The year of 2020 will of course be remembered through the strain the Covid-19 crisis has put on us all, our company and society. It has required specific attention and actions to protect the company. This has been handled very successfully. We have been able to secure an uninterrupted delivery of our service to clients, and we are now well prepared to handle the opportunities ahead of us with a very strong and successful team.
Despite the year’s many challenges, an adjusted EBITDA margin of 1% was achieved, before one-off costs of four million EUR largely split equally on redundancies and costs in relating to development of the office network. Both cash flow, close to four million, and cash position 16 million EUR at year end was very satisfactory and the Group’s equity ratio is still very healthy. Lower customer receivables due to more efficient invoicing and payment routines was the main driver to the positive cash flow. The Group also has a 5 million EUR overdraft facility available, a facility that was not used during 2020.
In mid-March when it became apparent that the Covid-19 outbreak would turn into a pandemic with a very significant impact on the world economy, plans to secure Mercuri Urval’s continued longterm development were quickly put in place and actioned. These plans covered all cost areas in the Group, and led to a reduction of employees and other costs.
Aside from the impact of the planned headcount changes, company income proved resilient over the full year. The effect of reduced headcount and the resilient income lead to a higher productivity in all role types and growth in several locations and industry sectors. In Q4 2020 we started to increase employment of more senior consultants from competitors – in line with same strategy to focus on the leadership segment.
Long term development
- Revenues: Continued focus on leadership segment provided increased margin contribution. Public Sector performed extremely strongly along with Life Sciences.
- Cost base and flexibility: Plans to create a more suitable and dynamic office footprint was fine-tuned and put into action and moving into 2021 we have radically lower costs for office rents compared to the situation a year ago. In some ways duration of existing lease contracts has delayed the full impact of the office footprint plans, so further actions are to come during this year and next. A shift to more flexible offices and office lease contracts has also started and over time flexibility will be as important as overall costs for offices.
All of these actions have led to a situation where, even if revenue growth is planned and budgeted, an unchanged income will mean margins well ahead of what has been achieved during the last few years. Stable operating performance and good cash flows during the autumn have also made it possible to continue and speed up long term development initiatives to further improve the Group’s long term competitive position.
Lower customer receivables due to more efficient invoicing and payment routines was the main driver to the positive cash flow.