TIDMEMR
RNS Number : 3799U
Empresaria Group PLC
28 March 2023
28 March 2023
Empresaria Group plc
("Empresaria" or the "Group")
Results for the year ended 31 December 2022
Solid growth and building to deliver on our medium-term
ambitions
Empresaria, the global specialist staffing group, reports its
final results for the year ended 31 December 2022.
% change
(constant
Highlights 2022 2021 % change currency)(2)
------------------------------- ---------- ---------- ----------- ---------------
Revenue GBP261.3m GBP258.4m +1% +0%
Net fee income GBP65.4m GBP59.5m +10% +8%
Operating profit GBP8.8m GBP6.7m +31%
Adjusted operating profit(1) GBP10.2m GBP9.3m +10% +6%
Profit before tax GBP7.6m GBP6.0m +27%
Adjusted profit before tax(1) GBP9.0m GBP8.6m +5%
Diluted earnings per share 6.7p 4.5p +49%
Adjusted diluted earnings
per share(1) 8.8p 8.6p +2%
-- Solid growth in net fee income
o Up 10% year-on-year to GBP65.4m
o Year-on-year growth in every quarter, but softening as the
second half progressed
o Offshore Services up 75% year-on-year
o Strong growth in Professional across the UK and APAC
o Partially offset by the expected reduction in Healthcare after
a record 2021
-- Adjusted operating profit up 10% to GBP10.2m
-- Adjusted profit before tax up 5% to GBP9.0m
-- Adjusted, diluted earnings per share up 2% against prior year
reflecting weighting of performance towards operations with a
higher proportion of non-controlling interests
-- Adjusted net debt of GBP7.9m, reduced by GBP6.1m from 31 December 2021
-- Proposed dividend of 1.4p per share, an increase of 17%
reflecting the Board's confidence in the Group's prospects and its
strong cash generation
-- Targeted investment in headcount - Offshore Services up 27%,
the rest of the Group up 8% compared to 31 December 2021
-- Increase in staff productivity - up 6% year-on-year
-- Two new Non-Executive Directors, Steve Bellamy and Ranjit de
Sousa, appointed in January 2023 and February 2023 respectively
-- Penny Freer appointed as Chair of the Board, having been Interim Chair since June 2022
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 2021 results at the 2022 exchange rates.
Chief Executive Officer, Rhona Driggs, commented:
"We are pleased to have delivered solid growth in both net fee
income and profits against a rapidly changing economic backdrop
which saw demand soften in the second half of the year. We continue
to see the benefits of our diversification and are starting to see
the positive results from the targeted investments we have made in
people, technology and process as evidenced by our strong growth in
Offshore Services, our early success in delivering Recruitment
Process Outsourcing in APAC, and an increase of 6% in staff
productivity.
We look forward to the year ahead with some caution given the
ongoing global economic uncertainty. We will continue to focus on
executing on our Roadmap to GBP20m to deliver on our medium-term
ambition to double adjusted operating profit."
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 Tuesday 28 March 2022 at 3:00pm
UK time.
Investors can sign up for free via:
https://www.investormeetcompany.com/empresaria-group-plc/register-investor
.
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the UK version of the EU Market Abuse Regulation (2014/596) which
is part of UK law by virtue of the European Union (Withdrawal) Act
2018, as amended and supplemented from time to time.
- Ends -
Enquiries:
Empresaria Group plc via Alma PR
Rhona Driggs, Chief Executive Officer
Tim Anderson, Chief Financial Officer
Singer Capital Markets (Nominated Adviser
and Joint Broker)
Shaun Dobson
James Moat 020 7614 3000
Cenkos Securities plc (Joint Broker)
Katy Birkin/Charlie Combe (Corporate Finance)
Michael Johnson/Jasper Berry (Sales) 020 7397 8900
Alma PR (Financial PR) 020 3405 0205
Sam Modlin empresaria@almapr.com
Pippa Crabtree
Hilary Buchanan
Notes for editors:
-- Empresaria Group plc is a global specialist staffing group.
We are driven by our purpose to positively impact the lives of
people, while delivering exceptional talent to our clients
globally. We offer temporary and contract recruitment, permanent
recruitment and offshore services across six sectors: Professional,
IT, Healthcare, Property, Construction & Engineering,
Commercial and Offshore Services.
-- Empresaria is structured in four regions (UK & Europe,
APAC, Americas and Offshore Services) and operates from locations
across the world including the four largest staffing markets of the
US, Japan, UK and Germany along with a strong presence elsewhere in
Asia Pacific and Latin America.
-- Empresaria is listed on AIM under ticker EMR. For more
information visit empresaria.com.
Chair's statement
2022 performance
We are pleased to report our full-year results which have
delivered solid growth in net fee income and profits. The year has
been characterised by two phases. In the first half of the year,
the ongoing recovery post COVID created significant opportunities
for the staffing market. However, as the second half of the year
progressed, the emergence of inflationary and recessionary
pressures saw this growth checked.
Despite the increased economic uncertainty, we delivered
year-on-year growth in net fee income in every quarter of 2022. Our
diversity by sector and geography has continued to benefit the
Group, with strong performances in Offshore Services, many of our
businesses in APAC, Professional in the UK and our logistics
operation in Germany. These outweighed the expected drop in
Healthcare, challenging conditions for our temporary business in
Germany, and the impact of a fall in global IT demand in the second
half of the year.
People
I want to acknowledge and thank our teams across the Group for
their hard work and dedication. Our results would not have been
possible without their contributions.
In June, Tony Martin CBE, our Chair of 18 years, retired. Tony
played an instrumental role on the Empresaria Board guiding the
Group through challenging times, helping to build the business, and
supporting the strategic changes that we have made in recent years.
We thank him for his significant contribution over the years.
We strengthened our senior leadership team in 2021 with the
appointment of regional leaders. Our leadership team has helped us
to accelerate the implementation of our strategy and is laying the
foundations for our future success.
I am pleased to welcome two new Non-Executive Directors to the
Board. Steve Bellamy was appointed in January 2023 and Ranjit de
Sousa was appointed in February 2023. Together they bring a wealth
of experience to the Board and its committees.
Dividend
The Board has reviewed the dividend in line with our progressive
dividend policy and for the year ended 31 December 2022 we are
pleased to propose a dividend of 1.4p per share, an increase of 17%
on the prior year. This increase reflects the growth in profits,
and strong cash generation, in the year and the Board's confidence
in the Group's medium-term prospects. Subject to shareholder
approval at the Annual General Meeting, the dividend will be paid
on 15 June 2023, to shareholders on the register on 26 May
2023.
