TIDMEMR
RNS Number : 0561F
Empresaria Group PLC
17 March 2022
17 March 2022
Empresaria Group plc
("Empresaria" or the "Group")
Results for the year ended 31 December 2021
Strong net fee income growth and 65% increase in profit,
benefiting from the Group's diversification
Empresaria, the global specialist staffing group, reports its
unaudited preliminary results for the year ended 31 December
2021.
% change
(constant
Highlights 2021 2020 % change currency)(2)
------------------------------- ---------- ---------- ----------- ---------------
Revenue GBP258.4m GBP256.5m +1% +4%
Net fee income GBP59.5m GBP54.0m +10% +14%
Operating profit/(loss) GBP6.7m GBP(1.0)m +770%
Adjusted operating profit(1) GBP9.3m GBP6.2m +50% +60%
Profit/(loss) before tax GBP6.0m GBP(2.0)m +400%
Adjusted profit before tax(1) GBP8.6m GBP5.2m +65%
Diluted profit/(loss) per
share 4.5p (6.2)p +173%
Adjusted diluted earnings
per share(1) 8.6p 4.1p +110%
-- Progressive growth in net fee income
o H2 up 21% on prior year (up 26% in constant currency)
o Full year up 10% to GBP59.5m (up 14% in constant currency)
-- Strong growth in profits
o Adjusted profit before tax up 65% to GBP8.6m
o Adjusted, diluted earnings per share up 110% to 8.6p, slightly
ahead of 2019
-- Benefits from diversification by geography and sector demonstrated again
o Record net fee income and profit in Healthcare and Offshore
Recruitment Services sectors
o Strong growth in profits in Professional and IT
o More than offsetting challenges in aviation and logistics
-- Strategic and operational investments accelerated
o Investment in new regional structure and senior leadership
o More than half the Group live on our common front office
platform with nine more locations added in the year
-- Increased working capital requirements resulted in a GBP0.4m
increase in adjusted net debt to GBP14.0m
-- Proposed dividend of 1.2p per share, an increase of 20%
1 Adjusted to exclude amortisation of intangible assets
identified in business combinations, impairment of goodwill and
other intangible assets, exceptional items, fair value charges on
acquisition of non-controlling shares and, in the case of earnings,
any related tax.
2 The constant currency movement is calculated by translating
the 2020 results at the 2021 exchange rates.
Chief Executive Officer, Rhona Driggs, commented:
"We are pleased to have delivered 65% growth in profit and
progressive growth in net fee income, again supported by our
diversity by both geography and sector. The shift from recovery
mode to growth mode has enabled us to continue to make significant
investments in the future of the Group both in our leadership team
and our technology.
Our teams around the world have done an incredible job of
navigating the pandemic in 2021 and I am proud of their continued
resilience and commitment. We have made great progress with our
Stronger Together initiatives, which are aimed at driving greater
synergies and collaboration across the Group and it is particularly
pleasing to see the impact this has had on our culture. Testament
to this is our recent award of 3rd place in the 'Top 100 Staffing
Firms to Work For in 2022' at the World Staffing Summit.
I also want to acknowledge the devasting events unfolding in
Ukraine. Our heartfelt thoughts go out to all the people in
Ukraine. We are actively looking at ways in which our businesses
can contribute to helping those impacted by the conflict. It is too
early to know how the developing situation will affect the global
economy. We are not experiencing any significant direct impact at
present as we do not have operations in either Russia or
Ukraine.
We look forward to the year ahead with optimism. Our steadfast
focus on our strategic initiatives along with the investments we
have made leave us well positioned for growth and we are confident
on demonstrating this potential in 2022."
Investor presentation
In line with Empresaria's commitment to ensuring appropriate
communication structures are in place for all sections of its
shareholder base, management will deliver an online results
presentation open to all existing and potential investors via the
Investor Meet Company platform on Thursday 17 March 2022 at 12:30pm
UK time.
Investors can sign up for free via:
https://www.investormeetcompany.com/empresaria-group-plc/register-investor
.
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.
Those who have already registered and requested to meet the
Company will be automatically invited.
- Ends -
Enquiries:
Empresaria Group plc via Alma PR
Rhona Driggs, Chief Executive Officer
Tim Anderson, Chief Financial Officer
Singer Capital Markets (Nominated
Adviser and Broker)
Shaun Dobson
James Moat 020 7614 3000
Alma PR (Financial PR) 020 3405 0205
Rebecca Sanders-Hewett empresaria@almapr.com
Sam Modlin
Hilary Buchanan
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 5 largest staffing markets of the US, Japan, UK, Germany and
Australia along with a strong presence elsewhere in Asia Pacific
and Latin America.
-- Empresaria is listed on AIM under ticker EMR. For more
information visit empresaria.com.
Chair's statement
2021 performance
We are pleased to report our full-year results which have
delivered a strong recovery in net fee income and very strong
recovery in profits. As the year progressed demand returned in most
of our markets and we were well positioned to benefit from
this.
Our diversity by geography and sector remains a key strength of
the Group and was critical to our performance as COVID-19 impacted
the global economy in 2020. In 2021, all of our sectors delivered
net fee income and profit better than, or in line with, 2020, with
our diversity reflected in different levels of performance across
the Group. Our Offshore Recruitment Services sector had a record
year, delivering very significant growth and increasing headcount
by more than 80%, capitalising on high demand as clients reviewed
their cost bases and operating models as they looked to rebuild.
Elsewhere, our Healthcare sector was well placed to support
vaccination programmes, particularly in the US, and delivered
record results. These exceptional performances were tempered by
challenges elsewhere. In our Professional sector, our aviation
operation continues to experience very subdued demand, particularly
in its core Asia market. In our Commercial sector our logistics
business, which had a very strong 2020, has experienced significant
challenges in filling lower paid roles as the economy and labour
market recovered.
People
We have made significant investment in our senior leadership
team in 2021 with the appointment of three experienced industry
professionals into regional leadership roles. We now have an
extremely strong
leadership team and we are starting to see the benefits in
accelerating the execution of our strategy and growth plans.
The recovery we have delivered in 2021 would not have been
possible without the hard work and commitment of our employees
across the Group and I would like to thank each of them for their
contribution.
During the year we launched our diversity, equality and
inclusion initiative, starting with the Group's first ever
Group-wide survey. We now have a DE&I committee in place which
will help to shape the Group's approach to this critical area.
Dividend
The Board has reviewed the dividend in light of the continued
recovery of the Group's results and our markets, and for the year
ended 31 December 2021 we propose a dividend of 1.2p per share, up
20% on the prior year. Subject to shareholder approval at the
Annual General Meeting, the dividend will be paid on 8 June 2022,
to shareholders on the register on 13 May 2022.
Outlook
In 2021 the Group moved back into growth mode, while investing
in our operations. This investment will continue into 2022 with
plans to grow our sales and recruitment teams in markets and
sectors where we see strong opportunities for growth. The benefits
from these investments will become apparent as we move through 2022
and we look forward to the year ahead with optimism.
Tony Martin
Chair
16 March 2022
Chief Executive's Review
Performance overview
Three key themes characterised 2021 for the Group: firstly, we
saw a shift from recovery mode to growth mode; secondly, we
continued our focus on operational efficiency through our Stronger
Together initiative aimed at making Empresaria a more joined-up,
global business; and finally, we made significant investment in
senior talent to lead Empresaria through its next phase of
growth.
In 2021, all five of our key sectors returned to growth with
Offshore Recruitment Services and Healthcare delivering
particularly strong performances and record net fee income and
profit levels. While some areas continued to experience challenging
conditions, such as within Commercial (logistics) and Professional
(aviation), these have been far outweighed by positives elsewhere,
highlighting the benefits of being a diverse Group by geography and
sector.
We also saw the continued benefits of the operational
initiatives we put in place throughout 2019 and 2020. We have
progressed well with our technology implementation with a further
nine operations going live on our common front office system during
the year. This rollout will continue in 2022 alongside parallel
workstreams to maximise the benefits and realise a competitive
advantage, including through implementation of partnership
technology.
