TIDMEMR
RNS Number : 7008J
Empresaria Group PLC
21 August 2019
21 August 2019
Empresaria Group plc ("Empresaria" or "Group")
Unaudited Interim Results for the six months ended 30 June
2019
On track to meet full year market expectations for profit
Empresaria Group plc (AIM: EMR), the international specialist
staffing group, announces its unaudited interim results for the six
month period ended 30 June 2019.
Overview of the half year
% change
(constant
2019 2018 % change currency)(2)
------------------------------ ---------- ---------- ----------- --------------
Revenue GBP175.5m GBP178.3m -2% -2%
Net fee income (gross
profit) GBP36.3m GBP34.0m +7% +6%
Adjusted operating profit(1) GBP4.3m GBP5.0m -14% -14%
Operating profit GBP2.9m GBP4.2m -31% -31%
Adjusted profit before
tax(1) GBP3.7m GBP4.7m -21% -21%
Profit before tax GBP2.3m GBP3.9m -41% -41%
Adjusted, diluted earnings
per share(1) 3.3p 5.0p -34%
Diluted earnings per share 1.4p 3.8p -63%
-- Diversified business delivering solid growth in net fee income
o +7%, +6% in constant currency
o 55% growth in Offshore Recruitment Services sector
-- Fall in profits in the first half as expected
o Low starting point for temps in Germany and Japan following
regulatory changes in 2018
o Investment in central team from 2018 H2
o Impact of Brexit uncertainty in certain UK markets
-- Aligned businesses around core sectors
o 5 sectors - Professional, IT, Engineering, Commercial and
Offshore Recruitment Services
o Drive to improve collaboration and leverage synergies
-- Focus on organic growth
o Launched Stronger Together initiative
o Expanding existing brands into new markets - 3 new office
openings
o Investment in Technology - signed an agreement with Bullhorn
to bring their product to multiple businesses
-- Revenue down due to change in mix between temp, perm and offshore recruitment services.
o First time contribution from Grupo Solimano offset by
reductions in our aviation business where we saw falls from a
change in billing method (with no impact on net fee income) and a
more challenging market as expected.
-- Diluted, adjusted earnings per share down 34% on prior year
reflecting profit mix with an increased contribution from companies
with a higher non-controlling interest.
-- Adjusted net debt of GBP18.1m, increased from GBP17.1m at 31
December 2018 and expected to reduce in the second half.
-- Remain on course to deliver full year market expectations for profit.
1 Adjusted to exclude amortisation of intangible assets
identified in business combinations, exceptional items, gain or
loss on disposal of businesses, fair value charges on acquisition
of non-controlling shares and in the case of earnings also adjusted
for any related tax.
2 The constant currency movement is calculated by translating
the 2018 results at the 2019 exchange rates.
A video interview with management covering the first half
performance is available here: http://bit.ly/EMRH1_19
Chief Executive Officer, Rhona Driggs, commented:
"We are encouraged by our net fee income growth and we remain
focused on efforts to further improve organic growth across the
Group. Although as expected, profit in the first half was lower
than the prior year we remain on track to meet full year market
expectations for profit."
"Our core geographies continue to show economic growth but there
are headwinds from Brexit, a weakening German economy and increased
geo-political risk. Operationally we are taking steps to ensure
that we are truly leveraging the benefits of being a diversified
group. As part of this, we have recently announced the alignment of
our business into core sectors to improve collaboration and to
leverage synergies in our operations. Our diversified and
specialist model provides a hedge against exposure to any one
region or sector."
"We believe the actions we are taking are the right ones and
that we are well placed to continue to drive organic growth and to
improve profitability."
- Ends -
Enquiries:
Empresaria Group plc via Alma PR
Rhona Driggs, Chief Executive Officer
Tim Anderson, Chief Financial Officer
Arden Partners (Nominated Adviser and
Broker)
Corporate Finance: John Llewellyn-Lloyd
/ Ciaran Walsh
Equity Sales: Tim Dainton 020 7614 5900
Alma PR (Financial PR) 020 3405 0205
Rebecca Sanders-Hewett empresaria@almapr.com
Sam Modlin
Hilary Buchanan
The investor presentation of these results will be made
available during the course of today on Empresaria's website:
empresaria.com
Notes for editors:
-- Empresaria Group plc is an international specialist staffing
group offering temporary and contract recruitment, permanent
recruitment and offshore recruitment services across 5 sectors:
Professional, IT, Engineering, Commercial and Offshore Recruitment
Services.
-- Empresaria operates in 21 countries 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 applies a multi-brand, management equity
philosophy and business model, with group company management teams
holding significant equity in their own business.
-- Empresaria is listed on AIM under ticker EMR. For more
information: empresaria.com
Cautionary statement regarding forward-looking statements
This document may contain forward-looking statements which are
made in good faith and are based on current expectations or
beliefs, as well as assumptions about future events. You can
sometimes, but not always, identify these statements by the use of
a date in the future or such words as "will", "anticipate",
"estimate", "expect", "project", "intend", "plan", "should", "may",
"assume" and other similar words. By their nature, forward-looking
statements are inherently predictive and speculative and involve
risk and uncertainty because they relate to events and depend on
circumstances that will occur in the future. You should not place
undue reliance on these forward-looking statements, which are not a
guarantee of future performance and are subject to factors that
could cause our actual results to differ materially from those
expressed or implied by these statements. Empresaria undertakes no
obligation to update any forward-looking statements contained in
this document, whether as a result of new information, future
events or otherwise.
Finance and operating review
Empresaria has delivered a solid first half performance with net
fee income up 7% to GBP36.3m demonstrating the strength of our
diverse business. This result is despite starting from a lower base
following regulatory changes in our key German and Japan markets
last year and Brexit uncertainty impacting our UK businesses. Costs
have risen in those businesses experiencing growth, but have not
fallen as quickly where net fee income is down due to the
challenges above. As a result of this and a higher central cost
base following the investments made in the second half of 2018,
adjusted operating profit is down 14% to GBP4.3m. Adjusted profit
before tax is GBP3.7m (2018: GBP4.7m). The adoption of IFRS 16
Leases, applied prospectively from 1 January 2019, has reduced
adjusted profit before tax by GBP0.1m in the first half. Adjusted,
diluted, earnings per share is down 34% impacted by the lower
profit figure and that a greater proportion of profits have been
derived from businesses with a higher non-controlling interest.