Outlook
The economic environment became more uncertain as 2022
progressed, with the post-COVID recovery giving way to inflationary
and recessionary concerns. Although this uncertainty is expected to
continue, we have proven our ability to successfully navigate
difficult periods and take advantage of opportunities as they
arise. We therefore look forward with cautious optimism and are
focused on delivering on our Roadmap to GBP20m.
Penny Freer
Chair
27 March 2023
Chief Executive's review
2022 performance overview
We continued to make good financial, strategic and operational
progress in 2022 which underpinned our overall performance.
Our Offshore Services operation continued to perform well and
delivered a record year with significant net fee income growth of
75%. We also saw record net fee income from our operations in
Japan, Indonesia, Singapore, Thailand and the Philippines and
strong performances from our Professional operations in the UK and
our logistics business in Germany. These stronger results helped to
outweigh those in markets that had more challenging trading
environments and performances.
Throughout 2022, we maintained our strategic focus and continued
to invest in our growth, adding significant headcount in both our
Offshore Services and APAC regions. We ended 2022 with our global
headcount up 22% year-on-year.
We made good progress on our key strategic objectives following
the appointment of our new regional leadership team in 2021,
strengthening our foundation for success.
We have made progress in launching our enhanced Recruitment
Process Outsourcing ('RPO') solutions and this has already proven
successful with the delivery of several RPO projects in APAC and UK
& Europe.
Our staff productivity increased 6% year-on-year following the
continued rollout of our common front office
technology. In addition, our ongoing shift away from a 360
recruitment model to an operating model that has dedicated sales
and delivery teams has allowed us to focus our expertise in these
areas and scale more effectively and leverage our Offshore Services
resources.
Roadmap to GBP20m
While we expect to see organic growth across all our sectors,
our Roadmap to GBP20m focuses on the three key pillars that we have
identified to accelerate our growth.
Our first pillar is to build scale and accelerate growth in high
potential sectors, capitalising on our core expertise in
Professional, IT and Healthcare. We currently offer Professional
recruitment services in just two of the six largest staffing
markets globally despite having operations in five of these. We
will leverage our existing footprint, client base and expertise,
and expand our Professional services into US, Japan and Germany,
with the US launch planned for 2023.
We will expand our IT offering by scaling existing locations,
leveraging our footprint to enter new locations while focusing on
increasing our temporary and contract business.
Lastly, we will focus on growing our Healthcare business in the
US where it is projected that demand for healthcare workers will
outpace supply by 2025.
Our second pillar will see us continue to diversify our client
offering beyond the more traditional temporary and permanent
recruitment services. Through Empresaria Solutions we will provide
clients with regional and global services as well as additional
value-added solutions like RPO.
And finally, our third pillar is continued growth in Offshore
Services. We will build scale and grow our client base by
strengthening our sales teams and accelerating their efforts. We
will continue to look at options to diversify our offering to our
staffing industry clients such as expanding our back office
services and introducing new services such as outsourced marketing.
We will also further expand our delivery capacity in the
Philippines in order to provide our clients with an additional
option outside of India and to expand our access to talent.
Investment priorities for 2023
Looking to 2023, we will focus on actions to deliver our Roadmap
to GBP20m.
In the first half of 2023 we will launch a new operation in the
US focused on providing temporary, contract and
permanent staffing in the Professional sector. We will seek to
leverage our existing client base in the Healthcare and IT sectors
where we have a proven track record of delivery, while providing
our clients with more options to use our services across their
businesses.
We will continue to execute on our strategy to broaden our
service offering and enhance our regional and global sales
capabilities under the Empresaria Solutions umbrella. We will
invest in strengthening our sales and delivery teams to target
areas where we see opportunities for success.
Our people are key to the success of our business. We will
continue to focus on developing and retaining our talent. We will
be launching our Top Talent Programme in the UK & Europe
following the successful 2022 programme in APAC. This programme is
aimed at engaging and developing the future leaders of our
organisation.
To further drive productivity, speed to market and
collaboration, we will continue to implement our core common
technology platform across the Group. We will also commence the
second phase of our technology roll out which is focused on
increasing productivity through bolt-on technologies such as
onboarding and reporting. We will complement this with increased
automation capabilities to build talent communities and long- term
engagement.
Global economic and geopolitical uncertainty
Our agility and diversification by geography and sector,
improves our resilience and we have proven that we can successfully
adapt to changing market conditions. The transformation of the
Group in recent years has created a strong foundation to capitalise
on the opportunities these changes present.
Ongoing skill shortages combined with low unemployment rates
have made the staffing market more resilient than normal to the
global economic uncertainty. While 2022 was dominated by strong
demand for permanent employees, market forecasts suggest a shift to
increased temporary recruitment as employers demand more
flexibility from their workforce. We therefore expect our mix of
temporary to permanent placements to adjust to reflect this, and we
are well positioned to support this change.
Outlook
The uncertainty in the wider economic environment resulted in a
softening of demand as the second half of 2022 progressed, and this
has continued with a slower start to 2023, however, across our
markets, the overall number of vacancies remains above pre-COVID
levels.
The strengthening of our leadership team and our progress in
investing in technology, people and process, leaves us well placed
to weather economic challenges and gives us confidence to stay the
course in executing our strategy and delivering on our Roadmap to
GBP20m.
Rhona Driggs
Chief Executive Officer
27 March 2023
Operating review
UK & Europe
GBPm 2022 2021
--------------------------- ------ ------
Revenue 124.9 133.1
Net fee income 28.4 29.0
Adjusted operating profit 4.7 5.3
% of Group net fee income 43% 49%
Average number of staff 272 282
The UK & Europe region saw mixed performances in 2022 with
net fee income reducing by 2% (2% in constant currency) and
adjusted operating profit falling by 11% (11% in constant
currency). Revenue fell by 6% (6% in constant currency) reflecting
the change in the temp to perm mix.
In the UK, net fee income grew by 3% year-on-year with double
digit percentage growth in profit. Net fee income from the
Professional sector grew 6% year-on-year, driven by permanent
placement activity which increased significantly, particularly in
the first half of the year. Net fee income from IT fell by 18%
compared to 2021 reflecting ongoing operational challenges.