We made significant investments throughout 2021 to drive the
future growth of the Group. This included the appointment of three
experienced senior regional leaders who, working with our existing
leadership, will be instrumental in accelerating the delivery of
the Group's strategy. We also welcomed a new Chief Marketing
Officer who will drive the global brand and communications strategy
for the Group.
Strategic update
Throughout 2021 the Group maintained its strategic focus and
continued to invest in future growth. Looking ahead to 2022, our
core strategic priorities remain consistent, but how we will
implement them has developed to reflect the evolution of our
operations. Our new regional structure will help accelerate our
strategy, but this change goes beyond just adding regional leaders.
It is enabling us to share ideas and resources more readily across
businesses, creating joined-up sales strategies and training plans.
In short, it is making us much more effective and accelerating the
changes needed for long-term growth.
Our Offshore Recruitment Services sector continues to be a key
part of our strategy, both in delivering growth and scale through
its external clients, but also in improving productivity and
efficiency with increasing levels of internal delivery.
In 2020, we proved that our debt model works, with working
capital inflows reducing net debt when sales and profits fell. This
enabled us to maintain key investments in our future during a
period of difficult trading. Continuing to make targeted and
effective investments will be key to our future growth.
Investment priorities
We will increase headcount in our sales and recruitment teams as
we continue to see a rebound in activity and where we see the best
opportunities for growth. Our people are our most important asset,
and we will focus on retention and development strategies, to
ensure we have the right people in place to continue our growth
trajectory. In 2021 we rolled out a new talent development
programme in our Asia Pacific region, and we will look to replicate
similar initiatives elsewhere.
Our clients are increasingly looking to us to support them in
maximising their workforce strategies. We will continue to develop
a wider mix of solutions, for example offering RPO (Recruitment
Process Outsourcing) across more markets, to ensure we are
delivering to these changing customer needs. We will invest in
training and developing capabilities in these different buying
models and integrate them into our regional sales offerings.
We will continue to invest in our Offshore Recruitment Services
sector, including plans to add additional office space to allow for
further expansion. The unprecedented demand in 2021 saw our
headcount grow by 900 to a total of 2,000 employees. We will
continue to increase our internal utilisation of these services to
drive efficiency across the Group.
We have seen benefits from our technology rollout on our speed
of delivery and productivity. As we continue to implement our core
technology across the Group, we will also look to enhance this
technology through partnership products. These additional tools
will be focused on driving candidate reach and engagement to
address the skill shortages our clients are experiencing.
Market dynamics
The diversity of the Group by both geography and sector is a key
differentiator, allowing us to adapt quickly to economic
uncertainty and shifting market trends.
Digitisation continues to impact organisations the world over,
and our operations have adjusted accordingly. We have been able to
move quickly in our own digital transformation ensuring we remain
effective in matching candidates with clients. Increased talent
scarcity means we need to continue enhancing our digital
capabilities to ensure wider candidate reach and community
management. The flexibility of our front office system (now
deployed in more than half of our operations) allows us to add
additional tools quickly and effectively to support these
actions.
Our customer relationships have never been more important. We've
supported our customers through the pandemic and into the current
environment of skill shortages and wage inflation. Our success is
built on their success, and we can only achieve this by acting as a
trusted partner and adviser.
As the world of work continues to evolve so too does our focus
on building a sustainable business for the future. Like many
organisations we are on our ESG (Environmental, Social and
Governance) journey and in 2021 we made good progress in our
Diversity, Equality and Inclusion (DE&I) initiatives. We
completed our first DE&I survey to identify a benchmark for
where we need to focus our DE&I activities. We also established
our DE&I committee with representation from across the
globe.
Outlook
We are seeing positive signs in many of our markets and are well
positioned, with the right structure and leadership team, to take
advantage of these. The COVID-19 pandemic remains a risk with
ongoing potential for new waves and variants and restrictions
imposed by governments in response. However, we have proven that we
can navigate the pandemic, and operate successfully in these
environments and remain confident in our ability to continue to do
so.
It is too early to know how the developing situation in Ukraine
and Russia will affect global economies. We are not experiencing
any significant direct impact at present as we do not have
operations in either country.
We look forward to the year ahead with optimism as our markets
continue to rebound and client and candidate confidence increases.
Our ambition is to create long-term sustainable profit growth for
the Group and deliver adjusted operating profit of GBP20m in the
medium term and we believe we are well positioned to achieve
this.
Rhona Driggs
Chief Executive Officer
16 March 2022
Operating Review
Professional
GBPm 2021 2020
--------------------------- ----- -----
Revenue 45.6 55.3
Net fee income 17.6 15.4
Adjusted operating profit 1.3 0.2
% of Group net fee income 29% 28%
Average number of staff 281 342
Our Professional sector saw strong recovery across almost all
operations. Net fee income in the second half of the year was up by
42% on 2020, while the full year was up 14% year-on-year (up 16% in
constant currency). This resulted in a strong profit performance
with adjusted operating profit increasing by 550% to GBP1.3m.
Revenue fell due to the ongoing COVID-19 related issues in
aviation, outlined in more detail below, where we primarily supply
temporary workers on high revenue, low margin contracts. This is
also reflected in the sector's service mix with permanent
recruitment increasing to 76% of net fee income (2020: 67%).
Excluding aviation, sector net fee income grew by 27%
year-on-year.
In the UK our domestic services and corporate hospitality
business had a very strong year with net fee income up by almost
50% as demand returned across its client base. This business
remains exposed to any ongoing COVID-19 impacts or restrictions,
particularly where supplying to private households or events. Our
digital and marketing operations have also seen very strong growth,
particularly in the second half of the year as positive momentum
increased. Our business supplying to clients in the financial
services sector also ended the year well, with net fee income in
the second half of the year up more than 40% on 2020 after a more
challenging first half of the year.
In Asia, excluding aviation, we have seen a strong recovery with
every operation delivering at least double-digit growth in net fee
income. This is despite many of these countries continuing to
operate with strict COVID-19 measures, particularly regarding
international travel. The majority of our markets are permanent
recruitment focused with restrictions on temporary and contract
operations, however where possible we are looking to expand our
temporary and contract offering to improve our net fee income
mix.
Our business supplying to the aviation industry continues to
experience very subdued demand with recovery delayed much longer
than we had hoped, particularly in Asia where the majority of our
clients operate. Revenues and net fee income fell during the year,
primarily in the first half when the comparative included
pre-COVID-19 performance. As a result, a further impairment charge
has been recorded against the goodwill and other intangible assets
related to this business (see notes 7 and 8 for details). Our main
revenues are from placing pilots in temporary and contract roles
but we continue to look to diversify our offering to maximise our
opportunities and provide greater stability. We are cautious on
short-term recovery but remain confident that this operation has
good growth prospects in the medium and long term.
IT
GBPm 2021 2020
--------------------------- ----- -----
Revenue 37.5 41.8
Net fee income 13.3 12.7
Adjusted operating profit 3.0 1.8
% of Group net fee income 22% 23%
Average number of staff 93 105
Our IT sector delivered solid growth in net fee income which was
up 5% on 2020 (10% in constant currency), with a 10% year-on-year
fall in revenue, reflecting the challenges in the UK outlined
below, more than offset by improvements in margins and growth in
permanent revenues. Profit growth was particularly strong, with
increases in all operations and sector adjusted operating profit
increasing by two-thirds to GBP3.0m.
Our performance in Japan was very encouraging with net fee
income up by more than 20% in constant currency and very strong
growth in profits. We see good opportunities in this market and are
investing in increasing our capacity to deliver future growth.
Our US operation has performed extremely strongly with net fee
income up more than 30% in constant currency and profits more than
doubling. We have been very successful in delivering to high demand
from our key clients and towards the end of the year started to
make some good progress on growing our temporary and contract
revenues which will continue to be a key focus for 2022.
Our UK business has continued to experience challenges with
temporary and contract numbers which continued to fall in the first
half of the year and did not recover as much as expected in the
second half. As a result, while margins have improved, net fee
income is down 10% year-on-year. However, the restructuring actions
undertaken in 2020 have proved effective and as a result profits
have increased significantly in 2021 compared to the prior year. We
are confident that further operational improvements made in the
year, including the appointment of a new leader, leave this
business well placed to deliver growth.
