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Empresaria Group plc - Results for the six months ended 30 June 2013

09 May 2013 by
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​Empresaria Group plc ("Empresaria" or the "Group", AIM: EMR), the international specialist staffing group announces its unaudited interim results for the six month period ended 30 June 2013.

Financial Highlights

  • Revenue decreased 2% to £95.6m (June 2012: £97.8m), with permanent revenue up 7% and temporary staffing revenues down 3%, year on year

  • Net fee income (gross profit) decreased 7% to £20.9m (30 June 2012: £22.4m)

  • Adjusted* operating profit up 11% at £2.0m (June 2012: £1.8m)

  • Net fee income diversified by geography with UK 38%, Continental Europe 32% and Rest of the World 30% (June 2012: UK 35%, Continental Europe 38%, Rest of the World 27%)

  • Conversion ratio improved to 9.4% (June 2012: 7.7%)

  • Adjusted* profit before tax up 21% to £1.7m (June 2012: £1.4m)

  • Earnings per share** up 29% to 1.8p (June 2012: 1.4p)

  • Net debt of £8.9m at period end (June 2012: £8.5m; December 2012: £8.1m) after acquisition of minority interests

Operational Highlights

  • Strong performance from Rest of the World region

  • Focus on operational efficiency has helped to increase profitability despite slightly reduced revenue levels

  • Restructuring of German operations substantially completed

  • Investment in staff and new office space in South East Asia driven by continued strong demand

Acquisitions of minority interests in Japanese and Finnish businesses

* adjusted to exclude amortisation of intangible assets and exceptional items

** earnings per share is from continuing and discontinued operations

Joost Kreulen, Chief Executive Officer of Empresaria said:

"The Group has delivered growth of 21% in adjusted profit before tax on the prior year, despite a fall in revenue and net fee income. We have seen another strong performance from the Rest of the World region which now represents 30% of Group net fee income. The UK has been fairly stable and shows signs of improving over the second half of the year. The markets in Continental Europe have been the most challenging, but cost controls have helped offset lower net fee income.

We remain focused on improving operational efficiency to deliver sustainable profit growth. We are committed to developing the Group through organic expansion and by taking a selective approach to external investment opportunities."

Board statement


The Group generated a 14% growth in profit before tax to £1.6m despite a 2% drop in revenue and 7% lower net fee income. Costs have been controlled with operating profit up 6% on the prior year at £1.9m, with 2012 benefiting from exceptional income of £0.1m. On an adjusted basis, excluding the impact of exceptional items and amortisation of intangibles, operating profit was up 11% and profit before tax was up by 21% on the prior year.

Permanent revenue grew by 7%, with12% growth coming from the Rest of the World region and 1% growth in the UK. There was a decline in Continental Europe, which has predominantly temporary revenue, as 2012 included a significant one-off temp-to-perm fee in Finland that did not recur in 2013. The growth in permanent revenue was offset by a 3% reduction in temporary revenue, with the decline mainly due to Continental Europe (down 11%), whereas the Rest of the World was up 12% and the UK was broadly stable. The lower sales in Germany were as expected following the introduction of equal pay legislation which has been implemented over a 9 month period from November 2012. The full impact was seen at the net fee income level, down 17% on 2012 with a resulting decline in temporary margin. Overall the Group's temporary margin was 15.3% (2012: 16.6%), but excluding Continental Europe was only 0.4% lower. The growth in permanent sales meant the operational mix was slightly higher for permanent margin, at 35% of net fee income (2012: 34%).

Earnings per share increased 29% to 1.8p (2012: 1.4p). On an adjusted basis, earnings per share grew 43% to 2.0p (2012: 1.4p) due to the increased profit contribution and acquisition of minority shares over recent years. During the first half year there were further purchases of shares in Skillhouse (Japan) and Mediradix (Finland & Estonia).

The Group has focused on improving its operating performance, in particular from the recent investments in Singapore and Hong Kong, where losses in the previous two years have been turned into a break even position, and in Chile where the results have improved significantly over the prior year following internal restructuring and a change in the client mix. Lower costs in Germany, resulting from the restructuring exercise started in 2012, helped offset the lower net fee income. Overall the Group conversion ratio of 9.4% was up on 7.7% in the prior year and remains a key area of management focus.




30 June 2013

30 June 2012




Net fee income



Adjusted operating profit



% of Group net fee income



Revenue in the period was marginally down at £33.6m (2012: £33.7m) with net fee income down 1% to £7.8m (2012: £7.9m). Permanent revenue grew by 1%, offset by a 1% decline in temporary sales. The temporary margin was down 0.5%, as a consequence of the mix of sales in the construction sector.

Adjusted operating profit was down to £0.9m (2012: £1.1m), with increased costs mostly for staff in expectation of more favourable market conditions in the second half of the year. The economic outlook in the UK is more positive than at year end with key business confidence indicators showing upward trends. The performance over the first half year has also reflected this improving confidence, with the second quarter up against the prior year for revenue, net fee income and profit before tax, after being behind in the first quarter. The Group is well placed to benefit from increased demand in the second half, with the prior year comparative figures including the slowdown due to the Olympic Games.

