Banner Default Image

Results for the six months ended 30th June 2012

06 September 2012 by Erin Smyth
Shutterstock 459894844

Empresaria Group plc ("Empresaria" or the "Group"), the international, multi branded specialist recruitment group, with a focus on high-growth staffing markets, has delivered an improved overall performance in the first half of the year, compared to a loss for the same period last year.


  • Revenue decreased 4% to £97.8m (June 2011: £101.4m)

  • Permanent revenue increased 13% and temporary staffing revenues decreased 5% year on year

  • Net fee income (gross profit) increased 1% to £22.4m (June 2011: £22.2m)

  • Net fee income diversified by geography (Continental Europe 38%, UK 35%, Rest of the World 27%)

  • Operating profit of £1.8m (June 2011: loss of £1.4m)

  • Adjusted* operating profit increased 6% to £1.8m (June 2011: £1.7m)

  • Profit before tax of £1.4m (June 2011: loss of £1.9m)

  • Good progress with the CGZP provision after agreeing the German social security liability to 2009

  • Earnings per share# of 1.4p (June 2011: loss per share of 3.3p)

  • Net debt unchanged at period end of £8.5m (June 2011: £8.5m)

* adjusted to exclude amortisation of intangible assets, exceptional items and movements in the fair values of options
# earnings per share is from continuing and discontinued operations

Chief Executive Joost Kreulen said:

"The Group has delivered an improved profit in the period, demonstrating the resilience of its businesses in difficult market conditions. Net fee income grew overall by 1%, despite a small fall in revenue and both operating profit and profit before tax were materially better than last year. The UK performance was stable overall and we have seen some particularly strong performances within the Asian region. In Europe operating profit increased against last year, although revenue declined.
The focus of the Group remains on improving operational performance. Changes are already underway in Headway, our German business, but this restructuring is going to impact short term profits negatively. Overall for the Group we expect performance improvements for the year as a whole, with profits slightly ahead of last year. We remain committed to strengthening the Group and identifying areas for growth and expansion."

Board statement


The Group generated net fee income (gross profit) of £22.4m, up 1% on 2011, despite a 4% drop in revenue to £97.8m (2011: £101.4m). Permanent revenue increased by 13%, driven mainly from the Asia-Pacific area, whilst temporary revenue declined by 5%. Overall, the temporary margin was slightly higher at 16.6% (2011: 16.5%). Operating profit was £1.8m, compared to a loss of £1.4m in 2011. Profit before tax was £1.4m, compared to a loss of £1.9m in the prior year period.
On an adjusted basis, excluding the impact of exceptional items, amortisation of intangible assets and fair value movements on options, both operating profit and profit before tax were up on the prior year period, by 4% and 17% respectively.

The Group's fastest growing region continues to be the Rest of the World, which accounted for 27% of Group net fee income (2011: 24%). Continental Europe remained the largest contributor to Group net fee income at 38% (2011: 41%). The UK contributed a static 35% of net fee income.

Earnings per share were 1.4p (2011: loss of 3.3p). On an adjusted basis, earnings per share grew 56% to 1.4p, reflecting both the improved profits and the benefits obtained from acquiring minority shares over the last year. The Group has continued to follow this strategy with further minority share purchases in 2012 for Headway, FastTrack, MediradiX and Bar 2.

The Group continued to focus on organic growth throughout the period, including opening a new office in Hong Kong for our LMA (financial services) brand. The Group's businesses in Singapore, opened last year, are developing well, although as expected are loss making in the first half. The financial services market has been generally weakened across the world and in both Singapore and Hong Kong our financial services facing brands have had to broaden their sector coverage to offset this market weakness. The new office opened in Australia has benefitted from a full year of operations and has delivered a break even result for the first half. The new branch in China, opened last year, has been merged into our existing business, having established an improved business model. The enlarged business has launched new desks covering the IT sector and has increased headcount.

The Group's results overall show an improved performance over the prior year period. This demonstrates the resilience of the Group and the benefit from our diversification strategy, given the difficult conditions in some of our sectors and markets. The focus for the remainder of the year is on developing the existing businesses, to improve their operational performance and ensure they have a platform for sustainable growth in profit.



Revenue in the period increased by 4% to £33.7m (2011: £32.5m), with net fee income rising by 1% to £7.9m (2011: £7.8m). Permanent recruitment revenues were the same as in the prior year period with the increase in revenue derived from temporary recruitment, predominantly in the Construction sector. Temporary gross margin was in line with the prior year period. Adjusted operating profit was up to £1.1m (2011: £1.0m). The financial services brands had mixed fortunes, with a strong result in the insurance sector but significant declines in the banking and financial services sector, resulting in lower profits than the prior year for this sector overall.

Continental Europe

Revenue in the period decreased by 14% to £43.3m (2011: £50.1m) although net fee income reduced by only 6% to £8.5m (2011: £9.0m) helped by an improved temporary margin. Adjusted operating profit improved to £0.2m (2011: £0.1m) helped by cost savings.

