Results for the year ended 31 December 2023

Empresaria Group PLC

26 March 2024

 

26 March 2024

Empresaria Group plc

("Empresaria" or the "Group")

Results for the year ended 31 December 2023

Offshore Services demonstrates strength and resilience despite challenging market conditions

Empresaria, the global specialist staffing group, reports its results for the year ended 31 December 2023.

Highlights	2023	2022	% change	% change (constant currency)2
Revenue	£250.3m	£261.3m	-4%	-4%
Net fee income	£57.5m	£65.4m	-12%	-11%
Adjusted operating profit1	£5.1m	£10.2m	-50%	-48%
Operating profit	£1.7m	£8.8m	-80%
Adjusted profit before tax1	£3.5m	£9.0m	-61%
Profit before tax	£0.1m	£7.6m	-99%
Adjusted diluted earnings per share1	0.6p	8.8p	-93%
Diluted (loss)/earnings per share	(5.9)p	6.7p	-188%

·    Challenging market conditions throughout 2023 impacted net fee income

o  Reduced by 12% year-on-year to £57.5m

o  Permanent placement down 25%

o  Temporary and contract down 10%

o  Growth of 8% from our resilient offshore services offering

·    Adjusted operating profit down 50% to £5.1m - reduction in net fee income partially offset by cost reductions

·    Adjusted profit before tax down 61% to £3.5m reflecting increased interest costs

·    Adjusted, diluted earnings per share reduced to 0.6p reflecting relative strength of Offshore Services which has a 28% non-controlling interest

·    Adjusted net debt increased to £11.1m (31 December 2022: £7.9m) with strong headroom of £17.8m

·    Proposed dividend of 1.0p per share (2022: 1.4p) reflecting the Board's confidence in the Group's medium-term prospects while acknowledging the lower level of profit in 2023

·    Actions taken to reduce cost, reduce complexity and sharpen focus on our core sectors

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 2022 results at the 2023 exchange rates.

Chief Executive Officer, Rhona Driggs, commented:

"We experienced challenging market conditions throughout 2023 across all our markets and sectors.  In particular, our permanent placement business declined significantly as client and candidate confidence remained low.  Against this backdrop I am pleased to report that our Offshore Services operation proved their strength and resilience, delivering year-on-year growth.

We continue to focus on simplifying our operations and have made substantial progress in improving our operating models in our core sectors (Professional, IT, Healthcare) in order to drive increased productivity and maximise opportunities with our clients. We believe these changes will be key in driving long-term value.

Challenging market conditions are expected to continue throughout the first half of 2024, but I am confident in our ability to navigate through this environment and we are well positioned to respond as the market recovers."

Investor presentation

Management will deliver an online results presentation open to all existing and potential investors via the Investor Meet Company platform on Tuesday 26 March 2024 at 4:00pm 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.

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 / Alex Bond / Angus Campbell	020 7496 3000
Cavendish Capital Markets Limited (Joint Broker) Katy Birkin (Corporate Finance) Michael Johnson / Jasper Berry (Sales)	020 7220 0500
Alma Strategic Communications (Financial PR) Sam Modlin / Rebecca Sanders-Hewett / Will Merison	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

2023 performance

2023 was a challenging year for the Group with adverse macroeconomic conditions persisting throughout the year and impacting all our regions. Despite this there were some positive performances; it was particularly pleasing to see our Offshore Services operation continue to demonstrate its strength and resilience, growing both net fee income and profits.

People

As a result of market conditions in 2023, we significantly reduced our costs and, as part of this, our headcount across the Group.

I want to acknowledge and thank all of our teams for their hard work and dedication during what has been a challenging period. Their perseverance and determination stood out, and it is our people that will enable us to return to growth and deliver on our potential.

Dividend

The Board has reviewed the dividend in line with the 2023 results and the current trading environment. For the year ended 31 December 2023 we are proposing a dividend of 1.0p per share, reduced from 1.4p in the prior year. This reflects the Board's confidence in the Group's medium-term prospects while acknowledging the lower level of profit in 2023. Subject to shareholder approval at the Annual General Meeting, the dividend will be paid on 13 June 2024 to shareholders on the register on 24 May 2024.

Outlook

The challenging economic environment has continued into 2024 and the outlook remains uncertain. We are, however, confident that the actions we have taken, and continue to take, to simplify our leadership and operational structures and create focus around our core operations, alongside the strength of our Offshore Services offering, leave us well positioned to benefit as and when market conditions improve and will enable us to realise the growth potential of the Group.

Penny Freer

Chair

25 March 2024

Chief Executive's review

2023 performance overview

2023 was a challenging year as adverse market conditions persisted across the staffing sector and, as a result, we experienced declining demand across all of our regions.

The most significant impact was on permanent recruitment as clients deferred hiring decisions and candidates were less confident about moving roles. The slowing of the global IT staffing sector and Healthcare in the US also affected our temporary and contract business.

Our Offshore Services sector delivered year-on-year growth despite the challenging market conditions in the US which was more than offset by demand in Healthcare in the UK.

I am proud of our team and the resilience they demonstrated in navigating these difficult market conditions.

Throughout 2023 we took clear action to control costs and, as a result, our headcount, excluding Offshore Services, reduced by 17% over the course of the year. We are focussed on simplifying how we operate to reduce complexity, creating greater opportunities for cross selling across our core sectors. We have streamlined our leadership structure and brought our core sector businesses under a single leader in key markets such as the UK and the US. This will allow us to maximise our opportunities for cross selling across our core sectors and we have also been able to reduce the size of our senior management team, without impacting collaboration across the Group.

We also accelerated the roll out of our '180 operating model', in markets that had not already adopted it, separating our sales and delivery functions into specialised teams. This model creates greater focus for both our clients and candidates and will improve productivity, enhance the candidate and client experience, and create greater career opportunities for our staff. This transition is largely complete in our core sectors and markets.

