http://pdf.reuters.com/Regnews/regnews.asp?i=43059c3bf0e37541&u=urn:newsml:reuters.com:20090910:RnsJ7945Y
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RNS Number : 7945Y

Empresaria Group PLC

10 September 2009

EMPRESARIA GROUP PLC PRESS RELEASE

Interim Results for the six months ended 30 June 2009

Revenue down 8%, Net Fee Income down 25%, break even at operating profit level

Performance in line with expectations, signs of stabilisation in certain
markets, with evidence of improving market conditions in Germany

Crawley, UK: 10 September 2009:- Empresaria Group plc, the AIM-quoted
international specialist staffing company, today announced revenues of £92.5
million and gross profit of £18.9 million in the six months ended 30 June 2009.
The Group posted an adjusted loss before tax of £0.5m (£1.8m profit in 2008)
although it broke even on an adjusted basis at operating profit level.

Chief Executive Miles Hunt said:

"Empresaria's strategy is to develop a multi-disciplined international
specialist staffing group, balanced in terms of sector, geographic and
operational coverage, as well as organic and acquisitive growth. Since 2004 we
have established operations either through start up or investment in an existing
business in 20 countries. The Group now generates over 60% of its net fee income
from markets outside the UK.

This development and diversification strategy is still at an early stage of
implementation. We are seeing significant growth being generated from a number
of companies, particularly in the Asia region. Although we benefit from this
portfolio effect and the increased contribution from these growing businesses,
they are not yet of a scale to offset completely the economic decline in the
more developed countries. Over time, as our business streams become less
dependent on individual markets and sectors, we expect to experience increasing
benefit from this risk reduction strategy. Our major priority is the completion
of this world-wide footprint in order to take advantage of the improving
recruitment market in future years.

The efforts to insulate the Group from market volatility have had a significant
positive impact but insufficient to withstand the full effects of a synchronised
global downturn.

The decline in demand experienced in most markets during the first quarter of
the year has, in large part, moved forward to a period of relative market
constancy with some signs of market improvement in specific countries. Although
the global economic backdrop is still a cause for concern and could lead to
renewed dips in demand, these early signs of increased stability are
encouraging. In the longer term the rebalancing of the supply and demand
equation for jobs and candidates augurs well for the long term growth prospects
for both the staffing industry and for our company.

The Board is confident as to the strategy and prospects for the Group.
Empresaria has an experienced operational management team, motivated and
entrepreneurial owner-managers and opportunities for rapid growth in developing
staffing markets. The uncertainty as to the economic outlook necessitates
caution when considering the prospects for the full year, although recent
tentative signs of recovery in certain markets are cause for optimism."

Financial Headlines


6 months to 30 June 2009 6 months to 30 June 2008 Percentage change
Revenue £92.5m £100.6m -8%
Gross profit £18.9m £25.3m -25%
Operating profit * £- m £2.3m
(Loss)/profit before tax * £(0.5)m £1.8m
Diluted (loss)/earnings per share * (0.6)p 2.5p



(Loss)/profit before tax £(2.2)m £1.3m
Diluted (loss)/earnings per share (4.6)p 1.0p


* adjusted for intangible amortisation and exceptional items.

- Ends -

Notes for editors:

* Empresaria Group plc (AIM: EMR; sector: Support Services, staffing) operates
in 20 countries with over 100 offices and approximately 1,000 internal staff.

* Empresaria Group plc applies a management equity philosophy and business model
with each group company management team holding significant equity in their own
business.

Enquiries;


Empresaria Group plc 01293 649900
Miles Hunt (Chief Executive)
Stuart Kilpatrick (Group Finance Director)

Singer Capital Markets Limited 020 3205 7500
Nominated Advisor - Nicholas How


Full results announcement attached. A presentation of these results will be made
to analysts and investors at 9.00am on 10 September 2009, and a copy of this
will be available later that morning on the Empresaria Group plc website:
www.empresaria.com

Chief Executive's Statement

.

Results

In the six months to 30 June 2009, revenues decreased by 8% to £92.5m and net
fee income (gross profit) by 25% to £18.9m. These results are in line with
management expectations.

At adjusted operating profit level, before exceptional items and intangible
amortisation, the Group achieved break even in the period (profit of £2.3m in
2008). At adjusted profit before tax level the Group produced a loss of £0.5m
against a prior period profit of £1.8m. One off restructuring and branch closure
expenditure led to an exceptional charge in the period of £1.5m of which £0.7m
was a cash charge and £0.6m related to asset impairment.

Dividend

In line with previous years, the Board is not recommending the payment of an
interim dividend for the six months ended 30 June 2009 (2008: nil).