Continental Europe


30 June 2013

30 June 2012




Net fee income



Adjusted operating profit



% of Group net fee income



Revenue decreased by 11% to £38.6m (2012: £43.3m) with net fee income falling further by 21% to £6.7m (2012: £8.5m). Cost savings helped adjusted operating profit to increase over 2012 to £0.3m (2012: £0.2m). The largest impact has been in Germany, which as expected was negatively impacted at the gross profit level by the adoption of new equal pay surcharges of up to 50% on temporary pay rates. This has been seen fully at net fee income as the surcharges generally did not include full margins. Costs were down across the region with most of the savings in Germany where staff costs were 20% lower following the restructuring exercise that started in the second quarter of 2012. Costs continue to be reviewed to identify further areas for savings.

The second quarter profit was up against 2012, after a decline in the first quarter. Whilst revenue and net fee income were down on their comparative periods in 2012 for both quarters, the rate of decline was greatly reduced in the second quarter.
The provision for retrospective pay and social security in Germany stands at £0.9m at 30 June 2013 (31 December 2012: £1.0m; 30 June 2012: £1.4m). No new claims have been made in the first half year and only one case remains unsettled at this date. The final position should be clear by the year end. The Board believe this provision covers all future liability.

In the Baltic region, our healthcare business experienced a decline in net fee income of 44%, partly due to a temp-to-perm fee in 2012 not repeating this year, but also due to increased competition in the core Estonian market. The company is broadening the candidate base in the second half of the year with a trial of doctors from Spain and a focus on the local Finnish market.

Rest of the World


30 June 2013

30 June 2012




Net fee income



Adjusted operating profit



% of Group net fee income



Revenue in the period increased by 12% to £23.4m (2012: £20.8m) and net fee income increased by 6% to £6.4m (2012: £6.0m). The improved performance, in particular in Chile, Singapore and Hong Kong, helped adjusted operating profit increase by 60% to £0.8m (2012: £0.5m). The region performed above the prior year in both the first and second quarters, from revenue through to profit.

In Japan both businesses have performed well. Our fashion retail brand, FINES, added a team of six consultants specialising in permanent recruitment in the second quarter. They are already contributing positively and this has helped to strengthen the brand which was previously focused mostly on temporary sales. In India our Recruitment Process Outsourcing business has grown strongly following a restructure in 2011, with growth coming from the UK and US markets in particular. The new businesses in Singapore and Hong Kong are performing much better and are in an overall break even position over the first half year, with pipelines indicating profits for the second half. Our executive search brand, Monroe, operating across South-East Asia, saw a small decline in profit, following investments in new staff and office space, but expectations for the full year remain positive as demand continues to be strong in their markets.

In Chile there is a small loss in the first half as the business finalised the exit from higher risk contracts and its restructuring programme. Sales have grown with new clients replacing the discontinued business and they are in line to generate profit over the full year.


Net borrowing at the half year increased to £8.9m (30 June 2012: £8.5m). The average net borrowing over the prior twelve months was level at £8.8m (2012: £8.8m). Total debt, including non-recourse invoice financing was £16.1m (30 June 2012: £16.9m). Total debt as a percentage of trade debtors was consistent with 2012 at 52%.

Cash generated from operations in the period increased to £2.5m (2012: £1.1m). After accounting for tax and interest payments net cash from operating activities was £1.3m (2012: deficit of £0.2m). Cash outflows included £1.2m on the acquisition of minority shares, £0.2m on dividends to shareholders and £0.3m on capital expenditure. The dividend to shareholders represents a phasing difference as it has previously been paid in July but has been brought forward to June from 2013. There was a £0.6m inflow on working capital, but this was largely offset by a £0.5m outflow on exceptional costs.

The acquisition of minority shares included £0.5m for the final payment for the shares in Headway in Germany. A further £0.5m was paid for 10% of Skillhouse (Japan) and £0.2m for 9% of Mediradix (Finland and Estonia).

New bank facilities have been introduced in Australia and Czech Republic through our Group banker, HSBC, to provide working capital funding for the temporary business. Overall bank facilities have increased since the year end.

Bank Facilities

30 June 2013 £m

30 June 2012 £m

Overdrafts, loans and other bank debt



Invoice financing facilities





Amount of facility undrawn at period-end



The amount of undrawn facility excludes the headroom on the invoice financing facility, which is only available to companies in the UK.


In line with previous years, the Board is not recommending the payment of an interim dividend for the six months ended 30 June 2013 (2012: nil).


The Group is trading in line with our expectations. Markets remain changeable but there are increasing signs of improving economic conditions and whilst visibility continues to be limited, we are confident of our ability to deliver profitable growth.

We remain focused on improving the efficiency of operations and delivering sustainable profit growth and are also taking a selective approach to external investment opportunities. Based on performance to date, we remain confident that earnings for the full year are expected to be in line with market expectations and look forward to delivering further growth with confidence.


Empresaria Group plc
Joost Kreulen, Chief Executive Officer
Spencer Wreford, Group Finance Director

01342 711 430

Shore Capital (Nominated Adviser and Broker)
Bidhi Bhoma / Edward Mansfield

020 7408 4090

Notes for editors:

  • Empresaria Group plc (AIM: EMR; Sector: Support Services, Staffing) operates in 18 countries with over 800 internal staff and has a strong focus on the development of emerging markets and speciality niche staffing sectors.

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

  • Continental Europe is represented by Austria, Czech Republic, Estonia, Finland, Germany and Slovakia.

  • Rest of the World is represented by Australia, Chile, China, Hong Kong, India, Indonesia, Japan, Malaysia, Philippines, Singapore and Thailand.