Healthcare
GBPm 2021 2020
--------------------------- ----- -----
Revenue 26.9 13.2
Net fee income 4.2 2.5
Adjusted operating profit 1.4 0.4
% of Group net fee income 7% 5%
Average number of staff 17 17
Our Healthcare sector was one of our star performers in 2021
delivering double the revenue of 2020, 68% growth in net fee income
(75% in constant currency) and 250% growth in profit.
Our US operation performed particularly well, with net fee
income almost doubling and profits quadrupling from 2020. Growth
has been driven by the COVID-19 vaccination programmes which we
were well placed to support. This demand for high volume, but lower
margin, roles also demonstrated the effectiveness and flexibility
of our operating model. In the US we have no recruiters in market,
with all recruiting activity being undertaken by our Offshore
Recruitment Services operations in India and the Philippines. This
demand is expected to drop back in 2022, but we have built momentum
in expanding into other areas, such as travel nursing, which will
help offset this.
In Finland our operation has continued to develop, delivering
double-digit growth in net fee income and strong growth in profits.
This business has also benefited from the COVID-19 vaccination
programmes as it expanded
from its core doctors offering and into nursing.
Property, Construction & Engineering
GBPm 2021 2020
--------------------------- ------ ------
Revenue 3.4 3.6
Net fee income 0.7 0.7
Adjusted operating loss (0.1) (0.2)
% of Group net fee income 1% 1%
Average number of staff 15 17
Our Property, Construction & Engineering sector is the
Group's smallest sector and is wholly UK based. Our operation
focuses on supplying sales staff to the new home sector alongside
building management systems workers. We have not seen any
significant recovery in this sector with net fee income flat
year-on-year. Losses have been minimised, halving to GBP0.1m.
The majority of revenue is from the supply of sales staff to the
new home sector. While that sector has itself largely recovered, it
has continued to operate in new ways adopted during the pandemic.
This has significantly reduced ongoing demand for temporary sales
staff. We continue to look at ways to diversify our offering and
adapt to the changes in the market.
Commercial
GBPm 2021 2020
--------------------------- ------ ------
Revenue 131.0 132.3
Net fee income 17.2 17.2
Adjusted operating profit 4.6 4.6
% of Group net fee income 29% 32%
Average number of staff 260 256
Our Commercial Sector has had a mixed year with results in line
with 2020, and with a large variation in underlying
performances.
In Germany, our logistics business benefitted strongly from
COVID-19 in 2020 with increased demand from its clients and
improved availability of candidates from within Germany as the
wider economy suffered. In 2021, while demand has remained strong,
candidate availability has weakened significantly as the German
economy recovered and candidates were less willing to take lower
paid roles. There have also been increased challenges in attracting
candidates into Germany from Eastern Europe, with greater
difficulty in crossing borders under ongoing COVID-19 restrictions.
As a result, net fee income and profits in this business have
fallen significantly in 2021 compared to the prior year.
Elsewhere in Germany our temporary staffing business has
performed very well with net fee income up by more than 20% and
very strong growth in profits, despite the ongoing supply chain
challenges for our clients in the automotive industry which held
back growth in the second half of the year. In Austria, where we
have a similar client profile, net fee income grew by more than 30%
and profits by more than 40% as we successfully maximised the
benefits from the recovery in demand.
In South America our operation in Chile had a good year with
double digit growth in net fee income and growth in profits. In
Peru, where there was a more significant impact from COVID-19, our
business has faced more significant challenges with net fee income
and profits falling in the year.
Offshore Recruitment Services
GBPm 2021 2020
--------------------------- ------ ------
Revenue 15.3 10.9
Net fee income 7.7 6.1
Adjusted operating profit 4.1 2.6
% of Group net fee income 12% 11%
Average number of staff 1,579 1,019
Our Offshore Recruitment Services sector performed very strongly
in the year with net fee income increasing by 26% over 2020 (35% in
constant currency) and adjusted operating profit increasing by 58%
(71% in constant currency). At the start of the year we closed our
operation in UAE after a number of years of losses. Excluding this
business net fee income grew by 43% (54% in constant currency).
Our operations support the staffing sector, principally in the
US and the UK, providing any aspect of the end-to-end recruitment
process alongside compliance and back-office services. Clients are
predominantly third parties but this sector also plays an important
role in supporting our own businesses across the Group.
Our operations grew very rapidly during the year, increasing
headcount by over 900 and closing the year with more than 2,000
employees. This was driven by strong demand as clients reviewed
their operating models and cost bases as they recovered from the
impact of COVID-19. Increased investment in our sales and delivery
teams has enabled us to capitalise on this.
In 2021 we successful trialled a new delivery team in the
Philippines in order to diversify our base and provide our clients
with an alternative delivery option. This trial was successful, and
we now have over 30 recruiters operating from the Philippines and
we expect to expand this significantly in 2022.
Regional Summary
Adjusted operating
Revenue Net fee income profit
GBPm 2021 2020 2021 2020 2021 2020
--------------------------- ------ ------ -------- ------- ---------- ---------
UK 44.0 46.4 14.8 13.4 1.8 0.6
Continental Europe 89.1 91.1 14.2 14.0 3.8 3.8
Asia Pacific 55.6 63.9 21.8 19.4 5.8 3.6
Americas 71.0 55.7 9.9 7.8 2.9 1.4
Central and consolidation (1.3) (0.6) (1.2) (0.6) (5.0) (3.2)
--------------------------- ------ ------ -------- ------- ---------- ---------
Total 258.4 256.5 59.5 54.0 9.3 6.2
--------------------------- ------ ------ -------- ------- ---------- ---------
The UK recovered strongly in 2021 with year-on-year growth of
10% in net fee income and 200% growth in profits. Revenue was down
5% reflecting challenges with temporary and contract recruitment in
our IT sector and a change in mix with permanent recruitment
recovering at a faster rate. All our UK operations delivered
improvements in profit compared to 2020.
Continental Europe delivered results in line with the prior
year. The positive performances in our Commercial sector temporary
staffing businesses in Germany and Austria along with our
Healthcare business in Finland offset the challenges in our
Commercial sector logistics business in Germany.
Asia Pacific grew strongly with a 12% increase in net fee income
and a 61% increase in profit. The drop in revenue was due to the
ongoing challenges in our Professional sector aviation operation
which has high revenue, low margin temporary contracts. All other
businesses in the region delivered growth in both net fee income
and profits, with the most significant profit driver being our
Offshore Recruitment Services operation in India.
In the Americas, both revenue and net fee income grew by 27%
with profit more than doubling to GBP2.9m. Growth was driven by our
US IT and Healthcare operations which delivered very strong growth.
In our Commercial sector we saw good growth in Chile but this was
offset by a weaker performance in Peru.
Finance Review
Overview
The Group's results for 2021 reflect a strong performance as the
market recovered from the impact of COVID-19. We were able to move
from recovery mode to growth mode with net fee income in the second
half of the year increasing by 26% in constant currency over the
same period in 2020. This strong performance translated to profit
growth with adjusted profit before tax up 65% year-on-year to
GBP8.6m and adjusted, diluted earnings per share increasing by 110%
to 8.6p.
The improvement in net fee income led to increased working
capital outflows but these were largely offset by the improved
profitability. As a result, our adjusted net debt position at 31
December 2021 was GBP14.0m, just GBP0.4m higher than at 31 December
2020 and substantially below the 31 December 2019, pre-COVID,
balance of GBP19.1m. As a result our debt to debtors ratio reduced
to 35% at 31 December 2021 (2020: 37%).
Income statement
% change
2021 2020 constant
GBPm GBPm % change currency(2)
Revenue 258.4 256.5 +1% +4%
Net fee income 59.5 54.0 +10% +14%
Operating profit/(loss) 6.7 (1.0) +770%
Adjusted operating profit(1) 9.3 6.2 +50% +60%
Profit/(loss) before tax 6.0 (2.0) +400%
Adjusted profit before tax(1) 8.6 5.2 +65%
Diluted earnings/(loss) per
share 4.5p (6.2)p +173%
Adjusted diluted earnings
per share(1) 8.6p 4.1p +110%
1 Adjusted to exclude amortisation of intangible assets
identified in business combinations, impairment of goodwill and
other intangible assets, exceptional items, fair value charges on
acquisition of non-controlling shares and, in the case of earnings,
any related tax. See note 5 for a reconciliation between profit
before tax and adjusted profit before tax.
