NFI up 4% at year-end 2018 for Empresaria
Empresaria Group has released its results for the year ended 31st December.
Empresaria delivered a 4% increase in adjusted profit before tax to £11.4m, representing a fourth consecutive year of record profits. Its diversified business has delivered on opportunities to mitigate the effect of some challenging markets and the group’s continued growth supports this approach.
Group revenue increased by 3% to £366.8m (2017: £357.1m), with net fee income up 4% to £72.3m (2017: £69.4m). Currency movements had a dampening impact in the year, with constant currency increases of 5% in revenue and 6% in net fee income. Profit before tax increased 16% to £9.4m. Operating profit also increased to £10.3m, up 18%. Earnings per share (diluted) were 9.1p and adjusted diluted earnings per share were 12.1p. The group reported a final dividend of 2.0p, up 52%.
The split of net fee income was 37% from permanent sales (2017: 36%), 58% from temporary & contract (2017: 60%) and 5% from RPO and offshore recruitment services (ORS) (2017: 4%). The temp margin percentage was 12.5%, down from 12.7% in the prior year, mainly due to the addition of Grupo Solimano with a margin of 10.7% and reduced margins in both Germany and Japan. The Group generated 67% of its net fee income from outside the UK (2017: 66%).
Chief executive officer, Spencer Wreford, said, “We are pleased to be reporting a fourth consecutive year of record adjusted profit before tax. We have also reduced the net debt in the group which, combined with the strength of our balance sheet and the board’s confidence in the group’s prospects, has allowed us to increase our annual dividend by 52%.
“In line with our strategy we continue to invest in the group, with a new brand in Peru joining in July 2018, as we strengthen our presence in the high potential Latin American market. We have also invested in our central team, to provide more support to the growth plans of our brands, with a new chief operating officer, Rhona Driggs, and group finance director, Tim Anderson, joining the board, as well as new staff with responsibilities for technology, training and marketing. Rhona brings with her 28 years of staffing industry experience, while Tim brings significant listed company finance experience. With a strong platform in place, these investments will help us to be more focused in our approach and work more closely with our brands to fully deliver the benefits of being in a group and to deliver the next phase of growth.
“Our focus in 2019 is to deliver organic growth and strengthen our core brands. With the quality of the brands in our Group and a more focused strategy, we see good opportunities to generate profitable growth, but we remain mindful of the increasing economic uncertainty arising from political risks.”
In the UK, revenue reduced by 1% to £85.7m but net fee income was up 1% to £23.7m and adjusted operating profit increased by 12% to £2.9m reflecting a mix of performances across the UK businesses.
In professional services, LMA had a strong year, particularly in the first half, with the successful integration of its previously separate insurance brand in January. In IT, digital and design, ConSol Partners had a strong year. In technical & industrial, FastTrack saw reduced net fee income and profit after a weaker second half performance. In domestic services, Greycoat delivered an improved second half performance with higher productivity resulting in full year operating profit growth ahead of the prior year. In retail (new house sales), Teamsales had another solid year, although the start of 2019 has been slow with Brexit uncertainties impacting on the UK property market.
The uncertainty around the UK’s exit from the European Union has impacted on UK business confidence as it moved through 2018. Until now Empresaria has seen limited direct impact on its business, but it remains at risk from any UK economic slowdown or prolonged hiring processes due to fears over Brexit uncertainty.
In Continental Europe, revenue reduced by 3% to £96.1m and net fee income was down by 5% to £15.6m with adjusted operating profit 23% lower (£4.7m), reflecting the impact of regulation changes in Germany.
The region is dominated by the Headway businesses in Germany and Austria. The Austrian business had another solid year but the German businesses have been impacted by the regulatory changes that applied during the year.
The German temporary staffing business saw the benefit from investments made last year in training and marketing, with revenue up 3% on prior year, however margins reduced due to the client mix and new regulations. Empresaria’s Finnish healthcare business, Medikumppani, performed in line with the prior year. Their market remains challenging due to candidate shortages.
In Asia Pacific, revenue grew by 3% to £136.8m, net fee income by 10% to £24.5m and adjusted operating profit by 36% to £6.1m. This was primarily driven by Rishworth (aviation) and IMS (offshore recruitment services) which both had strong years, along with the turnaround from prior year losses at BW&P (technical & industrial).
The Rishworth business has contributed strongly in the year, benefitting from the investment in new bases made in 2017.
IMS delivered strong growth with net fee income up by over 50% on the prior year, primarily driven by clients in the UK and US. In professional services, the LMA business in Singapore grew net fee income again and with a strong second half performance is well positioned for 2019.
In the IT, digital and design sector, Skillhouse in Japan was negatively impacted by previously highlighted regulatory changes which led to a reduction in its number of temporary workers. In executive search, Monroe Consulting delivered mixed results across South East Asia with an increase in net fee income but an overall drop in operating profit.
In the Americas, revenue grew by 25% to £48.6m, with net fee income up by 22% to £8.9m and adjusted operating profit more than doubling to £2.3m. This reflects both a strong performance by ConSol Partners in the US and the investment in Grupo Solimano in July.
In the IT, digital and design sector, ConSol Partners saw a strong rebound in the US, following a slow first half of 2017. In Chile, Alternattiva recorded another year of growth as they continue to develop their permanent and temporary businesses alongside their core outsourcing operation. In Peru, Grupo Solimano joined the Group in July and performed in line with its expectations. In healthcare, Pharmaceutical Strategies in the US delivered a stable year-on-year performance, but phasing issues in the last quarter offset a stronger first half result.
In Executive Search our Monroe Consulting business in Chile saw good growth and continues to develop positively. In Mexico, business was challenging and there was an increased loss. We are taking the necessary measures to turn the business around and continue to see good opportunities in the market.
Photo courtesy of Shutterstock.com