Empresaria Group Regulatory News (EMR)

The following amendment has been made to the Final Results announcement released today 2 March 2016 at 0700 under RNS No 7102Q.

The record date of the dividend stated in the dividend paragraph below has now been corrected from 9 May 2016, to 6 May 2016.

All other details remain unchanged.

The full amended text is shown below.

2 March 2016

Empresaria Group plc

("Empresaria" or the "Group")

Results for the year ended 31 December 2015

Record profit before tax with growth in all KPIs

Empresaria, the international specialist staffing group, has continued to deliver on its strategy with record profit before tax and growth in earnings per share.

· Ten consecutive quarters of net fee income growth

· Conversion ratio increased to 16.3% (2014: 14.7%)

· Proposed final dividend increased by 43% to 1.0p (2014: 0.70p)

· 26% reduction in net debt to £7.3m (2014: £9.8m)

· Continued strength in Germany and Offshore Recruitment Services from India

· Investments made in 2014 successfully integrated into Group

· Purchase of Pharmaceutical Strategies in the USA

* adjusted to exclude amortisation of intangible assets, exceptional items and gain or loss on disposal of business

Chief Executive Joost Kreulen said:

"Announcing record profit levels and our largest investment for eight years is testament to the strength of our strategy of building a diversified group and developing leading brands. We have made good progress against this strategy, with net fee income growth across all of our regions and an improved conversion ratio, helping to reduce debt levels again, down below our target ratio of 25% 'debt to debtors'.

Our purchase of Pharmaceutical Strategies ("PS") opened up a new region in the USA, further diversifying the Group geographically and at the same time strengthening our presence in the healthcare sector, a high growth market sector with good long-term prospects.

In line with our brand led strategy we continued to invest in the business with average staff numbers up 16% year on year. We opened a second brand in the UAE. The investments made in 2014 have been successfully integrated into the Group and with the new office openings have contributed positively against the prior year.

We see exciting opportunities across the Group in spite of current global uncertainty, and are confident in our ability to deliver profitable growth."

 - Ends -

Enquiries:

Notes for editors:

§ Empresaria Group plc is an international specialist staffing group with 19 brands operating in 18 countries across the globe including UK, Germany, Japan, India, UAE, Indonesia, Chile, Australia, Thailand, Singapore, Finland, USA and the Philippines.

§ The Group offers temporary and permanent staffing solutions as well as Offshore Recruitment Services in six key sectors including Technical & Industrial, IT Digital & Design, Financial, Healthcare and Retail.

§ Empresaria applies a multi brand, management equity philosophy and business model, with Group company management teams holding significant equity in their own business.

§ The Group is listed on AIM under ticker EMR. For more information: http://www.empresaria.com/

Chairman's statement

Performance overview

* The adjusted operating profit and adjusted profit before tax figures exclude exceptional items, profit or loss on disposal of businesses and intangible amortisation.

** The like-for-like currency movement is calculated by translating the 2014 results at the 2015 exchange rates.

It has been an important year in the Group's development as we delivered a record profit, developed the organic investments made in 2014, invested in new staff across our brands and issued new equity to fund the purchase of a high quality business operating in the USA healthcare sector, which also brought new investors onto the shareholder register.

The Group again delivered strong growth in profit and earnings per share in 2015, despite the continued impact of foreign exchange. This currency issue and our strategy of reducing our exposure to low margin, high volume business in the Technical & Industrial sector meant Group revenue remained broadly flat at £187.3m (2014: £187.9m). However, net fee income grew 10% to £49.2m (2014: £44.6m) as permanent recruitment sales were up 28% year on year. Net fee income from temporary recruitment was down 1.5%, due to a 3.5% reduction in sales, partially offset by improved margins of 16.7% (2014: 16.3%). Permanent sales, including the Offshore Recruitment Services ("ORS") business, now account for 45% of net fee income (2014: 38%).