2 The constant currency movement is calculated by translating
the 2020 results at the 2021 exchange rates.
Revenue increased by 1% (4% in constant currency) with net fee
income increasing by 10% (14% in constant currency). The increase
in revenue reflects strong growth in both permanent placement and
offshore recruitment services revenues, offset by a reduction in
temporary and contract revenues. The fall in temporary and contract
revenues was primarily driven by the ongoing challenges in aviation
(see operating review), which is mainly lower margin temporary and
contract revenue. Improvements in average margins meant that
temporary and contract net fee income grew by 2% alongside strong
growth from permanent recruitment and offshore recruitment
services. This growth in net fee income, combined with ongoing
operational improvements, translated into a 50% year-on-year
increase in adjusted operating profit.
A detailed analysis by sector is provided in the operating
review. Following the appointment of regional leaders during 2021,
the Group is moving to a regional reporting structure and, as a
result, with effect from 2022 the Group's operating segmental
analysis will be reported by region. For 2021, the analysis
continues to be presented by sector, reflecting the reporting of
information during the year.
Central costs have increased to GBP5.0m (2020: GBP3.2m)
reflecting the hiring of regional leaders, the reversal of
short-term cost-saving measures put in place in 2020, along with
increased costs for bonuses and share schemes. The cost of the new
regional leaders was, for the most part, funded by the exit of
sector and brand leadership in 2020 whose costs were reflected in
individual sectors.
In 2021, the Group continued to utilise government support
schemes introduced to help protect jobs and minimise redundancies.
The usage of these schemes reduced significantly during the year as
demand recovered and staff returned to work. Payments of GBP0.4m
(2020: GBP1.9m) were received in respect of internal staff,
primarily during the first half of the year, and these are offset
in administrative costs in the income statement. We also continued
to work with our clients to help protect the jobs of our temporary
workers, with a further GBP0.5m (2020: GBP3.6m) of support offset
against cost of sales in the income statement. Had the government
schemes not been available, in most cases this would have resulted
in those temporary assignments being ended.
Adjusted profit before tax has increased by 65% to GBP8.6m
reflecting the increase in adjusted operating profit and lower net
finance costs which in 2021 included interest credits following the
settlement of tax audits. The reported profit before tax of
GBP6.0m, increased significantly from a loss of GBP2.0m in 2020,
reflects impairment charges on goodwill and other intangible assets
of GBP1.2m (2020: GBP5.0m), and amortisation of intangible assets
identified in business combinations of GBP1.4m (2020: GBP1.7m).
2020 also included exceptional costs of GBP0.2m and a fair value
charge on acquisition of non-controlling shares of GBP0.3m for
which there were no equivalent charges in 2021.
The impairment charges principally arose in our Professional
sector where our operation providing pilots to the aviation
industry has continued to be impacted by that industry's slow
recovery from the pandemic. This is particularly the case in Asia
where the majority of our clients are based. As a result, an
impairment charge has been reflected for both goodwill and other
intangible assets related to this operation. Further details are
provided in notes 7 and 8.
The total tax charge for the year is GBP3.1m (2020: GBP1.2m),
with the effective tax rate of 52% (2020: -60%) distorted by the
mix of profits by jurisdiction and the non-deductible goodwill
impairment charge. On an adjusted basis, the effective rate is 40%
(2020: 46%). The effective tax rate is higher than the underlying
tax rates due to a number of factors, including:
-- the level of non-deductible expenses in the year (GBP0.4m);
-- withholding taxes, dividend taxes, and deferred tax
liabilities on unremitted earnings in respect of our overseas
operations (GBP0.4m); and
-- deferred tax assets not recognised for certain tax losses
around the Group, net of prior year losses recognised in the period
(GBP0.2m).
Adjusted, diluted earnings per share increased by 110% to 8.6p.
This reflects the increase in adjusted profit before tax, along
with a decrease in the proportion of profits allocated to
non-controlling interests due to the performance in aviation, the
acquisition of additional shares in our UK IT business in 2020, and
the strong recovery in results seen across the Group. Reported
diluted earnings per share was 4.5p (2020: loss per share 6.2p)
reflecting the above and the reduction in the level of impairment
charges compared to the prior year.
Balance sheet
2021 2020
GBPm GBPm
Goodwill and other intangible
assets 39.8 43.0
Trade and other receivables 50.5 44.9
Cash and cash equivalents 21.1 20.8
Right-of-use assets 7.5 9.0
Other assets 5.0 4.4
------------------------------- ------- -------
Assets 123.9 122.1
------------------------------- ------- -------
Trade and other payables (34.8) (33.4)
Borrowings (34.4) (33.4)
Lease liabilities (7.9) (9.4)
Other liabilities (4.5) (3.5)
------------------------------- ------- -------
Liabilities (81.6) (79.7)
------------------------------- ------- -------
Net assets 42.3 42.4
------------------------------- ------- -------
Goodwill and other intangible assets arise from the investments
the Group has made. As at 31 December 2021 the balance was GBP39.8m
(2020: GBP43.0m) with the movement from 2020 due to GBP1.6m of
amortisation of intangible assets (2020: GBP1.8m), foreign exchange
losses of GBP1.1m (2020: gains of GBP0.5m), impairment charges of
GBP1.2m (2020: GBP5.0m) and additions of GBP0.7m (2020: GBP0.3m).
The increase in additions reflects the acceleration of the Group's
investment in moving to a single front-office system.
Trade and other receivables include trade receivables of
GBP39.5m (2020: GBP37.0m) with the increase from 2020 reflecting
the improvement in trading. Average debtor days for the Group in
2021 were in line with the prior year at 48 (2020: 47), with debtor
days at 31 December 2021 of 47 (2020: 47). The income statement
includes a charge of GBP0.3m (2020: GBP0.6m) in respect of
impairment losses on trade receivables.
Cash and borrowings are discussed in the financing section
below.
Cash flow
The Group is typically highly cash generative with an
historically strong correlation between pre-tax profits and cash
flows. The Group measures its free cash flow as a key performance
indicator and defines this as net cash from operating activities
per the cash flow statement excluding cash flows related to pilot
bond liabilities (see financing section below) and after deducting
payments made under lease agreements.
2021 2020
GBPm GBPm
Net cash inflow from operating activities
per cash flow statement 7.9 14.2
Cash flows related to pilot bonds 0.3 0.5
Payments under lease agreements (5.6) (6.2)
------------------------------------------- ------ ------
Free cash flow 2.6 8.5
Taxation 2.7 3.0
------------------------------------------- ------ ------
Free cash flow (pre-tax) 5.3 11.5
------------------------------------------- ------ ------
Free cash flow in 2021 is significantly lower than 2020 with the
recovery in trading driving working capital outflows whereas 2020
reflected significant working capital inflows. These outflows were
partially offset by the increase in profit. The cash flow also
reflects settlement of GBP0.9m of liabilities deferred in 2020
under government deferral schemes. No further such amounts remain
outstanding. The Group also presents a pre-tax free cash flow
measure as tax payments in a global business can be volatile.
In 2021 the Group utilised its free cash flow as follows:
2021 2020
GBPm GBPm
Free cash flow 2.6 8.5
Acquisition of businesses (net of
cash acquired) - (0.1)
Purchase of shares in existing subsidiaries (0.6) (1.5)
Purchase of property, plant and equipment
and software (1.7) (0.7)
Dividends paid to owners of Empresaria (0.5) -
Group plc
Dividends paid to non-controlling
interests (0.3) (0.5)
Purchase of own shares in Employee
Benefit Trust (0.2) (0.2)
Other 0.4 -
--------------------------------------------- ------ ------
(Increase)/decrease in adjusted net
debt (0.4) 5.5
--------------------------------------------- ------ ------
The purchase of shares in existing subsidiaries mainly relates
to the final payment in respect of the acquisition of shares in
ConSol Partners in 2020.
Purchase of property, plant and equipment, and software of
GBP1.7m reflects investments in the year including the provision of
IT and other equipment to an additional 900 people in our Offshore
Recruitment Services operations, the ongoing investment in a common
front office system and the return to a more normalised level of
capex in operations which cut back or delayed expenditure in 2020.