A truly diversified Group, working together
The diversified nature of the Group has continued to deliver
benefits during the period. We now have over 1,950 staff working
across our five sectors. While the Professional sector contributes
43% of net fee income, this is also our most diverse sector placing
roles across a broad spectrum of professions including airline
pilots, accountants, doctors and butlers. No other sector
contributes more than a quarter of the Group's net fee income. We
continue to have a diversified revenue stream with 55% of net fee
income generated from temporary or contract business, 38% from
permanent placements and 8% from Offshore Recruitment Services
which strengthens the Group's resilience.
While our diversification remains a key strength we see the
opportunity for great benefits from closer collaboration between
our businesses. In May we launched our Stronger Together initiative
which involves all our businesses and, as well as organising these
within our new sector segmental structure, looks to identify and
drive areas of synergy in areas such as recruitment, sales and back
office operations. We expect to see these initiatives start to
deliver tangible benefits over the next 12 months.
As part of our collaboration initiatives, we have reviewed our
segmental reporting and management structure and aligned our
business around our core staffing sectors of Professional, IT,
Engineering, Commercial and Offshore Recruitment Services. This
will be a key driver in delivering improved results through
increased collaboration across the Group as part of our Stronger
Together initiative described in more detail below.
Driving growth and productivity
We remain focused on driving organic growth and improving
productivity throughout the Group and the initiatives we have
implemented will have a key role in helping us deliver this. At the
same time we are exploring ways in which we can scale our larger
brands into new markets. During 2019 we have opened three new
offices, with ConSol Partners opening in Austin, USA and Become
opening offices in Brisbane, Australia and Auckland, New Zealand.
Our expertise across our sectors gives us the opportunity to
rapidly develop existing, and enter new, markets by replicating
these established, successful approaches.
Technology continues to be a key focus area. In July we signed a
deal with Bullhorn to bring their technology platform to multiple
brands in the Group. Bullhorn is a market leader in recruitment
software, and we expect these businesses, which in some cases have
historically under invested in technology, to experience
significant benefits once this technology is fully implemented.
Leadership changes
In June 2019 Spencer Wreford stepped down as CEO. Spencer had
been with the Group for ten years as CFO, COO and then CEO. The
Board would like to thank Spencer for his contributions during his
various roles in the Group and wish him well for the future. The
costs associated with this have been shown as an exceptional item
in the income statement and total GBP0.5m.
Rhona Driggs has been appointed as CEO, having joined the Group
in November 2018 as Chief Operating Officer. She has almost 30
years' experience working in international companies within the
staffing sector and has a proven track record of delivering growth
and driving innovation.
Sector Performance
Adjusted operating profit by sector
% change
30 June 30 June (constant 31 December
GBP'm 2019 2018 % change currency) 2018
------------------------------- -------- -------- --------- ----------- ------------
Professional 2.0 2.0 - -1% 5.4
IT 1.3 1.5 -13% -16% 3.2
Engineering (0.4) 0.1 n/a n/a (0.1)
Commercial 1.9 2.2 -14% -13% 5.6
Offshore Recruitment Services 1.4 0.7 +100% +100% 1.9
Central costs (1.9) (1.5) +27% +27% (3.7)
-------- -------- ------------
Group 4.3 5.0 -14% -14% 12.3
-------- -------- ------------
Performance in each of the sectors is analysed below. The
increase in central costs reflects the investments made in the
central team in the second half of 2018 which are showing their
full effect in the first half of 2019.
Professional
% change
30 June 30 June (constant 31 December
GBP'm 2019 2018 % change currency) 2018
--------------------------- -------- -------- --------- ----------- ------------
Revenue 68.3 77.0 -11% -11% 154.0
Net fee income 15.6 14.4 +8% +7% 30.7
Adjusted operating profit 2.0 2.0 - -1% 5.4
% of Group net fee income 43% 42% 42%
Our Professional sector has had a mixed first half with some
strong performances offset by the impact of Brexit and challenging
markets elsewhere. The fall in revenue is driven by our airline
pilot business which, as previously communicated, expected more
challenging market conditions in 2019. However, part of the
reduction is due to a change in the billing structure for a number
of pilots which, following a base transfer, have moved from our
payroll onto our clients payroll. This means that while we achieve
the same net fee income, we do not gross up the revenue for salary
costs. When combined with improved ancillary revenues this business
has seen increases in both net fee income and adjusted operating
profit against prior year. Overall this sector has seen growth in
net fee income with the challenges of Brexit uncertainty,
particularly in our businesses which operate in the financial
services and house building markets, being more than offset by
strong performances elsewhere. Adjusted operating profit is in line
with last year as costs have not fallen as rapidly as net fee
income in those businesses impacted by Brexit uncertainty.
IT
% change
30 June 30 June (constant 31 December
GBP'm 2019 2018 % change currency) 2018
--------------------------- -------- -------- --------- ----------- ------------
Revenue 21.4 21.6 -1% -3% 44.0
Net fee income 6.8 6.5 +5% +2% 13.6
Adjusted operating profit 1.3 1.5 -13% -16% 3.2
% of Group net fee income 19% 19% 19%
In our IT sector, revenue has fallen due to lower revenue in
Japan where we are rebuilding the temporary base following the
regulatory changes last year. At a net fee income level this has
been more than offset by improvements in permanent revenue in Japan
and by growth elsewhere. The UK has had a particularly strong first
half with growth in both its permanent and temporary net fee
income, although our US business has dropped back following a very
strong 2018. The start-up losses of 4ward Talent, launched in
December 2018, and the investment in the new ConSol Partners office
in Austin, Texas opened in April 2019, mean that adjusted operating
profit for the first half has fallen. We are confident that these
new investments will help drive growth over the longer term
although may continue to generate losses in H2.