Operating profit grew by 19% to £7.6m (2014: £6.4m), with costs being carefully managed to help the conversion ratio improve to 16.3% (2014: 14.7%). Interest costs were level with the prior year, resulting in profit before tax increasing 20% to £7.1m. On an adjusted basis, excluding amortisation, exceptional items and profit or loss on disposal of businesses, operating profit of £8.0m was up 21% on prior year and profit before tax was £7.5m, up 23%.

Diluted earnings per share grew by 24% to 9.3p in line with our vision to deliver sustainable growth in earnings per share. On an adjusted basis it grew by 24% to 9.9p, increasing for the fourth year in a row.

We have made further progress in reducing our debt whilst also continuing to invest in the business. During the year the Group generated £7.6m of cash from operations which helped reduce our net debt from £9.8m to £7.3m. This includes the new term loan taken out in October to help fund the purchase of Pharmaceutical Strategies in the USA. This means we have achieved our target of a 'debt to debtors' ratio of no more than 25%, with the ratio dropping to 23% this year. This is a great achievement and demonstrates the improving financial strength of the Group.

Investments

Underpinning our strategy is our focus on investing in our existing brands, to help develop them to build long-term sustainable profit streams. Complementing this, we evaluate external investment opportunities to accelerate the growth of the Group and increase our presence in sectors where we feel we are under-represented.

In line with our strategy, in October we purchased Pharmaceutical Strategies (PS), a healthcare staffing firm operating from Boston and servicing clients throughout the USA. PS specialises in providing qualified pharmacists and nurses to the healthcare sector, in particular to the Pharmacy Benefit Management companies. This sector is undergoing high growth rates due to the implementation of the Affordable Care Act and we see good prospects for the business over the medium term. This investment also takes the Group into a new geography and provides a base for other brands to use if they want to enter the USA market. We have been pleased at how quickly it has integrated into the Group.

PeopleThe Group has a stable and experienced Board which is working hard to deliver growth, reduce risk and improve our long term financial performance, which in turn leads to higher shareholder returns.

A key part of our business model is management equity, aligning key management and shareholder interests. This approach enables Empresaria to attract and retain the best people. At the end of the year we had 42 management shareholders, owning shares in different Group companies. We expect to increase this number during 2016.

The success of the Group is testament to the hard work and commitment of our staff and the Board would like to thank every individual for their contribution to the business. I have visited a number of our brands over the last year and have been impressed by the dedication and hard work I have seen from our staff.

Governance

We have the right system of Governance in place to deliver on our vision and ensure there is a sustainable profitable future.

The Group adopts high standards of corporate governance which we believe is a core requirement for a successful business operating a decentralised model across different regions and brands. There is a strong culture of financial control in the Group, with clear policies covering corporate conduct and governance. The Board develops the Group's corporate governance arrangements with reference to the UK Corporate Governance Code.

The values and culture of the Group, which is based on shared ownership and true operational autonomy for brand managers, are key to our long-term growth prospects. As the Group continues to grow and operate in more countries the Board pays particular attention to maintaining this strong operating philosophy and it is reinforced during our leader's conference, last held in 2015 in Oman.

Dividend

The Board has reviewed the dividend in the light of the positive trading result, stronger balance sheet and reduction in total debt. The Board intends to follow a progressive dividend policy in line with trading performance and for the year ended 31 December 2015 the Board has proposed a final dividend of 1.0p per share (2014: 0.7p per share) which, if approved by shareholders at the Annual General Meeting, will be paid on 31 May 2016 to shareholders on the register on 6 May 2016.

Outlook

The Group has delivered another period of strong profit and earnings per share growth, driven by our focused growth strategy. We are confident that 2016 will be another year of growth with the Group benefiting from both the investments made in its existing brands and the purchase of Pharmaceutical Strategies.