Dividends paid to our shareholders were GBP0.5m (2020: nil)
reflecting the reinstatement of the Group's dividend in 2021. The
Group has continued to purchase Empresaria shares, transferring
these into the Employee Benefit Trust to satisfy future share
option exercises, and these purchases totalled GBP0.3m in 2021
(2020: GBP0.2m). Dividends paid to non-controlling interests were
GBP0.3m (2020: GBP0.5m).
Financing
The Group's treasury function is managed centrally and the
Group's financial risk management policies are set out in note 23
of the annual report.
2021 2020
GBPm GBPm
Cash and cash equivalents 21.1 20.8
Pilot bonds (0.7) (1.0)
--------------------------- ------- -------
Adjusted cash 20.4 19.8
--------------------------- ------- -------
Overdraft facilities (18.2) (22.1)
Invoice financing (4.6) (4.9)
Bank loans (11.6) (6.4)
--------------------------- ------- -------
Total borrowings (34.4) (33.4)
--------------------------- ------- -------
Adjusted net debt (14.0) (13.6)
--------------------------- ------- -------
Adjusted net debt at 31 December 2021 increased slightly to
GBP14.0m (2020: GBP13.6m) reflecting the cash flows discussed
above. Adjusted net debt excludes cash of GBP0.7m (2020: GBP1.0m)
held to match pilot bonds within our aviation business. Where
required by the client, pilot bonds are taken at the start of the
pilot's contract and are repayable to the pilot or the client
during the course of the contract or if it ends early. There is no
legal restriction over this cash, but given the requirement to
repay it over a three-year period, and that to hold these is a
client requirement, we exclude cash equal to the amount of the
bonds when calculating our adjusted net debt measure. Movements in
the level of bonds have no impact on our adjusted net debt
measure.
During 2021, the month-end average adjusted net debt position
was GBP14.8m (2020: GBP12.8m) with a high of GBP19.1m at 30 May
(2020: GBP17.7m at 31 March) and a low of GBP11.1m at 30 September
(2020: GBP8.9m at 30 June).
Our debt to debtors ratio (adjusted net debt as a percentage of
trade receivables) has reduced to 35% (2020: 37%) with the small
increase in net debt offset by an increase in trade receivables as
a result of improved trading. We continue to be focused on managing
our debt levels with the aim of lowering the debt to debtor ratio
to 25%.
Total borrowings were GBP34.4m (2020: GBP33.4m) being bank
overdrafts of GBP18.2m (2020: GBP22.1m), invoice financing of
GBP4.6m (2020: GBP4.9m) and bank loans of GBP11.6m (2020: GBP6.4m).
The Group's borrowings are principally held to fund working capital
requirements and are mainly due within one year. As at 31 December
2021, GBP11.2m of borrowings are shown as non-current (2020:
GBP1.2m) with the increase from 31 December 2020 reflecting the
refinancing of the revolving credit facility during 2021.
The Group maintains a range of facilities to manage its working
capital and financing requirements. At 31 December 2021 the Group
had facilities totalling GBP55.5m (2020: GBP57.3m).
2021 2020
GBPm GBPm
UK facilities
Overdrafts 10.0 10.0
Revolving credit facility 15.0 15.0
Invoice financing facility 10.0 10.0
----- -----
Total UK facilities 35.0 35.0
Continental Europe facilities 11.8 12.9
Asia Pacific facilities 2.4 3.2
Americas facilities 6.3 6.2
----- -----
55.5 57.3
----- -----
Undrawn facilities (excluding
invoice financing) 12.9 17.6
----- -----
In March 2021 the Group refinanced its GBP15m revolving credit
facility at the same level for a term of 2.5 years expiring in
September 2023. The renewal included an ongoing relaxation of
covenants, first agreed during 2020, until March 2022. These
covenants are tested on a quarterly basis and have been met
throughout the period, even if measured against the covenants that
will apply from March 2022. The covenants, and our performance
against them as at 31 December 2021, are as follows:
Target
Target (From 31 March
Covenant (31 Dec 2021) 2022) Actual
Net debt: EBITDA < 3.5 times < 3.0 times 1.3
Interest cover > 3.0 times > 4.0 times 15.7
Debtor coverage > 1.5 times > 1.75 times 3.5
Management equity
As highlighted in previous annual reports, the Group has moved
away from issuing second generation equity schemes for incoming
management and has put in place appropriate alternative incentive
schemes. Existing shareholdings and commitments remain in place and
continue to be reflected in these accounts.
Based on results for the year ended 31 December 2021, and using
applicable valuation mechanisms in shareholders' agreements but
ignoring any holding period requirements, the payment to acquire
all those second generation shares not held by the Group would be
approximately GBP0.4m were the maximum valuation multiples to
apply. First generation shares are accounted for as non-controlling
interests in the consolidated financial statements. Based on
results for the year ended 31 December 2021 and using applicable
valuation mechanisms in shareholders' agreements where these exist,
or equivalent valuation mechanisms where they do not, the payment
to acquire all those first generation shares not held by the Group
would be approximately GBP8.7m.
There is no legal obligation on the Group to acquire the shares
held by management at any time. Further information on the
management equity scheme is provided in note 27 of the annual
report.
During the year the Group acquired shares from management for
total consideration of less than GBP0.1m. Further details are
provided in note 6 of the annual report.
Dividend
During the year, the Group paid a dividend of 1.0p per share in
respect of the year ended 31 December 2020. For the year ended 31
December 2021, the Board is proposing a dividend of 1.2p per share,
an increase of 20%. Subject to shareholder approval at the Annual
General Meeting, the dividend will be paid on 8 June 2022 to
shareholders on the register on 13 May 2022.
Going concern
The Board has undertaken a recent and thorough review of the
Group's budget, forecasts and associated risks and sensitivities,
which included consideration of the potential ongoing impact of
COVID-19. Given the business forecasts and early trading
performance, the Group is expected to be able to continue in
operational existence for the foreseeable future, being a period of
at least 12 months from the date of approval of the accounts. As a
result, the going concern basis continues to be appropriate in
preparing the financial statements. Further details on going
concern are found in note 1 of the annual report.
Tim Anderson
Chief Financial Officer
16 March 2022
Consolidated income statement
2021 2020
Note GBPm GBPm
Revenue 2 258.4 256.5
Cost of sales (198.9) (202.5)
Net fee income 2 59.5 54.0
Administrative costs (including GBP0.3m (2020: GBP0.6m) in respect of trade receivable
impairment
losses) (50.2) (47.8)
-------- --------
Adjusted operating profit 2 9.3 6.2
Exceptional items - (0.2)
Fair value charge on acquisition of non-controlling shares - (0.3)
Impairment of goodwill 7 (0.9) (1.6)
Impairment of other intangible assets 8 (0.3) (3.4)
Amortisation of intangible assets identified in business combinations 8 (1.4) (1.7)
-------- --------
Operating profit/(loss) 6.7 (1.0)
-------- --------
Finance income 3 0.3 0.2
Finance costs 3 (1.0) (1.2)
-------- --------
Net finance costs 3 (0.7) (1.0)
Profit/(loss) before tax 6.0 (2.0)
Taxation 4 (3.1) (1.2)
Profit/(loss) for the year 2.9 (3.2)
-------- --------
Attributable to:
Owners of Empresaria Group plc 2.3 (3.1)
Non-controlling interests 0.6 (0.1)
-------- --------
2.9 (3.2)
-------- --------
Pence Pence
Earnings/(loss) per share
Basic 6 4.6 (6.2)
Diluted 6 4.5 (6.2)
Details of adjusted earnings per share are shown in note 6.