Corrective actions are in place to improve this performance
including accelerating the focus on growth in the UK market as the
majority of activity in our UK based operation is with clients
throughout mainland Europe. In the second half of the year we moved
a number of brands into a single location which is driving
collaboration and cross-selling as well as improving operational
efficiency.
In Finland, our Healthcare business had a challenging year as
net fee income fell by 35% and the business generated a loss. This
performance was in part driven by significant changes in public
sector healthcare in Finland, alongside the expected drop in
COVID-19 related demand.
In Germany, our operations focused on the Commercial sector
delivered contrasting results leaving overall net fee income and
profits in line with prior year. Our logistics operation saw a good
recovery with strong growth in both net fee income and profits.
However, our temporary staffing business has been adversely
affected by a number of factors including demand from key clients
operating in the troubled automotive industry, and an ongoing
increase in sickness rates due to COVID-19 which has impacted
margins.
Our operation in Austria is similar to our temporary business in
Germany and was impacted by the same factors outlined above. As a
result, net fee income fell by over 20% and profits fell by
two-thirds.
APAC
GBPm 2022 2021
--------------------------- ----- -----
Revenue 49.9 40.3
Net fee income 15.8 14.1
Adjusted operating profit 0.8 1.4
% of Group net fee income 24% 23%
Average number of staff 292 233
In our APAC region we saw strong growth in revenue, which was up
24% year-on-year (26% in constant currency), and in net fee income,
which grew by 12% (12% in constant currency). Profits fell,
reflecting investment in our regional team along with significant
challenges in a couple of locations.
Japan is our largest country in the region and we are primarily
focused on the IT sector. Our operations delivered solid results
with single digit percentage growth in both net fee income and
profit. Growth was stronger in the first half of the year and
driven by permanent placement revenues which saw high demand. In
the second half of the year we were impacted by a few key clients
significantly reducing hiring requirements and contractor
headcount. Despite the weaker close to the year, this was a record
year for both net fee income and profit.
In Australia, our operation is focused on digital and creative
roles within our Professional sector. Results in 2022 were
extremely disappointing with net fee income down 14% year-on-year
driven by a fall in temporary and contract activity. Investments in
staff have not proved successful and the operation delivered a loss
in the year. A significant restructuring of this operation has been
undertaken at the start of 2023 in order to bring this operation
back to profitability.
Vietnam and China both saw year-on-year falls in net fee income.
In China this reflected the challenges of local lockdowns which
continued to impact our Shanghai based operation throughout 2022.
In Vietnam high staff turnover at the start of the year disrupted
the strong progress made in 2021.
Elsewhere in the region a number of countries delivered record
levels of net fee income with Singapore, Indonesia, Philippines and
Thailand all beating their previous highs and delivering strong
growth in profits. Our operations in these countries are
predominantly permanent placement focused and showed strong growth
across the Professional and IT sectors in the year.
Our aviation operation, which has offices in New Zealand,
Singapore and Sweden, did not show any significant improvement in
2022. Aviation recovery in our core Asia market has lagged behind
that in the US and Europe reflecting the continued closure of China
throughout 2022 and significant restrictions on travel to Japan. As
these restrictions ease in 2023 we expect to see demand improve and
for this operation to move back towards profitability.
Americas
GBPm 2022 2021
--------------------------- ----- -----
Revenue 62.7 71.0
Net fee income 8.7 9.9
Adjusted operating profit 1.5 2.8
% of Group net fee income 13% 16%
Average number of staff 160 151
In the Americas, revenue fell by 12% (16% in constant currency),
net fee income fell by 12% (19% in constant currency) and profits
reduced by 46% to GBP1.5m.
In the US, net fee income dropped by 20%, and profits by half,
with reductions in both of our operations. In Healthcare we had a
record year in 2021 driven by COVID-19 related demand which reduced
as expected in 2022. In IT, we saw a significant impact in the
second half of 2022 from a drop in demand from key clients. We are
focused on diversifying our client base to create more opportunity
and stability. Temporary and contract growth in IT was
disappointing and is a key focus for us in the US. We are investing
in our sales team in order to drive this forward in 2023.
In Chile, net fee income was in line with 2021 although profits
fell back reflecting increases in the cost base. Our core strength
lies in our outsourcing operation, focused on the Commercial
sector, which has continued to grow strongly year-on-year. However,
permanent and temporary recruitment activity has dropped
significantly from pre-COVID levels and rebuilding these is now a
key focus.
In Peru, changes to outsourcing laws and political instability
have adversely impacted our operations in 2022. Despite this, net
fee income grew strongly reflecting recovery from 2021 which was
still being heavily impacted by COVID-19. Profits fell slightly as
we invested in ensuring we have the right team and structure to
rebuild the business to previous levels.
Offshore Services
GBPm 2022 2021
--------------------------- ------ ------
Revenue 25.3 15.3
Net fee income 13.5 7.7
Adjusted operating profit 7.1 4.1
% of Group net fee income 20% 12%
Average number of staff 2,481 1,578
Offshore Services delivered an extremely strong 2022 with
revenue up 65% (57% in constant currency), net fee income up 75%
(67% in constant currency) and adjusted operating profit up 73%.
These results reflect the strong momentum and growth which built
through 2021 and carried over into 2022. Average headcount in 2022
was up 57% year-on-year with headcount at 31 December 2022 27%
higher than a year earlier.
Our operations support the staffing sector, principally in the
US and the UK, and provide any aspect of the end-
to-end recruitment process alongside compliance, and finance and
accounting services. Clients are predominantly third-party staffing
companies but this operation also plays an important role in
supporting activity across the Group.
Our Philippines hub, which we opened in January 2021, is now
well established with a headcount of 105 primarily supporting our
US clients. We have started to expand our capabilities and now
offer services to our UK and Australian clients from this location
as well.
Demand in 2022 has been extremely strong from our UK clients,
particularly in the healthcare sector. As a result, the number of
billable seats supporting the UK closed the year up two-thirds
compared to 31 December 2021 and now exceeds those supporting the
US. Growth was from both existing and new clients with the number
of clients growing by 40% in the year.
In the US, demand has been more muted. While we saw some growth
in the first half of the year, the challenges in global IT have fed
through to our clients that support this sector. As a result, the
number of billable seats dropped back during the second half of the
year and closed the year 6% down on 31 December 2021. These
reductions have been driven by existing clients reducing their
requirements, not from the loss of clients, and the number of
clients we work with grew by 20% in the year. We expect this
reduction to be temporary and that as the IT sector returns to an
equilibrium we will be able to return to growth. We are also
focused on diversifying our US client base to build a greater
presence in other sectors such as healthcare.