Despite wider market uncertainties at the start of the year we see exciting opportunities to develop our network. We are committed to growing the business to drive increased profits and enhanced shareholder value. We look forward to the year ahead with confidence.

Anthony MartinChairman1 March 2016

Chief Executive's Review

Announcing record profit levels and our largest investment for eight years is testament to the strength of our strategy of building a diversified group and developing leading brands. We have made good progress against this strategy, with net fee income growth across all of our regions and an improved conversion ratio, helping to reduce debt levels again, down below our target ratio of 25% 'debt to debtors'.

Our purchase of Pharmaceutical Strategies ("PS") opened up a new region in the USA, further diversifying the Group geographically and at the same time strengthening our presence in the healthcare sector. PS is expected to deliver a good uplift in profit into 2016, having integrated well into the Group and is operating in a high growth market sector with good long-term prospects.

Last year we presented our five year growth plan to 2018 and we have been pleased with our progress, with improvements made in all areas. We delivered a growth in net fee income of 10% despite unfavourable currency movements (16% in constant currency), an increase in the conversion ratio to 16.3%, the fourth year of continued improvement and we reduced our 'debt to debtors' ratio from 32% to 23%, below our 25% target. This is important to enable to Group to take advantage of opportunities that arise and to be able to invest in the ongoing business. There is still more to be done but we believe we are on the right track and the Board is focused on making all of the targets a reality.

Organic growth is at the core of our business model and we have specific plans with each brand to develop them into leading brands in their sectors. However, to meet our long-term goals we also see the need to supplement our organic growth with external investments; to enter a new geography, increase our presence in an existing sector or as a bolt-on to an existing brand. We have an ongoing business development programme to identify suitable brands to join the Group, where there is a fit of people and culture and where they meet our strategic priorities.

Regional performance

UK

In the UK revenue declined by 5% due to the deliberate move away from low value work in the Technical & Industrial sector. The lower paid end of this sector has been heavily impacted by changes in legislation, with false self-employment legislation implemented in April 2014 and new travel and subsistence rules in place from April 2016. Our approach to transition away from the generalist market and to increase our presence in professional and specialist roles has helped offset the impact of this to a certain extent, but there has been a short-term profit impact with a lower contribution from this sector in 2015. Excluding this sector there was revenue growth of 27%, with a particularly strong result from the Professional services area, helped by improved conditions in the banking sector and ongoing growth within the HR and Secretarial areas. We enjoyed a full contribution from Ball and Hoolahan, acquired in December 2014. This business has been successfully integrated into the Become group and we have clear plans to grow the brand's presence across our network over the next few years. There were also positive performances from our brands in Domestic services and Retail (new house sales).

Net fee income grew by 16% to £18.4m (2014: £15.9m), however due to the move away from the lower paid end of the Technical & Industrial sector and the associated profit reduction, there was a reduction in conversion ratio. We also saw increased costs in the last quarter from three brands moving office. Whilst this has created space for future expansion there is an increase in rent costs and one-off moving costs. Overall there was an increase in average staff numbers of 27 with 224 in 2015 (2014: 197) as we continue to invest in the future growth.

Continental Europe

Continental Europe again delivered strong growth in profit, up over 100% in the last two years. This is due to the Headway business in Germany and Austria, where revenue growth (14% in local currency) is coupled with a more appropriate cost base, to deliver growth in adjusted operating profit of 28% in local currency. The German economy has grown in 2015, business confidence remains positive and we expect this to continue in 2016.

Our healthcare business in Finland is making good progress with its move away from an import model (reliant on Estonian staff working in Finland) to a local model (growth coming from Finnish staff). Costs were removed with the closure of a physical presence in Estonia and whilst we will continue to place Estonian workers we expect the mix to be in favour of Finnish by the end of 2016. The local economic conditions remain weak but we are pleased with the progress being made by the management team.

Due to the weak performance of the Euro, currency rates have negatively impacted on the reported results for the region, with profit growth being £0.3m higher in constant currency.