Engineering
% change
30 June 30 June (constant 31 December
GBP'm 2019 2018 % change currency) 2018
---------------------------------- -------- -------- --------- ----------- ------------
Revenue 12.2 14.9 -18% -19% 29.3
Net fee income 2.2 2.6 -15% -15% 4.9
Adjusted operating (loss)/profit (0.4) 0.1 n/a n/a (0.1)
% of Group net fee income 6% 8% 7%
Our Engineering sector, which is primarily based in the UK, has
struggled in the first half of 2019 with challenging market
conditions and the ongoing impact from Brexit. Both revenue and net
fee income are down significantly with the temporary revenue being
most impacted. As a result the sector has recorded a loss for the
first half of the year. The UK business has been restructured with
changes to key management and a clear focus to target the more
lucrative white collar market and while trading in the second half
of the year is expected to remain difficult, we expect to start
seeing these changes having an impact as we move into 2020.
Commercial
% change
30 June 30 June (constant 31 December
GBP'm 2019 2018 % change currency) 2018
--------------------------- -------- -------- --------- ----------- ------------
Revenue 68.4 61.9 +11% +12% 132.8
Net fee income 9.1 8.9 +2% +3% 19.2
Adjusted operating profit 1.9 2.2 -14% -13% 5.6
% of Group net fee income 25% 26% 27%
Our Commercial sector has benefitted from the contribution of
our investment in Peru made in July last year. Excluding this
investment, revenue and net fee income would be down on prior year
and this reduction in the first half was expected as our German
business, impacted by the changes in regulations last year, is
looking to rebuild its temp base starting from a lower position
than it did in 2018. This has been progressing well although
progress has been offset by the impact from the weakening of the
German automotive sector which represents a key market. As a result
adjusted profit for the first half is down on prior year but
following an extensive cost management exercise in the effected
businesses, we expect to see improvements in the second half.
Offshore Recruitment Services
% change
30 June 30 June (constant 31 December
GBP'm 2019 2018 % change currency) 2018
--------------------------- -------- -------- --------- ----------- ------------
Revenue 5.4 3.1 +74% +74% 7.1
Net fee income 2.8 1.8 +55% +55% 4.3
Adjusted operating profit 1.4 0.7 +100% +100% 1.9
% of Group net fee income 8% 5% 6%
In our Offshore Recruitment Services sector we have continued to
see significant growth following a very strong 2018 with good
results from its key US and UK markets. Our business in India moved
into new premises at the start of the year which has given it the
capacity to continue to expand its headcount which is now in excess
of 1,000. We see this sector as a key driver of the Group's future
growth and while there are some potential headwinds from the impact
of Brexit on GBP exchange rates, the business is well placed to
deliver a strong second half.
Regional summary
Adjusted operating
Revenue Net fee income profit
30 June 30 June 30 June 30 June 30 June 30 June
GBP'm 2019 2018 2019 2018 2019 2018
-------------------------- -------- -------- -------- -------- ---------- ---------
UK 40.2 42.1 11.8 11.6 0.9 1.5
Continental Europe 44.5 47.2 6.7 7.5 1.2 1.8
Asia Pacific 62.0 68.2 13.5 10.9 3.3 2.1
Americas 29.0 21.0 4.5 4.2 0.8 1.1
Central costs/intragroup (0.2) (0.2) (0.2) (0.2) (1.9) (1.5)
-------- -------- -------- -------- ---------- ---------
Total 175.5 178.3 36.3 34.0 4.3 5.0
-------- -------- -------- -------- ---------- ---------
In the UK we have seen an adverse impact from Brexit uncertainty
across a number of our businesses with hiring activity reducing in
financial services and construction related industries. Positive
growth in other UK businesses, including in the IT sector, has
offset the impact on net fee income, however, adjusted operating
profit has been impacted by Brexit uncertainty and the challenges
facing our Engineering business in the UK.
In Continental Europe we have seen a reduction as previously
communicated as the businesses in Germany look to rebuild their
temporary numbers following regulatory changes last year. As
described in more detail above, the weakness of the automotive
industry in Germany has also had an adverse impact.
In Asia Pacific we have seen strong growth in both net fee
income and adjusted operating profit reflecting the strong
performance of a number of our businesses there, including in our
Offshore Recruitment Services and Professional Sectors. Revenue has
reduced in our airline pilots business, without any adverse impact
on net fee income, as explained in the Professional Sector section
above.
The Americas segment has seen solid performances from our Latin
America businesses, including the contribution from our July 2018
investment in Peru, which has been offset by a dip in our US IT
business which had a challenging comparative following an excellent
start to last year.
Taxation
The tax charge in the period was GBP1.0m (2018: GBP1.4m)
representing an effective rate of 43% (2018: 37%). On an adjusted
basis the effective tax rate was 36% (2018: 34%).
Financing
Net finance costs remain low at GBP0.6m (2018: GBP0.3m)
reflecting the current low levels of variable interest payable on
the Group's debt. The increase from prior year includes an interest
charge of GBP0.2m from the adoption of IFRS 16 Leases (see note 1)
which has been applied prospectively from 1 January 2019 with no
requirement to restate comparatives, and a GBP0.1m interest charge
on tax payments.
Net cash inflow from operating activities was GBPnil (2018:
GBP1.8m). Excluding pilot bond repayments (which are excluded from
our principle debt measure as described below) and allowing for the
cash flows on leases (shown within the financing section of the
cash flow statement for 2019 following the adoption of IFRS 16
Leases), free cash flow was GBP1.1m (2018: GBP2.0m) with the
reduction reflecting higher tax payments from the settlement of
accrued tax liabilities following completion of tax audits.
Adjusted net debt (which excludes GBP1.2m cash held in respect
of pilot bonds and does not include Lease liabilities recognised
under IFRS 16 leases) was GBP18.1m as at 30 June 2019, lower than
the GBP19.5m as at 30 June 2018 but an increase on the GBP17.1m at
31 December 2018. The Group's debt to debtors ratio (adjusted net
debt as a percentage of trade receivables) increased slightly in
the period to 38% (30 June 2018: 44%, 31 December 2018: 36%).