Strategy

Empresaria's strategy is to develop a multi-disciplined international specialist
staffing group, balanced in terms of sector, geographic and operational
coverage, as well as organic and acquisitive growth. We embarked on our
international development programme in late 2004 both to gain access to high
growth economies and staffing markets and to diversify risk across different
sectors and economies. Since then we have made good progress, establishing
operations either through start up or investment in an existing business in 20
countries. The Group now generates over 60% of its net fee income from markets
outside the UK.

In addition, we are now benefiting from our focus on developing temporary
staffing operations in recent years. Net fee income from temporary staffing
operations has increased from around 50% in 2004 to 79% for the six months to
June (74% for the same period in 2008). Temporary staffing revenues are more
stable than permanent recruitment and we expect demand for temps to be the first
to pick up as market conditions improve.

This development and diversification strategy is still at an early stage of
implementation. We are seeing significant growth being generated from a number
of companies, particularly in the Asia region. Although we benefit from this
portfolio effect and the increased contribution from these growing businesses,
they are not yet of a scale to offset completely the economic decline in the
more developed countries. Over time, as our business streams become less
dependent on individual markets and sectors, we expect to experience increasing
benefit from this risk reduction strategy. Our major priority is the completion
of this world-wide footprint in order to take advantage of the improving
recruitment market in future years.

Market Overview

The trading environment since September last year has been challenging,
requiring significant action, particularly in managing the cost base. We
consistently review our portfolio of companies as to their future long term
contribution, performance and their sector viability as well as to market
trends. Actions taken in the first six months of the year as a result of this
review led to an exceptional charge of £1.5m. The full impact of these cost
savings took some months to take effect, primarily because of the high
employment termination costs in Continental Europe. We are now gaining the full
benefit of savings made with direct costs and overheads running at 79% of 2008
levels on a like for like basis, despite significant investment in our growing
businesses.

The trading environment remains challenging in most of our markets. Conditions
do, however, appear to have stabilised and in some countries, Germany in
particular, we have started to see tentative signs of recovery with temp numbers
growing in recent months.

Assuming a continuation of the current steady state market conditions, we do not
expect to have to make further material reductions to the cost base and
therefore do not anticipate incurring significant additional exceptional cost
charges in the second half of the year related to reorganisation or
restructuring costs. Management focus will instead be on continuing to
strengthen existing businesses and Group infrastructure as well as assessing
opportunities to accelerate the return to growth.

Operations

UK

UK revenue declined 7% to £37.1m in the six months ended 30 June 2009 (2008:
£39.9m). Stripping out disposals over the last 12 months, principally the exit
from the UK public sector, the underlying revenue reduction was 3%. Net fee
income declined by 34% to £7.1m (31% underlying decline). The disparity between
revenue and net fee income declines can be explained by the change in business
mix. In 2008 the UK region had the highest proportion of permanent recruitment
margin in the group (46% of overall regional net fee income). Permanent sales in
the UK are 53% down on the same period in 2008. At the same time, temporary
revenues increased by 5% on 2008.

Continental Europe

Revenue in Continental Europe decreased in the period by 14% to £37.9m (2008:
£44.0m). Net fee income was 26% lower at £7.9m. On a constant currency basis and
adjusting for changes to the business portfolio, the underlying change in
revenue and net fee income was 27% and 39% respectively. Gross margin declined
by a greater percentage than revenue due to the cost of idle time at Headway,
Germany and EAR, Netherlands, following the extended factory shutdowns in the
first quarter of 2009. We have responded quickly to the changing market
conditions and as a result of actions taken in 2008 and in the early part of
this year, overheads are 29% lower than the first half of 2008. Idle time issues
arising in the period have now been resolved.

Headway, the largest business in the region, experienced a challenging first
quarter with some exposure to the German manufacturing sector. Signs of
stability have emerged since early April and the business is now experiencing a
steady increase in temporary workers.

Rest of World

This region, which includes Asia Pacific and South America, increased revenue by
5% to £17.5m. Net fee income increased by 2% to £3.9m in the first half. On a
constant currency basis and adjusting for changes to the business portfolio, the
underlying change in revenue was a decline of 3% and net fee income was flat.

Chile, Japan and Indonesia comprise approximately 70% of the net fee income from
this region. In Japan, our largest individual country contributor where we have
some exposure to the financial services and retail markets, net fee income was
25% lower than previous year. The decline in net fee income in Japan was offset
by increased contribution from both South East Asia and in addition our Indian
operations which continue to benefit from increased demand for outsourced
recruitment and HR services. Net fee income in Indonesia was 36% higher than
2008 with strong growth at our training business Learning Resources. Net fee
income in India increased by 7% in the period. Chile continues to perform in
line with expectations although at lower levels than 2008 as it adapts to
changing labour regulations.