Consolidated statement of comprehensive income
2021 2020
GBPm GBPm
Profit/(loss) for the year 2.9 (3.2)
------ ------
Other comprehensive income
Items that may be reclassified subsequently to the income statement:
Exchange differences on translation of foreign operations (1.7) 0.4
Items that will not be reclassified to the income statement:
Exchange differences on translation of non-controlling interests in foreign operations (0.6) (0.1)
------ ------
Other comprehensive (loss)/income for the year (2.3) 0.3
Total comprehensive income/(loss) for the year 0.6 (2.9)
------ ------
Attributable to:
Owners of Empresaria Group plc 0.6 (2.7)
Non-controlling interests - (0.2)
------ ------
0.6 (2.9)
------ ------
Consolidated balance sheet
2021 2020
Note GBPm GBPm
Non-current assets
Property, plant and equipment 1.6 1.6
Right-of-use assets 7.5 9.0
Goodwill 7 30.5 32.5
Other intangible assets 8 9.3 10.5
Deferred tax assets 3.4 2.8
------- -------
52.3 56.4
------- -------
Current assets
Trade and other receivables 9 50.5 44.9
Cash and cash equivalents 21.1 20.8
------- -------
71.6 65.7
------- -------
Total assets 123.9 122.1
------- -------
Current liabilities
Trade and other payables 10 34.8 33.4
Current tax liabilities 1.9 1.1
Borrowings 11 23.2 32.2
Lease liabilities 4.6 5.3
------- -------
64.5 72.0
------- -------
Non-current liabilities
Borrowings 11 11.2 1.2
Lease liabilities 3.3 4.1
Deferred tax liabilities 2.6 2.4
------- -------
17.1 7.7
------- -------
Total liabilities 81.6 79.7
------- -------
Net assets 42.3 42.4
------- -------
Equity
Share capital 2.5 2.4
Share premium account 22.4 22.4
Merger reserve 0.9 0.9
Retranslation reserve 2.5 4.2
Equity reserve (10.2) (10.2)
Other reserves (0.6) (0.6)
Retained earnings 19.9 18.1
------- -------
Equity attributable to owners of Empresaria
Group plc 37.4 37.2
Non-controlling interests 4.9 5.2
------- -------
Total equity 42.3 42.4
------- -------
Consolidated statement of changes in equity
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
2019 2.4 22.4 0.9 4.0 (9.8) (0.6) 21.4 40.7 7.3 48.0
-------- -------- -------- -------------- -------- --------- --------- ------ ---------------- -------
Loss for the
year - - - - - - (3.1) (3.1) (0.1) (3.2)
Exchange
differences
on translation
of foreign
operations - - - 0.2 - 0.2 - 0.4 (0.1) 0.3
-------- -------- -------- -------------- -------- --------- --------- ------ ---------------- -------
Total
comprehensive
loss for the
year - - - 0.2 - 0.2 (3.1) (2.7) (0.2) (2.9)
Dividend paid to
non-controlling
interests - - - - - - - - (0.5) (0.5)
Acquisition of
non-controlling
shares - - - - (0.4) - - (0.4) (1.4) (1.8)
Purchase of own
shares
in Employee
Benefit
Trust - - - - - - (0.2) (0.2) - (0.2)
Share-based
payments - - - - - (0.2) - (0.2) - (0.2)
At 31 December
2020 2.4 22.4 0.9 4.2 (10.2) (0.6) 18.1 37.2 5.2 42.4
-------- -------- -------- -------------- -------- --------- --------- ------ ---------------- -------
Profit for the
year - - - - - - 2.3 2.3 0.6 2.9
Exchange
differences
on translation
of foreign
operations - - - (1.7) - - - (1.7) (0.6) (2.3)
-------- -------- -------- -------------- -------- --------- --------- ------ ---------------- -------
Total
comprehensive
income for the
year - - - (1.7) - - 2.3 0.6 - 0.6
Dividend paid to
owners
of Empresaria
Group
plc (see note
13) - - - - - - (0.5) (0.5) - (0.5)
Dividend paid to
non-controlling
interests - - - - - - - - (0.3) (0.3)
Purchase of own
shares
in Employee
Benefit
Trust - - - - - - (0.3) (0.3) - (0.3)
Exercise of
share options 0.1 - - - - (0.3) 0.3 0.1 - 0.1
Share-based
payments - - - - - 0.3 - 0.3 - 0.3
At 31 December
2021 2.5 22.4 0.9 2.5 (10.2) (0.6) 19.9 37.4 4.9 42.3
-------- -------- -------- -------------- -------- --------- --------- ------ ---------------- -------
Consolidated cash flow statement
2021 2020
GBPm GBPm
Profit/(loss) for the year 2.9 (3.2)
Adjustments for:
Depreciation of property, plant and equipment,
and software amortisation 1.0 1.1
Depreciation of right-of-use assets 5.3 6.3
Fair value charge on acquisition of non-controlling
shares - 0.3
Impairment of goodwill 0.9 1.6
Impairment of other intangible assets 0.3 3.4
Amortisation of intangible assets identified
in business combinations 1.4 1.7
Share-based payments 0.3 (0.2)
Net finance costs 0.7 1.0
Taxation 3.1 1.2
------ -------
15.9 13.2
(Increase)/decrease in trade and other receivables (8.2) 10.9
Increase/(decrease) in trade and other payables
(including pilot bonds outflow of GBP0.3m (2020:
outflow of GBP0.5m)) 3.5 (5.8)
Cash generated from operations 11.2 18.3
Interest paid (0.9) (1.1)
Income taxes paid (2.7) (3.0)
------ -------
Net cash inflow from operating activities 7.6 14.2
------ -------
Cash flows from investing activities
Consideration paid for business acquisitions
(net of cash acquired) - (0.1)
Purchase of property, plant and equipment, and
software (1.7) (0.7)
Finance income 0.3 0.2
------ -------
Net cash outflow investing activities (1.4) (0.6)
------ -------
Cash flows from financing activities
(Decrease)/increase in overdrafts (3.3) 3.8
Proceeds from bank loans 5.5 1.8
Repayment of bank loans (0.2) (5.7)
Decrease in invoice financing - (2.0)
Payment of obligations under leases (5.3) (6.2)
Purchase of shares in existing subsidiaries (0.6) (1.5)
Purchase of own shares in Employee Benefit Trust (0.3) (0.2)
Dividends paid to owners of Empresaria Group
plc (0.5) -
Dividends paid to non-controlling interests (0.3) (0.5)
------ -------
Net cash outflow from financing activities (5.0) (10.5)
------ -------
Net increase in cash and cash equivalents 1.2 3.1
Foreign exchange movements (0.9) 0.1
Cash and cash equivalents at beginning of the
year 20.8 17.6
Cash and cash equivalents at end of the year 21.1 20.8
------ -------
2021 2020
GBPm GBPm
Bank overdrafts at beginning of the year (22.1) (17.9)
Decrease/(increase) in the year 3.3 (3.8)
Foreign exchange movements 0.6 (0.4)
------- -------
Bank overdrafts at end of the year (18.2) (22.1)
Cash, cash equivalents and bank overdrafts at
end of the year 2.9 (1.3)
------- -------
1 Basis of preparation and general information
The financial information has been abridged from the audited
financial information for the year ended 31 December 2021.
The fi nancial i nformation set out above does not constitute
the Company's consolidated statutory accounts for the years ended
31 December 2021 or 2020, but is derived from those accounts.
Statutory accounts for 2020 have been delivered to the Registrar of
Compan ies and those for 2021 will be delivered followi ng the
Company's Annual General Meeti ng. The Auditors have reported on
those accounts; their reports were unqualified, did not draw
attention to any matters by way of emphasis without qualifyi ng
their reports and did not contain statements under s498(2) or (3)
Companies Act 2006 or equivalent preceding legislation.
Accounting policies have been applied consistently with those
set out in the 2020 financial statements, as amended when relevant
to reflect the adoption of new standards, amendments and
interpretations which became effective in the year. During 2021 no
new standards, amendments or interpretations had a significant
impact on the financial statements.
While the financial information included in this preliminary
announcement has been prepared in accordance with the recognition
and measurement criteria of UK-adopted international Accounting
Standards, this announcement does not itself contain sufficient
financial information to comply with UK-adopted international
Accounting Standards. The Group will be publishing full financial
statements that comply with UK-adopted international Accounting
Standards in April 2022.
2 Segment and revenue analysis
Information reported to the Group's Executive Committee,
considered to be the chief operating decision maker of the Group
for the purpose of resource allocation and assessment of segment
performance, is based on the Group's six operating sectors.