As part of our focus on core sectors and markets, we took steps to streamline some of our operations to offer a more succinct go to market proposition for our clients. We merged our UK marketing brand into our lead Professional brand enabling us to offer marketing recruitment services seamlessly across a wider client base. We also took the decision to close our loss-making Vietnam operation. We are continuing to review the sub-sectors and markets in which the Group operates. We have identified four of our smaller operations, in either markets or sectors where we do not plan to invest, that we will exit during 2024. These would not have a material impact on the net fee income or profits of the Group but would continue the process of simplification and focus.

Delivering on our strategy

We have been on a transformative journey, transitioning from a large collection of disconnected brands to a more cohesive group with a common purpose, strategy, and values, supported by centralised functions.

Over the past year we have made good progress on our three key pillars for growth.

Our first pillar is focussed on our core sectors of Professional, IT and Healthcare in key markets where we see the greatest opportunity for growth. As mentioned, we have brought these core sectors under a single leader in each country to ensure we are positioned to capitalise when the market recovers. These changes will help accelerate our growth, cross sell our services more effectively to our existing client base, and create a greater value proposition for new clients.

Our growth ambition is largely built on organic activity. We recently launched our lead Professional recruitment brand in the US enabling us to provide a wider range of services to our well established client base in IT and Healthcare. We continue to review acquisition opportunities as they arise but will only consider future acquisitions in our core sectors and key markets, and only when timing and circumstances are right.

In our second pillar we are focussed on diversifying our service offering to clients, building strategic partnerships and cross selling our recruitment services to our client base. We have seen good progress with offering RPO solutions to our clients in Asia, in particular the Philippines, and in the UK we became strategic partners to several large MSP programmes for which we are leveraging our offshore delivery engine.

Our third pillar is to deliver continued growth in Offshore Services.  We are pleased to have been able to deliver growth in both net fee income and profits in 2023, despite the adverse market conditions. We have also made good progress in increasing penetration of our clients through our diversified service offering.  Accounting and finance support services are now 10% of our net fee income and we have had a good initial response to our marketing solutions offering.

Our strategy is underpinned by investment in technology, people and process. We have continued to enhance our technology platforms with all but one of our core sector businesses now on our global front office system. Our global database gives our delivery teams access to a wider set of candidates and allows our sales teams to more effectively identify cross selling opportunities. In 2023 we piloted a data analytics tool which will further drive productivity and we rolled this out across our core sectors at the start of 2024. In addition, our use of automation to support our candidate communications and compliance has meant that we have replaced 84,000 hours of manual tasks, reducing the administrative burden on our consultants while enhancing the candidate experience.

Our people are our most important asset, and we continue to invest in their development. Last year we launched our leadership development programme to equip our leaders with the skills and knowledge to drive growth and create a more sustainable business model for the future. We have also expanded our Top Talent Programme that was launched in Asia in 2022 to include the UK and Europe and this will be expanded further in 2024.

Update on roadmap to £20m

In October 2022, we laid out the roadmap to deliver our ambition of achieving £20m of operating profit in the medium term. Despite the setback from market conditions in 2023, we continue to believe this is an achievable goal and we have made good progress on our key pillars for growth. As we progress through 2024, we will have a clearer picture of how the market is recovering and will provide updates on our progress.

Outlook

Market conditions remain challenging and are expected to continue to be throughout the first half of 2024. We are cautiously optimistic that we will see an improvement in market sentiment in the second half of the year. We are seeing some positive movement in overall activity levels with our more focussed approach to sales and delivery. We are confident that alongside this, the actions we have taken, and continue to take, to streamline our operations and focus on our core sectors will enable us to execute our strategy more quickly and effectively and realise our growth ambitions.

Rhona Driggs

Chief Executive Officer

25 March 2024

Operating review

UK & Europe

£m	2023	2022
Revenue	116.8	124.9
Net fee income	24.9	28.4
Adjusted operating profit	3.0	4.7
% of Group net fee income	43%	43%
Average number of staff	247	272

In UK & Europe, revenue reduced by 6% (8% in constant currency), net fee income reduced by 12% (13% in constant currency) and adjusted operating profit was down by 36% (38% in constant currency).

In the UK, net fee income reduced by 21% year-on-year with operating profit down by two-thirds. The fall in net fee income was primarily driven by a reduction in permanent hiring, which was down 30%, while temporary and contract net fee income was down 9%. Our largest sectors in the UK are IT and Professional and both saw significant reductions in net fee income with falls in demand seen across our client base. Towards the end of 2023 we brought our core operations in the UK under a single leader with a single management structure and we expect this to deliver significant benefits including through improving efficiency and increasing cross selling.

In Finland, our Healthcare business showed some improvements after a challenging 2022 with net fee income up 12% year on year. The operation recorded a small loss in the year but this was much reduced from the prior year.

In Germany, where our operations are focussed on the Commercial sector, we delivered a 2% decrease in net fee income with profits down 8%. Our best performance came from our operation that supports maintenance activity for businesses associated with the automotive industry, which delivered strong growth in both net fee income and profits. Our logistics operation delivered 3% growth in net fee income, but a 6% fall in profits reflecting inflationary pressures on its cost base. Our temporary staffing business has continued to deliver weaker results with falls in both net fee income and profits and a significant impact from strike actions at key clients in the latter part of the year.

Our operation in Austria is similar in nature to our temporary business in Germany and delivered solid results in the year with net fee income down 3%, but profits up 12%.

At the start of 2024 we brought our Commercial operations in Germany and Austria together under a single leader. This will create a more efficient structure and improve our ability to cross sell within and between these countries.