Financial Review

In line with management's expectations, net borrowings increased by £2.2m to
£11.3m in the first half of 2009. Net cash from operating activities was £1.6m
lower than last year as the decrease in operating profit was only partly offset
by a £2.0m reduction in working capital cash flow. Payments for corporation tax
were £0.4m higher than 2008 and included £0.6m which relate to fiscal years 2006
and 2007. Cash flows not expected to recur in the second half include
investments of £0.9m (including £0.7m of debt acquired on conversion of an
associate to a subsidiary) and £0.7m of restructuring costs.

Certain annual payments typically fall due for payment in the first half and
with a continued focus on debtor collection and limited investment activity, net
borrowings are expected to reduce in the second half. The Group remains
comfortable with its liquidity position.

The Group raised £2.7m net of expenses in May 2009 from a share placing to
strengthen its balance sheet and to ensure that the Group can capitalise on its
medium term opportunities within emerging markets with high growth potential.
Examples of the initiatives that the Group will be able to support following the
placing are continued expansion at IMS, India and a potential logistics joint
venture between our UK and German businesses. In addition, the Group will
complete its roll-out of a financial reporting system during the second half and
has approved a limited investment in digital technology over the next year.

Prospects

The efforts to insulate the Group from market volatility have had a significant
positive impact but insufficient to withstand the full effects of a synchronised
global downturn.

The decline in demand experienced in most markets during the first quarter of
the year has, in large part, moved forward to a period of relative market
constancy with some signs of market improvement in specific countries. Although
the global economic backdrop is still a cause for concern and could lead to
renewed dips in demand, these early signs of increased stability are
encouraging. In the longer term the rebalancing of the supply and demand
equation for jobs and candidates augurs well for the long term growth prospects
for both the staffing industry and for our company.

The Board is confident as to the strategy and prospects for the Group.
Empresaria has an experienced operational management team, motivated and
entrepreneurial owner-managers and opportunities for rapid growth in developing
staffing markets. The uncertainty as to the economic outlook necessitates
caution when considering the prospects for the full year, although recent
tentative signs of recovery in certain markets are cause for optimism.

Miles Hunt

Chief Executive

10 September 2009

Consolidated interim income statement


6 months to 30 June 2009 6 months to 30 June 2008 Year to 31
December 2008
£ m £ m £ m

Revenue 92.5 100.6 207.7
Cost of sales (73.6) (75.3) (156.2)
_______ _______ _______
Gross profit 18.9 25.3 51.5
Administrative costs (18.9) (23.0) (44.0)
_______ _______ _______
Operating profit before exceptional
items and intangible amortisation - 2.3 7.5
Exceptional items (1.5) (0.4) (4.8)
Intangible amortisation (0.2) (0.1) (0.3)
_______ _______ _______
Operating (loss)/profit (1.7) 1.8 2.4
Finance income 0.1 0.2 0.3
Finance costs (0.6) (0.7) (1.3)
Share of operating result from associates - - (0.1)
_______ _______ _______
(Loss)/profit before tax (2.2) 1.3 1.3
Income tax 0.3 (0.5) (1.8)
_______ _______ _______
(Loss)/profit for the period (1.9) 0.8 (0.5)
_______ _______ _______

Attributable to:
Equity holders of the parent (1.7) 0.4 (1.6)
Minority interest (0.2) 0.4 1.1
_______ _______ _______
(1.9) 0.8 (0.5)
_______ _______ _______

(Loss)/earnings per share :
Basic and diluted (pence) (4.6) 1.0 (4.8)

Before exceptional items and intangible amortisation:
Basic (pence) (0.6) 2.6 8.6
Diluted (pence) (0.6) 2.5 8.6




All results for the Group are derived from continuing operations

Consolidated interim balance sheet


30 June 30 June 31 December 2008
2009 2008
ASSETS £ m £ m £ m
Non-current assets
Property, plant and equipment 2.0 1.9 2.3
Goodwill & other intangible assets 31.9 26.3 33.8
Interests in associates 0.1 1.2 0.1
Deferred tax assets 0.8 1.1 0.4
_______ _______ _______
34.8 30.5 36.6
Current assets
Trade and other receivables 29.0 39.3 33.5
Cash and cash equivalents 3.7 3.7 5.7
_______ _______ _______
32.7 43.0 39.2
_______ _______ _______
Total assets 67.5 73.5 75.8

