 28.4 -5% 8%
Net fee income 2.6 3.4 -24% -16%
Adjusted operating loss (0.4) (0.3) -33% +0%
% of Group net fee income 10% 11%
In the Americas, revenue was down 5% on a reported basis, but up 8% in
constant currency, while net fee income was down 24% on a reported basis and
down 16% in constant currency. The reported operating loss increased
slightly on last year due to currency movements.
Results for the period are driven by our US operations which saw a 50%
year-on-year drop in net fee income resulting in an increased loss for the
period. The IT sector continues to be extremely challenging in the US and we
are yet to see any sustained signs of improvement. Costs have been cut as
far as practical to limit losses while protecting the ability to recover. In
Healthcare we saw positive momentum as H1 progressed and have a solid pipeline
for H2.
Our Commercial operations in South America showed strong growth in net fee
income of more than 10% in constant currency. Due to currency movements the
reported net fee income showed a small fall but reported profits increased
year on year.
Offshore Services
£m 6 months ended 6 months ended % change % change (CC LFL)
30 June 30 June
2024 2023
Revenue 13.1 13.2 -1% +3%
Net fee income 6.1 7.0 -13% -9%
Adjusted operating profit 2.6 3.7 -30% -28%
% of Group net fee income 23% 23%
Offshore Services delivered a fall in reported revenue of 1% (up 3% in
constant currency) with reported net fee income down 13% (down 9% in constant
currency). Revenue reflects some low margin temporary and contract business
which was not present in the prior year. Excluding this, revenue in the core
offshore services offering was down 6%.
Offshore Services showed strong resilience last year, delivering record net
fee income despite market challenges as they benefited from the full year
effect of the strong growth they delivered in 2022. At the end of 2023 and
the start of 2024, UK Healthcare demand fell significantly in response to the
NHS targeting reductions in agency spend. Demand has stabilised in both the
UK and US but remains muted reflecting the wider conditions for the
recruitment industry where the vast majority of our clients operate. We see
opportunities to diversify our client base, particularly in our accounting and
finance offering, to help offset this exposure. The results reflect some
additional pressure on margins with inflationary rises in the cost base and
greater challenges in passing these increases on to clients in the current
economic environment.
Financing
Net finance costs for the period were £0.8m (2023: £0.8m) with the impact of
higher interest rates and higher average levels of net debt in the period
offset by improved cash efficiency.
Net cash inflow from operating activities was nil (2023: £4.6m), reflecting
trading for the period and the impact of an exceptional bad debt provision
recognised in the period which was partially offset by a net working capital
inflow across the Group.
The Group sold its Finland based Healthcare operation in the first half of
2024 resulting in a £0.4m cash inflow. Capital expenditure was £0.4m
(2023: £0.9m) significantly reduced from the prior year which included
infrastructure investment to support growth in Offshore Services. The
Group's dividend to its shareholders resulted in a £0.5m outflow (2023:
£0.7m) and dividends to non-controlling interests were £0.3m (2023: £0.4m).
The Group has a programme of purchasing shares and transferring these into the
Employee Benefit Trust in order to build shares for the part-settlement of
share options in order to reduce the dilutive impact on exercise. As there
are currently no outstanding, vested share options and the Employee Benefit
Trust holds 0.8m shares, no purchases were made in the period (2023: £0.1m).
Adjusted net debt (which excludes £0.2m cash held in respect of pilot bonds
and does not include lease liabilities recognised under IFRS 16) was £13.5m
as at 30 June 2024, an increase of £2.4m from 31 December 2023. Average
month end adjusted net debt during the period was £10.9m (six months ended 30
June 2023: £7.9m).
As at 30 June 2024, the Group had financing facilities totalling £42.1m (31
December 2023: £50.8m). Excluding invoice financing, undrawn facilities
reduced to £10.5m (31 December 2023: £17.8m) reflecting the higher level of
net debt alongside an improvement in cash management enabling certain facility
limits to be reduced.
The Group's revolving credit facility covenants are tested on a quarterly
basis. The covenants, and our performance against them as at 30 June 2024,
are as follows:
Measure Target Actual
Net debt to EBITDA < 2.5 times 1.7 times
Interest cover > 4.0 times 5.3 times
Dividend
In line with prior years, the Board is not recommending the payment of an
interim dividend for 2024 (2023: nil).
