Empresaria Group plc ("Empresaria" or the "Group")
Trading Update and Notice of Results
First half net fee income growth and on course to deliver full year adjusted profit before tax in line with market expectations
Empresaria (AIM: EMR), the international specialist staffing group, is pleased to provide a trading update ahead of announcing its interim results on Wednesday 21 August 2019.
For the first half the Group has delivered solid net fee income growth of 7%, 6% in constant currency. As part of the Group's Stronger Together initiative, launched in May, brands have been aligned to the Group's core staffing sectors. This will be a key driver in delivering improved results through increased collaboration in "like" businesses, driving operational efficiencies and maximising synergies in each of the sectors. An analysis of net fee income by sector is provided below.
Net fee income by sector for the 6 months to 30 June:
% change (constant currency)*
Offshore Recruitment Services
* The constant currency movement is calculated by translating the 2018 results at the 2019 exchange rates.
The Group's Professional sector has shown strong growth, with positive performances overseas and in the UK more than offsetting the adverse impact of Brexit uncertainty on those UK businesses that operate in the financial services and new house sales markets.
The Group's IT sector has grown, more than offsetting the challenges of rebuilding the temp base in Japan following the regulatory changes last year.
The Group's Engineering sector, which is primarily based in the UK, has struggled in the first half with challenging market conditions and the ongoing impact from Brexit. The business has been restructured with changes to key management and refocused to target the more lucrative white collar part of the market and the Group expects to see improved results starting to come through in the second half of the year.
The Group's Commercial sector has a significant presence in Germany where the focus is on rebuilding the temp base following the changes in legislation last year. This has been progressing well but has been offset by the weaker German automotive sector which represents a key market. The Group's investment in July 2018 in the Commercial sector, Grupo Solimano in Peru, contributed £0.9m to net fee income in the period as expected.
The Group's Offshore Recruitment Services business in India continues to build on the strong growth of 2018 with another period of significant growth in the first half of 2019. The Group expects this sector to continue to be a strong driver of growth in the future.
Adjusted net debt at 30 June 2019 is £18.1m, an increase against the 31 December position of £17.1m. In July the Group invested in additional shares in ConSol Partners for consideration of £3.5m, increasing net debt by this amount.
As expected, adjusted profit before tax for the first half is anticipated to be approximately £3.7m (2018: £4.7m) excluding the costs associated with the previous CEO stepping down in June 2019 which have been treated as exceptional. This reflects the lower starting position of businesses in Germany and Japan along with the impact of Brexit uncertainty in the UK and a higher central cost base following the investments made in the second half of 2018. The Board is positive about the prospects for the second half of the year and the Group remains on course to deliver adjusted profit before tax in line with market expectations.
Rhona Driggs, CEO of Empresaria, commented:
"We have remained focused on efforts to improve organic growth across the Group and as a result our net fee income continues to show improvement. Our sector alignment and continued investment in best in class technology, along with recent actions taken in underperforming businesses, means that we are well placed to continue to drive organic net fee income growth and to improve profitability."
Empresaria Group plc
via Alma PR
Arden Partners (Nominated Adviser and Broker)
020 7614 5900
Alma PR (Financial PR)
020 3405 0205
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