LIABILITIES
Current liabilities
Trade and other payables 20.9 29.1 25.6
Borrowings 6.3 8.7 5.4
Corporation tax 1.7 2.5 2.6
_______ _______ _______
28.9 40.3 33.6
Non-current liabilities
Borrowings 8.7 2.0 9.4
Deferred tax liabilities 0.6 0.9 0.6

_______ _______ _______
Total non-current liabilities 9.3 2.9 10.0
_______ _______ _______
Total liabilities 38.2 43.2 43.6
_______ _______ _______
Net assets 29.3 30.3 32.2
_______ _______ _______
Equity attributable to equity holders of the parent
Share capital 2.2 1.7 1.7
Share premium account 19.4 16.7 17.0
Other reserves 3.5 3.5 7.2
Profit and loss account 1.7 5.6 3.4
_______ _______ _______
26.8 27.5 29.3
Minority interests 2.5 2.8 2.9
_______ _______ _______
Total equity 29.3 30.3 32.2
_______ _______ _______



Consolidated interim statement of recognised income and expense


6 months to 30 June 2009 6 months to 30 June 2008 Year to 31 December 2008
£ m £ m £ m

Valuation (losses)/gains taken to equity - (0.1) 0.1
Exchange differences on translation of foreign operations (3.7) 0.7 4.5
_______ _______ _______
Net (loss)/ income recognised directly in equity (3.7) 0.6 4.6
(Loss)/profit for the period (1.9) 0.8 (0.5)
_______ _______ _______
Total recognised income and expense for the period (5.6) 1.4 4.1

Attributed to:
Equity holders of the parent (5.4) 1.0 3.0
Minority interest (0.2) 0.4 1.1
_______ _______ _______
(5.6) 1.4 4.1
_______ _______ _______


Consolidated interim cash flow statement


6 months 6 months Year to
to 30 June to 30 June 31 December 2008
2009 2008
£ m £ m £ m
Operating activities
(Loss)/profit for the period (1.9) 0.8 (0.5)
Adjustments for:
Depreciation 0.5 0.5 0.8
Intangible amortisation 0.2 0.1 0.3
Tax (credit)/charge (0.3) 0.5 1.8
Share of losses in associates - - 0.1
Finance costs 0.5 0.5 1.0
Share based payments - 0.2 -
Exceptional items charged 1.5 0.4 4.8
Cash paid for exceptional items (0.7) - (1.3)
_______ _______ _______
Operating cash flow before movement in (0.2) 3.0 7.0
working capital

Decrease/(increase) in trade receivables 3.2 (4.2) 1.1
(Increase)/decrease in trade & other payables (3.5) 1.9 (4.3)
_______ _______ _______
Cash generated from operations (0.5) 0.7 3.8
Income taxes paid (0.9) (0.5) (1.8)
_______ _______ _______
Net cash (used in)/from operating activities (1.4) 0.2 2.0

Investing activities
Acquisition of subsidiaries net of cash acquired - (0.3) (1.5)
Further investments in existing subsidiaries (0.2) (0.2) (2.3)
Forward contract settlement - - (2.0)
Investment in associates/loans to associates - (0.1) (0.8)
Purchase of property, plant and equipment (0.3) (0.4) (0.5)
Finance income 0.1 0.2 0.3
_______ _______ _______
Net cash used in investing activities (0.4) (0.8) (6.8)


Financing activities
Issue of shares 2.7 0.1 -
Proceed from bank loans 0.1 2.6 6.0
Payment of loan (0.2) (0.2) (0.3)
(Decrease)/increase in invoice financing facilities (1.3) (1.2) 1.9
Interest paid (0.6) (0.7) (1.3)
Dividends paid - - (0.2)
Dividends paid to minority shareholders in subsidiary (0.3) (0.6) (0.8)
undertakings
_______ _______ _______
Net cash from financing activities 0.4 - 5.3


Net (decrease)/increase in cash and cash equivalents (1.4) (0.6) 0.5
Foreign exchange on cash and cash equivalents (0.6) 0.2 1.1
Cash and cash equivalents at beginning of period 5.7 4.1 4.1
_______ _______ _______
Cash and cash equivalents at end of period 3.7 3.7 5.7
_______ _______ _______


Notes to the consolidated interim financial statements

1 General information

Empresaria Group plc is the Group's ultimate parent company. It is incorporated
and domiciled in Great Britain. The address of Empresaria Group plc's registered
office is Peveril Court, 6-8 London Road, Crawley, West Sussex RH10 8JE. Its
shares are listed on AIM, a market of London Stock Exchange plc.