While the vast majority of our net fee income is derived from
recruitment and related compliance services, we are delivering
finance and accounting support to an increasing number of our
clients. This now accounts for 8% of our net fee income and
continues to be a focus area for growth.
Sector summary
Revenue Net fee income
GBPm 2022 2021 2022 2021
------------------------- ------ ------ -------- -------
Professional 56.5 57.5 18.7 17.3
IT 34.1 37.6 12.6 13.5
Healthcare 17.6 27.4 3.2 4.3
Property, Construction
& Engineering 9.2 8.1 2.2 1.7
Commercial 120.5 114.8 16.6 16.3
Offshore Services 24.9 14.5 13.1 7.6
Intragroup eliminations (1.5) (1.4) (1.0) (1.2)
------------------------- ------ ------ -------- -------
Total 261.3 258.5 65.4 59.5
------------------------- ------ ------ -------- -------
The greatest growth in 2022 was from Offshore Services as
described in more detail in the Offshore Services operating
review.
Professional saw good growth in net fee income (up 8%) driven by
permanent placement activity across the UK and APAC. Revenue fell
slightly reflecting this change in mix.
IT net fee income fell 7% with good growth in APAC, more than
offset by the challenges in our UK operation and the adverse second
half impact in the US as discussed in more detail in the Americas
operating review.
Healthcare net fee income fell by 26% year-on-year, as expected,
given the record performance in 2021 which was driven by COVID-19
related demand.
Property, Construction and Engineering saw some good recovery in
net fee income which was up 29% with the largest growth coming from
APAC.
Commercial net fee income grew by 2%. Our largest operations
delivering to this sector are in Germany where we saw mixed
performances with overall net fee income flat as described in more
detail in the UK & Europe operating review.
Finance review
Overview
The Group's results for 2022 reflect a solid performance with
net fee income and adjusted operating profit increasing by 10%.
Higher net interest costs due to the increase in base rates are
reflected in a 5% increase in adjusted profit before tax and a 2%
increase in adjusted, diluted earnings per share.
Our adjusted net debt has reduced significantly to GBP7.9
million (2021: GBP14.0m) and is at its lowest year end level since
2015. This reduction was driven by the profits for the year, along
with a working capital inflow generated despite the increase in net
fee income. We have seen an increase in permanent placement
activity, which has a lower working capital requirement, but a
reduction in temporary and contract revenues, which are more
working capital intensive. As a result of the reduction in net
debt, our debt to debtors ratio has fallen to 24%, below our 25%
target level. In the current economic environment we expect the mix
to shift back towards temporary and contract placements which may
result in an increased working capital requirement.
Income statement
% change
2022 2021 constant
GBPm GBPm % change currency(2)
Revenue 261.3 258.4 +1% +0%
Net fee income 65.4 59.5 +10% +8%
Operating profit 8.8 6.7 +31%
Adjusted operating profit(1) 10.2 9.3 +10% +6%
Profit before tax 7.6 6.0 +27%
Adjusted profit before tax(1) 9.0 8.6 +5%
Diluted earnings per share 6.7p 4.5p +49%
Adjusted, diluted earnings
per share(1) 8.8p 8.6p +2%
(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 2021 results at the 2022 exchange rates.
Revenue increased by 1% (nil% in constant currency) with net fee
income increasing by 10% (8% in constant currency). The growth in
net fee income reflects strong growth in both permanent placement
(up 9% year-on-year) and offshore services (up 73% year-on-year),
offset by a reduction in temporary and contract (down 5%
year-on-year). This growth in net fee income is reflected in a 10%
year-on-year increase in adjusted operating profit (6% increase in
constant currency) with improved staff productivity offset by
investments including in technology.
Following the appointment of regional leaders during 2021, the
Group has moved to a regional reporting structure. As a result,
with effect from 2022, the Group's operating segmental analysis is
presented by region. 2021 financial information has been
re-presented on this basis. A detailed analysis by region is
provided in the operating review. Central costs have reduced to
GBP3.9m (2021: GBP4.3m) reflecting reduced costs for bonuses and
share schemes.
Adjusted profit before tax has increased by 5% to GBP9.0m
reflecting the increase in adjusted operating profit and an
increased net interest cost due to the impact of higher interest
rates and 2021 interest credits following the settlement of tax
audits. The reported profit before tax reflects amortisation of
intangible assets identified in business combinations of GBP1.4m.
There were no charges for impairment in 2022 (2021: GBP1.2m) and as
a result reported profit before tax increased by 27% year-on-year
to GBP7.6m.
The total tax charge for the year is GBP2.8m (2021: GBP3.1m),
resulting in an effective tax rate of 37% (2021: 52%). On an
adjusted basis, the effective rate is 34% (2021: 40%). The
effective tax rate is higher than the underlying tax rates due to a
number of factors, including:
-- expenses not deductible for tax purposes (GBP0.3m);
-- withholding taxes, dividend taxes, and deferred tax
liabilities on unremitted earnings in respect of our overseas
operations (GBP0.3m);
-- deferred tax assets not recognised for certain tax losses
around the Group, (GBP0.4m); partially offset by
-- expenses with enhanced deductions for tax purposes (GBP0.2m).
Adjusted, diluted earnings per share increased by 2% to 8.8p.
This reflects the increase in adjusted profit before tax partially
offset by an increase in the proportion of profits allocated to
non-controlling interests due to the strong performance in our
Offshore Services operation where there is a 28% non-controlling
interest. Reported diluted earnings per share increased by 49% to
6.7p reflecting the above and the GBP1.2m of impairment charges in
the prior year.
Balance sheet
2022 2021
GBPm GBPm
Goodwill and other intangible
assets 40.1 39.8
Trade and other receivables 46.7 50.5
Cash and cash equivalents 22.3 21.1
Right-of-use assets 7.5 7.5
Other assets 7.2 5.0
------------------------------- ------- -------
Assets 123.8 123.9
------------------------------- ------- -------
Trade and other payables (33.3) (34.8)
Borrowings (29.6) (34.4)
Lease liabilities (7.9) (7.9)
Other liabilities (4.0) (4.5)
------------------------------- ------- -------
Liabilities (74.8) (81.6)
------------------------------- ------- -------
Net assets 49.0 42.3
------------------------------- ------- -------
Goodwill and other intangible assets arise from the investments
and acquisitions the Group has made. At 31 December 2022 the
balance was GBP40.1m (2021: GBP39.8m) with the movement in 2022 due
to GBP1.6m of amortisation of intangible assets (2021: GBP1.6m),
foreign exchange gains of GBP1.8m (2021: losses of GBP1.1m),
impairment charges of GBPnil (2021: GBP1.2m) and additions of
GBP0.1m (2021: GBP0.7m).