As in prior years the Group's cash flow is weighted towards the
second half of the year when a more significant operating cash
inflow is typically recorded. We would therefore expect adjusted
net debt to reduce in the second half of the year, even after
allowing for the investment in ConSol Partners in July.
A breakdown of the Group's facilities as at 30 June 2019 is
given below:
30 June 30 June 31 December
2019 2018 2018
GBPm GBPm GBPm
UK facilities
- Overdrafts 7.5 7.5 7.5
- Revolving credit facility 10.0 10.0 10.0
- Term loan - 1.2 -
- Invoice financing facility 13.0 13.0 13.0
-------- -------- ------------
Total UK facilities 30.5 31.7 30.5
Continental Europe facilities 12.9 12.7 12.9
Asia Pacific facilities 2.4 1.4 1.5
Americas facilities 4.6 3.8 4.5
-------- -------- ------------
50.4 49.6 49.4
-------- -------- ------------
Undrawn facility (excluding invoice
financing) 12.0 16.9 16.7
-------- -------- ------------
The level of undrawn facilities has reduced during the period
due to the repayment of GBP4.1m of pilot bonds following a change
in a key client's requirement to hold bonds. All those bonds have
now been repaid with GBP1.2m of pilot bonds remaining which relates
to other clients.
The Revolving Credit Facility covenants are tested on a
quarterly basis. The Group continues to have significant headroom
and the covenants as at 30 June 2019 are as follows:
Measure Covenant Actual
Net debt:EBITDA < 2.5 times 0.9
Interest cover > 5.0 times 17.1
Debt service
cover > 1.25 times 5.2
In July the Group activated GBP4m of the available GBP5m
accordion extension to the revolving credit facility in order to
facilitate the GBP3.5m investment in ConSol Partners as detailed
below.
Management equity
In July 2019 the Group increased its investment in ConSol
Partners from 65% to 82.5% for total consideration of GBP3.5m. This
investment was done on the same terms as per the original
acquisition in 2016 and is expected to have a positive impact on
earnings in the current year. There were no transactions in the 6
months to 30 June 2019.
Based on the Group's results for the year ended 31 December 2018
and ignoring holding period requirements, the potential payment to
acquire non-controlling interests in full (excluding the ConSol
Partners investment in July) would be in the range of GBP8.5m to
GBP12.0m, with the lower end of the range based on Empresaria's
current share price and the upper end assessed using the maximum
multiple that could be applied. There is no legal obligation on the
Group to acquire the shares held by management at any time.
Dividend
In line with prior years, the Board is not recommending the
payment of an interim dividend for 2019 (2018: nil). The 2018 full
year dividend of 2.0p per share was paid during the period.
Outlook
The Board is confident that the Group's strong diversified
platform will drive our next stage of growth. Our focus on
delivering organic growth is rooted in strengthening our core
brands in our key markets. The structural drivers remain strong,
with high demand for specialist skills across our target
sectors.
While the macro economic environment is mixed, the Group's core
geographies are still showing economic growth. We are cognisant of
headwinds including Brexit, a weaker German economy and increased
geo-political risk and we have planned appropriately. The Group's
diversified business model and specialist focus provides a hedge
against exposure to any one region or sector.
The Board is confident in the Group's ability to deliver future
growth and we are taking the right actions and decisions to enable
this. The Group remains on track to deliver full year expectations
for profit and we looks forward to the future with optimism.
21 August 2019
Condensed consolidated income statement
Six months ended 30 June 2019
6 months 6 months Year to
to 30 June to 30 June 31 December
2019 2018 2018
Unaudited Unaudited
Notes GBPm GBPm GBPm
Revenue 3 175.5 178.3 366.8
Cost of sales (139.2) (144.3) (294.5)
------------ ------------ -------------
Net fee income 3 36.3 34.0 72.3
Administrative costs (32.0) (29.0) (60.0)
------------ ------------ -------------
Adjusted operating profit 3 4.3 5.0 12.3
Exceptional items (0.5) - (0.3)
Amortisation of intangible assets
identified in business combinations (0.9) (0.8) (1.7)
------------ ------------ -------------
Operating profit 2.9 4.2 10.3
------------ ------------ -------------
Finance income 4 0.1 0.1 0.2
Finance costs 4 (0.7) (0.4) (1.1)
------------ ------------ -------------
Net finance costs 4 (0.6) (0.3) (0.9)
------------ ------------ -------------
Profit before tax 2.3 3.9 9.4
Taxation 6 (1.0) (1.4) (3.6)
Profit for the period 1.3 2.5 5.8
------------ ------------ -------------
Attributable to:
Owners of Empresaria Group plc 0.7 2.0 4.6
Non-controlling interests 0.6 0.5 1.2
------------ ------------ -------------
1.3 2.5 5.8
------------ ------------ -------------
Earnings per share (pence)
Basic 7 1.4 3.8 9.2
Diluted 7 1.4 3.8 9.1
Adjusted earnings per share (pence)
Basic 7 3.4 5.0 12.2
Diluted 7 3.3 5.0 12.1
Condensed consolidated statement of comprehensive income
Six months ended 30 June 2019
6 months 6 months Year to
to 30 to 30 31 December
June 2019 June 2018 2018
Unaudited Unaudited
GBPm GBPm GBPm
Profit for the period 1.3 2.5 5.8
----------- ----------- -------------
Other comprehensive income
Items that may be reclassified subsequently
to income statement:
Exchange differences on translation
of foreign operations 0.3 (0.2) 0.8
Items that will not be reclassified
to income statement:
Exchange differences on translation
of non-controlling interests in foreign
operations - (0.1) (0.1)
----------- ----------- -------------
Other comprehensive income/(loss) for
the period 0.3 (0.3) 0.7
----------- ----------- -------------
Total comprehensive income for the period 1.6 2.2 6.5
----------- ----------- -------------
Attributable to:
