Final Results

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.

Highlights	2022	2021	% change	% change (constant currency)2
Revenue	£261.3m	£258.4m	+1%	+0%
Net fee income	£65.4m	£59.5m	+10%	+8%
Operating profit	£8.8m	£6.7m	+31%
Adjusted operating profit1	£10.2m	£9.3m	+10%	+6%
Profit before tax	£7.6m	£6.0m	+27%
Adjusted profit before tax1	£9.0m	£8.6m	+5%
Diluted earnings per share	6.7p	4.5p	+49%
Adjusted diluted earnings per share1	8.8p	8.6p	+2%

· Solid growth in net fee income

o  Up 10% year-on-year to £65.4m

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 £10.2m

· Adjusted profit before tax up 5% to £9.0m

· 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 £7.9m, reduced by £6.1m 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 £20m 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 Rhona Driggs, Chief Executive Officer Tim Anderson, Chief Financial Officer	via Alma PR
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) Sam Modlin Pippa Crabtree Hilary Buchanan	020 3405 0205 [e-mail]

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 £20m.

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 £20m

While we expect to see organic growth across all our sectors, our Roadmap to £20m 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 £20m.

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 £20m.

Rhona Driggs

Chief Executive Officer

27 March 2023

Operating review

UK & Europe

£m	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

£m	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

£m	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 £1.5m.

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

£m	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
£m	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 £7.9 million (2021: £14.0m) 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

	2022 £m	2021 £m	% change	% change constant currency2
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 profit1	10.2	9.3	+10%	+6%
Profit before tax	7.6	6.0	+27%
Adjusted profit before tax1	9.0	8.6	+5%
Diluted earnings per share	6.7p	4.5p	+49%
Adjusted, diluted earnings per share1	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 £3.9m (2021: £4.3m) reflecting reduced costs for bonuses and share schemes.

Adjusted profit before tax has increased by 5% to £9.0m 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 £1.4m. There were no charges for impairment in 2022 (2021: £1.2m) and as a result reported profit before tax increased by 27% year-on-year to £7.6m.

The total tax charge for the year is £2.8m (2021: £3.1m), 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 (£0.3m);

· withholding taxes, dividend taxes, and deferred tax liabilities on unremitted earnings in respect of our overseas operations (£0.3m);

· deferred tax assets not recognised for certain tax losses around the Group, (£0.4m); partially offset by

· expenses with enhanced deductions for tax purposes (£0.2m).

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 £1.2m of impairment charges in the prior year.

Balance sheet

	2022	2021
	£m	£m
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 £40.1m (2021: £39.8m) with the movement in 2022 due to £1.6m of amortisation of intangible assets (2021: £1.6m), foreign exchange gains of £1.8m (2021: losses of £1.1m), impairment charges of £nil (2021: £1.2m) and additions of £0.1m (2021: £0.7m).

Trade and other receivables include trade receivables of £33.3m (2021: £39.5m) 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 £nil (2021: £0.3m) 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
	£m	£m
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 £3.5m in 2022 compared to an outflow of £4.4m 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
	£m	£m
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 £2.1m 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 £0.6m (2021: £0.5m) 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 £0.3m in 2022 (2021: £0.3m). Dividends paid to non-controlling interests were £0.4m (2021: £0.3m).

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
	£m	£m
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 £7.9m (2021: £14.0m) reflecting the cash flows discussed above. Adjusted net debt excludes cash of £0.6m (2021: £0.7m) 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 £11.0m (2021: £14.8m) with a month end high of £16.1m at 28 February (2021: £19.1m at 31 May) and a month end low of £7.9m at 31 December (2021: £11.1m 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 £29.6m (2021: £34.4m) being bank overdrafts of £17.1m (2021: £18.2m), invoice financing of £3.5m (2021: £4.6m) and bank loans of £9.0m (2021: £11.6m). The Group's borrowings are principally held to fund working capital requirements and are mainly due within one year. As at 31 December 2022, £0.5m of borrowings are shown as non-current (2021: £11.2m) 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 £54.8m (2021: £55.5m).

	2022	2021
	£m	£m
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 £15.0m 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 £0.4m 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 £10.4m.

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 £0.1m.

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	£m	£m
Revenue	2	261.3	258.4
Cost of sales		(195.9)	(198.9)
Net fee income	2	65.4	59.5
Administrative costs (including £nil (2021: £0.3m) 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
	£m	£m
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	£m	£m
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 capital	Share premium account	Merger reserve	Retranslation reserve	Equity reserve	Other reserves	Retained earnings	Total	Non-controlling interests	Total equity
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
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
	£m	£m
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 £0.1m (2021: outflow of £0.3m))	(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
	£m	£m
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 financial information 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 Companies and those for 2022 will be delivered following the Company's Annual General Meeting. The Auditors have reported on those accounts; their reports were unqualified, did not draw attention to any matters by way of emphasis without qualifying 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
		Revenue	Net fee income	Adjusted operating profit	Revenue	Net fee income	Adjusted operating 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
	£m	£m
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
	£m	£m
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
	£m	£m
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
	£m	£m
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
	£m	£m
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:

UK & Europe:	13.0% to 18.0% (2021: 10.4% to 12.7%)
APAC:	13.8% to 18.9% (2021: 11.6% to 17.6%)
Americas:	13.3% to 16.0% (2021: 12.9% to 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 £0.6m 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 £2.0m and the recoverable amount, based on value in use, was assessed as £1.4m. A further impairment review was carried out on this operation at 31 December 2021 and no additional impairment was identified. An impairment charge of £0.3m 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 £0.2m (2021: £nil) would be recorded in respect £0.1m for one business in our APAC region and £0.1m for one business in our Americas region. If the discount rate were to increase by 2% an impairment charge of £0.2m (2021: £nil) would be recorded in respect £0.1m for one business in our APAC region and £0.1m for one business in our Americas region.

8  Other intangible assets

	Intangible assets identified in business combinations
2022	Customer relationships	Trade names & marks	Sub total	Software	Total
	£m	£m	£m	£m	£m
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
		£m	£m
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 £20.1m (2021: £21.6m) on which security has been given under bank facilities.

10  Trade and other payables

		2022	2021
		£m	£m
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, £0.3m (2021: £0.3m) would be repayable in more than one year.

11  Borrowings

	2022	2021
	£m	£m
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	£m	£m	£m	£m
Bank overdrafts
UK1	GBP2	On demand with annual review	1% above applicable currency base rates	10.0	10.0	6.3	6.9
Germany	EUR	On demand with annual review	EURIBOR + 3.0%	11.5	10.9	8.7	8.4
USA	USD	On demand with annual review	LIBOR + 2%	1.7	1.5	-	1.5
New Zealand	NZD	On demand with annual review	New Zealand Base Lending Rate + 2%	0.5	0.5	-	-
Invoice financing
UK	GBP	On demand with annual review	UK base rate + 1.82%	10.0	10.0	2.0	3.0
Chile	CLP	On demand with annual review	Weighted average rate 15.7% (2021: 5.5%)	2.9	4.2	1.5	1.6
Bank loans
UK - Revolving Credit Facility	GBP	2023	SONIA + 2% to 3%	15.0	15.0	8.0	10.5
Japan	JPY	2025-2028	Weighted average rate 0.6% (2021: 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 £1.9m of cash shown within cash and cash equivalents in the balance sheet (2021: £1.2m).

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 £15.0m.  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
	£m	£m
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
	£m	£m
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
	£m	£m
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
	£m	£m
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.

 

END

 

 

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