APAC

£m	2023	2022
Revenue	51.9	49.9
Net fee income	13.6	15.8
Adjusted operating (loss)/profit	(0.8)	0.8
% of Group net fee income	23%	24%
Average number of staff	304	292

In our APAC region revenue increased by 4% (9% in constant currency) and net fee income reduced by 14% (10% in constant currency). Overall, the region delivered a loss of £0.8m.

Our IT operations were impacted by the global fall in IT demand and Japan, our largest contributor in the region, saw net fee income fall by almost a fifth. Reductions were seen across both permanent, and temporary and contract hiring with key clients significantly reducing hiring requirements and contractor headcount at the end of 2022.

In Australia, our operation is focussed on digital and creative roles within our Professional sector. Results in 2023 continued to be disappointing after a poor 2022, with further falls in net fee income and an increase in the level of losses. Further action has been taken on the cost base of this operation in order to look to eliminate these losses.

The Philippines performed strongly in the year delivering net fee income growth of 20%. We achieved a new record level of net fee income and had ongoing success from our project RPO offering which accounted for more than 40% of net fee income in the year. We are looking to replicate this RPO success across the region.

Our aviation operation, which has offices in New Zealand, Singapore and Sweden, started to show improvement in trading, particularly in the second half of the year, with net fee income up by a third on 2022. We have seen success in expanding our operation into other roles in the industry and in growing permanent placements alongside our traditional pilot leasing offering. Although this operation continues to generate losses, we are pleased to see these improvements in trading.

In Thailand, the election in the year created significant political uncertainty. This led to a significant drop in demand, particularly from our international clients, as they adopted a wait and see approach to hiring. As a result, both net fee income and profits fell significantly compared to 2022.

In Singapore, which generated a record level of net fee income in 2022, we had a much more challenging year. Net fee income was down a quarter with permanent placement down significantly, partially offset by some promising improvements in temporary and contract. With the strong 2022 performance, significant investment in headcount had been made in that year and despite actions taken in 2023, the higher cost base at the start of the year meant that this operation delivered a loss.

Elsewhere in the region, Indonesia and Malaysia saw significant reductions in demand and as a result net fee income and profits reduced year-on-year. We took the decision to close our loss-making Vietnam operation in October 2023 in line with our strategy of focussing on markets where we see the greatest opportunity for growth.

Americas

£m	2023	2022
Revenue	55.9	62.7
Net fee income	6.1	8.7
Adjusted operating (loss)/profit	(0.9)	1.5
% of Group net fee income	10%	13%
Average number of staff	131	160

In the Americas, revenue fell by 11% (12% in constant currency) and net fee income fell by 30% (31% in constant currency). Overall, the region delivered a loss of £0.9m.

Our US operations were the main driver of these results with net fee income reducing by half from 2022. In the US we operate primarily in the IT and Healthcare sectors, both of which saw sharp falls in demand during the year. In IT we were impacted by a combination of the general decline in IT staffing demand, particularly for permanent staff, alongside the collapse of Silicon Valley Bank which impacted a large number of our clients. While we have made good progress in broadening our client base and expanding our temporary and contract opportunities, demand remains extremely subdued. Healthcare demand has also dropped significantly, with the elevated pay levels seen in the last few years also dropping back. In August 2023, we launched our lead Professional brand in the US, targeting our existing client base, and enabling us to deliver to all of our core sectors in one of our key markets. It is early days for this new offering and, as expected, it contributed a loss in its first months of trading.

Our operations in Chile, which are focussed on the Commercial sector, had a strong year with net fee income up by 11% and profits up by a quarter. We have seen good success in offering multiple services to our clients in order to increase client penetration.

In Peru, we have seen ongoing disruption following recent changes to outsourcing laws. As a result, net fee income and profits fell year-on-year. We are confident that these have now settled down and that this operation is well positioned to return to growth.

Offshore Services

£m	2023	2022
Revenue	26.9	25.3
Net fee income	14.0	13.5
Adjusted operating profit	7.5	7.1
% of Group net fee income	24%	20%
Average number of staff	2,565	2,481

Offshore Services had a strong 2023, delivering year-on-year growth despite the wider market conditions. Revenue increased by 6% (13% in constant currency), net fee income increased by 4% (9% in constant currency) and profits were up 6% (12% in constant currency).  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, finance and accounting, and other services. Clients are predominantly third-party staffing companies, but this operation also plays an important role in supporting activity across the Group. We operate from two locations in India and one in the Philippines.

In the UK, demand from our healthcare clients remained strong for the majority of the year, albeit not showing the significant growth we have seen in the last two years. Towards the end of 2023 we saw some reduction as clients adjusted to lower demand from the NHS as it looks to manage its approach to agency spend.

In the US, in the first half of 2023 we saw a continuation of the reduction in demand that started in 2022. This was driven by the general weakness in US staffing, and particularly from IT recruiters which are the majority of our US clients. This stabilised in the second half of the year but has yet to show significant signs of a return to sustained growth. We remain confident that as and when conditions improve we will see an increase in demand and a return to growth.

Sector summary

	Revenue		Net fee income
£m	2023	2022	2023	2022
Professional	59.7	56.5	14.6	18.7
IT	29.7	34.1	9.7	12.6
Healthcare	9.2	17.6	2.1	3.2
Property, Construction & Engineering	9.4	9.2	2.0	2.2
Commercial	117.4	120.5	16.2	16.6
Offshore Services	26.1	24.9	14.0	13.1
Intragroup eliminations	(1.2)	(1.5)	(1.1)	(1.0)
Total	250.3	261.3	57.5	65.4

Professional saw good growth in temporary and contract revenue, particularly from our lower margin aviation contracts, which drove an overall increase in revenue of 6%. The significant fall in permanent placement activity, particularly across APAC and the UK, meant that overall net fee income was down 22% year-on-year.