20 August 2024
Condensed consolidated income statement
Six months ended 30 June 2024
6 months ended 30 June 2024 6 months ended 30 June 2023 Year
ended 31 December 2023
Unaudited Unaudited
Notes £m £m £m
Revenue 3 121.8 125.7 250.3
Cost of sales (96.5) (96.0) (192.8)
Net fee income 3 25.3 29.7 57.5
Administrative costs(1) (24.3) (28.4) (52.4)
Adjusted operating profit 3 1.0 1.3 5.1
Exceptional items(1) 5 (3.5) - (0.6)
Loss on sale of subsidiary (0.2) - -
Fair value charge on acquisition of non-controlling shares (0.4) (0.1) (0.1)
Impairment of goodwill - - (1.5)
Amortisation of intangible assets identified in business combinations (0.5) (0.6) (1.2)
Operating (loss)/profit (3.6) 0.6 1.7
Finance income 4 0.4 0.2 0.6
Finance costs 4 (1.2) (1.0) (2.2)
Net finance costs 4 (0.8) (0.8) (1.6)
(Loss)/profit before tax (4.4) (0.2) 0.1
Taxation 7 0.9 (0.1) (1.4)
Loss for the period (3.5) (0.3) (1.3)
Attributable to:
Owners of Empresaria Group plc (4.1) (1.0) (2.9)
Non-controlling interests 0.6 0.7 1.6
(3.5) (0.3) (1.3)
Pence Pence Pence
Unaudited Unaudited
Earnings per share
Basic 8 (8.4) (2.0) 5.9
Diluted 8 (8.4) (2.0) 5.9
Details of adjusted earnings per share are shown in note 8.
1 The income statement includes costs in respect of the impairment of
trade receivables totalling £3.0m (2023: £0.3m) of which £nil is included
with administrative costs (2023: £0.3m) and £3.0m is within exceptional
items (2023: nil).
Condensed consolidated statement of comprehensive income
Six months ended 30 June 2024
6 months ended 30 June 2024 6 months ended 30 June 2023 Year
ended 31 December 2023
Unaudited Unaudited
£m £m £m
Loss for the period (3.5) (0.3) (1.3)
Other comprehensive income
Items that may be reclassified subsequently to the income statement:
Exchange differences on translation of foreign operations (0.5) (2.0) (2.2)
Items that will not be reclassified to the income statement:
Exchange differences on translation of non-controlling interests in (0.1) (0.2) (0.4)
foreign operations
Other comprehensive loss for the period (0.6) (2.2) (2.6)
Total comprehensive loss for the period (4.1) (2.5) (3.9)
Attributable to:
Owners of Empresaria Group plc (4.6) (3.0) (5.1)
Non-controlling interests 0.5 0.5 1.2
(4.1) (2.5) (3.9)
Condensed consolidated balance sheet
As at 30 June 2024
30 June 2024 30 June 2023 31 December 2023
Unaudited Unaudited
Notes £m £m £m
Non-current assets
Property, plant and equipment 2.0 2.8 2.4
Right-of-use assets 4.7 5.2 6.4
Goodwill 28.9 31.1 29.7
Other intangible assets 6.3 7.5 6.9
Deferred tax assets 6.1 5.2 5.7
48.0 51.8 51.1
Current assets
Trade and other receivables 11 41.6 44.4 44.7
Cash and cash equivalents 10 16.5 19.6 17.1
58.1 64.0 61.8
Total assets 106.1 115.8 112.9
Current liabilities
Trade and other payables 12 29.8 33.2 31.5
Current tax liabilities 0.9 1.2 1.3
Borrowings 9 19.7 18.8 18.7
Lease liabilities 2.6 2.2 4.3
53.0 55.4 55.8
Non-current liabilities
Borrowings 9 10.1 9.0 9.2
Lease liabilities 2.6 3.4 2.6
Deferred tax liabilities 2.3 2.5 2.4
15.0 14.9 14.2
Total liabilities 68.0 70.3 70.0
Net assets 38.1 45.5 42.9
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 1.0 1.8 1.6
Equity reserve (10.2) (10.2) (10.2)
Retained earnings 14.8 21.8 19.2
Equity attributable to owners of Empresaria Group plc 31.4 39.2 36.4
Non-controlling interests 6.7 6.3 6.5
Total equity 38.1 45.5 42.9
Condensed consolidated statement of changes in equity
Six months ended 30 June 2024
Equity attributable to owners of Empresaria Group plc
Share capital Share premium account Merger reserve Equity reserve Retranslation reserve Retained earnings Total Non-controlling interests Total equity
£m £m £m £m £m £m £m £m £m
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 period - - - - - (1.0) (1.0) 0.7 (0.3)