Following the appointment of regional leaders during 2021, the
Group is moving to a regional reporting structure. As a result,
with effect from 2022 the Group's operating segmental analysis will
be reported by region. For 2021, the analysis continues to be by
sector, reflecting the reporting of information during the
year.
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 recruitment services.
The analysis of the Group's results by sector is set out
below:
2021 2020
Adjusted Adjusted
Net fee operating Net fee operating
Revenue income profit Revenue income profit
GBPm GBPm GBPm GBPm GBPm GBPm
Professional 45.6 17.6 1.3 55.3 15.4 0.2
IT 37.5 13.3 3.0 41.8 12.7 1.8
Healthcare 26.9 4.2 1.4 13.2 2.5 0.4
Property, Construction
& Engineering 3.4 0.7 (0.1) 3.6 0.7 (0.2)
Commercial 131.0 17.2 4.6 132.3 17.2 4.6
Offshore Recruitment
Services 15.3 7.7 4.1 10.9 6.1 2.6
Central costs - - (5.0) - - (3.2)
Intragroup eliminations (1.3) (1.2) - (0.6) (0.6) -
-------- -------- ----------- -------- -------- -----------
258.4 59.5 9.3 256.5 54.0 6.2
-------- -------- ----------- -------- -------- -----------
3 Finance income and costs
2021 2020
GBPm GBPm
Finance income
Bank interest receivable 0.3 0.2
------ ------
0.3 0.2
------ ------
Finance costs
Invoice financing (0.1) (0.1)
Bank loans and overdrafts (0.7) (0.5)
Interest on lease liabilities (0.3) (0.4)
Interest on tax payments 0.1 (0.2)
------ ------
(1.0) (1.2)
------ ------
Net finance costs (0.7) (1.0)
------ ------
4 Taxation
The tax expense for the year is as follows:
2021 2020
GBPm GBPm
Current tax
Current year income tax expense 3.7 2.9
Adjustment in respect of prior years (0.1) (0.1)
------ ------
Total current tax expense 3.6 2.8
Deferred tax
Deferred tax credit - on origination and reversal
of temporary differences (0.5) (1.6)
------ ------
Total income tax expense in the income statement 3.1 1.2
------ ------
5 Reconciliation of adjusted profit before tax to profit before tax
2021 2020
GBPm GBPm
Profit/(loss) before tax 6.0 (2.0)
Exceptional items - 0.2
Fair value charge on acquisition of non-controlling
shares - 0.3
Impairment of goodwill 0.9 1.6
Impairment of other intangible assets 0.3 3.4
Amortisation of intangible assets identified in
business combinations 1.4 1.7
----- ------
Adjusted profit before tax 8.6 5.2
----- ------
6 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 2021 and
2020 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.
2021 2020
GBPm GBPm
Earnings attributable to owners of Empresaria
Group plc 2.3 (3.1)
Adjustments:
Exceptional items - 0.2
Fair value charge on acquisition of non-controlling
shares - 0.3
Impairment of goodwill 0.9 1.6
Impairment of other intangible assets 0.3 3.4
Amortisation of intangible assets identified in
business combinations 1.4 1.7
Tax on the above (0.3) (1.2)
Non-controlling interests in respect of the above (0.2) (0.8)
--------- ---------
Adjusted earnings 4.4 2.1
--------- ---------
Number of shares Millions Millions
Weighted average number of shares- basic 49.8 50.3
Dilution effect of share options 1.6 1.3
--------- ---------
Weighted average number of shares- diluted 51.4 51.6
--------- ---------
Earnings per share Pence Pence
Basic 4.6 (6.2)
Dilution effect of share options (0.1) -
--------- ---------
Diluted 4.5 (6.2)
--------- ---------
Adjusted earnings per share Pence Pence
Basic 8.8 4.2
Dilution effect of share options (0.2) (0.1)
--------- ---------
Diluted 8.6 4.1
--------- ---------
In 2020, all share options were antidilutive for the purpose of
assessing diluted earnings per share in accordance with IAS 33
Earnings Per Share. As such, diluted earnings per share and basic
earnings per share were equal. As these options are nil-cost
options these were reflected as dilutive in assessing adjusted,
diluted earnings per share presented above.
The weighted average number of shares (basic) has been
calculated as the weighted average number of shares in issue during
the year plus the number of share options already vested less the
weighted average number of shares held by the Empresaria Employee
Benefit Trust. The Trustees have waived their rights to dividends
on the shares held by the Empresaria Employee Benefit Trust.
7 Goodwill
2021 2020
GBPm GBPm
At 1 January 32.5 33.5
Impairment charge (0.9) (1.6)
Foreign exchange movements (1.1) 0.6
------ ------
At 31 December 30.5 32.5
------ ------
Goodwill is reviewed and tested for impairment on an annual
basis or more frequently if there is an indication that goodwill
might be impaired. Goodwill has been tested for impairment by
comparing the carrying amount of the group of cash-generating units
('CGUs') the goodwill has been allocated to, with the recoverable
amount of those CGUs. The recoverable amount of each group of CGUs
is considered to be its value in use. The key assumptions in
assessing value in use are as follows:
Operating profit and pre-tax cash flows
The operating profit and pre-tax cash flows are based on the
2022 budgets approved by the Group's Board. These budgets are
extrapolated using short-term growth rate forecasts and long-term
growth rates and margins that are consistent with the business
plans approved by the Group's Board. These cash flows are
discounted to present value to assess the value in use.
Discount rates
The pre-tax, country-specific rates used to discount the
forecast cash flows range from 10.4% to 18.4% (2020: 9.2% to 16.9%)
reflecting current local market assessments of the time value of
money and the risks specific to the relevant business. These
discount rates reflect the estimated industry weighted average cost
of capital in each market and are based on the Group's weighted
average cost of capital adjusted for local factors.
Pre-tax discount rates used by sector are as follows:
Professional: 11.2% to 17.6% (2020: 10.0%
to 16.9%)
IT: 11.2% to 11.6% (2020: 9.5% to 11.3%)
Healthcare: 11.0% to 12.9% (2020: 9.8% to
12.3%)
Property, Construction & Engineering: 12.2%
(2020: 11.0%)
Commercial: 10.4% to 18.4% (2020: 9.2% to
16.0%)
Offshore Recruitment Services: 17.3% (2020:
16.6%)
Growth rates
The growth rates used to extrapolate beyond the most recent
budgets and forecasts and to determine terminal values are based
upon IMF GDP growth forecasts for the specific market. Longer-term
growth rates ranged from 0.5% to 6.0%. GDP growth is a key driver
of our business and is therefore an appropriate assumption in
developing long-term forecasts.
Long-term growth rates used by sector are as follows:
Professional: 1.5% to 5.2% (2020: 2.0% to
3.0%)
IT: 0.5% to 1.5% (2020: 1.0% to 2.0%)
Healthcare: 1.3% to 1.7% (2020: 2.0%)
Property, Construction & Engineering: 1.5%
(2020: 2.0%)
Commercial: 0.5% to 1.0% (2020: 1.0% to
2.0%)
Offshore Recruitment Services: 6.0% (2020:
2.0%)
In 2021, an impairment charge of GBP0.6m has been recognised in
respect of a business in the Professional sector. This business
supplies the aviation industry which has not recovered from the
severe impact of COVID-19 as quickly as was previously anticipated.
As a result, an impairment review was carried out at 30 June 2021
and an impairment charge booked. Before the impairment charge was
recognised, the carrying value of the goodwill was GBP2.0m and the
recoverable amount, based on value in use, was assessed as GBP1.4m.
A further impairment review was carried out on this operation at 31
December 2021 and no additional impairment was identified. An
impairment charge of GBP0.3m has also been recognised in respect of
a business in the Commercial sector.
In 2020, an impairment charge of GBP1.6m was recognised in
respect of a business in the Professional sector which was been
heavily impacted by the decline in the aviation industry due to the
impact of COVID-19. Before the impairment charge was recognised the
carrying value of the goodwill was GBP3.7m and the recoverable
amount, based on value in use, was assessed as GBP2.1m.
As part of the impairment review, reasonably possible changes in
the growth rate and discount rate assumptions have been considered
to assess the impact on the recoverable amount of each business.
