For best results when printing this announcement, please click on the link below:
RNS Number : 1445J
Empresaria Group PLC
25 March 2010
EMPRESARIA GROUP PLC PRESS RELEASE
Crawley, UK: 25 March 2010:- Empresaria Group plc, the AIM-quoted international specialist staffing company, today
announced its results for the year ended 31 December 2009. After the sharp downturn experienced in the first six months of
the year, trading performance has improved and the Group has experienced both an encouraging second half in 2009 and start
Revenue decreased by 6% to £195.2m, net fee income was down 20% to £41.4m and adjusted profit before tax reduced by 50% to
£3.2m. Adjusted earnings per share reduced from 8.6p to 3.1p, partly due to a higher number of shares in issue.
Net debt improved by £1.1m to £8.0m driven by an improved second half where borrowings reduced by £3.3m.
65% of net fee income in 2009 was generated outside of the UK, up from 59% in 2008.
Empresaria has operations in 17 countries through more than 130 offices and approximately 800 staff.
Chief Executive Miles Hunt commented:
"For the first time in 13 years, our revenue and net fee income reduced. In particular the trading conditions in the first
half of the year in Germany, the UK and Japan, our three largest markets, were incredibly challenging.
Overall, however, given difficult market conditions, we delivered a performance for the year which reflects the resilience
of our business model - underpinned by our equity ownership philosophy, our focus on temporary staffing operations and a
strategy of risk diversification across different sectors and geographies.
Whilst the macro-economic environment remains fragile, we have confidence in our prospects for the current year. In recent
months we have experienced a growing demand for both temporary and permanent staffing solutions and since January both
revenues and net fee income have been significantly higher than in the same period in 2009. We are encouraged by the
progress now being made by operations in emerging markets, particularly in Asia, which are expected to generate a
significantly greater contribution to Group profits in 2010. In addition, as with previous market downturns, the demand
from clients for the flexibility offered by temporary staffing solutions is strong and we are seeing this reflected in
growing temp numbers particularly in the UK and Germany. Although we retain a cautious view of the economic recovery,
Empresaria is well positioned to take advantage of the current market trends and the opportunities that they present for
A presentation of these results will be made to analysts and investors at 9.00am on 25 March 2010 and an edited copy of
this will be made available later that morning on the Empresaria Group plc website: www.empresaria.com
For further information contact:
Miles Hunt, Chief Executive, Empresaria Group plc:
01293 649 900
Stuart Kilpatrick, Group Finance Director, Empresaria Group plc:
01293 649 900
Nicholas How, Singer Capital Markets Ltd:
020 3205 5000
Full Stock Exchange announcement follows:
Empresaria Group plc
Preliminary Announcement for the Year Ended 31December 2009
§ Revenues of £195.2m (2008: £207.7m)
§ Gross profit of £41.4m (2008: £51.5m)
§ Adjusted profit before tax* £3.2m (2008: £6.4m)
§ Adjusted operating profit* £4.1m (2008: £7.5m)
§ Adjusted earnings per share* 3.1p (2008: 8.6p)
§ Operating loss of £2.5m (2008: profit of £2.4m)
§ Loss before tax of £3.4m (2008: profit of £1.3m)
§ Loss per share of 12.4p (2008: (4.8p))
§ Group net debt at year end £8.0m (2008: £9.1m)
§ Proposed dividend of 0.35p (2008: 0.35p)
§ 19% increase in second half net fee income compared to first half (2008: 4%)
§ Decisive action to reduce costs and rationalise business portfolio taken in first half of 2009 resulted in a 15%
reduction in administrative costs
§ 80% of gross profit from more resilient temporary staffing
§ Increased focus on specialist divisions in German operations drive improved revenues and margins in second half 2009
§ Growth enjoyed by our Indian, SE Asian, Chinese and UK construction businesses
§ Strong performance from healthcare businesses purchased in 2008
§ Reduction in net debt of £3.3m in second half
*Figures based on underlying profits excluding amortisation of intangible assets and exceptional items. See reconciliation
in note 5
Financial summary by region
In accordance with our strategy of creating a diversified international specialist staffing business we review the regional
performance of our operations, a summary of which is provided below.