Exchange differences on translation of foreign operations - - - - (2.0) - (2.0) (0.2) (2.2)
Total comprehensive income for the period - - - - (2.0) (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 (10.2) 1.8 21.8 39.2 6.3 45.5
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 income for the year - - - - (2.2) (2.9) (5.1) 1.2 (3.9)
Dividend paid to owners of Empresaria Group plc - - - - - (0.7) (0.7) - (0.7)
Dividend 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
(Loss)/profit for the period - - - - - (4.1) (4.1) 0.6 (3.5)
Exchange differences on translation of foreign operations - - - - (0.6) 0.1 (0.5) (0.1) (0.6)
Total comprehensive (loss)/income for the period - - - - (0.6) (4.0) (4.6) 0.5 (4.1)
Dividend paid to owners of Empresaria Group plc - - - - - (0.5) (0.5) - (0.5)
Dividend paid to non-controlling interests - - - - - - - (0.3) (0.3)
Share-based payments - - - - - 0.1 0.1 - 0.1
At 30 June 2024 (Unaudited) 2.5 22.4 0.9 (10.2) 1.0 14.8 31.4 6.7 38.1
Condensed consolidated cash flow statement
Six months ended 30 June 2024
6 months ended 30 June 2024 6 months ended 30 June 2023 Year ended 31 December 2023
Unaudited Unaudited
£m £m £m
Loss for the period (3.5) (0.3) (1.3)
Adjustments for:
Depreciation and software amortisation 0.7 0.7 1.5
Depreciation of right-of-use assets 2.3 2.7 5.4
Loss on sale of subsidiary 0.2 - -
Fair value charge on acquisition of non-controlling shares 0.2 0.1 0.1
Impairment of goodwill - - 1.5
Amortisation of intangible assets identified in business 0.5 0.6 1.2
combinations
Share-based payments 0.1 0.2 (0.3)
Net finance costs 0.8 0.8 1.6
Taxation (0.9) 0.1 1.4
0.4 4.9 11.1
Decrease in trade and other receivables 2.0 0.6 0.2
(Decrease)/increase in trade and other payables (including pilot bonds outflow (0.7) 1.1 (0.4)
of £0.1m (30 June 2023: £0.1m, 31 December 2023: £0.3m))
Cash generated from operations 1.7 6.6 10.9
Interest paid (1.1) (1.0) (2.2)
Income taxes paid (0.6) (1.0) (3.2)
Net cash inflow from operating activities - 4.6 5.5
Cash flows from investing activities
Cash received on sale of subsidiary 0.4 - -
Purchase of property, plant and equipment, and software (0.4) (0.9) (1.4)
Finance income 0.4 0.2 0.6
Net cash inflow/(outflow) from investing activities 0.4 (0.7) (0.8)
Cash flows from financing activities
Increase/(decrease) in overdrafts 1.2 (2.0) (1.7)
Proceeds from bank loans 1.0 0.7 1.0
Repayment of bank loans (0.1) - (0.4)
Increase/(decrease) in invoice financing 0.1 (0.2) (0.3)
Payment of obligations under leases (2.1) (2.7) (5.4)
Purchase of shares in existing subsidiaries (0.2) (0.1) (0.1)
Purchase of own shares in Employee Benefit Trust - (0.1) (0.3)
Dividends paid to owners of Empresaria Group plc (0.5) (0.7) (0.7)
Dividends paid to non-controlling interests (0.3) (0.4) (0.9)
Net cash outflow from financing activities (0.9) (5.5) (8.8)
Net decrease in cash and cash equivalents (0.5) (1.6) (4.1)
Foreign exchange movements (0.1) (1.1) (1.1)
Cash and cash equivalents at beginning of the period 17.1 22.3 22.3
Cash and cash equivalents at end of the period 16.5 19.6 17.1
Bank overdrafts at beginning of the period (15.2) (17.1) (17.1)
(Increase)/decrease in the period (1.2) 2.0 1.7
Foreign exchange movements 0.1 0.2 0.2
Bank overdrafts at end of the period (16.3) (14.9) (15.2)
Cash, cash equivalents and bank overdrafts at period end 0.2 4.7 1.9
Notes to the interim financial statements
Six months ended 30 June 2024
1 Basis of preparation and general information
Empresaria Group plc is the Group's ultimate parent company. It is
incorporated and domiciled in England, its registered office address is Old
Church House, Sandy Lane, Crawley Down, Crawley, West Sussex, RH10 4HS, United
Kingdom, its company registration number is 03743194 and its shares are listed
on AIM, a market of London Stock Exchange plc.