In IT, revenue was down 13% and net fee income was down 23% reflecting the significant fall in global IT staffing demand. 

Healthcare revenue was down 48%, with net fee income down 34%, driven by our US Healthcare operations.

Property, Construction & Engineering, showed a small improvement in revenue which was up 2% year-on-year with net fee income down 9%.

Our Commercial sector showed itself to be fairly resilient with revenue down 3% and net fee income down 2% with a strong performance in Chile partially offsetting weaker ones elsewhere. 

Offshore Services performed strongly despite the market conditions.

Finance review

Overview

The Group's 2023 results reflect tough market conditions with revenue down 4%, net fee income down 12% and adjusted operating profit down by 50%. Higher net interest costs due to the continued increase in base rates during the year are reflected in a 61% decrease in adjusted profit before tax and, when combined with a greater weighting of profit towards our non-controlling interests, a 93% decrease in adjusted, diluted earnings per share.

Our adjusted net debt has increased during the year to £11.1m (2022: £7.9m). This increase was driven by adverse foreign exchange movements, a higher proportion of tax cash payments reflecting the impact of loss-making subsidiaries, and cash outflows in other areas such as capital expenditure and dividends. The reduction in net fee income did not result in a significant net working capital inflow in 2023 as working capital is primarily driven by revenue which fell by just 4% and much of the working capital impact of this reduction was realised at the end of 2022. The Group continues to have significant headroom in its financing facilities with £17.8m of headroom (excluding invoice financing) at 31 December 2023.

Income statement

	2023 £m	2022 £m	% change	% change constant currency2
Revenue	250.3	261.3	-4%	-4%
Net fee income	57.5	65.4	-12%	-11%
Operating profit	1.7	8.8	-80%
Adjusted operating profit1	5.1	10.2	-50%	-48%
Profit before tax	0.1	7.6	-99%
Adjusted profit before tax1	3.5	9.0	-61%
Diluted (loss)/earnings per share	(5.9)p	6.7p	-188%
Adjusted, diluted earnings per share1	0.6p	8.8p	-93%

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 6 for a reconciliation between profit before tax and adjusted profit before tax.

² The constant currency movement is calculated by translating the 2022 results at the 2023 exchange rates.

Revenue decreased by 4% (4% in constant currency) with net fee income decreasing by 12% (11% in constant currency). The fall in net fee income reflects the revenue mix with net fee income from permanent placement down 25% and temporary and contract down 10% partially offset by a strong performance in offshore services which grew 8%. Staff productivity was impacted by the market conditions and although significant actions were taken to reduce costs, adjusted operating profit was down 50% from 2022.

A detailed analysis of the results by region is provided in the operating review. Central costs reduced slightly to £3.7m (2022: £3.9m).

Adjusted profit before tax decreased by 61% to £3.5m reflecting the reduction in adjusted operating profit and an increased net interest cost due to the impact of higher interest rates. The reported profit before tax of £0.1m (2022: £7.6m) additionally reflects amortisation of intangible assets identified in business combinations of £1.2m (2022: £1.4m), a charge for impairment of goodwill of £1.5m (2022: £nil), exceptional items of £0.6m (2022: £nil) and a fair value charge on acquisition of non-controlling shares of £0.1m (2022: £nil).

The impairment of goodwill was in our UK & Europe region and reflects recent poor results in our operations in the Healthcare, and Property, Construction & Engineering sectors and a more pessimistic view on the time frame for these to improve. Further details are provided in note 8.

Exceptional items reflect the costs of closing our Vietnam operation in the second half of 2023 (£0.3m), along with the costs associated with making changes to the Group's senior management (£0.3m) as discussed in more detail in the Chief Executive's review.

The total tax charge for the year is £1.4m (2022: £2.8m) which, due to the low level of profit before tax, does not result in a meaningful effective tax rate (2022: 37%). On an adjusted basis, the effective rate is 46% (2022: 34%). The effective tax rate is higher than the underlying tax rates due to a number of factors, including:

•     expenses not deductible for tax purposes (£0.1m);

•     withholding taxes, dividend taxes, and deferred tax liabilities on unremitted earnings in respect of our overseas operations (£0.4m); and

•     deferred tax assets not recognised for certain tax losses around the Group (£0.9m),

partially offset by:

•     expenses with enhanced deductions for tax purposes (£0.1m); and

•     the recognition of prior year losses (£0.3m).

Adjusted, diluted earnings per share decreased by 93% to 0.6p. This reflects the decrease in adjusted profit before tax and 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 decreased to a loss of 5.9p reflecting the above and the impact of impairment charges and

exceptional items in the year.

Balance sheet

	2023	2022
	£m	£m
Goodwill and other intangible assets	36.6	40.1
Trade and other receivables	44.7	46.7
Cash and cash equivalents	17.1	22.3
Right-of-use assets	6.4	7.5
Other assets	8.1	7.2
Total assets	112.9	123.8
Trade and other payables	(31.5)	(33.3)
Borrowings	(27.9)	(29.6)
Lease liabilities	(6.9)	(7.9)
Other liabilities	(3.7)	(4.0)
Total liabilities	(70.0)	(74.8)
Net assets	42.9	49.0

Goodwill and other intangible assets arise from the investments and acquisitions the Group has made. At 31 December 2023 the balance was £36.6m (2022: £40.1m) with the movement in 2023 due to £1.4m of amortisation of intangible assets (2022: £1.6m), foreign exchange losses of £1.0m (2022: gains of £1.8m), impairment charges of £1.5m (2022: £nil) and additions of £0.4m (2022: £0.1m).

Trade and other receivables include trade receivables of £31.0m (2022: £33.3m) with the decrease from 2022 reflecting the trading performance and mix. Average debtor days for the Group in 2023 reduced to 41 (2022: 45), with debtor days at 31 December 2023 of 41 (2022: 43). The income statement includes a charge of £0.3m (2022: £nil) 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.

