Empresaria (EMR) is the latest recruiter to talk about the UK’s recent political chaos coming home to roost, citing a “noticeable slowdown in the hiring process” following this year's snap general election and a shortage of candidates as a result of Brexit. As predicted, however, its diversified businesses have given it resilience and helped deliver the 16th consecutive quarter of net fee income growth, up 17 per cent in constant currency to £34.4m.
However, despite strong top-line growth, recent investments have constricted like-for-like profitability. An increase in amortisation charges left operating profit flat on last year at constant currencies. The conversion rate - the ratio of operating profit to gross profit, a common measure of performance for recruiters - also slipped to 11 per cent from 12.5 per cent for the same period last year. Management is targeting conversion of 20 per cent at the full year.
Net debt was up 56 per cent to £15.9m following the acquisitions of Consol Partners and Rishworth Aviation. Management said no external investments were planned for this year and that they would aim to bring net debt down to around £9m-£10m by the full-year mark.
Analysts at Arden Partners are forecasting adjusted profit before tax of £12.6m, giving EPS of 14.3p for 2017 (from £9.2m and 11.6p in 2016).
| EMPRESARIA (EMR) | ||||
| ORD PRICE: | 141p | MARKET VALUE: | £68.8m | |
| TOUCH: | 138-143p | 12-MONTH HIGH: | 168p | LOW: 91p |
| DIVIDEND YIELD: | 0.8% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 85p* | NET DEBT: | 33% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 106 | 3.1 | 3.5 | nil |
| 2017 | 173 | 3.5 | 4.1 | nil |
| % change | +63 | +13 | +17 | - |
| Ex-div: | na | |||
| Payment: | na | |||
| Includes intangible assets of £55.8m, or 114p a share | ||||