UK Financial highlights 2009 2008
The UK Group provides permanent and temporary staffing solutions across four main sectors; Construction and Property Services, Financial Services, Supply Chain and Other Brands. Revenue (£m) 75.7 83.6
Net fee income (£m) ¹ 14.8 20.9
Adjusted operating profit (£m) ² 2.0 3.8
Number of trading companies 13 18
Average number of employees 207 281
Continental Europe Financial highlights 2009 2008
Following the acquisition of headwayholdings GmbH ("Headway") in May 2007, the Group has a significant foothold in the German recruitment market. In addition the Group has interests in companies based in Holland, Finland, Slovakia and the Czech Republic. Revenue (£m) 84.8 92.1
Net fee income (£m) ¹ 18.9 22.9
Adjusted operating profit (£m) ² 1.8 3.0
Number of trading companies 7 13
Average number of employees 205 278
Rest of the World Financial highlights 2009 2008
The Group has interests in companies based in Japan, South East Asia, Australia, India, China and South America. Revenue (£m) 34.7 32.0
Net fee income (£m) ¹ 7.7 7.7
Adjusted operating profit (£m) ² 0.3 0.7
Number of trading companies 13 21
Average number of employees 351 342
The Group has interests in companies based in Japan, South East Asia, Australia, India, China and South America.
Net fee income (£m) ¹
Adjusted operating profit (£m) ²
Number of trading companies
Average number of employees
¹ Net fee income is equivalent to gross profit
² Figures based on underlying profits excluding amortisation of intangible assets and exceptional items. See reconciliation
in note 5
2009 has been the first year in the thirteen year history of the Group in which revenues and net fee income have declined,
reflecting the challenges presented by global economic and market environments faced by the Group during the year. The
fact, however, that revenues and margins were maintained at relatively high levels reflects the benefit of our
international development programme and the strength of our diversified portfolio of operations.
Group financial performance in 2009 was a tale of two halves. In the first half of the year the focus was on managing the
continued decline in demand that had commenced in late 2008. Not all businesses were affected, with some operations in
developing economies (such as Indonesia) or in specific market sectors (such as construction infrastructure) continuing to
thrive. In the majority of our markets, however, remedial action was necessary, resulting in a 15% reduction in our cost
base and underlying operating profits at break even in the first half. In the second half of the year a combination of
market stability, with improved trading conditions in some countries and sectors, and a lower cost base resulted in
underlying operating profits of £4.1m. More importantly, the recovery experienced in the second half of 2009 reflects a
growing momentum within the Group's temporary staffing operations which has continued into the first months of 2010. As
enterprises examine the flexibility of their cost base to accommodate new economic challenges and respond quickly to new
opportunities, they continue to appreciate the potential value from temporary and outsourced staffing models. This in turn
will create opportunities for organisations such as Empresaria that provide entrepreneurial and flexible staffing
Group strategy, following the move to AiM in late 2004, has been to develop a specialist international staffing group
balanced both in terms of sector focus and geographical coverage. This diversification strategy is designed to reduce the
impact over time of market volatility and gain access to higher growth economies and staffing markets.
The development programme implemented between 2004 and early 2008 focused on a combination of green field investments in
emerging economies, and investments in existing businesses in more developed staffing markets where economies of scale or
barriers to entry justified this approach. In each case investments have been made alongside local management teams who
have acquired or retained a material equity stake in their business. Empresaria currently operates in 17 countries and has
approximately 800 internal staff.
The change in market conditions has generated a change in the development approach, with management and financial resources
being concentrated on supporting existing Group businesses. Having planted investment seeds in a number of emerging
markets over recent years, we are now concentrating on fulfilling this growth potential. Issuing new shares and raising
new funds in May 2009 has allowed the Group to provide increased financial support for our developing operations in
countries such as India and Indonesia at the same time as supporting the working capital requirements of staffing
operations across the rest of the Group.
Revenues declined in the year by 6% to £195.2m (2008: £207.7m). Net fee income declined 20% to £41.4m (2008: £51.5m).