	2023	2022
	£m	£m
Net cash inflow from operating activities per cash flow statement	5.5	14.7
Remove cash flows related to pilot bonds	0.3	0.1
Deduct payments under lease agreements	(5.4)	(5.3)
Free cash flow	0.4	9.5
Taxation	3.2	4.2
Free cash flow (pre-tax)	3.6	13.7

Free cash flow in 2023 was significantly lower than 2022, with the largest drivers being the reduction in profits and a large working capital inflow of £3.5m in 2022 compared to a £0.1m working capital inflow in 2023 (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.

The Group utilised its free cash flow as follows:

	2023	2022
	£m	£m
Free cash flow	0.4	9.5
Purchase of shares in existing subsidiaries	(0.1)	(0.1)
Purchase of property, plant and equipment, and software	(1.4)	(2.1)
Dividends paid to owners of Empresaria Group plc	(0.7)	(0.6)
Dividends paid to non-controlling interests	(0.9)	(0.4)
Purchase of own shares in Employee Benefit Trust	(0.3)	(0.3)
Other items	(0.2)	0.1
(Increase)/decrease in adjusted net debt	(3.2)	6.1

Purchase of property, plant and equipment, and software of £1.4m includes ongoing investments in the office, IT and infrastructure of our Offshore Services operation. Spend is much reduced from 2022 reflecting the lower levels of headcount growth. Dividends paid to our shareholders were £0.7m (2022: £0.6m) 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 2023 (2022: £0.3m). Dividends paid to non-controlling interests were £0.9m (2022: £0.4m) with the increase reflecting the growth of Offshore Services.

Financing

The Group's treasury function is managed centrally and the Group's financial risk management policies are set out in note 23 of the annual report.

	2023	2022
	£m	£m
Cash and cash equivalents	17.1	22.3
Pilot bonds	(0.3)	(0.6)
Adjusted cash	16.8	21.7
Overdrafts	(15.2)	(17.1)
Invoice financing	(3.2)	(3.5)
Bank loans	(9.5)	(9.0)
Total borrowings	(27.9)	(29.6)
Adjusted net debt	(11.1)	(7.9)

Adjusted net debt at 31 December 2023 increased to £11.1m (2022: £7.9m) reflecting the cash flows discussed above. Adjusted net debt excludes cash of £0.3m (2022: £0.6m) 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 2023, the month-end average adjusted net debt position was £8.3m (2022: £11.0m) with a month end high of £11.1m at 31 December (2022: £16.1m at 28 February) and a month end low of £6.2m at 31 January (2022: £7.9m at 31 December).

Our debt to debtors ratio (adjusted net debt as a percentage of trade receivables) has increased to 36% (2022: 24%) reflecting the increase in adjusted net debt. We continue to target a sustained debt to debtors position of 25%.

Total borrowings were £27.9m (2022: £29.6m) being bank overdrafts of £15.2m (2022: £17.1m), invoice financing of £3.2m (2022: £3.5m) and bank loans of £9.5m (2022: £9.0m). The Group's borrowings are principally held to fund working capital requirements and are mainly due within one year. As at 31 December 2023, £9.2m of borrowings are shown as non-current (2022: £0.5m) with the increase reflecting the revolving credit facility which was refinanced in March 2023 (see note 12).

The Group maintains a range of facilities to manage its working capital and financing requirements. At 31 December 2023 the Group had facilities totalling £50.8m (2022: £54.8m).

	2023	2022
	£m	£m
UK facilities
Overdrafts	10.0	10.0
Revolving credit facility	15.0	15.0
Invoice financing facility	7.5	10.0
Total UK facilities	32.5	35.0
Continental Europe facilities	12.1	12.4
APAC facilities	1.8	2.3
Americas facilities	4.4	5.1
	50.8	54.8
Undrawn facilities (excluding invoice financing)	17.8	17.9

Undrawn facilities have remained at a high level with improved cash efficiency offsetting the increase in adjusted net debt.

Covenants are tested on a quarterly basis in respect of the revolving credit facility and all covenants were met during the year. The covenants, and our performance against them at 31 December 2023, are as follows:

Covenant	Target	Actual
Net debt: EBITDA	<2.5 times	1.2
Interest cover	>4.0 times	5.2

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.

There is no legal obligation on the Group to acquire the shares held by management at any time. Further information is provided in note 27 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 1.4p per share in respect of the year ended 31 December 2022. For the year ended 31 December 2023, the Board is proposing a dividend of 1.0p per share. Subject to shareholder approval at the Annual General Meeting, the dividend will be paid on 13 June 2024 to shareholders on the register on 24 May 2024.

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 these 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

25 March 2024

Consolidated income statement

for the year ended 31 December 2023

		2023	2022
	Note	£m	£m
Revenue	2	250.3	261.3
Cost of sales		(192.8)	(195.9)
Net fee income	2	57.5	65.4
Administrative costs		(52.4)	(55.2)
Adjusted operating profit	2	5.1	10.2
Exceptional items	3	(0.6)	-
Fair value on acquisition of non-controlling shares		(0.1)	-
Impairment of goodwill	8	(1.5)	-
Amortisation of intangible assets identified in business combinations	9	(1.2)	(1.4)
Operating profit		1.7	8.8
Finance income	4	0.6	0.3
Finance costs	4	(2.2)	(1.5)
Net finance costs	4	(1.6)	(1.2)
Profit before tax		0.1	7.6
Taxation	5	(1.4)	(2.8)
(Loss)/profit for the year		(1.3)	4.8
Attributable to:
Owners of Empresaria Group plc		(2.9)	3.4
Non-controlling interests		1.6	1.4
		(1.3)	4.8
		Pence	Pence
Earnings per share
Basic	7	(5.9)	6.9
Diluted	7	(5.9)	6.7

Details of adjusted earnings per share are shown in note 7.