Trade and other receivables include trade receivables of
GBP33.3m (2021: GBP39.5m) with the decrease from 2021 reflecting a
change in mix with an increase in permanent placement revenue and a
reduction in temporary and contract revenue. Average debtor days
for the Group in 2022 reduced to 45 (2021: 48), with debtor days at
31 December 2022 of 43 (2021: 47). The income statement includes a
charge of GBPnil (2021: GBP0.3m) 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.
2022 2021
GBPm GBPm
Net cash inflow from operating activities
per cash flow statement 14.7 7.6
Cash flows related to pilot bonds 0.1 0.3
Payments under lease agreements (5.3) (5.3)
------------------------------------------- ------ ------
Free cash flow 9.5 2.6
Taxation 4.2 2.7
------------------------------------------- ------ ------
Free cash flow (pre-tax) 13.7 5.3
------------------------------------------- ------ ------
Free cash flow in 2022 was significantly higher than 2021, with
the largest driver being working capital which showed an inflow of
GBP3.5m in 2022 compared to an outflow of GBP4.4m in 2021 (both
excluding pilot bonds). The Group also presents a pre-tax free cash
flow measure as tax payments in a global business can be
volatile.
In 2022 the Group utilised its free cash flow as follows:
2022 2021
GBPm GBPm
Free cash flow 9.5 2.6
Purchase of shares in existing subsidiaries (0.1) (0.6)
Purchase of property, plant and equipment
and software (2.1) (1.7)
Dividends paid to owners of Empresaria
Group plc (0.6) (0.5)
Dividends paid to non-controlling
interests (0.4) (0.3)
Purchase of own shares in Employee
Benefit Trust (0.3) (0.3)
Other 0.1 0.4
--------------------------------------------- ------ ------
Decrease/(increase) in adjusted net
debt 6.1 (0.4)
--------------------------------------------- ------ ------
The purchase of shares in existing subsidiaries in the 2021 cash
flow mainly related 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
GBP2.1m reflects ongoing investments in the office, IT and
infrastructure of our Offshore Services operation to support its
growth and the ongoing investment in a common front office system.
Dividends paid to our shareholders were GBP0.6m (2021: GBP0.5m)
reflecting the increased dividend paid in the year. 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 2022 (2021:
GBP0.3m). Dividends paid to non-controlling interests were GBP0.4m
(2021: GBP0.3m).
Financing
The Group's treasury function is managed centrally and the
Group's financial risk management policies are set out in note 22
of the annual report.
2022 2021
GBPm GBPm
Cash and cash equivalents 22.3 21.1
Pilot bonds (0.6) (0.7)
--------------------------- ------- -------
Adjusted cash 21.7 20.4
--------------------------- ------- -------
Overdraft facilities (17.1) (18.2)
Invoice financing (3.5) (4.6)
Bank loans (9.0) (11.6)
--------------------------- ------- -------
Total borrowings (29.6) (34.4)
--------------------------- ------- -------
Adjusted net debt (7.9) (14.0)
--------------------------- ------- -------
Adjusted net debt at 31 December 2022 decreased significantly to
GBP7.9m (2021: GBP14.0m) reflecting the cash flows discussed above.
Adjusted net debt excludes cash of GBP0.6m (2021: GBP0.7m) 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 2022, the month-end average adjusted net debt position
was GBP11.0m (2021: GBP14.8m) with a month end high of GBP16.1m at
28 February (2021: GBP19.1m at 31 May) and a month end low of
GBP7.9m at 31 December (2021: GBP11.1m at 30 September).
Our debt to debtors ratio (adjusted net debt as a percentage of
trade receivables) has reduced to 24% (2021: 35%) with the
significant reduction in adjusted net debt partly offset by a
reduction in trade receivables. This has brought us below our debt
to debtors target of 25% for the first time since 2015.
Total borrowings were GBP29.6m (2021: GBP34.4m) being bank
overdrafts of GBP17.1m (2021: GBP18.2m), invoice financing of
GBP3.5m (2021: GBP4.6m) and bank loans of GBP9.0m (2021: GBP11.6m).
The Group's borrowings are principally held to fund working capital
requirements and are mainly due within one year. As at 31 December
2022, GBP0.5m of borrowings are shown as non-current (2021:
GBP11.2m) with the reduction reflecting the revolving credit
facility which as at 31 December 2022 was due within one year.
Subsequent to the reporting date, in March 2023, this facility has
been refinanced for a further 3 years (see note 11).
The Group maintains a range of facilities to manage its working
capital and financing requirements. At 31 December 2022 the Group
had facilities totalling GBP54.8m (2021: GBP55.5m).
2022 2021
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 12.4 11.8
Asia Pacific facilities 2.3 2.4
Americas facilities 5.1 6.3
----- -----
54.8 55.5
----- -----
Undrawn facilities (excluding
invoice financing) 17.9 12.9
----- -----
Undrawn facilities have increased significantly during the year,
reflecting the strong cash flows and the reduction in adjusted net
debt.
Covenants are tested on a quarterly basis in respect of the
revolving credit facility and all covenants have been met during
the year. The covenants, and our performance against them at 31
December 2022, are as follows:
Covenant Target Actual
Net debt: EBITDA < 3.0 times 0.7
Interest cover > 4.0 times 9.7
Debtor coverage > 1.75 times 7.1
Subsequent to the reporting date, in March 2023, the revolving
credit facility has been refinanced. The facility continues to be
for GBP15.0m and has a 3 year term to March 2026. For more details
see note 11.
Management equity
As highlighted in previous annual reports, the Group has moved
away from issuing second generation equity schemes for incoming
subsidiary 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 2022, 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 and in some
cases do not include defined valuation mechanisms. Based on results
for the year ended 31 December 2022, and using applicable valuation
mechanisms in shareholders' agreements where these exist or
applying these same valuation mechanisms where they do not, the
payment to acquire all those first generation shares not held by
the Group would be approximately GBP10.4m.