In line with our strategy to exit businesses without strong growth prospects, we finalised the exit of our loss making GiT business operating in Czech Republic (disposal) and Slovakia (closed down).

Rest of the World

Following investment in 2014, we have seen a marked improvement in profit in the year with the new offices all delivering improved contributions this year. There were mixed performances across the region, with the established markets in Japan and Australia both performing well, as well as good results coming in particular from Thailand, Chile and India.

In India, our Offshore Recruitment Services business has seen significant growth, with staff numbers at the end of the year up 65% on the prior year. The plan to open a third office in 2016 was brought forward due to high demand, opening in November 2015 so they now operate out of three offices in Ahmedabad. This business mainly services clients in the USA and UK, with a primary focus on the IT and Healthcare sectors in each respective market. We see good opportunities for continued growth in 2016.

We also now have a direct presence in the USA with the purchase of Pharmaceutical Strategies in October 2015. Based in Boston, Massachusetts, they supply qualified pharmacists to the high-growth healthcare sector. According to the US Department of Health and Humans Services, healthcare expenditure is expected to grow at an average rate of 5.8% between 2014 and 2024. This growth is driven by increased demand from the implementation of the Affordable Care Act, an ageing population, rising obesity levels and good economic conditions.

Market conditions in South East Asia and China have been mixed. In Indonesia we have seen business confidence dented by worsening economic conditions. Our Executive search business saw slightly lower profit levels and our training business has been restructured to reflect their lower sales level. The majority of this programme has been completed in the year and the management team has been strengthened so we expect a marked improvement in bottom line performance in 2016. In Thailand we have seen strong growth and there have been improved performances also in the Philippines, Malaysia and Singapore. China is going through a high profile rebalancing of their economy. We only have a small presence in China, which has been restructured and rebranded to the successful executive search brand Monroe Consulting. We see good prospects moving into 2016, with a greater emphasis on Chinese clients rather than relying on multinational companies.

In January 2015 we sold our small stand-alone brand in Malaysia to management. We now operate in that market through our established Monroe Consulting brand which is making good progress.

Finance review

Finance income and costs

Finance income was £0.1m (2014: £0.1m), all being bank interest income. Finance costs were £0.6m (2014: £0.6m), which primarily related to interest payable on invoice discounting, bank loans and overdrafts. In 2015 there were also interest costs from the late payment of tax following an ongoing tax audit in Germany.

Taxation

The total tax charge in the year is £2.6m (2014: £2.1m) representing an effective tax rate of 36% (2014: 35%). This rate is higher than the UK rate due to a number of factors:

· The mix of profits is weighted towards higher tax jurisdictions, including Germany, Japan, India and Australia.

· A deferred tax asset has not been recognised for certain tax losses around the Group.

· There are higher levels of non-deductible expenses in the year, including the costs related to the purchase of Pharmaceutical Strategies.

Dividend

During the year, the Group paid a dividend of £0.3m in respect of the year ended 31 December 2014, amounting to 0.70p per share. For the year ended 31 December 2015, the Board is proposing a dividend of 1.0p per share, which if approved by shareholders at the Annual General Meeting, will be paid on 31 May 2016 to shareholders on the register on 6 May 2016.

Treasury

The Group has a central treasury function. Under the Group's treasury policy speculative transactions are not permitted and where possible debt should match the location and currency of the related assets. The following matters are reserved for Board approval:

- Changes to the Group's capital structure;

- Approval of Group financing arrangements or significant changes to existing arrangements;

- Approval of treasury policies and any activity involving forward contracts, derivatives, hedging activity and significant foreign currency exposures; and

- Approving the appointment of any of the Group's principal bankers.

Treasury is managed to deal with the following risk areas.

