TIDMEMR

RNS Number : 8253G

Empresaria Group PLC

29 July 2021

29 July 2021

Empresaria Group plc

("Empresaria" or the "Group")

Trading Update and Notice of Results

Strong recovery in profits and investment in future growth

Empresaria (AIM: EMR), the global specialist staffing group, provides a trading update ahead of announcing its interim results for the six months ended 30 June 2021 on Thursday 12 August 2021.

Trading update

   --      H1 profits expected to be significantly ahead of prior year 
   --      H1 net fee income up 1% on 2020 (up 4% in constant currency) with Q2 up 30% and Q1 down 19% 

-- Net debt increased to GBP16.5m (31 December 2020: GBP13.6m) reflecting working capital outflows as activity levels increased, with headroom remaining strong at GBP12.4m

-- Operational investment accelerated with appointment of highly experienced industry leadership to regional management roles

The ongoing recovery in net fee income resulted in the second quarter being 30% ahead of 2020 with overall first half net fee income up 1% on 2020 (up 4% in constant currency) and profits expected to be significantly ahead of prior year. Net fee income was down in the first quarter against prior year reflecting the Group's strong start to 2020 before the impact of COVID-19.

The Group has invested in its senior management structure with the appointment of Regional CEOs for APAC and for the UK & Europe and we will be announcing the appointment of a Regional President for North America in the coming week. The addition of these proven industry leaders will help the Group accelerate the implementation of its strategy and growth plans.

Financial position

Adjusted net debt at 30 June 2021 was GBP16.5m, a GBP2.9m increase since 31 December 2020. The increase is driven by the higher activity levels as net fee income improved, resulting in increased working capital requirements. Headroom has reduced reflecting these working capital changes but remains strong at GBP12.4m (31 December 2020: GBP17.6m).

Performance by sector

Net fee income by sector for the six months ended 30 June:

 
                                                                       % change 
                                                                      (constant 
 GBPm                                     2021    2020   % change    currency)* 
--------------------------------------  ------  ------  ---------  ------------ 
 Professional (excluding aviation)         7.7     7.1        +8%          +10% 
 Aviation                                  0.5     1.7       -71%          -72% 
--------------------------------------  ------  ------  ---------  ------------ 
 Professional (total)                      8.2     8.8        -7%           -7% 
 IT                                        6.5     6.7        -3%           +2% 
 Healthcare                                2.2     1.2       +83%         +100% 
 Property, Construction & Engineering      0.4     0.4         -%            -% 
 Commercial                                8.4     8.0        +5%           +8% 
 Offshore Recruitment Services             3.2     3.4        -6%           +3% 
 Intragroup                              (0.5)   (0.3) 
--------------------------------------  ------  ------  ---------  ------------ 
 Total                                    28.4    28.2        +1%           +4% 
--------------------------------------  ------  ------  ---------  ------------ 
 

* The constant currency movement is calculated by translating the 2020 results at the 2021 exchange rates.

Excluding aviation, the Group's Professional sector had a strong first half with net fee income up 8% reflecting good performances across the sector and a 59% increase in net fee income in the second quarter compared to 2020. Our aviation recruitment business continues to see very subdued demand with net fee income down more than 70% against 2020. We continue to be cautious on the speed of recovery of this business but are confident that it continues to have good growth potential in the medium and long term.

The Group's IT sector has seen a 3% fall in net fee income compared to the first half of 2020, although in constant currency net fee income was up 2%. This, in part, reflects a strong comparative performance with a delayed impact on net fee income from COVID-19 in 2020. The second quarter was up 5% on 2020. Our business in Japan has performed particularly well in 2021 delivering net fee income ahead of the prior year.

The Group's Healthcare sector has performed extremely strongly in 2021 with net fee income 83% ahead of the first half of 2020. The COVID-19 vaccination and testing programmes were identified as a key area of opportunity and our investment in delivering to these programmes has been the key driver of the sector's performance as demand has peaked through the first half of 2021. We would expect this sector to return to more normal levels of activity in the second half as the COVID-19 related demand in our markets slows down.

The Group's Property, Construction & Engineering sector is flat year on year and continues to see low levels of demand, particularly in our business supplying sales staff to the new home sector which has continued to operate under COVID-19 restrictions, limiting the demand for temporary staff. We are looking to diversify the business as well as positioning ourselves for when the market recovers.

The Group's Commercial sector has had a mixed first half with net fee income up 5% on 2020, with the second quarter up by 17%. We have seen good recovery in our operations in Chile and in our temporary staffing businesses in Germany and Austria. However, our logistics business in Germany, which had a very strong 2020, has seen a fall in net fee income. While demand remains strong it has become increasingly difficult to fill these lower paid roles as the wider economy recovers and there have been increased challenges in attracting candidates into Germany from Eastern Europe.

In Offshore Recruitment Services net fee income has reduced by 6%, primarily driven by foreign currency fluctuations and the exit from our loss-making operation in Dubai with effect from 1 January which contributed GBP0.4m of net fee income in 2020. Excluding these factors, net fee income increased and our operation in India, which recovered strongly in the second half of 2020, has continued to grow with high demand from clients in both the UK and the US. Our headcount in this business is now at a record high with more than 1,500 employees at 30 June.

Rhona Driggs, CEO of Empresaria, commented:

"We have had a positive start to 2021 with a strong recovery in profits after an extremely challenging 2020. This is testament to the resilience of our people and businesses and a result of the operational initiatives and investments we have made over the last two years.

We have made key senior appointments in the last few months bringing in individuals with proven track records and significant industry experience. Our ability to attract top talent illustrates our potential and ambition and these appointments to our senior management team will be key in helping us deliver on our growth strategies.

Despite the positive demand, there remain ongoing challenges in some of our key markets and sectors. Given the broad global footprint of the Group and the varying impact in each market we expect COVID-19 to remain a challenge in the short term. In addition, industry data tells us that while global hiring optimism is returning to pre-pandemic levels the talent shortages are at their highest for 15 years. Our investments in technology are going to be critical in enabling us to deliver in this environment.

This year marks our 25th anniversary but, in many ways, we have only just begun our journey. The acceleration of operational improvements and key leadership appointments means we are better placed than ever to realise the exceptional potential of the Group."

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 12 August 2021 at 4:30pm UK time.

Questions can be submitted pre-event through the platform or at any time during the live presentation. Management may not be in a position to answer every question it receives but will address those it can while remaining within the confines of information already disclosed to the market.

Q&A responses will be published at the earliest opportunity on the Investor Meet Company platform.

Investors can sign up for free via: https://www.investormeetcompany.com/empresaria-group-plc/register-investor. Those who have already registered and requested to meet the Company will be automatically invited.

- 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 7496 3000 
Alma PR (Financial PR)                   020 3405 0205 
 Sam Modlin                               empresaria@almapr.com 
 David Ison 
 Hilary Buchanan 
 

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 www.empresaria.com.

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END

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