There is no legal obligation on the Group to acquire the shares
held by management at any time. Further information is provided in
note 26 of the annual report.
During the year the Group acquired shares from management for
total consideration of GBP0.1m.
Dividend
During the year, the Group paid a dividend of 1.2p per share in
respect of the year ended 31 December 2021. For the year ended 31
December 2022, the Board is proposing a dividend of 1.4p per share,
an increase of 17%. Subject to shareholder approval at the Annual
General Meeting, the dividend will be paid on 15 June 2023 to
shareholders on the register on 26 May 2023.
Going concern
The Board has undertaken a recent and thorough review of the
Group's budget, forecasts and associated risks and sensitivities.
Given the latest 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
27 March 2023
Consolidated income statement
2022 2021
Note GBPm GBPm
Revenue 2 261.3 258.4
Cost of sales (195.9) (198.9)
Net fee income 2 65.4 59.5
Administrative costs (including GBPnil (2021: GBP0.3m) in respect of trade receivable
impairment
losses) (55.2) (50.2)
-------- --------
Adjusted operating profit 2 10.2 9.3
Impairment of goodwill 7 - (0.9)
Impairment of other intangible assets 8 - (0.3)
Amortisation of intangible assets identified in business combinations 8 (1.4) (1.4)
-------- --------
Operating profit 8.8 6.7
-------- --------
Finance income 3 0.3 0.3
Finance costs 3 (1.5) (1.0)
-------- --------
Net finance costs 3 (1.2) (0.7)
Profit before tax 7.6 6.0
Taxation 4 (2.8) (3.1)
Profit for the year 4.8 2.9
-------- --------
Attributable to:
Owners of Empresaria Group plc 3.4 2.3
Non-controlling interests 1.4 0.6
-------- --------
4.8 2.9
-------- --------
Pence Pence
Earnings per share
Basic 6 6.9 4.6
Diluted 6 6.7 4.5
Details of adjusted earnings per share are shown in note 6.
Consolidated statement of comprehensive income
2022 2021
GBPm GBPm
Profit for the year 4.8 2.9
----- ------
Other comprehensive income
Items that may be reclassified subsequently to the income statement:
Exchange differences on translation of foreign operations 2.6 (1.7)
Items that will not be reclassified to the income statement:
Exchange differences on translation of non-controlling interests in foreign operations 0.3 (0.6)
----- ------
Other comprehensive income/(loss) for the year 2.9 (2.3)
Total comprehensive income for the year 7.7 0.6
----- ------
Attributable to:
Owners of Empresaria Group plc 6.0 0.6
Non-controlling interests 1.7 -
----- ------
7.7 0.6
----- ------
Consolidated balance sheet
2022 2021
Note GBPm GBPm
Non-current assets
Property, plant and equipment 2.8 1.6
Right-of-use assets 7.5 7.5
Goodwill 7 31.9 30.5
Other intangible assets 8 8.2 9.3
Deferred tax assets 4.4 3.4
------- -------
54.8 52.3
------- -------
Current assets
Trade and other receivables 9 46.7 50.5
Cash and cash equivalents 22.3 21.1
------- -------
69.0 71.6
------- -------
Total assets 123.8 123.9
------- -------
Current liabilities
Trade and other payables 10 33.3 34.8
Current tax liabilities 1.5 1.9
Borrowings 11 29.1 23.2
Lease liabilities 5.3 4.6
------- -------
69.2 64.5
------- -------
Non-current liabilities
Borrowings 11 0.5 11.2
Lease liabilities 2.6 3.3
Deferred tax liabilities 2.5 2.6
------- -------
5.6 17.1
------- -------
Total liabilities 74.8 81.6
------- -------
Net assets 49.0 42.3
------- -------
Equity
Share capital 2.5 2.5
Share premium account 22.4 22.4
Merger reserve 0.9 0.9
Retranslation reserve 5.1 2.5
Equity reserve (10.2) (10.2)
Other reserves (0.3) (0.6)
Retained earnings 22.4 19.9
------- -------
Equity attributable to owners of
Empresaria Group plc 42.8 37.4
Non-controlling interests 6.2 4.9
------- -------
Total equity 49.0 42.3
------- -------
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
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
-------- -------- -------- -------------- -------- --------- --------- ------ ---------------- -------
Profit for the
year - - - - - - 3.4 3.4 1.4 4.8
Exchange
differences
on translation
of foreign
operations - - - 2.6 - - - 2.6 0.3 2.9
-------- -------- -------- -------------- -------- --------- --------- ------ ---------------- -------
Total
comprehensive
income for the
year - - - 2.6 - - 3.4 6.0 1.7 7.7
Dividend paid to
owners
of Empresaria
Group
plc (see note
13) - - - - - - (0.6) (0.6) - (0.6)
Dividend paid to
non-controlling
interests - - - - - - - - (0.4) (0.4)
Purchase of own
shares
in Employee
Benefit
Trust - - - - - - (0.3) (0.3) - (0.3)
Share-based
payments - - - - - 0.3 - 0.3 - 0.3
At 31 December
2022 2.5 22.4 0.9 5.1 (10.2) (0.3) 22.4 42.8 6.2 49.0
-------- -------- -------- -------------- -------- --------- --------- ------ ---------------- -------
Consolidated cash flow statement
2022 2021
GBPm GBPm
Profit for the year 4.8 2.9
Adjustments for:
Depreciation of property, plant and equipment,
and software amortisation 1.1 1.0
Depreciation of right-of-use assets 5.4 5.3
Impairment of goodwill - 0.9
Impairment of other intangible assets - 0.3
Amortisation of intangible assets identified
in business combinations 1.4 1.4
Share-based payments 0.3 0.3
Net finance costs 1.2 0.7
Taxation 2.8 3.1
------- ------
17.0 15.9
Decrease/(increase) in trade and other receivables 6.9 (8.2)
(Decrease)/increase in trade and other payables
(including pilot bonds outflow of GBP0.1m (2021:
outflow of GBP0.3m)) (3.5) 3.5
Cash generated from operations 20.4 11.2
Interest paid (1.5) (0.9)
Income taxes paid (4.2) (2.7)
------- ------
Net cash inflow from operating activities 14.7 7.6
------- ------
Cash flows from investing activities
Purchase of property, plant and equipment, and
software (2.1) (1.7)
Finance income 0.3 0.3
------- ------
Net cash outflow from investing activities (1.8) (1.4)
------- ------
Cash flows from financing activities
Decrease in overdrafts (1.8) (3.3)
Proceeds from bank loans - 5.5
Repayment of bank loans (2.7) (0.2)
Decrease in invoice financing (1.2) -
Payment of obligations under leases (5.3) (5.3)
Purchase of shares in existing subsidiaries (0.1) (0.6)
Purchase of own shares in Employee Benefit Trust (0.3) (0.3)
Dividends paid to owners of Empresaria Group
plc (0.6) (0.5)
Dividends paid to non-controlling interests (0.4) (0.3)
------- ------
Net cash outflow from financing activities (12.4) (5.0)
------- ------
Net increase in cash and cash equivalents 0.5 1.2
Foreign exchange movements 0.7 (0.9)
Cash and cash equivalents at beginning of the
year 21.1 20.8
Cash and cash equivalents at end of the year 22.3 21.1
------- ------
2022 2021
GBPm GBPm
Bank overdrafts at beginning of the year (18.2) (22.1)
Decrease in the year 1.8 3.3
Foreign exchange movements (0.7) 0.6
------- -------
Bank overdrafts at end of the year (17.1) (18.2)
Cash, cash equivalents and bank overdrafts at
end of the year 5.2 2.9
------- -------
1 Basis of preparation and general information
The financial information has been abridged from the audited
financial information for the year ended 31 December 2022.