Liquidity and funding risk

The Group maintains a range of appropriate facilities to manage its working capital and medium-term financing requirements. At the year-end the Group had banking facilities totalling £36.7m (2014: £32.5m) with the increase coming from overdraft facilities. The amount of facility undrawn of £15.6m (2014: £10.2m) excludes the headroom on the invoice financing facility. The invoice financing facility is available to the UK companies only.

During the year we replaced the £7.8m revolving credit facility in the UK with a mixture of a new €5m three year term loan and €8m overdraft facility provided directly to Headway in Germany by HSBC. A new £4.5m term loan from HSBC was taken out to part-fund the purchase of Pharmaceutical Strategies in October 2015, with the old term loan that was due to end in 2016 being repaid early as part of the renewal and increase in overdraft facility in the UK.

Group net debt decreased to £7.3m at 31 December 2015 (2014: £9.8m), as detailed below:

The Group had to meet certain bank covenant tests on a quarterly basis under the terms of the old revolving credit facility. These were removed when the facility was replaced, although the new term loan taken out in the year has reinstated two covenants. The first test point was at 31 December 2015 and the figures are shown below:

Interest rate risk

The Group's bank facilities are subject to floating interest rates. This is expected to match the interest costs with the economic cycle (eg when interest rates are higher there is typically better economic growth and so for a cyclical industry such as recruitment, profits should be greater when the economy is performing positively). The majority of facilities are used to fund specific working capital requirements for temporary recruitment businesses. During a downturn there is typically an unwinding of working capital as trade receivables are collected, so reducing the financing requirement and subsequent interest cost.

Within the UK Group the majority of bank accounts are included in a cash pooling arrangement. An interest optimisation model allows currency balances (including overdrafts) to be included within the cash pooling arrangement. With interest income not generally paid on current accounts, the Group aims to minimise the external interest cost by repatriating surplus funds from around the Group to minimise the use of the overdraft facilities.

Finance costs were £0.6m (2014: £0.6m), which primarily related to interest payable on invoice discounting, bank loans and overdrafts. The effective interest rate for bank facilities for the year was 2.8% (2014: 3.4%).

Foreign exchange risk

There was a foreign exchange gain of £161,000 (2014: loss of £11,000).

The Group remains open to translation risk from reporting overseas results in Sterling. We do not actively hedge this exposure, with the diversity of operations across different countries providing an element of natural hedge. During the year we were negatively impacted by adverse movements in exchange rates on the translation of Group results, the largest detailed below:

Credit risk

The main credit risks arise through the use of different banks across the Group and on the Group's trade receivables. The credit ratings of the banks used within the Group are monitored with a target that no more than 10% of Group cash is held in banks with a rating below BBB (Fitch rating) or equivalent. This target was fully met throughout the year.

Debtor days are reviewed monthly with high balances followed up with local management. Average debtor days for the Group in 2015 were 51 (2014: 52), with a year-end balance of 52 (2014: 51 days). The debtor days in UAE remain higher than the Group average. Progress on reducing this has been slower than expected during 2015.

Cashflow

Net debt decreased by £2.5m in the year to £7.3m (2014: £9.8m). The main areas of expenditure were on business investments and purchasing shares in existing subsidiaries, which was a net £6.3m, partly funded by an issue of new equity and additional bank facilities. Dividend payments were £0.3m, there was a net funding of working capital of £0.7m and the net tax and interest payment was £2.3m.

Investments and disposals

During the year, the Group made the following investments and purchases of shares in subsidiaries held by minority shareholders:

- 10% of PT Monroe Consulting Group (Indonesia) for cash consideration of £0.3m, taking the Group's total interest to 90%.

- 9% of Mansion House Limited (UK) for cash consideration of £0.1m, taking the Group's total shareholding to 67%.

- In October 2015, 100% of the shares in Pharmaceutical Strategies, a USA healthcare recruiter based in Boston, for an initial cash payment of $7.3m (approximately £4.8 million). Further payments are contingent on the results for the twelve months ended 31 December 2015, 2016 and 2017, with £3.2m recognised in the accounts at year-end.

