TIDMEMR
RNS Number : 1272N
Empresaria Group PLC
28 January 2021
28 January 2021
Empresaria Group plc
("Empresaria" or the "Group")
Trading Update and Notice of Results
Profitability, operational resilience and financial strength
Empresaria (AIM: EMR), the global specialist staffing group,
today provides a trading update for the financial year ended 31
December 2020 ahead of announcing its full year results on 18 March
2021.
Trading update
-- Adjusted profit before tax expected to be approximately 5%
above the top end of market guidance
-- Net fee income of GBP54.0m, towards the higher end of market
guidance, down 28% compared to 2019, (27% in constant currency)
-- Profitable* in every quarter despite impact of COVID-19,
demonstrating the benefits of the Group's diversity by sector and
geography
-- Maintained a strong balance sheet - adjusted net debt at 31
December 2020 of GBP13.6m, a reduction of GBP5.5m compared to 31
December 2019 and an increase of GBP4.7m from 30 June 2020
reflecting working capital outflows as trading started to
recover
-- Operational investments and initiatives continue to position the Group for long-term growth
-- Good momentum in Q4 2020, but cautious start to 2021 with
increased lockdown and other restrictions across several
markets
* adjusted profit before tax
The Group had a strong start to 2020 delivering year on year
growth in operating profit in every month of the first quarter as
operational initiatives, launched in 2019 and aimed at improving
collaboration and delivering synergies and efficiency across the
Group, started to have a positive impact. COVID-19 started to
impact the Group in March, resulting in net fee income for the
first quarter being down 5% on 2019.
The second and third quarters saw the most significant impact
from the COVID-19 pandemic on the Group with May, June and July
being hit hardest as clients reacted to the impact of lockdowns on
their own businesses and the wider economy. Overall, second quarter
net fee income was down 39% against 2019 while the third quarter
was down 38%. As markets and clients started adjusting to a new
normal, we were pleased to see some positive momentum going into
the final months of the year, with net fee income for the fourth
quarter down 27% on prior year.
The swift and decisive actions taken on costs at the start of
the pandemic translated into ongoing strong cost controls, while
operating model efficiencies put in place both before and during
the pandemic delivered benefits. As a result, profits started to
recover more quickly than net fee income in the second half of 2020
and the Group's adjusted operating profit for the second half of
2020 was greater than the first half.
The Group has continued to benefit from its diverse nature by
both sector and geography. In our Commercial sector our German
logistics business performed strongly while our Healthcare
operation in the US saw some good momentum starting to build
towards the end of the year with increased COVID-19 testing and the
commencement of vaccinations. These have helped partially offset
the more significant impacts we have seen elsewhere, particularly
in our Professional sector where, for example, our business
supporting the aviation industry saw very significant falls in net
fee income.
We have taken the opportunity to accelerate and drive forward
key operational investments and initiatives, particularly in
technology where we are investing in the implementation of a common
platform across the Group to help drive sales and improve operating
efficiency. These initiatives will help the Group to exit the
pandemic more strongly than we entered it and to deliver a return
to growth.
Financial position
Adjusted net debt at 31 December 2020 was GBP13.6m, a GBP5.5m
reduction from 31 December 2019, and an increase of GBP4.7m against
30 June 2020. The significant working capital inflows seen in the
first half of the year began to unwind as trading levels started to
recover. Headroom, excluding invoice financing, remains strong at
GBP17.6m and the Group is in the final stages of refinancing its
revolving credit facility and expects to have a new facility in
place in time for the full year results announcement.
Performance by sector
Net fee income by sector for the year ended 31 December:
% change
(constant
GBPm 2020 2019 % change currency)*
-------------------------------------- ------ ------ --------- ------------
Professional 15.4 27.3 -44% -43%
IT 12.7 14.4 -12% -12%
Healthcare 2.5 2.8 -11% -11%
Property, Construction & Engineering 0.7 3.8 -82% -82%
Commercial 17.2 19.7 -13% -12%
Offshore Recruitment Services 6.1 7.0 -13% -8%
Intragroup (0.6) (0.5) +20% +20%
-------------------------------------- ------ ------ --------- ------------
Total 54.0 74.5 -28% -27%
-------------------------------------- ------ ------ --------- ------------
* The constant currency movement is calculated by translating
the 2019 results at the 2020 exchange rates.
The Group's Professional sector has seen the greatest impact
from COVID-19 with a 44% fall in net fee income compared with 2019.