Were the long-term growth rate to reduce to nil no impairment
charge would be recorded (2020: GBPnil), while if the discount rate
were to increase by 2% no impairment charge would be recorded
(2020: GBP0.5m impairment charge in respect of one business in the
Professional sector).
8 Other intangible assets
Intangible assets identified
in business combinations
--------------------------------------
Trade
Customer names
2021 relationships & marks Sub Total Software Total
GBPm GBPm GBPm GBPm GBPm
Cost
At 1 January 14.4 9.0 23.4 1.2 24.6
Additions - - - 0.7 0.7
Foreign exchange movements (0.5) (0.2) (0.7) (0.1) (0.8)
--------------- --------- ---------- --------- ------
At 31 December 13.9 8.8 22.7 1.8 24.5
--------------- --------- ---------- --------- ------
Accumulated amortisation
At 1 January 9.7 3.5 13.2 0.9 14.1
Charge for the year 0.9 0.5 1.4 0.2 1.6
Impairment 0.1 0.2 0.3 - 0.3
Foreign exchange movements (0.5) (0.3) (0.8) - (0.8)
--------------- --------- ---------- --------- ------
At 31 December 10.2 3.9 14.1 1.1 15.2
--------------- --------- ---------- --------- ------
Net book value
--------------- --------- ---------- --------- ------
At 31 December 2020 4.7 5.5 10.2 0.3 10.5
--------------- --------- ---------- --------- ------
At 31 December 2021 3.7 4.9 8.6 0.7 9.3
--------------- --------- ---------- --------- ------
At 30 June 2021 a full impairment review was carried out on an
operation in our Professional sector which supplies the aviation
industry. This industry has been hit hard by COVID-19 and the
recovery has been slower than we previously anticipated. As a
result, an impairment charge of GBP0.3m has been recorded.
As required under IFRS, the Group reviewed its assets for
indications of impairment as at 31 December 2021. No further
impairments were identified.
9 Trade and other receivables
2021 2020
GBPm GBPm
Current
Gross trade receivables 40.4 37.9
Less provision for impairment
of trade receivables (0.9) (0.9)
------ ------
Trade receivables 39.5 37.0
Prepayments 1.7 1.5
Accrued income 5.0 3.6
Corporation tax receivable 0.9 1.0
Other receivables 3.4 1.8
------ ------
50.5 44.9
------ ------
Trade receivables include GBP21.6m (2020: GBP22.5m) on which
security has been given under bank facilities.
10 Trade and other payables
2021 2020
GBPm GBPm
Current
Trade payables 2.0 1.6
Other tax and social security 7.1 8.0
Pilot bonds 0.7 1.0
Client deposits 0.5 0.4
Temporary recruitment worker wages 3.3 4.3
Other payables 1.2 1.3
Accruals 20.0 16.2
Deferred consideration - 0.6
----- -----
34.8 33.4
----- -----
Pilot bonds represent unrestricted funds held by our aviation
business at the request of clients that are repayable to the pilot
over the course of a contract, typically between three and five
years. If the pilot terminates their contract early, the
outstanding bond is payable to the client. For this reason the
bonds are shown as a current liability. As at 31 December 2021, if
the bonds were to be repaid in line with existing contracts,
GBP0.3m (2020: GBP0.6m) would be repayable in more than one
year.
11 Borrowings
2021 2020
GBPm GBPm
Current
Bank overdrafts 18.2 22.1
Invoice financing 4.6 4.9
Bank loans 0.4 5.2
----- -----
23.2 32.2
----- -----
Non-current
Bank loans 11.2 1.2
----- -----
11.2 1.2
----- -----
Borrowings 34.4 33.4
----- -----
The following key bank facilities are in place at 31 December
2021:
Facility limit Outstanding
2021 2020 2021 2020
Currency Maturity Interest rate GBPm GBPm GBPm GBPm
Bank overdrafts
On demand 1% above applicable
with annual currency base
UK(1) GBP(2) review rates 10.0 10.0 6.9 7.4
On demand EURIBOR + 3.0%
with annual (2020: EURIBOR
Germany EUR review + 2.3%) 10.9 11.6 8.4 10.4
On demand
with annual
USA USD review LIBOR + 2% 1.5 1.5 1.5 1.5
On demand New Zealand
with annual Base Lending
New Zealand NZD review Rate + 2% 0.5 1.1 - -
Invoice financing
UK base rate
On demand + 1.82% (2020:
with annual UK base rate
UK GBP review + 1.47%) 10.0 10.0 3.0 3.3
On demand Weighted average
with annual rate 5.5% (2020:
Chile CLP review 5.5%) 4.2 4.0 1.6 1.6
Borrowings
UK - Revolving SONIA + 2%
Credit Facility GBP 2023 to 3% 15.0 - 10.5 -
UK - Revolving
Credit Facility GBP 2021 LIBOR +1.5% - 15.0 - 5.0
Weighted average
rate 0.5% (2020:
Japan JPY 2025-2028 0.5%) 0.9 1.1 0.9 1.1
1 The UK overdraft is a net overdraft arrangement across a
number of UK entities. For facility utilisation purposes these
amounts are presented net in the table above, but for accounting
purposes cash and overdrawn balances are presented gross in the
balance sheet. The utilisation amount in the table is net of
GBP1.2m of cash shown within cash and cash equivalents in the
balance sheet (2020: GBP2.5m).
2 The UK overdraft can be drawn in a number of different
currencies with the overall facility limit expressed in GBP.
The UK revolving credit facility was refinanced in March 2021
with the new facility of GBP15.0m expiring in September 2023. The
interest rate margin varies based on the Group's net debt to EBITDA
ratio and ranges from 2.0% to 3.0%. The New Zealand overdraft limit
was reduced to NZD 1.0m from NZD 2.0m in the year reflecting the
reduced working capital requirements of our business supplying the
aviation industry.
The UK revolving credit facility is secured by a first fixed
charge over all book and other debts given by the Company and
certain of its UK, German and New Zealand subsidiaries. It is also
subject to financial covenants and these are disclosed in the
finance review. The UK invoice financing facility is also secured
by a fixed and floating charge over trade receivables.
12 Net debt
a) Net debt
2021 2020
GBPm GBPm
Cash and cash equivalents 21.1 20.8
Borrowings (34.4) (33.4)
------- -------
Net debt (13.3) (12.6)
------- -------
b) Adjusted net debt
2021 2020
GBPm GBPm
Cash and cash equivalents 21.1 20.8
Less cash held in respect of pilot bonds (0.7) (1.0)
------- -------
Adjusted cash 20.4 19.8
Borrowings (34.4) (33.4)
------- -------
Adjusted net debt (14.0) (13.6)
------- -------
The Group presents adjusted net debt as its principal debt
measure. Adjusted net debt is equal to net debt excluding cash held
in respect of pilot bonds within our aviation business. Where
required by the client, pilot bonds are taken at the start of the
pilot's contract and are repayable to the pilot or the client
during the course of the contract or if it ends early. There is no
legal restriction over this cash, but given the requirement to
repay it over a three-year period, and that to hold these is a
client requirement, cash equal to the amount of the bonds is
excluded in calculating adjusted net debt.
c) Movement in adjusted net debt
2021 2020
GBPm GBPm
At 1 January (13.6) (19.1)
Net increase in cash and cash equivalents per
consolidated cash flow statement 1.2 3.1
(Increase)/decrease in overdrafts and loans (2.0) 0.1
Decrease in invoice financing - 2.0
Foreign exchange movement 0.1 (0.2)
Adjusted for decrease in cash held in respect
of pilot bonds 0.3 0.5
------- -------
At 31 December (14.0) (13.6)
------- -------
13 Dividends
2021 2020
GBPm GBPm
Amount recognised as distribution to equity holders in the year:
Final dividend for the year ended 31 December 2020 of 1.0p (2019: nil) per share 0.5 -
----- -----
Proposed final dividend for the year ended 31 December 2021 of 1.2p (2020: 1.0p) per share 0.6 0.5
----- -----
The proposed final dividend for the year ended 31 December 2021
is subject to approval by shareholders at the Annual General
Meeting and has not been included as a liability in these financial
statements.
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END
FR SFDESMEESEFD
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March 17, 2022 03:00 ET (07:00 GMT)
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