Last checked at 29 Jan 2020 07:00
29 January 2020
Empresaria Group plc ("Empresaria" or the "Group")
Trading Update and Notice of Results
Operational changes made to build a strong base for future growth, profit in line with market expectations
Empresaria (AIM: EMR), the global specialist staffing group, today provides a trading update for the financial year ended 31 December 2019 ahead of announcing its full year results on Wednesday 18 March 2020.
The Board confirms that it expects the Group to deliver results in line with current market expectations for the financial year ended 31 December 2019.
Net fee income has grown 3% from the prior year, 2% in constant currency. As expected, net fee income progress was weighted towards the first half of the year with the second half flat year on year. The growth in businesses such as in our Offshore Recruitment Services sector, which has had another very strong year, has been offset by the impact of the previously communicated challenges in UK Engineering, the weakness in the German automotive sector and Brexit.
Net fee income by sector for the year ended 31 December is as follows:
£m | 2019 | 2018 | % change | % change (constant currency)* |
Professional | 27.3 | 26.8 | +2% | +1% |
IT | 14.4 | 13.6 | +6% | +3% |
Healthcare | 2.8 | 2.7 | +4% | +2% |
Property, Construction and Engineering | 3.8 | 5.3 | -28% | -28% |
Commercial | 19.7 | 19.2 | +3% | +3% |
Offshore Recruitment Services | 7.0 | 5.1 | +37% | +37% |
Intragroup | (0.5) | (0.4) | - | - |
Total | 74.5 | 72.3 | +3% | +2% |
* The constant currency movement is calculated by translating the 2018 results at the 2019 exchange rates.
** The Group has made further revisions to its sectors during the second half of the year to reflect actions taken in the UK Engineering business and to separately show the Group's healthcare operations which are expected to be a strong driver of future profit growth.
The Group's Professional sector has seen a small increase in net fee income despite the adverse impact of Brexit, particularly on those UK businesses that operate in the financial services and new home sales markets. Additionally, our aviation business is now seeing an adverse impact from the grounding of the Boeing 737 Max and an ongoing reduction in demand for new pilots from a large client which will continue to impact through 2020. As we communicated in October we restructured and merged our marketing/creative business under our professional services business. This change is expected to drive both cost and sales synergies and enable us to create greater size and scale in this business.
The Group's IT sector has shown an increase in net fee income, more than offsetting the challenges of rebuilding the temp base in Japan following the regulatory changes in 2018. We are investing in growing our presence in the US temp market and in strengthening our position in temp in the UK in order to ensure we are well placed to deliver future growth.
The Healthcare sector has shown positive growth in the second half of the year after a weaker first half with management and business model changes implemented during the year starting to have an impact.
The previously announced material restructuring of the Group's Property, Construction and Engineering sector is now complete resulting in the closure of the majority of the UK Engineering business. We have retained selected profitable elements and incorporated these into another of our UK businesses which will now have a broader service offering and more potential to expand. Future growth and investment in this sector will be focused on the skilled, white collar end of the market where we see greater opportunity. This sector is expected to return to profit in 2020 as a result of the actions taken.
The Group's Commercial sector has a significant presence in Germany where the focus has been on rebuilding the temp base following the changes in legislation in 2018. This has been progressing well but has been offset by the impact from the weaker German automotive sector which represents a key market. The Group's investment in Peru in July 2018 contributed a full year's result for the first time and accounts for a £1.0m increase in net fee income over 2018.
The Group's Offshore Recruitment Services sector has continued to build on the strong growth of 2018 with another year of significant growth in 2019. We believe this sector will be a key driver of future growth for the Group and we will be investing in 2020 to enable it to deliver on its growth potential.
Adjusted profit before tax is anticipated to be in line with market expectations at £9.3m (2018: £11.4m). Adjusted profit before tax is stated before exceptional costs incurred as a result of the significant operational change made during the year including the restructuring of our UK Engineering business and costs associated with the change of CEO in June 2019. The reduction in adjusted profit before tax reflects the impact of the material declines in the UK Engineering business along with the impact of Brexit in the UK and the slowdown of the German automotive sector.
Adjusted net debt at 31 December 2019 is £19.1m, an increase of £2m on the prior year reflecting the investment in additional shares in our UK and US IT business for consideration of £3.5m, the reduction in profits, and costs associated with the significant operational changes made in the year.
Rhona Driggs, CEO of Empresaria, commented:
"We have delivered results for the year in line with expectations as stated in October, with growth in net fee income for the year despite a challenging trading environment. We have made a number of significant operational changes in 2019 and have identified further key areas for operational improvement and investment in 2020 in order to build a stronger base for future growth and deliver an improved financial performance. While we invest in positioning the business for future growth in net fee income and profitability, our diversity across sectors and geographies continues to provide a strong, profitable and cash generative foundation from which to build."
Enquiries:
Empresaria Group plcRhona Driggs, Chief Executive OfficerTim Anderson, Chief Financial Officer | via Alma PR |
Arden Partners (Nominated Adviser and Broker)John Llewellyn-Lloyd Ciaran Walsh | 020 7614 5900 |
Alma PR (Financial PR)Rebecca Sanders-Hewett Sam Modlin Hilary Buchanan David Ison | 020 3405 0205empresaria@almapr.com |
Notes for editors:
§ Empresaria Group plc is a global specialist staffing group offering temporary and contract recruitment, permanent recruitment and offshore recruitment services across 6 sectors: Professional, IT, Healthcare, Property, Construction and Engineering, Commercial and Offshore Recruitment Services.
§ Empresaria operates in 20 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 is listed on AIM under ticker EMR. For more information: empresaria.com