Equity holders of the parent 1.0 1.8 5.4
Non-controlling interests 0.6 0.4 1.1
----------- ----------- -------------
1.6 2.2 6.5
----------- ----------- -------------
Condensed consolidated balance
sheet
As at 30 June 2019
30 June 30 June 31 December
2019 2018 2018
Unaudited Unaudited
Notes GBPm GBPm GBPm
ASSETS
Non-current assets
Property, plant and equipment 2.5 1.5 2.1
Right-of-use assets 1 13.5 - -
Goodwill 37.2 35.8 37.1
Other intangible assets 16.8 17.3 17.7
Deferred tax assets 1.6 1.0 1.5
---------- ---------- ------------
71.6 55.6 58.4
---------- ---------- ------------
Current assets
Trade and other receivables 10 58.5 54.9 57.3
Cash and cash equivalents 9 21.2 26.9 25.4
---------- ---------- ------------
79.7 81.8 82.7
---------- ---------- ------------
Total assets 151.3 137.4 141.1
---------- ---------- ------------
LIABILITIES
Current liabilities
Trade and other payables 11 39.1 42.3 41.9
Current tax liabilities 1.4 2.2 3.2
Borrowings 8 28.9 36.9 32.0
Lease liabilities 1 6.1 - -
---------- ---------- ------------
75.5 81.4 77.1
---------- ---------- ------------
Non-current liabilities
Borrowings 8 9.2 2.2 5.2
Lease liabilities 1 7.5 - -
Deferred tax liabilities 3.9 4.0 4.2
---------- ---------- ------------
20.6 6.2 9.4
---------- ---------- ------------
Total liabilities 96.1 87.6 86.5
---------- ---------- ------------
Net assets 55.2 49.8 54.6
========== ========== ============
EQUITY
Share capital 2.4 2.4 2.4
Share premium account 22.4 22.4 22.4
Merger reserve 0.9 0.9 0.9
Retranslation reserve 6.2 4.8 5.8
Equity reserve (7.7) (7.7) (7.7)
Other reserves (0.6) (0.7) (0.7)
Retained earnings 22.9 20.6 23.2
---------- ---------- ------------
Equity attributable to owners of
Empresaria Group plc 46.5 42.7 46.3
Non-controlling interests 8.7 7.1 8.3
Total equity 55.2 49.8 54.6
========== ========== ============
Condensed consolidated statement of changes in
equity
Six months ended
30 June 2019
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
Balance at 31
December 2017 2.4 22.4 0.9 5.0 (7.5) (0.7) 19.6 42.1 6.8 48.9
----------------- -------- -------- --------- -------------- -------- --------- --------- ------ ---------------- -------
Profit for the
period - - - - - - 2.0 2.0 0.5 2.5
Exchange
differences on
translation
of foreign
operations - - - (0.2) - - - (0.2) (0.1) (0.3)
----------------- -------- -------- --------- -------------- -------- --------- --------- ------ ---------------- -------
Total
comprehensive
income for
the period - - - (0.2) - - 2.0 1.8 0.4 2.2
Dividend paid to
owners of
Empresaria
Group plc - - - - - - (0.6) (0.6) - (0.6)
Dividend paid to
non-controlling
interests - - - - - - - - (0.2) (0.2)
Acquisition of
non-controlling
shares - - - - (0.2) - - (0.2) 0.1 (0.1)
Purchase of own
shares in
Employee
Benefit Trust - - - - - - (0.4) (0.4) - (0.4)
Balance at 30
June 2018
(Unaudited) 2.4 22.4 0.9 4.8 (7.7) (0.7) 20.6 42.7 7.1 49.8
----------------- -------- -------- --------- -------------- -------- --------- --------- ------ ---------------- -------
Balance at 31
December 2017 2.4 22.4 0.9 5.0 (7.5) (0.7) 19.6 42.1 6.8 48.9
----------------- -------- -------- --------- -------------- -------- --------- --------- ------ ---------------- -------
Profit for the
year - - - - - - 4.6 4.6 1.2 5.8
Exchange
differences on
translation
of foreign
operations - - - 0.8 - - - 0.8 (0.1) 0.7
----------------- -------- -------- --------- -------------- -------- --------- --------- ------ ---------------- -------
Total
comprehensive
income for
the year - - - 0.8 - - 4.6 5.4 1.1 6.5
Dividend paid to
owners of
Empresaria
Group plc - - - - - - (0.6) (0.6) - (0.6)
Dividend paid to
non-controlling
interests - - - - - - - - (0.4) (0.4)
Acquisition of
non-controlling
shares - - - - (0.2) - - (0.2) 0.2 -
Purchase of own
shares in
Employee
Benefit Trust - - - - - - (0.4) (0.4) - (0.4)
Business
combination - - - - - - - - 0.6 0.6
Balance at 31
December 2018 2.4 22.4 0.9 5.8 (7.7) (0.7) 23.2 46.3 8.3 54.6
----------------- -------- -------- --------- -------------- -------- --------- --------- ------ ---------------- -------
Profit for the
period - - - - - - 0.7 0.7 0.6 1.3
Exchange
differences on
translation
of foreign
operations - - - 0.4 - (0.1) - 0.3 - 0.3
----------------- -------- -------- --------- -------------- -------- --------- --------- ------ ---------------- -------
Total
comprehensive
income for
the period - - - 0.4 - (0.1) 0.7 1.0 0.6 1.6
Dividend paid to
owners of
Empresaria
Group plc - - - - - - (1.0) (1.0) - (1.0)
Dividend paid to
non-controlling
interests - - - - - - - - (0.2) (0.2)
Share-based
payments - - - - - 0.2 - 0.2 - 0.2
Balance at 30
June 2019
(Unaudited) 2.4 22.4 0.9 6.2 (7.7) (0.6) 22.9 46.5 8.7 55.2
================= ======== ======== ========= ============== ======== ========= ========= ====== ================ =======
Condensed consolidated cash flow
statement
Six months ended 30 June 2019
6 months to 30 June Year to 31 December
6 months to 30 June 2019 2018 2018
Unaudited Unaudited
GBPm GBPm GBPm
Profit for the period 1.3 2.5 5.8
Adjustments for:
Depreciation and software
amortisation 3.7 0.4 1.0
Amortisation of
intangible assets
identified in business
combinations 0.9 0.8 1.7
Impairment of intangible
assets - - 0.3
Share-based payments 0.2 - -
Net finance costs 0.6 0.3 0.9
Taxation charge 1.0 1.4 3.6
-------------------------- ---------------------- ----------------------
7.7 5.4 13.3
Increase in trade and other
receivables (0.8) (2.1) (2.2)
(Decrease)/increase in trade
and other payables (including
pilot bonds outflow of
GBP4.1m
(30 June 2018: GBP0.2m, 31
December 2018: GBP2.2m)) (3.1) 0.7 (2.7)
-------------------------- ---------------------- ----------------------
Cash generated from operations 3.8 4.0 8.4
Interest paid (0.6) (0.4) (1.0)
Income taxes paid (3.2) (1.8) (2.9)
-------------------------- ---------------------- ----------------------
Net cash inflow from operating
activities - 1.8 4.5