These condensed interim financial statements have been prepared applying the
accounting policies and presentation that were applied in the preparation of the
company's published consolidated financial statements for the year ended 31
December 2008. The comparative figures for the financial year ended 31 December
2008 are not the company's statutory accounts for that financial year. Those
accounts have been reported on by the company's auditors and delivered to the
Registrar of Companies. The auditor's report on those financial statements was
unqualified, did not include a reference to any matters to which the auditors
drew attention by way of emphasis without qualifying their report and did not
contain a statement under Section 237(2) or (3) of the Companies Act 1985. These
interim financial statements were approved for issue by the Board of Directors
on 9 September 2009.

2 Accounting estimates and judgements

The preparation of interim financial statements requires management to make
judgements, estimates and assumptions that affect the application of accounting
policies and the reported amount of income, expense, assets and liabilities. The
significant estimates and judgements made by management were consistent with
those applied to the consolidated financial statements for the year ended 31
December 2008.

3 Segment analysis

The analysis of the Group's business by geographical origin is set out below:


6 months to 30 June 2009 6 months to 30 June 2008 Year to 31 December
2008
£m £m £m
Revenue
UK 37.1 39.9 83.6
Continental Europe 37.9 44.0 92.1
Rest of World 17.5 16.7 32.0
________ ________ ________
92.5 100.6 207.7
________ ________ ________



Gross profit
UK 7.1 10.8 20.9
Continental Europe 7.9 10.7 22.9
Rest of World 3.9 3.8 7.7
________ ________ ________
18.9 25.3 51.5
________ ________ ________



6 months to 6 months to Year to 31 December
30 June 2009 30 June 2008 2008
£m £m
£m
Adjusted operatingprofit (before exceptional items and
intangible amortisation)
UK 0.5 1.4 3.8
Continental Europe (0.4) 0.6 3.0
Rest of World (0.1) 0.3 0.7
________ ________ ________
- 2.3 7.5
________ ________ ________



6 months to 6 months to Year to 31 December
30 June 2009 30 June 2008 2008
Operatingprofit
UK - 1.0 2.2
Continental Europe (1.3) 0.5 0.4
Rest of World (0.4) 0.3 (0.2)
________ ________ ________
(1.7) 1.8 2.4
________ ________ ________


4 Exceptional items

Exceptional items are those which, in management's judgement, need to be
disclosed separately by virtue of their size or incidence in order for the
reader to obtain a proper understanding of the financial information.


6 months to 30 June 2009 6 months to 30 June 2008 Year to 31 December 2008
£m £m £m
UK
Restructuring costs 0.4 - 0.5
Goodwill impairments and business disposals 0.1 0.4 1.0
Aborted acquisition costs - - 0.4
________ ________ ________
0.5 0.4 1.9
Continental Europe
Restructuring costs 0.5 - 0.5
Goodwill impairments and business disposals 0.3 - 1.4
________ ________ ________
0.8 - 1.9
Rest of the World
Goodwill impairments and business disposals 0.2 - 0.4
Impact of significant legislative changes in Chile - - 0.6
________ ________ ________
0.2 - 1.0
________ ________ ________
1.5 0.4 4.8
_______ _______ _______


5 Earnings per share

The calculation of the basic earnings per share is based on the earnings
attributable to ordinary shareholders divided by the average number of shares in
issue during the year. Based on current trading conditions, the Directors are of
the opinion that there would be no dilution to the earnings per share figure
resulting from subsidiary minority shareholders trading up. A reconciliation of
the earnings and weighted average number of shares used in the calculations are
set out below.


6 months to 30 June 2009 6 months to 30 June 2008 Year to 31 December 2008
£m £m £m
(Loss)/earnings for the purposes of basic earnings per share (1.7) 0.4
(1.6)
Adjustments:
Exceptional items and intangible amortisation 1.7 0.5 5.1
Tax on exceptional items and intangible amortisation (0.1) -
(0.3)
Minority interest in intangible amortisation and exceptional (0.1)
items (0.3)
_______ _______ _______
Adjusted earnings (0.2) 0.9 2.9
_______ _______ _______




6 months to 30 June 2009 6 months to 30 June 2008 Year to 31 December 2008

Weighted average number of shares - basic (millions) 36.6 33.4 33.6
Effect of dilutive share schemes (millions) - 0.9 -
________ ________ ________
Weighted average number of shares - diluted (millions) 36.6 34.3 33.6
________ ________ ________



Earnings per share:


6 months to 30 June 2009 6 months to 30 June 2008 Year to 31 December 2008


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