Following this purchase the CEO acquired equity in the company in line with our philosophy of management holding equity in the businesses they are responsible for.

The Group received £0.1m in deferred consideration from the disposal made in 2013 of the Bar 2 payroll business and the disposals of Metis in January 2015 and GiT in March 2015.

There was also a deferred consideration payment of £0.5m for the purchase of 75% of the shares of Ball and Hoolahan Limited in September 2015. This represented the maximum amount payable under the Sale and Purchase Agreement.

Non-controlling interestsAs part of our business model management can hold non-controlling interests in Group subsidiaries. As these interests are purchased they are typically replaced by "second generation" equity. There is no obligation on Empresaria to acquire these shares but management shareholders have certain opportunities to offer their shares for sale.

Based on the results for the year ended 31 December 2015, the total value of all non-controlling interests, if purchased in 2016 using the valuation mechanism in existing shareholder agreements would total £3.6 million, ignoring any discounts applying to early transfers of shares.

In some instances the consideration payable under the shareholders agreement for second generation equity may be greater than the fair value of the shares under IFRS 13. Based on the results for the year ended 31 December 2015, the value in excess of fair value of all non-controlling interests, if purchased in 2016 using the valuation mechanism in existing shareholder agreements would total £1.3 million, ignoring any discounts applying to early transfers of shares.

Any consideration in excess of this fair value of the non-controlling interest is recognised as a charge in the income statement. These amounts are included as adjusting items when presenting the adjusted operating profit, adjusted profit before tax and adjusted earnings per share. There have not been any such charges in 2015 (2014: £Nil).

Post balance sheet events

There were no post balance sheet events.

Going concern

The Board has undertaken a recent and thorough review of the Group's budget, forecasts and associated risks and sensitivities. The Group's UK and German overdraft facilities were renewed in February 2016 for a further 12 months. Given the business forecasts and early trading performance, 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.

Joost Kreulen Spencer WrefordCEO Group Finance Director

1 March 2016

Consolidated income statement 

Consolidated statement of comprehensive income

Consolidated balance sheet

Consolidated statement of changes in equity

Equity comprises the following:

· "Share capital" represents the nominal value of equity shares.

· "Share premium account" represents the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue.

· "Merger reserve" relates to premiums arising on shares issued subject to the provisions of section 612 "Merger relief" of the Companies Act 2006.

· "Retranslation reserve" represents the exchange differences arising from the translation of the financial statements of foreign subsidiaries.

· "Equity reserve" represents movement in equity due to acquisition of non-controlling interests under IFRS 3 Business combinations.

· "Other reserves" represents the share based payment reserve of £0.6m and exchange differences on intercompany long-term receivables which are treated as a net investment in foreign operations.

· "Retained earnings" represents accumulated profits less distributions and income/expense recognised in equity from incorporation.

· "Non-controlling interest" represents Equity in a subsidiary not attributable, directly or indirectly, to a parent.

Consolidated cash flow statement

1 Basis of preparation and general information

The financial information has been abridged from the audited financial information for the year ended 31 December 2015.

The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2015 or 2014, but is derived from those accounts. Statutory accounts for 2014 have been delivered to the Registrar of Companies and those for 2015 will be delivered following the Company's Annual General Meeting. The Auditors have reported on those accounts; their reports were unqualified, did not draw attention to any matters by way of emphasis without qualifying their reports and did not contain statements under s498(2) or (3) Companies Act 2006 or equivalent preceding legislation.

Accounting policies have been consistently applied throughout 2014 and 2015.

Whilst the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards ('IFRS'), this announcement does not itself contain sufficient financial information to comply with IFRS. The Group will be publishing full financial statements that comply with IFRS in April 2016.