-------------------------- ---------------------- ----------------------
Cash flows from investing
activities
Consideration for business
acquisitions (net of cash
acquired) (0.2) - (1.7)
Consideration received for
business disposals - - 0.1
Purchase of property, plant and
equipment and software (1.0) (0.6) (1.5)
Finance income 0.1 0.1 0.2
-------------------------- ---------------------- ----------------------
Net cash outflow from investing
activities (1.1) (0.5) (2.9)
-------------------------- ---------------------- ----------------------
Cash flows from financing
activities
(Decrease)/increase in
overdrafts (2.3) 5.7 1.5
Proceeds from bank loans 4.0 1.0 4.0
Repayment of bank loans (0.2) (5.2) (6.4)
(Decrease)/increase in invoice
financing (0.6) (0.2) 0.1
Payment of obligations under
leases (3.0) - -
Purchase of own shares in
Employee Benefit Trust - (0.4) (0.4)
Dividends paid to owners of
Empresaria Group plc (1.0) (0.6) (0.6)
Dividends paid to
non-controlling interests (0.2) (0.2) (0.4)
-------------------------- ---------------------- ----------------------
Net cash (outflow)/inflow from
financing activities (3.3) 0.1 (2.2)
-------------------------- ---------------------- ----------------------
Net (decrease)/increase in cash
and cash equivalents (4.4) 1.4 (0.6)
Effect of foreign exchange rate
movement 0.2 (0.4) 0.1
Cash and cash equivalents at
beginning of the period 25.4 25.9 25.9
-------------------------- ---------------------- ----------------------
Cash and cash equivalents at end
of the period 21.2 26.9 25.4
-------------------------- ---------------------- ----------------------
Bank overdrafts at beginning of
the period (22.0) (20.4) (20.4)
Decrease/(increase in the
period) 2.3 (5.7) (1.5)
Effect of foreign exchange rate
changes - - (0.1)
-------------------------- ---------------------- ----------------------
Bank overdrafts at end of the
period (19.7) (26.1) (22.0)
-------------------------- ---------------------- ----------------------
Cash, cash equivalents and bank
overdrafts at end of the period 1.5 0.8 3.4
-------------------------- ---------------------- ----------------------
Notes to the interim financial statements
Six months ended 30 June 2019
Basis of preparation and
1 general information
Empresaria Group plc is the Group's ultimate parent company. It is incorporated and domiciled
in England and its registered office address is Old Church House, Sandy Lane, Crawley Down,
Crawley, West Sussex, RH10 4HS, United Kingdom. Its shares are listed on AIM, a market of
London Stock Exchange plc.
The condensed set of financial statements has been prepared using accounting policies consistent
with International Financial Reporting Standards (IFRSs) as adopted by the European Union.
The same accounting policies, presentation and methods of computation are followed in the
condensed set of financial statements as applied in the Group's latest annual audited financial
statements with the exception of the adoption of IFRS 16 Leases (see below), which has been
applied for the first time in presenting this condensed set of financial statements. The Group
does not anticipate any further change in these accounting policies for the year ended 31
December 2019. While the financial figures included in this half-yearly report have been prepared
in accordance with IFRSs applicable to interim periods, this half-yearly report does not contain
sufficient information to constitute an interim financial report as that term is defined in
IAS 34.
The information for the year ended 31 December 2018 has been derived from audited statutory
accounts for the year ended 31 December 2018. The information for the year ended 31 December
2018 included herein does not constitute statutory accounts as defined in section 434 of the
Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the
Registrar of Companies. The auditors reported on those accounts: their report was unqualified,
did not draw attention to any matters by way of emphasis and did not contain a statement under
section 498(2) or (3) of the Companies Act 2006. The interim financial information for 2019
and 2018 has been neither audited nor reviewed.
Adoption of IFRS 16 Leases
The Group has adopted IFRS 16 for the first time in this condensed set of financial statements.
The Group has opted to apply the transition approach which does not require the restatement
of comparative information. 2018 figures have therefore not been restated and IFRS 16 has
an impact from 1 January 2019. On 1 January 2019 the Group recognised right-of-use assets
and corresponding and equal lease liabilities with no impact on the Group's net assets or
equity. As a result of the adoption of IFRS 16, from 1 January 2019 the Group no longer records
a rental expense within its operating costs but instead records a depreciation charge in respect
of the right of use assets within operating costs, and an interest charge on the lease liabilities
within its finance costs.
Going concern
The Group's activities are funded by a combination of long-term equity capital, revolving
credit facilities, term loans, short-term invoice financing and bank overdraft facilities.
The day to day operations are funded by cash generated from trading, invoice financing and
overdraft facilities. The Board has reviewed the Group's profit and cash flow projections
and applied sensitivities to the underlying assumptions. These projections suggest that the
Group will meet its obligations as they fall due with the use of existing facilities.
The majority of the Group's overdraft facilities fall due for renewal at the end of January
each year and, based on informal discussions the Board has had with its lenders, has no reason
to believe that these facilities will not continue to be available to the Group for the foreseeable
future. As a result, the going concern basis continues to be appropriate in preparing the
financial statements.