The condensed set of financial statements have been prepared using accounting
policies consistent with UK-adopted International Accounting Standards. The
same accounting policies, presentation and methods of computation are followed
in the condensed set of financial statements as applied in the Group's latest
annual audited financial statements. The Group does not anticipate any
change in these accounting policies for the year ended 31 December 2024.
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 defined in IAS 34.
The information for the year ended 31 December 2023 has been derived from
audited statutory accounts for that year. The information for the year ended
31 December 2023 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 have been delivered to the Registrar of Companies.
The auditors report on those accounts 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 2024 and 2023 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 with its lenders, the Board
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 these interim 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 2023.
Notes to the interim financial statements
Six months ended 30 June 2024
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 results by region is set out below:
Six months to 30 June 2024 Revenue Net fee income Adjusted operating profit/(loss)
£m £m £m
UK & Europe 58.3 11.6 1.3
APAC 23.8 5.5 (0.4)
Americas 27.1 2.6 (0.4)
Offshore Services 13.1 6.1 2.6
Central costs - - (2.1)
Intragroup eliminations (0.5) (0.5) -
121.8 25.3 1.0
Six months to 30 June 2023 Revenue Net fee income Adjusted operating profit/(loss)
£m £m £m
UK & Europe 58.7 12.6 0.9
APAC 26.0 7.3 (0.6)
Americas 28.4 3.4 (0.3)
Offshore Services 13.2 7.0 3.7
Central costs - - (2.4)
Intragroup eliminations (0.6) (0.6) -
125.7 29.7 1.3
Year ended 31 December 2023 Revenue Net fee income Adjusted operating profit/(loss)
£m £m £m
UK & Europe 116.8 24.9 3.0
APAC 51.9 13.6 (0.8)
Americas 55.9 6.1 (0.9)
Offshore Services 26.9 14.0 7.5
Central costs - - (3.7)
Intragroup eliminations (1.2) (1.1) -
250.3 57.5 5.1
Notes to the interim financial statements
Six months ended 30 June 2024
4 Finance income and costs
6 months ended 30 June 2024 6 months ended 30 June 2023 Year
ended 31 December 2023
Unaudited Unaudited
£m £m £m
Finance income
Bank interest receivable 0.4 0.2 0.6
0.4 0.2 0.6
Finance costs
Invoice financing (0.1) (0.1) (0.3)
Bank loans and overdrafts (0.9) (0.7) (1.6)
Interest on lease liabilities (0.2) (0.2) (0.3)
(1.2) (1.0) (2.2)
Net finance costs (0.8) (0.8) (1.6)
5 Exceptional items
6 months ended 30 June 2024 6 months ended 30 June 2023 Year
ended 31 December 2023
Unaudited Unaudited
£m £m £m
Closure of operations (0.3) - (0.3)
Impairment of trade receivables (3.0) - -
Restructure of senior management (0.2) - (0.3)
(3.5) - (0.6)
Closure of operations includes the Group's exit from Vietnam in 2023 and
China in 2024.
Notes to the interim financial statements
Six months ended 30 June 2024
6 Reconciliation of profit before tax to adjusted profit before tax
6 months ended 30 June 2024 6 months ended 30 June 2023 Year
ended 31 December 2023
Unaudited Unaudited
£m £m £m
(Loss)/profit before tax (4.4) (0.2) 0.1
Add back:
Exceptional items 3.5 - 0.6
Loss on sale of subsidiary 0.2 - -
Fair value charge on acquisition of non-controlling shares 0.4 0.1 0.1
Impairment of goodwill - - 1.5
Amortisation of intangible assets identified in business combinations 0.5 0.6 1.2
Adjusted profit before tax 0.2 0.5 3.5
7 Taxation
The tax credit for the six month period is £0.9m (6 months ended 30 June
2023: £0.1m charge, year ended 31 December 2023: £1.4m charge). On an
adjusted basis (excluding adjusting items as set out in note 6 and their tax
effect), the tax charge for the six month period is £0.2m. 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 plus irrecoverable withholding taxes incurred in the six
month period.
Notes to the interim financial statements
Six months ended 30 June 2024
8 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 2024 and
2023 these are all related to share options. Reconciliations between basic
and diluted measures are given below.
The Group also presents adjusted earnings per share which it considers to be a
key measure of the Group's performance. A reconciliation of earnings to
adjusted earnings is provided below.