Consolidated statement of comprehensive income

for the year ended 31 December 2023

	2023	2022
	£m	£m
(Loss)/profit for the year	(1.3)	4.8
Other comprehensive income
Items that may be reclassified subsequently to the income statement:
Exchange differences on translation of foreign operations	(2.2)	2.6
Items that will not be reclassified to the income statement:
Exchange differences on translation of non-controlling interests in foreign operations	(0.4)	0.3
Other comprehensive (loss)/income for the year	(2.6)	2.9
Total comprehensive (loss)/income for the year	(3.9)	7.7
Attributable to:
Owners of Empresaria Group plc	(5.1)	6.0
Non-controlling interests	1.2	1.7
	(3.9)	7.7

Consolidated balance sheet

as at 31 December 2023

		2023	2022
	Note	£m	£m
Non-current assets
Property, plant and equipment		2.4	2.8
Right-of-use assets		6.4	7.5
Goodwill	8	29.7	31.9
Other intangible assets	9	6.9	8.2
Deferred tax assets		5.7	4.4
		51.1	54.8
Current assets
Trade and other receivables	10	44.7	46.7
Cash and cash equivalents		17.1	22.3
		61.8	69.0
Total assets		112.9	123.8
Current liabilities
Trade and other payables	11	31.5	33.3
Current tax liabilities		1.3	1.5
Borrowings	12	18.7	29.1
Lease liabilities		4.3	5.3
		55.8	69.2
Non-current liabilities
Borrowings	12	9.2	0.5
Lease liabilities		2.6	2.6
Deferred tax liabilities		2.4	2.5
		14.2	5.6
Total liabilities		70.0	74.8
Net assets		42.9	49.0
Equity
Share capital		2.5	2.5
Share premium account		22.4	22.4
Merger reserve		0.9	0.9
Equity reserve		(10.2)	(10.2)
Translation reserve		1.6	3.8
Retained earnings		19.2	23.4
Equity attributable to owners of Empresaria Group plc		36.4	42.8
Non-controlling interests		6.5	6.2
Total equity		42.9	49.0

Consolidated statement of changes in equity

for the year ended 31 December 2023

	Equity attributable to owners of Empresaria Group plc
	Share capital	Share premium account	Merger reserve	Equity reserve	Translation reserve1	Retained earnings1	Total	Non-controlling interests	Total equity
	£m	£m	£m	£m	£m	£m	£m	£m	£m
At 31 December 2021	2.5	22.4	0.9	(10.2)	1.2	20.6	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
Dividends paid to owners of Empresaria Group plc (see note 14)	-	-	-	-	-	(0.6)	(0.6)	-	(0.6)
Dividends 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	(10.2)	3.8	23.4	42.8	6.2	49.0
(Loss)/profit for the year	-	-	-	-	-	(2.9)	(2.9)	1.6	(1.3)
Exchange differences on translation of foreign operations	-	-	-	-	(2.2)	-	(2.2)	(0.4)	(2.6)
Total comprehensive (loss)/income for the year	-	-	-	-	(2.2)	(2.9)	(5.1)	1.2	(3.9)
Dividends paid to owners of Empresaria Group plc (see note 14)	-	-	-	-	-	(0.7)	(0.7)	-	(0.7)
Dividends paid to non-controlling interests	-	-	-	-	-	-	-	(0.9)	(0.9)
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 2023	2.5	22.4	0.9	(10.2)	1.6	19.2	36.4	6.5	42.9

1 The Group has amended its presentation of reserves compared to previous years as is explained further in note 1.

Consolidated cash flow statement

for the year ended 31 December 2023

	2023	2022
	£m	£m
(Loss)/profit for the year	(1.3)	4.8
Adjustments for:
Depreciation of property, plant and equipment, and software amortisation	1.5	1.1
Depreciation of right-of-use assets	5.4	5.4
Fair value charge on acquisition of non-controlling shares	0.1	-
Impairment of goodwill	1.5	-
Amortisation of intangible assets identified in business combinations	1.2	1.4
Share-based payments	(0.3)	0.3
Net finance costs	1.6	1.2
Taxation	1.4	2.8
	11.1	17.0
Decrease in trade and other receivables	0.2	6.9
Decrease in trade and other payables (including pilot bonds outflow of £0.3m (2022: outflow of £0.1m))	(0.4)	(3.5)
Cash generated from operations	10.9	20.4
Finance costs paid	(2.2)	(1.5)
Income taxes paid	(3.2)	(4.2)
Net cash inflow from operating activities	5.5	14.7
Cash flows from investing activities
Purchase of property, plant and equipment, and software	(1.4)	(2.1)
Finance income received	0.6	0.3
Net cash outflow from investing activities	(0.8)	(1.8)
Cash flows from financing activities
Decrease in overdrafts	(1.7)	(1.8)
Proceeds from bank loans	1.0	-
Repayment of bank loans	(0.4)	(2.7)
Decrease in invoice financing	(0.3)	(1.2)
Payment of obligations under leases	(5.4)	(5.3)
Purchase of shares in existing subsidiaries	(0.1)	(0.1)
Purchase of own shares in Employee Benefit Trust	(0.3)	(0.3)
Dividends paid to owners of Empresaria Group plc	(0.7)	(0.6)
Dividends paid to non-controlling interests	(0.9)	(0.4)
Net cash outflow from financing activities	(8.8)	(12.4)
Net (decrease)/increase in cash and cash equivalents	(4.1)	0.5
Foreign exchange movements	(1.1)	0.7
Cash and cash equivalents at beginning of the year	22.3	21.1
Cash and cash equivalents at end of the year	17.1	22.3

	2023	2022
	£m	£m
Bank overdrafts at beginning of the year	(17.1)	(18.2)
Decrease in the year	1.7	1.8
Foreign exchange movements	0.2	(0.7)
Bank overdrafts at end of the year	(15.2)	(17.1)
Cash, cash equivalents and bank overdrafts at end of the year	1.9	5.2

1     Basis of preparation and general information

The financial information has been abridged from the audited financial information for the year ended 31 December 2023.