The fi nancial i nformation set out above does not constitute
the Company's consolidated statutory accounts for the years ended
31 December 2022 or 2021, but is derived from those accounts.
Statutory accounts for 2021 have been delivered to the Registrar of
Compan ies and those for 2022 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 2021 financial statements, as amended when relevant
to reflect the adoption of new standards, amendments and
interpretations which became effective in the year. During 2022 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 2023.
2 Segment and revenue analysis
From 1 January 2022, following the appointment of regional
leaders in 2021, information reported to the Group's Executive
Committee, considered to be the chief operating decision maker of
the Group for the purpose of resource allocation and assessment of
segment performance, is based on the Group's four regions. The
segmental information is therefore now presented by region, which
represents a change from the prior year which was reported by
operating sector. Prior period information is re-presented by
region.
The Group has one principal activity, the provision of staffing
and recruitment services, delivered across a number of service
lines, being permanent placement, temporary and contract placement,
and offshore services.
The analysis of the Group's results by region is set out
below:
2022 2021
Adjusted Adjusted
Net operating Net fee operating
Revenue fee income profit Revenue income profit
UK & Europe 124.9 28.4 4.7 133.1 29.0 5.3
APAC 49.9 15.8 0.8 40.3 14.1 1.4
Americas 62.7 8.7 1.5 71.0 9.9 2.8
Offshore Services 25.3 13.5 7.1 15.3 7.7 4.1
Central costs - - (3.9) - - (4.3)
Intragroup eliminations (1.5) (1.0) - (1.3) (1.2) -
261.3 65.4 10.2 258.4 59.5 9.3
-------- ------------ ----------- -------- -------- -----------
3 Finance income and costs
2022 2021
GBPm GBPm
Finance income
Bank interest receivable 0.3 0.3
------ ------
0.3 0.3
------ ------
Finance costs
Invoice financing (0.1) (0.1)
Bank loans and overdrafts (1.1) (0.7)
Interest on lease liabilities (0.3) (0.3)
Interest on tax payments - 0.1
------ ------
(1.5) (1.0)
------ ------
Net finance costs (1.2) (0.7)
------ ------
4 Taxation
The tax expense for the year is as follows:
2022 2021
GBPm GBPm
Current tax
Current year income tax expense 3.9 3.7
Adjustments in respect of prior years (0.1) (0.1)
------ ------
Total current tax expense 3.8 3.6
Deferred tax
Deferred tax credit - on origination and reversal
of temporary differences (1.0) (0.5)
------ ------
Total income tax expense in the income statement 2.8 3.1
------ ------
5 Reconciliation of adjusted profit before tax to profit before tax
2022 2021
GBPm GBPm
Profit before tax 7.6 6.0
Impairment of goodwill - 0.9
Impairment of other intangible assets - 0.3
Amortisation of intangible assets identified in
business combinations 1.4 1.4
----- -----
Adjusted profit before tax 9.0 8.6
----- -----
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 2022 and
2021 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.
2022 2021
GBPm GBPm
Earnings attributable to owners of Empresaria
Group plc 3.4 2.3
Adjustments:
Impairment of goodwill - 0.9
Impairment of other intangible assets - 0.3
Amortisation of intangible assets identified in
business combinations 1.4 1.4
Tax on the above (0.3) (0.3)
Non-controlling interests in respect of the above - (0.2)
--------- ---------
Adjusted earnings 4.5 4.4
--------- ---------
Number of shares Millions Millions
Weighted average number of shares - basic 49.4 49.8
Dilution effect of share options 1.5 1.6
--------- ---------
Weighted average number of shares - diluted 50.9 51.4
--------- ---------
Earnings per share Pence Pence
Basic 6.9 4.6
Dilution effect of share options (0.2) (0.1)
--------- ---------
Diluted 6.7 4.5
--------- ---------
Adjusted earnings per share Pence Pence
Basic 9.1 8.8
Dilution effect of share options (0.3) (0.2)
--------- ---------
Diluted 8.8 8.6
--------- ---------
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
2022 2021
GBPm GBPm
At 1 January 30.5 32.5
Impairment charge - (0.9)
Foreign exchange movements 1.4 (1.1)
----- ------
At 31 December 31.9 30.5
----- ------
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
2023 budgets approved by the Group's Board. These budgets are
extrapolated using short-term growth rate forecasts over four years
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 13.0% to 18.9% (2021: 10.4% to
18.4%) 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 region are as follows:
13.0% to 18.0% (2021: 10.4% to
UK & Europe: 12.7%)
13.8% to 18.9% (2021: 11.6% to
APAC: 17.6%)
13.3% to 16.0% (2021: 12.9% to
Americas: 18.4%)
Offshore Services: 15.8% (2021: 17.3%)
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 0.4% to 6.2%. 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 region are as follows:
UK & Europe: 1.3% to 1.5% (2021: 1.1% to 1.5%)
APAC: 0.4% to 5.1% (2021: 0.5% to 5.2%)
Americas: 1.9% to 3.0% (2021: 1.7% to 3.2%)
Offshore Services: 6.2% (2021: 6.0%)
In 2022 no impairment of goodwill has been recognised.