Adverse impacts were seen across the sector but the most
significant fall was in our aviation recruitment business which has
experienced very substantial and sustained reductions in demand. We
do not expect to see a recovery to pre-COVID-19 levels in the short
term, but believe that this business continues to have good growth
potential in the medium and long term and the aviation industry has
a strong track record of rebounding after significant adverse
events. A substantial restructuring has been undertaken in this
business to right size its cost base and ensure it is well placed
to rebuild when the market returns. Elsewhere in Professional we
saw some signs of recovery in the second half of 2020, particularly
in our domestic services and digital businesses, but remain
cautious on outlook as we move into 2021.
The Group's IT sector has proven to be one of our more resilient
sectors in the face of COVID-19 with net fee income falling by 12%
against 2019. Our US and Japan businesses have been the most
resilient with single digit falls in net fee income although in the
US, where the majority of our business is permanent recruitment,
demand fell significantly after a very strong start to the year.
The UK, where the majority of sales are into Europe, was more
heavily affected and demand remained muted in the second half of
the year. The UK business has been restructured to increase the
focus on driving sales and creating a more efficient operating
model.
The Group's Healthcare sector was adversely impacted by
COVID-19, particularly during the first lockdowns, with patients
unable or unwilling to engage with healthcare services unless
absolutely necessary resulting in lower demand for temporary staff.
However, demand started to recover in the second half and the end
of the year saw strong momentum in the US driven by the testing and
vaccination programmes.
The Group's Property, Construction & Engineering sector,
which is based in the UK, has been significantly impacted, with
lockdown restrictions closing new home sales sites and
significantly reducing demand. Prior year net fee income includes
the UK engineering business, a substantial part of which was closed
in late 2019.
The Group's Commercial sector saw a 13% fall in net fee income
compared with 2019. In Germany, our logistics business has had a
positive impact from COVID-19, particularly during lockdown
restrictions where demand from supermarkets increased. This was
offset by adverse impacts in our businesses with major clients in
the automotive sector which faced significant challenges in the
first half of the year, although we started to see some increase in
demand in the second half of the year. COVID-19 also had a negative
impact on our businesses in Peru and Chile, however, our business
in Chile has received some protection as supermarkets form a large
part of its client base.
The Group's Offshore Recruitment Services business in India,
which supports the staffing sector in the US and UK, experienced a
significant drop in demand during the second quarter, particularly
from its US clients, when staffing services started to see the
initial impact of COVID-19 on their own businesses. As a result,
net fee income for the year was down 13%. However, the business
recovered strongly through the second half of 2020 and is now back
at the levels seen at the beginning of the year. We have continued
investment in this business with the launch of a managed talent
community solution supporting direct sourcing and recruitment
process outsourcing (RPO) which we anticipate will further
accelerate the growth and diversification of this business.
Rhona Driggs, CEO of Empresaria, commented:
"I would like to acknowledge the incredible efforts of our teams
around the world as we continue to navigate the uncertainty of
COVID-19. We have come together with purpose as a group, delivering
resilient results under difficult trading conditions, and have
remained committed to our strategy.
We took swift and decisive actions at the start of the pandemic
which have translated into improved ongoing cost controls, while
operating model efficiencies put in place both before and during
the pandemic have delivered cost benefits and, along with our
ongoing investment in technology initiatives, strengthen our
position to capitalise on market recovery. As a result of our
actions we have delivered greater adjusted operating profit in the
second half of 2020 than in the first.
The Group experienced positive momentum through the second half
of 2020, particularly through the fourth quarter, delivering
profits ahead of the guidance we issued at the start of December.
We have made good progress, although we are cautious on the
immediate outlook given the increase in national lockdowns and
local restrictions across our markets at the start of 2021.
We have proven we can deliver under adverse conditions and I
believe the operational investments and initiatives we have
continued to implement leave us well positioned to exit the
pandemic stronger than we entered it."
- Ends -
Enquiries:
Empresaria Group plc via Alma PR
Rhona Driggs, Chief Executive Officer
Tim Anderson, Chief Financial Officer
N+1 Singer (Nominated Adviser and
Broker)
Shaun Dobson / James Moat 020 7614 3000
Alma PR (Financial PR) 020 3405 0205
Sam Modlin empresaria@almapr.com
David Ison
Notes for editors:
-- Empresaria Group plc is a global specialist staffing group
offering temporary and contract recruitment, permanent recruitment
and offshore recruitment services across 6 sectors: Professional,
IT, Healthcare, Property, Construction and Engineering, Commercial
and Offshore Recruitment Services.
-- Empresaria operates from locations across the world including
the 4 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.
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END
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