6 months ended 30 June 2024 6 months ended 30 June 2023 Year ended 31 December 2023
Unaudited Unaudited
£m £m £m
Earnings
Earnings attributable to owners of Empresaria Group plc (4.1) (1.0) (2.9)
Adjustments:
Loss of sales of business 0.2 - -
Exceptional items 3.5 - 0.6
Fair value charge on acquisition of non-controlling shares 0.4 0.1 0.1
Impairment of goodwill - - 1.5
Amortisation of intangible assets identified in business combinations 0.5 0.6 1.2
Tax on the above (1.1) (0.1) (0.2)
Adjusted earnings (0.6) (0.4) (0.3)
Number of shares Millions Millions Millions
Weighted average number of shares - basic 49.1 49.5 49.1
Dilution effect of share options 0.8 1.4 0.7
Weighted average number of shares - diluted 49.9 50.9 49.8
Earnings per share Pence Pence Pence
Basic (8.4) (2.0) (5.9)
Dilution effect of share options - - -
Diluted (8.4) (2.0) (5.9)
Adjusted earnings per share Pence Pence Pence
Basic (1.2) (0.8) 0.6
Dilution effect of share options - - -
Diluted (1.2) (0.8) 0.6
For all periods presented, 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 2024
9 Borrowings
30 June 2024 30 June 2023 31 December 2023
Unaudited Unaudited
£m £m £m
Current
Bank overdrafts 16.3 14.9 15.2
Invoice financing 3.2 3.4 3.2
Bank loans 0.2 0.5 0.3
19.7 18.8 18.7
Non-current
Bank loans 10.1 9.0 9.2
10.1 9.0 9.2
Borrowings 29.8 27.8 27.9
The UK revolving credit facility is secured by a first fixed charge over all
book and other debts given by the Company and certain of its subsidiaries. It
is also subject to financial covenants, and these are disclosed in the finance
and operating review. The UK invoice financing facility is also secured by a
fixed and floating charge over trade receivables.
Notes to the interim financial statements
Six months ended 30 June 2024
10 Adjusted net debt
a) Adjusted net debt 30 June 2024 30 June 2023 31 December 2023
Unaudited Unaudited
£m £m £m
Cash and cash equivalents 16.5 19.6 17.1
Less cash held in respect of pilot bonds (0.2) (0.5) (0.3)
Adjusted cash 16.3 19.1 16.8
Borrowings (29.8) (27.8) (27.9)
Adjusted net debt (13.5) (8.7) (11.1)
The Group presents adjusted net debt as its principle net 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 this is a client requirement, cash equal to the
amount of the bonds is excluded in calculating adjusted net debt.
b) Movement in adjusted net debt 6 months ended 30 June 2024 6 months ended 30 June 2023 Year ended 31 December 2023
Unaudited Unaudited
£m £m £m
At 1 January (11.1) (7.9) (7.9)
Net decrease in cash and cash equivalents per consolidated cash flow statement (0.5) (1.6) (4.1)
Net (increase)/decrease in overdrafts and loans (2.1) 1.3 1.1
(Increase)/decrease in invoice financing (0.1) 0.2 0.3
Foreign exchange movements 0.2 (0.8) (0.8)
Decrease in cash held in respect of pilot bonds 0.1 0.1 0.3
At period end (13.5) (8.7) (11.1)
Notes to the interim financial statements
Six months ended 30 June 2024
11 Trade and other receivables
30 June 2024 30 June 2023 31 December 2023
Unaudited Unaudited
£m £m £m
Gross trade receivables 33.1 32.0 31.8
Less provision for impairment of trade receivables (4.3) (0.7) (0.8)
Trade receivables 28.8 31.3 31.0
Prepayments 1.9 3.5 2.0
Accrued income 6.8 6.3 7.5
Corporation tax receivable 1.6 0.7 1.2
Other receivables 2.5 2.6 3.0
41.6 44.4 44.7
The provision for impairment of trade receivables at 30 June 2024 includes
£3.6m (including recoverable sales taxes of £0.6m) for an individual client
trade debtor in Germany. The net exposure of £3.0m has been reflected as an
exceptional cost in the income statement. More detail is provided in the
finance and operating review.
12 Trade and other payables
30 June 2024 30 June 2023 31 December 2023
Unaudited Unaudited
£m £m £m
Current
Trade payables 2.2 2.4 2.0
Other tax and social security 5.2 5.5 5.7
Pilot bonds 0.2 0.5 0.3
Client deposits 0.4 0.3 0.3
Other payables 5.3 5.2 5.2
Accruals 16.5 19.3 18.0
29.8 33.2 31.5
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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