2 Accounting estimates and judgements
The preparation of interim financial statements requires management to make judgements, estimates
and assumptions that affect the application of accounting policies and the reported amount
of income, expense, assets and liabilities. The significant estimates and judgements made
by management were consistent with those applied to the consolidated financial statements
for the year ended 31 December 2018, with the exception of IFRS 16 which has been applied
for the first time in 2019. Under IFRS 16 the key area of judgement is lease length, including
whether or not break clauses are expected to be exercised, and the identification of the appropriate
discount rate.
Notes to the interim financial statements
Six months ended 30 June 2019
3 Segment analysis
During the period the Group has reviewed and revised its segmental
reporting. 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 now based on sectors. The Group's business is segmented into five
sectors: Professional,
IT, Engineering, Commercial and Offshore Recruitment Services.
The Group has one principal activity, the provision of staffing and
recruitment services.
Each unit is managed separately with local management responsible for
implementing local strategy.
The analysis of the Group's business by sector is set out below:
Six months to 30 June Adjusted
2019 operating
Revenue Net fee income profit/(loss)
GBPm GBPm GBPm
Professional 68.3 15.6 2.0
IT 21.4 6.8 1.3
Engineering 12.2 2.2 (0.4)
Commercial 68.4 9.1 1.9
Offshore Recruitment
Services 5.4 2.8 1.4
Central costs - - (1.9)
Intragroup
eliminations (0.2) (0.2) -
---------------- ------------------ ------------------
Total 175.5 36.3 4.3
---------------- ------------------ ------------------
Six months to 30 June Adjusted
2018 operating
Revenue Net fee income profit/(loss)
GBPm GBPm GBPm
Professional 77.0 14.4 2.0
IT 21.6 6.5 1.5
Engineering 14.9 2.6 0.1
Commercial 61.9 8.9 2.2
Offshore Recruitment
Services 3.1 1.8 0.7
Central costs - - (1.5)
Intragroup
eliminations (0.2) (0.2) -
---------------- ------------------ ------------------
Total 178.3 34.0 5.0
---------------- ------------------ ------------------
Year ended 31 Adjusted
December 2018 operating
Revenue Net fee income profit/(loss)
GBPm GBPm GBPm
Professional 154.0 30.7 5.4
IT 44.0 13.6 3.2
Engineering 29.3 4.9 (0.1)
Commercial 132.8 19.2 5.6
Offshore Recruitment
Services 7.1 4.3 1.9
Central costs - - (3.7)
Intragroup
eliminations (0.4) (0.4) -
---------------- ------------------ ------------------
Total 366.8 72.3 12.3
---------------- ------------------ ------------------
Notes to the interim
financial statements
Six months ended 30
June 2019
Finance income and
4 costs
6 months to 30 June 6 months to 30 June Year to 31 December
2019 2018 2018
Unaudited Unaudited
GBPm GBPm GBPm
Finance income
Bank interest receivable 0.1 0.1 0.2
----------------------- ----------------------- -----------------------
0.1 0.1 0.2
----------------------- ----------------------- -----------------------
Finance costs
Invoice financing (0.1) (0.1) (0.2)
Bank loans and overdrafts (0.3) (0.3) (0.7)
Interest on lease
obligations (0.2) - -
Interest on tax liabilities (0.1) - (0.2)
(0.7) (0.4) (1.1)
----------------------- ----------------------- -----------------------
Net finance costs (0.6) (0.3) (0.9)
----------------------- ----------------------- -----------------------
5 Reconciliation of profit before tax to adjusted profit before tax
6 months to 30 June 6 months to 30 June Year to 31 December
2019 2018 2018
Unaudited Unaudited
GBPm GBPm GBPm
Profit before tax 2.3 3.9 9.4
Exceptional items 0.5 - 0.3
Amortisation of
intangible assets
identified in business
combinations 0.9 0.8 1.7
Adjusted profit before
tax 3.7 4.7 11.4
----------------------- ----------------------- -----------------------
6 Taxation
The tax charge for the six month period is GBP1.0m (6 months ended 30 June 2018: GBP1.4m,
year ended 31 December 2018: GBP3.6m), representing an effective tax rate of 43% (6 months
ended 30 June 2018: 37%). On an adjusted basis (excluding adjusting items as set out in note
5 and their tax effect), the effective tax rate is 36% (6 months ended 30 June 2018: 34%).
The tax charge for the period is assessed using the best estimate of the effective tax rates
expected to be applicable for the full year, applied to the pre-tax income of the six month
period.
Notes to the interim financial statements
Six months ended 30 June 2019
7 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 2019 and 2018
these are all related to share options. Reconciliations between
basic and diluted measures are given below.
The Group also presents adjusted earnings per share which it considers
to be a key measure of the Group's performance. A reconciliation
of earnings to adjusted earnings is provided below.
6 months 6 months Year to
to 30 June to 30 June 31 December
2019 2018 2018
Unaudited Unaudited
GBPm GBPm GBPm
Earnings
Earnings attributable to owners of
Empresaria Group plc 0.7 2.0 4.6
Adjustments:
Exceptional items 0.5 - 0.3
Amortisation of intangible assets identified
in business combinations 0.9 0.8 1.7
Tax on the above (0.3) (0.1) (0.3)
Non-controlling interests in respect
of the above (0.1) (0.1) (0.1)
Earnings for the purpose of adjusted
earnings per share 1.7 2.6 6.2
-------------- ------------ -------------
Number of shares Millions Millions Millions
Weighted average number of shares -
basic 50.4 50.7 50.6
Dilution effect of share options 0.7 0.4 0.4
Weighted average number of shares -
diluted 51.1 51.1 51.0
Earnings per share Pence Pence Pence
Basic 1.4 3.8 9.2
Dilution effect of share options - - (0.1)
Diluted 1.4 3.8 9.1
Adjusted earnings per share Pence Pence Pence
Basic 3.4 5.0 12.2
Dilution effect of share options (0.1) - (0.1)
Diluted 3.3 5.0 12.1
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.