Profit before tax (adjusted for intangible amortisation and exceptional items) reduced to £3.2m from £6.4m in the previous
year. The Group incurred exceptional cash expenditure of £1.2m in the year, the bulk of which was booked in the first half
of the year as part of a restructuring process. As indicated when reporting on the 2009 interim results, this
restructuring process has now been largely concluded and, although we will continue to review our portfolio of operations,
unless there is a dramatic deterioration in current market conditions there is no expectation of material restructuring
charges in the current year. In a similar vein, the reduction in profitability in a number of Group companies in 2009 and
subsequent review of goodwill carrying values has led to goodwill impairment charges of £4.6m. As with cash related
restructuring costs, unless there is a material change in circumstances or market conditions, there is no expectation of
further goodwill impairment charges in 2010.
Group net borrowings decreased by £1.1m in the year to £8.0m and by £3.3m in the six months to December 2009. The balance
sheet is expected to continue to strengthen in 2010 as cash inflows from trading are used to fund working capital
requirements and continue to reduce overall Group debt over the full year.
The challenges faced by the Group in 2009 were reflected in the constant pressure on all of our people who have each had to
deal with uncertain and often difficult trading conditions. 2009 was a year of change and of personal challenge and
sacrifice. It was also though a year of entrepreneurial flair and endeavour, the benefit of which will be felt in the
future. We thank them all for their creativity, forbearance and perseverance in a difficult year.
Current trading and outlook
We have seen an improved trading environment in recent months, although any forward view is clouded by uncertainty as to
the macro-economic outlook.
A number of internal indicators suggest that the outlook for Empresaria in 2010 is a positive one. We finished 2009 with
strengthening financial performances from all three of our regions. This has been driven by a combination of three key
factors: stable and growing temp numbers in the UK and Germany, increased permanent recruitment activity and increased
profits from maturing companies in emerging economies. This positive momentum has continued into the first months of 2010
with both revenues and net fee income significantly higher than in 2009 and on a materially lower cost base, giving
confidence as to the full year outlook.
24 March 2010
Operating and Financial Review
The Group, having broken even in the first half, achieved an operating profit for the full year, before exceptional items
and amortisation, of £4.1m. Net borrowings reduced by £1.1m over the year, driven by an improved second half where net
borrowings reduced by £3.3m.
During the latter part of 2008 and first quarter of 2009, Empresaria experienced a sharp decline in revenues and net fee
income and responded quickly to reduce costs and refine its portfolio of businesses. In the second quarter, markets
stabilised and we experienced some improvement in trading conditions. The Group has enjoyed increases to net fee income in
Q3 and Q4 2009, culminating in an overall increase of 19% (2008: 4%) over the first half. This trend, combined with a
lower cost base following the restructuring in the early part of the year, resulted in the strong improvement in
The Group derives the majority of its revenues from placing people in permanent and temporary positions of employment with
its clients. For the placement of permanent staff ("permanent sales"), a one-time fee is charged on commencement of
employment; for temporary placements ("temporary sales") the client is charged an hourly or daily rate which includes
payroll and associated costs (tax, insurance etc.) borne by the Group plus a profit margin. Gross profit ("net fee
income") comprises the gross value of permanent sales plus the profit margin earned on temporary sales.
Overall in the year revenue was 6% lower in 2009 at £195.2m (2008: £207.7m) due to a 4% fall in temporary sales and a 34%
decline in permanent sales. A substantial proportion of the Group's business is conducted overseas and after adjusting for
movements in exchange rates and changes in the business portfolio, like for like revenues were 11% lower.
Gross profit or net fee income was 20% lower at £41.4m (2008: £51.5m) due to a combination of lower permanent sales, idle
time costs incurred in Continental Europe in the first quarter of 2009 and some price pressure on temporary sales margin
during the year. After adjusting for movement in exchange rates and changes in the business portfolio, like for like net
fee income was 24% lower than previous year.
Gross margin, the ratio of net fee income to revenue, was 21.2% in 2009 (2008: 24.8%). Lower permanent sales gave rise to
approximately half of the fall in margin and this combined with idle time in Continental Europe in the first quarter
represented the majority of the decrease. Gross margin in the second half of 2009 improved by 1.6 percentage points to
22.0% (1st half: 20.4%).
