REG - Empresaria Group PLC - Trading Update and Notice of Results

EmpresariaAnnouncement

25/01/2024 07:00

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RNS Number : 8317A  Empresaria Group PLC  25 January 2024

25 January 2024

 

Empresaria Group plc

("Empresaria" or the "Group")

 

Trading Update and Notice of Results

 

 

Profits in line with current market expectations; Offshore Services continues
to outperform

Empresaria (AIM: EMR), the global specialist staffing group, provides a
trading update for the financial year ended 31 December 2023 ahead of
announcing its full year results on 26 March 2024.

 

Trading update

 

·      Net fee income down 12% to £57.5m (down 11% in constant
currency)

·      Adjusted profit before tax expected to be at the top end of the
range guided to in November 2023 of £3.0m to £3.5m

·      Offshore Services continues to perform well with net fee income
up 4% despite challenging market conditions (up 9% in constant currency)

·      Taking actions to maximise short and long term value

 

The macroeconomic backdrop remained challenging throughout 2023 and this had
an impact across the Group.  As detailed in the table below, all of our
regions have shown year-on-year reductions in net fee income with the
exception of Offshore Services which has delivered year-on-year growth despite
the adverse market conditions.  Permanent placement activity has been most
significantly impacted with net fee income down 25% year-on-year.  Temporary
and contract net fee income was down 10%, primarily driven by our exposure to
the global IT sector and the US Healthcare sector, both of which had
significant reductions in demand in 2023.

 

Net fee income by region for the year ended 31 December was as follows:

 £m                 2023   2022   % change  % change (constant currency)*
 UK & Europe        24.9   28.4   -12%      -13%
 APAC               13.6   15.8   -14%      -10%
 Americas           6.1    8.7    -30%      -31%
 Offshore Services  14.0   13.5   +4%       +9%
 Intragroup         (1.1)  (1.0)  -10%      -10%
 Total              57.5   65.4   -12%      -11%

* The constant currency movement is calculated by translating the 2022 results
at the 2023 exchange rates.

 

Adjusted net debt increased to £11.1m, £3.2m higher than 31 December 2022.
The increase is primarily driven by a higher proportion of tax cash payments
reflecting the impact of loss-making subsidiaries, adverse foreign exchange
movements and the impact on working capital requirements from the shift of
revenue mix.  Headroom, excluding invoice financing facilities, remains
strong at £17.8m.

 

Taking actions to maximise short and long term value

 

During 2023 we took strong action on costs, including reducing our headcount
(excluding Offshore Services) by 17%, which delivered a significant benefit in
the second half of the year and will continue to do so in 2024.  We have also
been further streamlining our operations, bringing businesses in key markets
under a single leader and common operating structure.  In countries where we
operate in more than one of our core sectors this will enable us to provide
our full range of services and increase penetration of key clients as well as
helping us to operate more efficiently and effectively.  By consolidating our
leadership structure we have also been able to reduce the size of our senior
management team, without adversely impacting our Group-wide initiatives.

 

We are focussing on our core sectors of Professional, IT and Healthcare and on
the markets where we see the greatest opportunity for growth.  As part of
this we continue to review the sub-sectors and markets in which the Group
operates.  As a result, in 2023 we closed our Vietnam operation.  We have
also merged our UK marketing brand into our lead Professional brand enabling
us to offer marketing recruitment services seamlessly to a wider client
base.  We expect a small number of further actions in the short term.

 

Our Offshore Services operation continues to perform strongly.  This business
delivered year-on-year growth in net fee income despite the challenging market
conditions and has grown at a compound annual rate of 32% since 2017.  The
Board believes that our share price does not reflect the value and potential
of this business.  Given M&A activity that has occurred in the sector in
recent years, such as the acquisition of PSG Global by Teleperformance in late
2022, the Board is of the belief that our 72% investment in this operation is
likely worth significantly more than the value attributed to the entire Group
based on its share price over the last 12 months.

 

 

Rhona Driggs, CEO of Empresaria, commented:

 

"Challenging market conditions persisted throughout 2023 across our markets
and sectors.  We took significant action to adjust our cost base and
continued to manage this closely as the year progressed.  I am proud of the
resilience of our team in navigating these difficult times.

 

While the global economic environment remains challenging, we are confident
that the actions we are taking to create greater focus on our core sectors and
operations will enable us to execute our strategy more quickly and effectively
to realise our long term growth ambitions."

 

 

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)  020 7496 3000
 Shaun Dobson / Alex Bond / Angus Campbell

 Cavendish Capital Markets Limited (Joint Broker)             020 7220 0500
 Katy Birkin (Corporate Finance)

Michael Johnson / Jasper Berry (Sales)
 Alma PR (Financial PR)                                       020 3405 0205
 Sam Modlin / Rebecca Sanders-Hewett / Will Merison
empresaria@almastrategic.com

 

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.

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