Notes to the interim financial statements
Six months ended 30 June 2019
8 Borrowings
30 June 30 June 31 December
2019 2018 2018
Unaudited Unaudited
GBPm GBPm GBPm
Current
Bank overdrafts 19.7 26.1 22.0
Invoice financing 9.1 9.4 9.7
Bank loans 0.1 1.4 0.3
---------- ---------- ------------
28.9 36.9 32.0
---------- ---------- ------------
Non-current
Bank loans 9.2 2.2 5.2
---------- ---------- ------------
9.2 2.2 5.2
---------- ---------- ------------
Total Borrowings 38.1 39.1 37.2
---------- ---------- ------------
The following key bank facilities are in place at 30 June 2019:
A revolving credit facility of GBP10.0 million, expiring in June
2021. As at 30 June 2019 the amount outstanding is GBP9.0 million
(30 June 2018: GBP2.0 million). Interest is payable at 1.5% plus
LIBOR or EURIBOR. In July 2019, GBP4.0m of a potential GBP5.0m
extension to the revolving credit facility was activated, increasing
the revolving facility to GBP14.0m.
Overdraft facilities are in place in the UK with a limit of GBP7.5m.
The balance on this facility as at 30 June 2019 was GBP5.1m (30
June 2018: GBP4.4m). The interest rate was fixed at 1% above applicable
currency base rates. A $2.0m overdraft facility to provide working
capital funding to Pharmaceutical Strategies had a balance as at
30 June 2019 of $1.0m (30 June 2018: $0.5m). Interest on this USD
facility is payable at 2% over LIBOR. A EUR13m overdraft facility
is also in place in Germany. The balance at 30 June 2019 was EUR8.5m
(30 June 2018: EUR10.3m) and interest is payable at EURIBOR plus
2.3%. A NZ$2.0m overdraft facility has been set up for Rishworth
Aviation in New Zealand during 2019. The overdraft has not been
utilised and attracts interest at 2% over the base lending rate.
The UK facilities are secured by a first fixed charge over all
book and other debts given by the Company and certain of its UK
subsidiaries, Headway in Germany and Rishworth Aviation in New
Zealand.
There is an invoice financing facility in the UK of GBP13.0m (2018:
GBP13.0m). As at 30 June 2019 the amount outstanding was GBP8.8m
(30 June 2018: GBP8.2m). Interest is payable at 1.47% over UK base
rate. There are also invoice financing facilities in Chile of GBP2.6m
(30 June 2018: GBP1.9m). As at 30 June 2019 the amount outstanding
was GBP0.4m (30 June 2018: GBP1.3m). Interest is payable at approximately
6%.
Notes to the interim financial statements
Six months ended 30 June 2019
9 Adjusted net debt
30 June 30 June 31 December
a) Adjusted net debt 2019 2018 2018
Unaudited Unaudited
GBPm GBPm GBPm
Cash and cash equivalents 21.2 26.9 25.4
Less cash held in respect of pilot
bonds (1.2) (7.3) (5.3)
------------ ------------ -------------
Adjusted cash 20.0 19.6 20.1
Borrowings (see note 8) (38.1) (39.1) (37.2)
Adjusted net debt (18.1) (19.5) (17.1)
------------ ------------ -------------
The Group presents adjusted net debt as its principle debt measure.
Adjusted net debt excludes cash held in respect of pilot bonds
within the Rishworth 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.
At the start of 2019 a major client confirmed that they would
no longer require bonds to be held and as a result these bonds
have been repaid during the period. This does not impact the Group's
adjusted cash or adjusted net debt measures.
6 months 6 months Year to
to 30 June to 30 June 31 December
b) Movement in adjusted net debt 2019 2018 2018
Unaudited Unaudited
GBPm GBPm GBPm
As at 1 January (17.1) (19.5) (19.5)
Net (decrease)/increase in cash
and cash equivalents per consolidated
cash flow statement (4.4) 1.4 (0.6)
Borrowings in business acquired - - (0.2)
(Increase)/decrease in overdrafts
and loans (1.5) (1.5) 0.9
Decrease/(increase) in invoice
financing 0.6 0.2 (0.1)
Foreign exchange movement 0.2 (0.3) 0.2
Adjusted for decrease in cash held
in respect of pilot bonds 4.1 0.2 2.2
(18.1) (19.5) (17.1)
------------ ------------ -------------
Notes to the interim financial
statements
Six months ended 30 June 2019
10 Trade and other receivables
30 June 30 June 31 December
2019 2018 2018
Unaudited Unaudited
GBPm GBPm GBPm
Gross receivables 48.7 44.8 49.2
Less provision for impairment of
trade receivables (0.6) (0.3) (1.1)
---------- ---------- ------------
Trade receivables 48.1 44.5 48.1
Prepayments 2.4 2.1 1.9
Accrued income 3.5 2.7 3.3
Corporation tax receivable 1.3 1.7 1.2
Other receivables 3.2 3.9 2.8
---------- ---------- ------------
58.5 54.9 57.3
---------- ---------- ------------
11 Trade and other payables
30 June 30 June 31 December
2019 2018 2018
Unaudited Unaudited
GBPm GBPm GBPm
Current
Trade payables 2.2 2.1 2.2
Other tax and social security 7.6 8.1 8.1
Pilot bonds 1.2 7.3 5.3
Client deposits 0.9 0.9 0.9
Temporary recruitment worker wages 4.3 4.0 3.9
Other payables 1.4 2.2 1.9
Accruals 21.5 17.7 19.4
Deferred consideration - - 0.2
39.1 42.3 41.9
---------- ---------- ------------
Pilot bonds represent unrestricted funds held by Rishworth Aviation
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.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR KBLFLKVFZBBQ
(END) Dow Jones Newswires
August 21, 2019 02:00 ET (06:00 GMT)
Empresaria (LSE:EMR)
Historical Stock Chart
From Apr 2024 to May 2024
Empresaria (LSE:EMR)
Historical Stock Chart
From May 2023 to May 2024