Administrative costs, before intangible amortisation and exceptional items, reduced by 15%, or £6.7m, to £37.3m (2008:
£44.0m). After adjusting for movements in exchange rates and portfolio changes in the year, the like for like reduction in
costs was 17% or £7.4m. Operating profit, adjusted for exceptional items and intangible amortisation, was £4.1m (2008:
Market and Business Overview
Revenues decreased by 9% to £75.7m (2008: £83.6m) and net fee income decreased by 29% to £14.8m (2008: £20.9m). Net fee
income showed a far sharper decline than revenues mainly because permanent sales fell by 51% to £4.4m (2008: £8.9m)
compared with a 5% reduction in temporary sales, where the gross margin on temporary sales also fell to 14.5% from 16%. As
a result, the gross profit percentage for UK operations fell from 25% to 19% and temporary staffing contributed a
significantly greater proportion of net fee income (70% of the total in 2009 against 57% in 2008).
At the end of 2008 and in the first quarter to 2009, we acted quickly to reduce the UK cost base. As a result total costs,
before intangible amortisation and exceptional items, fell by 25% to £12.8m from £17.1m in 2008. These reductions were
achieved largely through lower remuneration costs, rationalising the UK property portfolio and by merging a number of
smaller operations. These measures helped the UK Group to an adjusted operating profit of £2.0m which, although down 47%
from the 2008 figure of £3.8m, was a significant achievement given difficult market conditions.
Cost reductions have enabled the UK Group to benefit from the somewhat improved market conditions in the second half of the
year and have positioned it well for a sustained recovery. From July to December, year on year net fee income fell by 25%,
compared with 34% in the first six months. The trend was most noticeable in Q4, where net fee income was 17% down on 2008.
Our Property Services and Engineering Sector performed extremely well in the year, with revenue and net fee income growth
driven by a focus on infrastructure work, especially rail and airport projects.
With a marked reduction in permanent sales, most of the other UK operations found market conditions challenging, although
almost all delivered an operating profit by the end of the year and look well placed to benefit from improved activity
levels in the first months of 2010, with evidence of growing temporary sales and indications of increased demand for
Revenues decreased by 8% to £84.8m (2008: £92.1m) and net fee income declined 17% to £18.9m (2008: £22.9m). During 2009,
the gross margin on temporary sales reduced by 3% to 22% (2008: 25%).
2009 was an unprecedented year in the European staffing industry with rapid and severe revenue declines across most
industry sectors. Empresaria's revenues in the region declined in the first half of the year by 14%. These results
significantly improved in the second half with revenues in Q4 being up 4% on the same period in 2008 and 8% up on Q3
The drop in net fee income was driven largely by margin reductions in our core German market, where a combination of
pricing pressure and idle time costs incurred in the first quarter of the year reduced percentage gross margins from 24% to
20%. The second half of the year did, however, see margins improving to 24%, with overall gross margin for the year being
To compensate for the decline in revenues, operating companies reduced their cost base by a total of 15% in local currency
terms. Restructuring initiatives did, however, result in one off exceptional costs related to staff redundancy pay.
Our German operations account for approximately 88% (2008: 88%) of Group revenues in Continental Europe. Although a
developed economy, the German staffing market is immature, having grown rapidly from a small base since the Hartz reforms
to the labour market in 2004. Being relatively under developed compared to other European staffing markets, there is still
a predominance of blue collar operations. Our Headway brand operates mainly within the Engineering and Logistics sectors
and, as with many German temporary staffing companies, had a proportion of skilled/semi-skilled temporary workers on its
books in late 2008. The extended factory closures over the winter of 2008/9 resulted in a dramatic fall in demand for
these workers and the consequent need to reduce costs. As with all temporary markets, however, the economic downturn acted
as a stimulus for employers to consider the benefits of increasing flexibility within the workforce. Although the German
economy has stabilised rather than entered a phase of recovery, the German staffing market and the performance of our
Headway operations, particularly in the second half of 2009, have been positive. Revenues generated in the final quarter
of 2009 were comparable to those in the same period of 2008 but on a much lower cost base and with a greater proportionate
contribution from the specialist divisions and, in particular, from longer term outsourcing contracts. The growth and
success of the Headway Logistics operations, specifically in the outsourcing of warehouse management and staffing, have led
to the management teams of both Headway and the UK's Logistics operations agreeing to form a joint venture in the UK, to
offer a combination of Headway expertise and UK management market knowledge.