2 Segment analysis

Information reported to the Group's Chief Executive who is considered to be Chief operating decision maker of the Group for the purpose of resource allocation and assessment of segment performance is based on geographic region. The Group's business is segmented into three regions, UK, Continental Europe and Rest of the World. There is no material difference between the segmentation of the Group's turnover by geographic origin or destination.

The Group has one principal activity, the provision of staffing and recruitment services. Each unit is managed separately with local management responsible for determining local strategy.

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

* Adjusted operating profit represents operating profit before exceptional items, gain or loss on business disposal and intangible amortisation.

Revenue of Continental Europe includes £71.4 million (2014: £69.8 million) from Germany.

3 Business investment

On 19 October 2015 the Group purchased 100% of the shares in Pharmaceutical Strategies, LLC, Recruitment Strategies, LLC, Medical Recruitment Strategies, LLC and Recruitment Strategies Group, LLC (together "PS" or "Pharmaceutical Strategies"), a United States staffing company specialising in the Pharmacy Benefit Management ('PBM') sector of the US healthcare market.

Initial consideration is £4.7 million with one contingent payment based on the final performance of the year ended 31 December 2015 and two further contingent payments based on the performance of the company in the years ending 31 December 2016 and 2017. The contingent consideration payments payable for the year ending 31 December 2016 and 2017 are based on the growth in earnings over the year ended 31 December 2015. Of the £3.2 million contingent consideration £2.7 million is no longer contingent and is payable in the year ended 31 December 2016.

The amounts recognised in respect of the purchase consideration, identifiable assets acquired and liabilities assumed and goodwill are as set out in the table below:

(1) The above table represents fair value on date of investment.

Acquisition related costs amounting to £0.2 million are not included above and have been recognised in the income statement.

The goodwill comprises the value of its employees and their close understanding of their client's requirements which are of great importance in the recruitment business. The four subsidiaries of Pharmaceutical Strategies are run as one operating unit and represent a single cash generating unit for goodwill allocation.

Goodwill of £1.6 million and intangibles of £5.1 million are expected to be deductible for tax purposes.

There are no post-combination employee services identified from this acquisition.

The investment has contributed £1.4 million to the Group's revenue and £0.1 million to profits attributed to equity holders of the parent and £34,000 to the Group's operating cash flow since acquisition for the period ended 31 December 2015.

If the investments had been completed on 1 January 2015 the Group would have generated additional revenues of £5.7 million for the period to 31 December 2015. The profit attributed to equity holders of the parent, including amortisation and after tax, for the period would have been an additional £0.2 million. Excluding amortisation the profits attributed to equity holders of the parent would increase by a further £0.3 million to £0.5 million.

Contingent consideration

The contingent consideration is payable upon the final results for the years ending 31 December 2015, 2016 and 2017. As at 31 December 2015, the maximum contingent consideration payable that could be required under the share purchase agreement was £5.7 million.

An amount of £3.2 million contingent consideration has been accrued as a best estimate based upon discounting the future cash flows of Pharmaceutical Strategies following business plans and budget preparations with the management team. Of this amount, £2.7 million is no longer contingent and is payable by the end of April 2016.

4 Finance income and cost

5 Taxation

6 Reconciliation of Adjusted profit before tax to Profit before tax

In addition to the adjustments shown above, any consideration paid for non-controlling interests in subsidiary companies in excess of fair value derived under IFRS 13 which is charged to the income statement will also represent an adjusting item. There have not been any such charges (2014: £nil) in the current year.

7 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. A reconciliation of the earnings and weighted average number of shares used in the calculations are set out below.

The calculation of the basic and diluted earnings per share is based on the following data:

The dilution on the number of shares is from share options granted to the executive directors.

8 Goodwill

Goodwill arising on business combinations is reviewed and tested for impairment on an annual basis or more frequently if there is indication that goodwill might be impaired. Goodwill has been tested for impairment by comparing the carrying amount of each cash-generating unit (CGU) at lowest level of cash flow, including goodwill, with the recoverable amount of that income-generating unit. The recoverable amounts of the CGUs are determined from value-in-use calculations.