The financial information set out above does not constitute the Company's consolidated statutory accounts for the years ended 31 December 2023 or 2022, but is derived from those accounts. Statutory accounts for 2022 have been delivered to the Registrar of Companies and those for 2023 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 2022 financial statements, as amended when relevant to reflect the adoption of new standards, amendments and interpretations which became effective in the year. During 2023 no new standards, amendments or interpretations had a significant impact on the financial statements.

In 2023, the Group has chosen to make some changes to its presentation of the components of equity. The Group's other reserves (31 December 2022: £(0.3)m, 31 December 2021: £(0.6)m), which included the share-based payment reserve (31 December 2022: £1.0m, 31 December 2021: £0.6m) and the exchange differences on intercompany amounts treated as a net investment in foreign operations (31 December 2022: £(1.3)m, 31 December 2021: £(1.2)m), has been combined into other components of equity. The share-based payment reserve has been combined into retained earnings and the foreign exchange element has been combined with the retranslation reserve into a single translation reserve. The Group believes this provides a clearer and simpler presentation of its equity components. These changes have been reflected in the information presented for 2023, 2022 and 2021.

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 2024.

2     Segment and revenue analysis

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 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:

		2023			2022
		Revenue	Net fee income	Adjusted operating profit/ (loss)	Revenue	Net fee income	Adjusted operating profit/ (loss)
UK & Europe		116.8	24.9	3.0	124.9	28.4	4.7
APAC		51.9	13.6	(0.8)	49.9	15.8	0.8
Americas		55.9	6.1	(0.9)	62.7	8.7	1.5
Offshore Services		26.9	14.0	7.5	25.3	13.5	7.1
Central costs		-	-	(3.7)	-	-	(3.9)
Intragroup eliminations		(1.2)	(1.1)	-	(1.5)	(1.0)	-
		250.3	57.5	5.1	261.3	65.4	10.2

3     Exceptional items

Exceptional items are those items that in the Directors' view are required to be separately disclosed by virtue of their size, nature or incidence. Adjusted operating profit, adjusted profit before tax and adjusted earnings per share are considered to be key measures in understanding the Group's financial performance and exclude exceptional items.

	2023	2022
	£m	£m
Closure of Vietnam Operation	0.3	-
Restructure of senior management	0.3	-
	0.6	0.3

4     Finance income and costs

	2023	2022
	£m	£m
Finance income
Bank interest receivable	0.6	0.3
	0.6	0.3
Finance costs
Invoice financing	(0.3)	(0.1)
Bank loans and overdrafts	(1.6)	(1.1)
Interest on lease liabilities	(0.3)	(0.3)
	(2.2)	(1.5)
Net finance costs	(1.6)	(1.2)

5     Taxation

The tax expense for the year is as follows:

	2023	2022
	£m	£m
Current tax
Current year income tax expense	2.9	3.9
Adjustments in respect of prior years	-	(0.1)
Total current tax expense	2.9	3.8
Deferred tax
On origination and reversal of temporary differences	(1.1)	(1.0)
Relating to changes in tax rates	(0.1)	-
Recognition of previously unrecognised tax losses	(0.3)	-
Total deferred tax credit	(1.5)	(1.0)
Total income tax expense in the income statement	1.4	2.8

6     Reconciliation of adjusted profit before tax to profit before tax

	2023	2022
	£m	£m
Profit before tax	0.1	7.6
Exceptional items	0.6	-
Fair value charge on acquisition of non-controlling shares	0.1	-
Impairment of goodwill	1.5	-
Amortisation of intangible assets identified in business combinations	1.2	1.4
Adjusted profit before tax	3.5	9.0

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 2023 and 2022 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.

	2023	2022
	£m	£m
Earnings attributable to owners of Empresaria Group plc	(2.9)	3.4
Adjustments:
Exceptional items	0.6	-
Fair value charge on acquisition of non-controlling shares	0.1	-
Impairment of goodwill	1.5	-
Amortisation of intangible assets identified in business combinations	1.2	1.4
Tax on the above	(0.2)	(0.3)
Adjusted earnings	0.3	4.5
Number of shares	Millions	Millions
Weighted average number of shares - basic	49.1	49.4
Dilution effect of share options	0.7	1.5
Weighted average number of shares - diluted	49.8	50.9
Earnings per share	Pence	Pence
Basic	(5.9)	6.9
Dilution effect of share options	-	(0.2)
Diluted	(5.9)	6.7
Adjusted earnings per share	Pence	Pence
Basic	0.6	9.1
Dilution effect of share options	-	(0.3)
Diluted	0.6	8.8

In 2023, all share options were antidilutive for the purpose of assessing diluted earnings per share in accordance with IAS 33 Earnings Per Share. As such, diluted earnings per share and basic earnings per share were equal. As these options are nil-cost options these were reflected as dilutive in assessing adjusted, diluted earnings per share presented above.

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.

8     Goodwill

	2023	2022
	£m	£m
At 1 January	31.9	30.5
Impairment charge	(1.5)	-
Foreign exchange movements	(0.7)	1.4
At 31 December	29.7	31.9

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 2024 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 18.5% (2022: 13.0% to 18.9%) 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 17.9% (2022: 13.0% to 18.0%)
APAC:	14.8% to 18.5% (2022: 13.8% to 18.9%)
Americas:	14.4% to 15.5% (2022: 13.3% to 16.0%)
Offshore Services:	15.1% (2022: 15.8%)

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 6.3%. 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:	0.9% to 1.6% (2022: 1.3% to 1.5%)
APAC:	0.4% to 5.0% (2022: 0.4% to 5.1%)
Americas:	2.1% to 3.0% (2022: 1.9% to 3.0%)
Offshore Services:	6.3% (2022: 6.2%)

In 2023, an impairment charge of £1.5m was recognised in respect of two businesses in the UK & Europe region. Both businesses have performed more weakly in recent years and have not yet recovered to previous performance levels and as a result impairment charges have been booked. Before the impairment charge was recognised the carrying value of the goodwill was £2.5m and the recoverable amount was assessed as £1.0m.

In 2022, no impairment of goodwill was recognised.

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 £0.7m would be recorded in respect of two businesses in our Americas region (2022: £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 £0.6m (2022: £0.2m) would be recorded in respect of two businesses in our Americas region (2022: £0.1m for one business in our APAC region and £0.1m for one business in our Americas region).

9     Other intangible assets

	Intangible assets identified in business combinations
2023	Customer relationships	Trade names & marks	Sub total	Software	Total
	£m	£m	£m	£m	£m
Cost
At 1 January	14.9	9.3	24.2	2.0	26.2
Additions	-	-	-	0.4	0.4
Disposals	-	-	-	(0.1)	(0.1)
Foreign exchange movements	(0.8)	(0.4)	(1.2)	(0.1)	(1.3)
At 31 December	14.1	8.9	23.0	2.2	25.2
Accumulated amortisation
At 1 January	11.9	4.7	16.6	1.4	18.0
Charge for the year	0.6	0.6	1.2	0.2	1.4
Disposals	-	-	-	(0.1)	(0.1)
Foreign exchange movements	(0.7)	(0.3)	(1.0)	-	(1.0)
At 31 December	11.8	5.0	16.8	1.5	18.3
Net book value
At 31 December 2022	3.0	4.6	7.6	0.6	8.2
At 31 December 2023	2.3	3.9	6.2	0.7	6.9

As required under IFRS, the Group reviewed these assets for indications of impairment as at 31 December 2023. Following this review, no impairment charges have been reflected.

10    Trade and other receivables

		2023	2022
		£m	£m
Current
Gross trade receivables		31.8	34.1
Less provision for impairment of trade receivables		(0.8)	(0.8)
Trade receivables		31.0	33.3
Prepayments		2.0	2.4
Accrued income		7.5	7.4
Corporation tax receivable		1.2	0.9
Other receivables		3.0	2.7
		44.7	46.7

Trade receivables include £18.1m (2022: £20.1m) on which security has been given under bank facilities.

11    Trade and other payables

		2023	2022
		£m	£m
Current
Trade payables		2.0	2.4
Other tax and social security		5.7	5.1
Pilot bonds		0.3	0.6
Client deposits		0.3	0.4
Temporary recruitment worker wages		3.3	3.4
Other payables		1.9	1.6
Accruals		18.0	19.8
		31.5	33.3

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 2023, if the bonds were to be repaid in line with existing contracts, £nil (2022: £0.3m) would be repayable in more than one year.

12    Borrowings

	2023	2022
	£m	£m
Current
Bank overdrafts	15.2	17.1
Invoice financing	3.2	3.5
Bank loans	0.3	8.5
	18.7	29.1
Non-current
Bank loans	9.2	0.5
	9.2	0.5
Borrowings	27.9	29.6

The following key bank facilities are in place at 31 December 2023:

				Facility limit		Outstanding
				2023	2022	2023	2022
	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	8.0	6.3
Germany	EUR	On demand with annual review	EURIBOR + 3.0%	11.3	11.5	5.5	8.7
USA	USD	On demand with annual review	LIBOR + 2%	1.6	1.7	-	-
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 + 1.47%	7.5	10.0	2.0	2.0
Chile	CLP	On demand with annual review	Weighted average rate 12.8% (2022: 15.7%)	2.4	2.9	1.2	1.5
Bank loans
UK - Revolving Credit Facility	GBP	2026	SONIA + 2% to 2.75%	15.0	15.0	9.0	8.0
Japan	JPY	2025-2028	Weighted average rate 0.6% (2022: 0.6%)	0.4	0.7	0.4	0.7

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 £1.5m of cash shown within cash and cash equivalents in the balance sheet (2022: £1.9m).

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, US 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.

13    Net debt

a)  Net debt

	2023	2022
	£m	£m
Cash and cash equivalents	17.1	22.3
Borrowings	(27.9)	(29.6)
Net debt	(10.8)	(7.3)

b) Adjusted net debt

	2023	2022
	£m	£m
Cash and cash equivalents	17.1	22.3
Less cash held in respect of pilot bonds	(0.3)	(0.6)
Adjusted cash	16.8	21.7
Borrowings	(27.9)	(29.6)
Adjusted net debt	(11.1)	(7.9)

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

	2023	2022
	£m	£m
At 1 January	(7.9)	(14.0)
Net (decrease)/increase in cash and cash equivalents per consolidated cash flow statement	(4.1)	0.5
Net decrease in overdrafts and loans	1.1	4.5
Decrease in invoice financing	0.3	1.2
Foreign exchange movement	(0.8)	(0.2)
Adjusted for decrease in cash held in respect of pilot bonds	0.3	0.1
At 31 December	(11.1)	(7.9)

14    Dividends

	2023	2022
	£m	£m
Amount recognised as distribution to equity holders in the year:
Final dividend for the year ended 31 December 2022 of 1.4p (2021: 1.2p) per share	0.7	0.6
Proposed final dividend for the year ended 31 December 2023 of 1.0p (2022: 1.4p) per share	0.5	0.7

The proposed final dividend for the year ended 31 December 2023 is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements.

 

END