Our companies in Holland, Czech Republic and Slovakia were also affected by the change in market conditions. In the former
due to a dependency on the Dutch construction sector and a drop in demand for technical temporary staff and in the latter
two markets it was due to a predominance of permanent recruitment in the operational mix. There are indications of
improved trading in the Czech Republic and Slovakia, although the outlook for the Dutch staffing market, where we have a
relatively small presence, remains a concern.
MediradiX, our healthcare staffing operation in Finland and Estonia performed well throughout the year, growing revenues,
net fee income and operating profit. The outlook for this business is excellent as the structural scarcity of doctors and
dentists in the Nordic region is expected to remain for years to come.
Rest of the World
Revenues increased by 8% to £34.7m (2008: £32.0m) and net fee income remained constant at £7.7m (2008: £7.7m). Temporary
sales increased by 9% in the period but the gross margin percentage reduced from 16% to 14% mainly as a consequence of
changing the mix of temporary staffing sales with growth from lower margin sectors and operations being offset by declines
in higher margin operations.
Reviewing year-on-year comparisons, the results in the Rest of the World region, made up primarily of operations in Asia
and South America, have been stable in the face of more difficult market conditions. Looking at our operations in more
detail, there were a range of outcomes and company performances in the region as well as a change from dependency on a
small number of key markets to a broader portfolio of contributing businesses. In 2008, 64% of regional net fee income was
derived from Japan and Chile. In 2009 this reduced to 58% due both to volume declines in these markets caused by market
deterioration and to the influence of growing operations in India and SE Asia. Year-on-year comparisons are also skewed by
reason of the decision to sell our underperforming People Intelligence business in Australia to the management team in
April 2009. This business contributed £0.1m of net fee income in 2009 (2008: £1.1m).
Within our principal regional markets, our Japanese temporary staffing companies (Skillhouse and FINES) were both severely
impacted by the downturn in the Japanese IT and Retail markets although there was evidence of more stable trading
conditions during the second half of the year. Our Chilean operations, also retail focused, suffered a drop in demand
during the first half of the year, although there was evidence of recovery and a return to growth in later months and the
outlook for this market, despite considerable disruption caused by the recent earthquake, is positive in 2010.
The compensation for this drop in net fee income came from our growing Indian, SE Asian and Chinese operations. In
particular, our Monroe Consulting (executive recruitment) and Learning Resources (corporate training) operations in
Indonesia saw strong revenue and profit growth. In the case of Learning Resources, growth was underpinned by a series of
new eLearning products launched early in the year. IMS, our Indian operation, both grew revenues in the year and improved
profitability through expanding its Recruitment Process Outsourcing operations to cover new markets, including Australia
and East Africa. In addition, on the back of demand for its services in the UK, it opened its first overseas branch there
in January 2010. Shanghai HR Intelligence, our operation in mainland China, also grew as a result of new HR outsourcing
contracts as well as increased demand for permanent staff.
International Financial Reporting Standards (IFRS) require that items of income and expenditure that are material in terms
of their nature or amount be disclosed separately. Such items have been disclosed as exceptional within this report and the
Board considers that the information presented in this report provides useful additional information relating to the
underlying performance of the Group. This information should not be considered as an alternative but as supplementary to
the full IFRS income statement on page 14.
An exceptional charge of £6.3m (2008: £4.8m) comprises £4.6m of impairments to goodwill and £1.7m of redundancy,
restructuring and business disposal costs. The annual goodwill impairment review compares the discounted cash flow
valuation of a cash generating unit ('CGU') to the carrying value of goodwill. Having carried out sensitivity analysis and
taking a medium term view of the markets in which some of our businesses operate, impairments of £1.2m in the UK, £1.3m in
Continental Europe and £2.1m in the Rest of the World region have been charged. The impairments primarily relate to our
retail business in Tokyo, Japan, the UK Logistics business and EAR in the Netherlands. There are no current year cash
outflows in relation to the impairment charge.
Exceptional restructuring costs amounted to £1.1m in the year and these were incurred in the UK and in Continental Europe,
primarily in the first quarter of 2009 when the Group reacted quickly to reduce its cost base due to the economic downturn.
In addition the Group incurred one-off asset write downs and closure costs of £0.6m as it adjusted its portfolio of
businesses to reflect market conditions. Cash spent in the year on restructuring and reorganisation was £1.2m.
The total tax charge for the year was £0.8m (2008: £1.8m). Tax on adjusted profits before exceptional items and goodwill
amortisation was £1.0m representing an effective rate of 31.3% (2008: 32.8%). This is higher than the standard rate in the
UK of 28.0% due to a combination of unrelieved losses and the mix of profits in the different jurisdictions in which the
(Loss) / earnings per share
Reported earnings per share from continuing operations, under IFRS, was a loss of 12.4p (2008: (4.8p)). This is due mainly
to goodwill impairments which do not attract tax relief or an adjustment for minority interest. To gain a better
understanding of underlying performance for the year, the Group also reports earnings per share adjusted for items
classified as exceptional and for intangible amortisation. Adjusted earnings per share decreased to 3.1p (2008: 8.6p) due
to the lower adjusted profit before taxation and a higher number of shares in issue.
During the year the Group paid a dividend in respect of the year ended 31 December 2008 of 0.35p per share. For the year
ended 31 December 2009, the Board is proposing a dividend of 0.35p per share which, if approved, will be paid on 16 August
2010 to shareholders on the register on 16 July 2010.
Net borrowings decreased by £1.1m in the year to £8.0m and by £3.3m in the period since 30 June 2009. The cash generated in
the second half was due to the operating profit (before exceptional items and goodwill amortisation) and a net reduction in
working capital of £1.1m due to a continued focus on debtor collection, with good results at Headway, Germany and
The cash outflow from investments during the year comprised £0.4m of deferred consideration in relation to Headway, Germany
net of £0.2m cash consolidated on conversion of an associate to a subsidiary.
The Group raised additional cash of £2.7m net of expenses in May 2009 from a share placing which strengthened the balance
sheet and ensures that the Group can continue to capitalise on its medium term growth opportunities.
IAS 8 requires that where a newly issued or modified IFRS does not include transitional provisions, a resultant change in
accounting policy must be applied retrospectively. As a result of a modification of IAS 38, which relates to expenditure
on promotional and advertising activities, the Group has restated its prior year balance sheets to reflect adjustments to
the fair value as at the date of acquisition. The effect of the change of accounting policy is set out in note 7.
The Group maintains a range of facilities appropriate to manage its working capital and medium term financing requirements.
At the year end the Group had banking facilities totalling £29.4m (2008: £30.2m).
The Group's bank covenant tests at 31 December 2009 were net debt:EBITDA of 1.6 times (covenant < 2.5 times), interest
cover of 5.6 times (covenant > 3 times) and debt service cover of 2.1 times (covenant >1.25 times).
Principal risks and uncertainties
The Group has a process that identifies certain risks that could affect business operations and hence the financial results
of Empresaria. Further information on this process is set out in the Corporate Governance report in the Group's 2009 Annual
Report to be published shortly.
Dependence on key executives and personnel
The Group's future success is substantially dependent on retaining and incentivising its senior management and certain key
employees. The loss of the service of key personnel may have an adverse impact on the Group's business and relationships.
However, the Group's philosophy of management equity ensures that key management is appropriately incentivised through
equity ownership. In addition, as the Group grows and diversifies geographically, its reliance on any one company and the
individuals associated with that company reduces.
Empresaria's businesses are highly dependent on IT systems for the day to day running of their operations. As a consequence
there is an ongoing review process to ensure that systems are maintained adequately and that repairs and upgrades are made
as necessary. It is Group policy that each business has a process in place to protect against potential malicious attacks
to its IT systems. In common with many organisations, although preventative procedures are in place, there remains a
residual risk of disruption to voice and data infrastructure.
The Group maintains a comprehensive insurance programme with limits and deductibles that are set so as to optimise the
total cost of risk borne by the Group. Empresaria works with underwriters and insurance brokers to ensure appropriate cover
is in place. As with all businesses there is the risk of failure of financial controls. The Group's internal control
framework is set out in the Corporate Governance report in the Group's 2009 Annual Report to be published shortly.
The Group's strategy includes investing in new businesses and managing start-ups. This strategy has certain inherent risks
and failure to quickly address underperformance in start-up businesses and or acquired businesses may adversely impact
results, including the Group's cash flow. Failure to ensure the Group has sufficient senior management resources to manage
and control its growth could adversely impact its profitability. The Board regularly assesses the number and suitability of
its senior management resources and adapts this resource to the needs of the Group.
A change in government policy may impact on the level of public spending in the key sectors in which the Group operates.
Changes of this nature in the macro-economic environment could adversely affect the financial performance of the Company.
The performance of staffing businesses has historically shown a strong correlation with performance of the economies in
which they operate. Empresaria's strategy of diversification within individual geographic markets and its expansion
internationally is designed to mitigate the effect of a downturn in any one economy. Nevertheless, a significant global
economic downturn, such as we experienced in 2009, has resulted in reduced revenues and profits for the Group.
The Group's business is subject to European, UK and overseas employment legislation. Any changes to this may impact on the
manner in which Empresaria conducts its business and could therefore affect the financial performance of the Group.
The Group operates in 17 countries and is exposed to potential changes in the values of 13 different currencies. The
revenues and costs of each of the Group's businesses are typically in the currency of operation and Empresaria has little
exposure to transactional risk. The Group's reporting currency is sterling and the results of each business are translated
into sterling at average rates for the year. Empresaria does not seek to hedge translation risk as there is to some degree
a natural hedge from operating in a wide range of countries.
The Group operates a central treasury function which manages and monitors external and internal funding requirements and
the following treasury risks:
i) Credit risk
ii) Liquidity risk
iii) Market risk
The Group's policies and procedures to manage these risks are set out in the Group's 2009 Annual Report to be published
The Board has undertaken a recent and thorough review of the Group's budget, forecasts and associated risks and
sensitivities. Despite the significant uncertainty in the economy and its inherent risk and impact on the business, the
Board has concluded, given the level of borrowings and bank facilities,
that the Group is expected to be able to continue in operational existence for the foreseeable future, being a period of at
least twelve months from the date of approval of the 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 the Group's 2009 Annual
Report to be published shortly.
Miles Hunt Stuart Kilpatrick
Chief Executive Group Finance Director
24 March 2010 24 March 2010
Consolidated Income Statement
Before intangible amortisation & exceptional items Intangible amortisation & exceptional items (note 3) Total Before intangible amortisation & exceptional items Intangible amortisation & exceptional items (note 3) Total
£m £m £m £m £m £m
Revenue 195.2 - 195.2 207.7 - 207.7
Cost of sales (153.8) - (153.8) (156.2) - (156.2)
Gross profit 41.4 - 41.4 51.5 - 51.5
Intangible amortisation - (0.3) (0.3) - (0.3) (0.3)
Administrative costs (37.3) (6.3) (43.6) (44.0) (4.8) (48.8)
Operating profit / (loss) 4.1 (6.6) (2.5) 7.5 (5.1) 2.4
Finance income 0.2 - 0.2 0.3 - 0.3
Finance costs (1.1) - (1.1) (1.3) - (1.3)
Share of operating loss from associates - - - (0.1) - (0.1)
Profit / (loss) before tax 3.2 (6.6) (3.4) 6.4 (5.1) 1.3
Income tax (1.0) 0.2 (0.8) (2.1) 0.3 (1.8)
Profit / (loss) for the year 2.2 (6.4) (4.2) 4.3 (4.8) (0.5)
Equity holders of the parent 1.3 (6.3) (5.0) 3.0 (4.6) (1.6)
Minority interest 0.9 (0.1) 0.8 1.3 (0.2) 1.1
2.2 (6.4) (4.2) 4.3 (4.8) (0.5)
Loss per share from
continuing operations (pence) (12.4) (4.8)
Adjusted earnings per share from
continuing operations (pence) 3.1 8.6
Loss per share from
continuing operations (pence)
Adjusted earnings per share from
continuing operations (pence)
Consolidated Statement of Comprehensive Income
Available-for-saleinvestments:valuationgainstakentoequity - 0.1
Exchangedifferenceonnetassetsofoverseassubsidiaries (2.5) 4.5
Net(expense)/ incomerecogniseddirectlyinequity (2.5) 4.6
(Loss)fortheperiod (4.2) (0.5)
Totalrecognisedincomeandexpensefortheperiod (6.7) 4.1
Equity holdersoftheparent (7.5) 3.0
Minorityinterest 0.8 1.1
2009 2008 2007
£m £m £m
ASSETS Restated Restated
Property,plantandequipment 2.0 2.3 1.9
Goodwill 26.5 31.2 22.6
Otherintangibleassets 2.7 3.2 2.7
Interestsinassociates - 0.1 1.0
Deferred taxassets 0.5 0.5 1.0
31.7 37.3 29.2
Tradeandotherreceivables 28.5 33.3 32.2
Cash and bank balance 4.9 5.7 4.1
33.4 39.0 36.3
Total assets 65.1 76.3 65.5
Tradeandotherpayables 22.4 26.4 25.5
Currenttaxliabilities 1.8 2.6 2.1
Short-termborrowings 4.3 5.4 6.2
28.5 34.4 33.8
Long-term borrowings 8.6 9.4 2.1
Other creditors 0.2 - -
Deferred tax liabilities 0.6 0.6 0.9
Total non-current liabilities 9.4 10.0 3.0
Total liabilities 37.9 44.4 36.8
Net assets 27.2 31.9 28.7
Sharecapital 2.2 1.7 1.7
Sharepremiumaccount 19.4 17.0 16.6
Mergerreserve 1.5 1.5 1.5
Translationreserve 3.9 5.6 1.0
Otherreserves (0.7) 0.1 (0.1)
Retained earnings (1.8) 3.4 5.3
Equity attributable to equity holders of the parent 24.5 29.3 26.0
Minority interest 2.7 2.6 2.7
Total equity 27.2 31.9 28.7
Equity attributable to equity holders of the parent
Consolidated Statement of Changes in Equity
Share capital Share premium account Merger reserve Translation reserve Other reserves Retained earnings Attributable to company share holders Minority interest Totalequity
Group £m £m £m £m £m £m £m £m £m
Balanceat1January2007 1.2 5.2 1.5 - (0.1) 2.9 10.7 0.8 11.5
Issueofsharecapital 0.5 11.4 - - - - 11.9 - 11.9
Profitfortheyear - - - - - 2.6 2.6 1.6 4.2
Dividend - - - - - (0.2) (0.2) - (0.2)
Currencytranslationdifferences - - - 1.0 - 1.0 (0.1) 0.9
Minoritiesacquired duringtheyear - - - - - - 0.9 0.9
Dividendpaid to minority - - - - - - - (0.5) (0.5)
Balanceat31 December2007 1.7 16.6 1.5 1.0 (0.1) 5.3 26.0 2.7 28.7
Issueofsharecapital - 0.4 - - - - 0.4 - 0.4
Lossfortheyear - - - - - (1.6) (1.6) 1.1 (0.5)
Dividend - - - - - (0.2) (0.2) - (0.2)
Currencytranslationdifferences - - - 4.6 0.1 - 4.7 - 4.7
Minoritiesacquired duringtheyear - - - - 0.1 (0.1) - (0.4) (0.4)
Dividendpaid to minority - - - - - - - (0.8) (0.8)
Balanceat31 December2008 1.7 17.0 1.5 5.6 0.1 3.4 29.3 2.6 31.9
Issueofsharecapital 0.5 2.4 - - - - 2.9 - 2.9
Lossfortheyear - - - - - (5.0)
- More to follow, for following part double click [ID:nRSY1445Jb]