In 2021, an impairment charge of GBP0.6m was recognised in
respect of a business in the APAC region. This business supplies
the aviation industry which had 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 was also recognised in respect of
another business in the APAC region.
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 an impairment
charge of GBP0.2m (2021: GBPnil) would be recorded in respect
GBP0.1m for one business in our APAC region and GBP0.1m for one
business in our Americas region. If the discount rate were to
increase by 2% an impairment charge of GBP0.2m (2021: GBPnil) would
be recorded in respect GBP0.1m for one business in our APAC region
and GBP0.1m for one business in our Americas region.
8 Other intangible assets
Intangible assets identified
in business combinations
--------------------------------------
Trade
Customer names
2022 relationships & marks Sub total Software Total
GBPm GBPm GBPm GBPm GBPm
Cost
At 1 January 13.9 8.8 22.7 1.8 24.5
Additions - - - 0.1 0.1
Foreign exchange movements 1.0 0.5 1.5 0.1 1.6
--------------- --------- ---------- --------- ------
At 31 December 14.9 9.3 24.2 2.0 26.2
--------------- --------- ---------- --------- ------
Accumulated amortisation
At 1 January 10.2 3.9 14.1 1.1 15.2
Charge for the year 0.9 0.5 1.4 0.2 1.6
Foreign exchange movements 0.8 0.3 1.1 0.1 1.2
--------------- --------- ---------- --------- ------
At 31 December 11.9 4.7 16.6 1.4 18.0
--------------- --------- ---------- --------- ------
Net book value
--------------- --------- ---------- --------- ------
At 31 December 2021 3.7 4.9 8.6 0.7 9.3
--------------- --------- ---------- --------- ------
At 31 December 2022 3.0 4.6 7.6 0.6 8.2
--------------- --------- ---------- --------- ------
As required under IFRS, the Group reviewed its assets for
indications of impairment as at 31 December 2022. Following this
review, no impairment charges have been reflected.
9 Trade and other receivables
2022 2021
GBPm GBPm
Current
Gross trade receivables 34.1 40.4
Less provision for impairment
of trade receivables (0.8) (0.9)
------ ------
Trade receivables 33.3 39.5
Prepayments 2.4 1.7
Accrued income 7.4 5.0
Corporation tax receivable 0.9 0.9
Other receivables 2.7 3.4
------ ------
46.7 50.5
------ ------
Trade receivables include GBP20.1m (2021: GBP21.6m) on which
security has been given under bank facilities.
10 Trade and other payables
2022 2021
GBPm GBPm
Current
Trade payables 2.4 2.0
Other tax and social security 5.1 7.1
Pilot bonds 0.6 0.7
Client deposits 0.4 0.5
Temporary recruitment worker wages 3.4 3.3
Other payables 1.6 1.2
Accruals 19.8 20.0
33.3 34.8
----- -----
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 2022, if
the bonds were to be repaid in line with existing contracts,
GBP0.3m (2021: GBP0.3m) would be repayable in more than one
year.
11 Borrowings
2022 2021
GBPm GBPm
Current
Bank overdrafts 17.1 18.2
Invoice financing 3.5 4.6
Bank loans 8.5 0.4
----- -----
29.1 23.2
----- -----
Non-current
Bank loans 0.5 11.2
----- -----
0.5 11.2
----- -----
Borrowings 29.6 34.4
----- -----
The following key bank facilities are in place at 31 December
2022:
Facility limit Outstanding
2022 2021 2022 2021
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 6.3 6.9
On demand
with annual
Germany EUR review EURIBOR + 3.0% 11.5 10.9 8.7 8.4
On demand
with annual
USA USD review LIBOR + 2% 1.7 1.5 - 1.5
On demand New Zealand
with annual Base Lending
New Zealand NZD review Rate + 2% 0.5 0.5 - -
Invoice financing
On demand
with annual UK base rate
UK GBP review + 1.82% 10.0 10.0 2.0 3.0
On demand Weighted average
with annual rate 15.7%
Chile CLP review (2021: 5.5%) 2.9 4.2 1.5 1.6
Bank loans
UK - Revolving SONIA + 2%
Credit Facility GBP 2023 to 3% 15.0 15.0 8.0 10.5
Weighted average
rate 0.6% (2021:
Japan JPY 2025-2028 0.5%) 0.7 0.9 0.7 0.9
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
GBP1.9m of cash shown within cash and cash equivalents in the
balance sheet (2021: GBP1.2m).
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 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.
The UK revolving credit facility was refinanced in March 2023
for three years with the same facility limit of GBP15.0m. The
interest rate margin continues to vary based on the Group's net
debt to EBITDA ratio and ranges from 2.0% to 2.75%.
12 Net debt
a) Net debt
2022 2021
GBPm GBPm
Cash and cash equivalents 22.3 21.1
Borrowings (29.6) (34.4)
------- -------
Net debt (7.3) (13.3)
------- -------
b) Adjusted net debt
2022 2021
GBPm GBPm
Cash and cash equivalents 22.3 21.1
Less cash held in respect of pilot bonds (0.6) (0.7)
------- -------
Adjusted cash 21.7 20.4
Borrowings (29.6) (34.4)
------- -------
Adjusted net debt (7.9) (14.0)
------- -------
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
2022 2021
GBPm GBPm
At 1 January (14.0) (13.6)
Net increase in cash and cash equivalents per
consolidated cash flow statement 0.5 1.2
Decrease/(increase) in overdrafts and loans 4.5 (2.0)
Decrease in invoice financing 1.2 -
Foreign exchange movement (0.2) 0.1
Adjusted for decrease in cash held in respect
of pilot bonds 0.1 0.3
------- -------
At 31 December (7.9) (14.0)
------- -------
13 Dividends
2022 2021
GBPm GBPm
Amount recognised as distribution to equity holders in the year:
Final dividend for the year ended 31 December 2021 of 1.2p (2020: 1.0p) per share 0.6 0.5
----- -----
Proposed final dividend for the year ended 31 December 2022 of 1.4p (2021: 1.2p) per share 0.7 0.6
----- -----
The proposed final dividend for the year ended 31 December 2022
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 SEAFAWEDSEFD
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March 28, 2023 02:00 ET (06:00 GMT)
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