The decline in this geography's net fee income was predominantly due to reducing numbers of temporary workers experienced in Headway throughout the first quarter. By the half year these worker numbers had stabilised and, in the second half, are showing signs of improvement. The new management team are focussing the business towards higher skilled workers, with an expected lower volume of sales but improved margins. The temporary margin for the first half was circa 0.5% better than last year and costs have been reduced significantly, helping to offset the lower net fee income. However, the German business is undergoing a restructuring project over this year which, whilst expected to have a positive impact on future performance, is likely to impact short term profits negatively. In addition, in November 2012 there is going to be an increase in the equal pay rates in Germany which may impact margins. Overall therefore, full year profits in Headway are likely to be lower than the prior year.

The CGZP provision is £1.4m at the half year (31 December 2011: £1.7m; 30 June 2011: £3.0m). Following the successful conclusion of the German social security department audits, the liability for the years to 2009 has been finalised, allowing a £0.1m release to the income statement. We have also settled a number of worker claims for a small value and no new claims have been made in the period. The Board believe this provision covers all future liability.

In the Baltic region, our healthcare business enjoyed growth in net fee income, helped by a significant one-off "temp to perm" fee and an improvement in the temporary margin, although the average temporary worker numbers are down on the prior year. A new managing director started in August 2012.
The specialist businesses in Czech Republic and Slovakia continued to turn around operating losses from 2011 into a break even position this year.

Rest of the World

Revenue in the period increased by 11% to £20.8m (2011: £18.8m) and net fee income increased by 11% to £6.0m (2011: £5.4m). However, there was a decline in adjusted operating profit of 17% to £0.5m (2011: £0.6m) as a result of specific operational issues in our Chilean business.

The Asia Pacific region has performed strongly, with revenue growth of 17% over the prior year period. Adjusted operating profit also increased, despite the investment in the new offices in Singapore and Hong Kong. In Japan we have seen a good improvement in profit over 2011, which had been impacted by the earthquake last March. Whilst the Japanese economy remains fragile following this disaster, our businesses have grown both revenue and profit and are well placed for the second half of the year. Our executive search brand Monroe, operating across South-East Asia, has seen strong growth in Indonesia, Thailand and the Philippines. Profits at our training business in Indonesia were down at the half year, due to the phasing of training being provided and an investment in new sales staff in the year. However, the sales pipeline for the second half shows a good improvement over the first half.

In Chile the decision to exit from an unprofitable major contract resulted in transitional losses in the first half. Despite this, the business has been working throughout the year to diversify its client base and has already secured new clients which are expected to bring worker numbers back to historic levels by the end of the year.


Net borrowing at the period end was unchanged at £8.5m (June 2011: £8.5m), including an increase in with-recourse invoice financing of £1.0m (previously structured as non-recourse financing and so offset against trade debtors). On a gross basis (including the non-recourse invoice financing), the overall net borrowing at the half year increased to £16.9m (June 2011: £15.4m). This debt figure was slightly higher than expected, primarily due to increased debtor days and contract exit costs in Chile. Local procedures have been strengthened in Chile to improve the debtor days in the second half of the year.

Cash generated from operations in the period was £1.1m (2011: deficit of £0.3m). After accounting for tax and interest there was a small deficit on free cash flow (being net cash from operating activities) of £0.2m (2011: deficit of £1.7m). Cash outflow included £1.4m on the acquisition of minority shares, £0.4m on dividends to minority shareholders and £0.3m on capital expenditure. There was cash inflow on business disposals of £0.2m, which included £0.1m of final deferred consideration on the disposal of ACI in August 2011. There was also a £1.1m cash outflow on working capital.

Headway in Germany accounted for the majority of the acquisitions of minority shares and dividends to minority shareholders representing £1.3m of the expenditure. A further £0.4m related to the purchase of 14.5% of the shares in Bar 2 Limited and dividends payable to the minority shareholders.

As announced on 13 July 2012, the Group acquired the final 5.7% of the shares held by minority shareholders in FastTrack for £0.3m. In line with our management equity philosophy we intend to arrange second generation equity for the senior management team at FastTrack to incentivise them to further develop and grow the company. Second generation equity typically has a threshold profit figure, below which the minority shareholders do not share in the profits of the company.

We announced on 15 August 2012 the acquisition of a further 26.7% shareholding from the former managing director of the MediradiX businesses, with Empresaria now owning 86.7% of these companies.


In line with previous years, the Board is not recommending the payment of an interim dividend for the six months ended 30 June 2012 (2011: nil).


In Germany cost reductions and other actions by the new management are improving operational performance, but full recovery will take longer than originally anticipated and in the short term we expect to see a reduction in profit.

The UK is in a stable position but economic conditions overall remain challenging.

Asia is performing well and we expect an improved result from Chile in the second half of the year.

Overall for the Group we expect performance improvements for the year as a whole, with profits being slightly ahead of the prior year.

For further information contact:

Empresaria Group plc
Joost Kreulen, Chief Executive
Spencer Wreford, Group Finance Director
01342 711 430

Altium (Nominated Adviser)
Tim Richardson
0207 484 4040

Allenby Capital Limited (Broker)
Nick Naylor
0203 328 5656

Full results announcement attached. The analyst presentation of these results will be available on 6 September 2012 on the Empresaria website.

Notes for editors:

  • Empresaria Group plc (AIM: EMR; Sector: Support Services, Staffing) operates in 19 countries with over 800 internal staff.

  • Empresaria Group plc applies a management equity philosophy and business model, with group company management teams holding significant equity in their own business.