The key assumptions for the value-in-use calculations are as follows:

Operating profit & pre-tax cash flows

The operating profit & pre-tax cash flow is based on the latest one-year forecasts for the CGUs approved by the Group's Management Board which are compiled using expectations of fee growth, consultant productivity and operating costs. The Group prepares cash flow forecasts derived from the most recent financial forecasts approved by management and extrapolates cash flows in perpetuity based on the long-term growth rates using margins that are consistent with the business plan approved by the Group's Management Board.

Discount rates

The pre-tax, country specific rate used to discount the forecast cash flows ranges from 13% to 21% (2014: 12.5%) reflecting current local market assessments of the time value of money and the risks specific to the relevant CGUs. These discount rates reflect estimated industry weighted average cost of capital in each market.

Pre-tax discount rates used for various cash generating units in operating segments are as follows:

Growth rates

Growth rates used to extrapolate beyond the most recent forecasts and to determine terminal values are based upon the long term average GDP growth forecast, which are consistent with external sources, for the relevant country. Growth rates range from 0.7% to 7.7%. Any growth rate in excess of 3.0% was capped for the purpose of this calculation. GDP growth is a key driver of our business, and is therefore a key consideration in developing long-term forecasts.

Growth rates used for various cash generating units in operating segments are as follows:

Impairment reviews were performed at the year-end by comparing the carrying value of goodwill with the recoverable amount of the CGUs to which goodwill has been allocated. It is the opinion of the Directors that at 31 December 2015 there was no impairment of goodwill.

As part of the impairment review, management has considered the sensitivity of the recoverable amount for each unit to changes in the growth rates and discount rate. This sensitivity analysis showed that the long-term growth rate could reduce to nil without giving rise to an impairment of goodwill. The discount rates were also increased by adding an additional 2% to the in country specific pre-tax discount rates. None of these changes in the key assumptions are expected to reasonably occur.

Goodwill acquired in a business combination is allocated, at acquisition, to the groups of CGUs that are expected to benefit from that business combination. The carrying amount of goodwill has been allocated as follows:

9 Borrowings

During the year the UK revolving credit facility of up to €10 million was repaid, replaced by new facilities in Germany provided directly to our subsidiary company. The new facilities comprise a term loan of €5 million which expires in 2018 and an increase in overdraft facilities of €5 million to €8 million. As at 31 December 2015, the term loan was fully utilised and €2.2 million of the overdraft was utilised. Interest is payable at EURIBOR plus 3% for the term loan and EURIBOR plus 2.3% for the overdraft. The facilities are secured by a parent company guarantee.

The term loan in the UK outstanding as at 31 December 2014 of £0.8 million was also repaid during the year and resulted in an increase in the UK overdraft facility of £0.5 million. A new term loan of £4.5 million, which expires in 2018, was entered into to part fund the initial acquisition payment and the deferred consideration payments for the acquisition of Pharmaceutical Strategies (see note 3 for details) due between 2016 and 2018. A $1.5 million overdraft facility was also entered into to provide working capital facilities to the acquired entity. As at 31 December 2015, £1.6 million of the term loan was utilised and $1.1 million of the overdraft was utilised. Interest is payable at UK base rate plus 1.5% for the term loan and UK base rate plus 2.0% for the overdraft.

The existing UK overdraft facilities were increased from £4.0 million to £5.5 million during the year. The interest rate on the UK bank overdrafts was fixed during the year at rates up to 1.0% above applicable currency base rates. The value of the UK bank overdrafts at 31 December 2015 was nil (2014: £2.0 million).

The UK facilities are secured by a first fixed charge over all book and other debts given by the Company and certain of its UK subsidiaries.

Other overseas overdrafts had interest rates of between 1.1% and 7.7% during the year.

10 Dividends

The proposed dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements.