Empresaria Group Regulatory News (EMR)

19 Sep 2005 07:00

Empresaria Group PLC19 September 2005 Empresaria Group plc Interim results for the six months ended 30th June 2005 Empresaria Group plc ("Empresaria" or "the Group") is pleased to announce itsunaudited interim results for the six months ended 30th June 2005. Financial highlights • Turnover increased by 17% to £24.5m (2004: £20.9m)• Net fee income increased by 13% to £7m (2004: £6.2m) • Adjusted operating profit increased by 46% to £861,000 (2004: £591,000)*• Adjusted profit before tax increased by 70% to £749,000 (2004: £440,000)*• Adjusted earnings per share increased by 50% to 1.8p (2004: 1.2p)* Operating highlights • Strong organic growth in existing businesses (net fee income up by 11%)• Investments in Japan and the US exceeding expectations• UK start-up investment already moving into profitability earlier than anticipated• Strong financial contribution from recent acquisitions Tony Martin, Chairman, commented that "The Group is making progress in itsdevelopment of international staffing operations and its first investments ininternational markets, particularly Empresaria's Japanese venture, areperforming strongly. The Group's strategy is to build a portfolio of staffingcompanies both by geography and sector. Markets are generally buoyant and thegroup continues to perform in line with expectations. A combination of solidorganic growth and increasing exposure to new investment opportunities gives theBoard confidence as to Empresaria's future prospects." *Figures based on underlying profits, adjusted for goodwill amortisation andexceptional costs. There were no exceptional costs in the period to 30 June2005. The directors of the issuer accept responsibility for this announcement. For further enquiries please contact: Empresaria Group Plc 01293 649 900Tony Martin (Chairman)Miles Hunt (Chief Executive)Nick Hall-Palmer (Finance Director) Robert W. Baird Limited 020 7488 1212Nick Tulloch/David Rae Notes for editors: Empresaria Group plc is a international recruitment group diversified bygeography and sector. Its aim is to grow through organic growth, investment instart-up businesses, by providing funding for management buy outs andacquisitions. The philosophy of the Group is for management teams to have a substantial equityinterest in their business. Empresaria was formed in 1996 by Miles Hunt and consists of 21 staffingcompanies. Its business model, allows founder managers and key staff withinEmpresaria's subsidiaries to acquire or retain a meaningful stake in thebusinesses they run or work in. Empresaria currently provides recruitment services across five sectors in theUK; namely: 1. Construction, Property Services & Engineering;2. Supply Chain;3. Public Sector;4. Financial Services; and5. Specialist Brands. In addition, Empresaria is actively expanding internationally and hasestablished operations in both the US and Japan. Chairman's Statement Results In the six month period to June 2005 the Group once again produced an excellentset of results with EPS growth of 50% and adjusted EPS growth also up 50%, whenadjusted to exclude goodwill amortisation and exceptional costs. This earningsgrowth was driven by an increase in turnover of 17% to £24.5m (2004: £20.9m), anincrease in net fee income, of 13% to £7.0m (2004: £6.2m) and an increase inadjusted pre-tax profit of 70% to £749,000 (2004: £440,000). Earnings per share before amortisation of goodwill were 1.8p. Earnings pershare after amortisation of goodwill were 0.9p. There were no exceptional costsin the period. Dividend The Board is not recommending the payment of an interim dividend for the sixmonths to 30 June 2005 (2004 interim: nil, 2004 final 0.4p). Group development The Group's development is focussed on combining controlled growth with managingand reducing business risk. The Group's strategy can be distilled into thefollowing components: i) International expansion The Group is committed to investing in international staffing markets throughinvestment in start-ups, acquisitions and, where appropriate, through itsexisting successful UK brands. Investment overseas will provide exposure to highgrowth staffing markets and further reduce business risk throughdiversification. The Group's first international investment was made at the endof 2004 when it started an IT temporary staffing company, Skillhouse Staffing,in Tokyo. The company is growing rapidly in a very strong recruitment market andis performing well ahead of initial expectations. In June this year Empresaria invested in Gerard Stewart Inc, an Atlanta basedrecruitment to recruitment company and an extension of an existing successful UKbrand in this sector. The financial performance of this company is alsoexceeding initial expectations. The Group continues to investigate overseas markets, and has a pipeline ofopportunities. ii) A portfolio of specialist staffing businesses There are 24 staffing companies in the Group (including associate companyinvestments) in sectors ranging from insurance to healthcare to construction.Focussing on a range of sectors allows the Group to switch resources accordingto the business cycles of each sector and protects the Group from downturns inindividual markets. This approach has resulted in consistent turnover andearnings growth over the last five years. iii) Management equity The structure and strategy of the Group is underpinned by the philosophy ofmanagement equity. Each company in the Group is being developed by managementteams holding a meaningful equity stake. The culture of ownership,entrepreneurship and responsibility created by this philosophy and model drivesorganic growth and generates robust businesses with low turnover of key staff.When Empresaria makes acquisitions it applies the same principles, eitherco-investing with a management team (MBO/MBI structures) or allowing a partialrealisation for an existing ambitious management team. iv) Balanced growth The Group continues to take a balanced approach to growth, combining three corestrands; organic growth, investment in start-ups and acquisitions. a) Organic growth Turnover growth in the six months ended 30th June 2005 on a like for like basiswas 12% and gross profit increased on the same basis by 11%. Adjusted profitbefore tax, again on the same basis, was up 21%. Continued investment is beingmade in growth in consultant numbers and in branch network expansion. Duringthe period MVP (Supply Chain sector) established a branch in Manchester as didThe Recruitment Business (creative and design sectors staffing). b) Start-ups The Group invested in one start-up during the period, Gerard Stewart Inc inAtlanta. We also continue to absorb the start-up costs of Skillhouse Staffingin Tokyo although we expect it to move into profitability by the end of theyear. In the UK we started 2nd City Resourcing (marketing and PR staffing) inSeptember 2004, which is still in start-up mode and now moving to profitability. It is not expected to contribute to earnings in the current year but isgrowing, as with our overseas businesses, ahead of expectations. c) Acquisitions We continue to seek acquisitions that either complement existing groupoperations or that extend group coverage into international staffing markets. InFebruary this year we announced the acquisition of The Recruitment Business ("TRB"), a provider of creative and design staff to a range of markets includingthe media, public and financial sectors. As expected, TRB is making asignificant contribution to group profits and, with the expansion through thenew Manchester office, identifying new areas of organic growth. In July this year we announced the acquisition of More Driving, a South coastbased contract driving recruitment company. The company is currently beingabsorbed within our existing DriveLink brand network. The acquisition extendsthe geographic coverage of the DriveLink business and is expected to contributeto earnings in 2006. Prospects The Group is making steady progress in its development of international staffingoperations and its first investments in international markets, particularlyEmpresaria's Japanese venture, are performing strongly. The UK market isgenerally buoyant and the Group continues to perform in line with expectations.Our Financial Services companies, as outlined in the Chairman's report to theaccounts for the 2004 year end, experienced a slow start to the year but are nowall showing signs of picking up and are all producing encouraging currentresults. A combination of solid organic growth and increasing exposure to newinvestment opportunities gives the Board confidence as to Empresaria's futureprospects. Tony Martin Chairman 19th September 2005 CONSOLIDATED PROFIT AND LOSS ACCOUNTFor the 6 months ended 30th June 2005 Half Year Half Year Full Year 2005 2004 2004 £ 000 £ 000 £ 000 (unaudited) (unaudited) (audited) TurnoverExisting operations 22,679 20,177 43,721Acquisitions 1,848 - -Continuing operations 24,527 20,177 43,721Discontinued operations - 740 1,709Total turnover 24,527 20,917 45,430 Cost of sales (17,507) (14,708) (32,289) Gross profit 7,020 6,209 13,141 Administrative expenses (6,366) (5,736) (11,771)Exceptional administrative expenses - (33) (303)Total administrative expenses (6,366) (5,769) (12,074) Operating profitExisting operations 493 417 1,246Acquisitions 183 - -Continuing operations 676 417 1,246Discontinued operations (22) 23 (179) Group operating profit 654 440 1,067 Share of operating loss in associated company (34) - - 620 440 1,067 Net interest payable and similar charges (112) (136) (325) Profit on ordinary activities before taxation 508 304 742 Tax on profit on ordinary activities (225) (119) (350) Profit on ordinary activities after taxation 283 185 392 Minority equity interests (101) (92) (169) Profit on ordinary activities attributable tothe members of Empresaria Group plc 182 93 223 Equity dividends proposed - - (80) Retained profit for the period 182 93 143 Earnings per share (pence) basic 0.9 0.6 1.4 CONSOLIDATED BALANCE SHEETAs at 30th June 2005 June June December 2005 2004 2004 £ 000 £ 000 £ 000 (unaudited) (unaudited)Fixed assetsIntangible assets 6,042 4,122 4,836Tangible assets 301 297 284Investment in associates 274 145 6,617 4,419 5,265Current assetsTrade and other debtors 10,393 7,926 8,328Cash 1,658 - 2,921 12,051 7,926 11,249 CreditorsAmounts falling due within one year (9,309) (5,845) (7,972) Net current assets 2,742 2,081 3,277 CreditorsAmounts falling due after more than one year (1,595) (1,828) (1,669) Total net assets 7,764 4,672 6,873 Capital and reservesCalled up share capital 1,037 759 997Other reserve 991 854 991Share premium 3,463 906 2,895Profit and loss account 1,291 1,058 1,109 Equity shareholders' funds 6,782 3,577 5,992 Minority interests 982 1,095 881 7,764 4,672 6,873 CONSOLIDATED CASH FLOW STATEMENTFor the 6 months ended 30th June 2005 June June December 2005 2004 2004 Note £ 000 £ 000 £ 000 (unaudited) (unaudited)Net cash inflow/(outflow) fromoperating activities 1 35 (288) 2,027 Returns on investments andservicing of financeNet interest paid (112) (151) (325)Dividends paid to minorityshareholders in subsidiarycompanies (33) - (78)Net cash outflow for returns oninvestments and servicing offinance (145) (151) (403) Taxation - corporation tax paid (95) (38) (297) Capital expenditure and financialinvestment Payments to acquire tangible assets (189) (140) (206) Net cash outflow for capitalexpenditure (189) (140) (206) Acquisitions and disposals Purchase of subsidiaries (1,134) (1,181) (2,256)Cash acquired with subsidiary 324 - -Purchase of associates (162) - -Net cash outflow for acquisitionsand disposals (972) (1,181) (2,256) Equity dividends paid - - (59) Net cash outflow before financing (1,366) (1,798) (1,194) Financing Issue of shares - 10 2,257Raising of long term loan - 1,000 1,000Repayment of loan (96) (94) (215)Increase/(decrease) in factoringbalances 199 (437) 67Capital elements of hire purchasecontracts - (2) (2) Net cash inflow from financing 103 477 3,107 (Decrease)/increase in cash in the 3period (1,263) (1,321) 1,913 1 Reconciliation of operating profit to net cash inflow from operating activities June June December 2005 2004 2004 Operating profit 620 440 1,067Share of associates losses 34 - -Depreciation of tangible assets 134 142 273Amortisation of goodwill 241 118 345Increase in debtors (1,224) (602) (1,218)Increase/(decrease) in creditors 230 (386) 1,560 Net cash inflow from operating 35 (288) 2,027activities 2 Reconciliation of net cash flow to movement in net debt June June December 2004 2004 2004 £000's £000's £000's (Decease)/increase in cash in the period (1,263) (1,321) 1,913Cash outflow from decrease in debt (103) (467) (850) Change in net debt resulting from cash (1,366) (1,788) 1,063flowsConversion and cancellation of loan - 32 32stockFactoring debt acquired - (1,376) (1,376) (1,366) (3,132) (281)Opening net debt (1,567) (1,286) (1,286) Closing net debt (2,933) (4,418) (1,567) 3 Analysis of net debt Other 31 December non-cash 30 June 2004 Cash flow changes 2005 £000's £000's £000's £000'sNet cash:Cash at bank and in hand 2,921 (1,263) - 1,658 Amounts owed to factors (2,700) (199) - (2,899)Long term LoansDue within one year (239) 96 (71) (214)Due after one year (1,549) 71 (1,478) (1,567) (1,366) - (2,933) NOTES TO INTERIM REPORT 1. Basis of preparation The interim financial information has been prepared on the basis of accountingpolicies consistent with those adopted for the year ended 31 December 2004. Theinterim financial information has not been audited and does not constitutestatutory accounts within the meaning of section 240 of the Companies Act 1985. The comparative results for this period present an abridged version of the fullaccounts for the year ended 31 December 2004, which received an unqualifiedaudit report, and which have been filed with the Registrar of Companies. The interim financial statements comprise the following: • Profit and loss account for the six months ended 30 June 2005 with comparative information for the year ended 31 December 2004 and for the 6 months ended 30 June 2004; • Balance sheet as at 30 June 2005 with comparative information at 31 December 2004 and at 30 June 2004; and • Cash flow statement for the 6 months ended 30 June 2005 with comparative information for the year ended 31 December 2004 and the 6 months ended 30 June 2004. 2. Dividend The directors do not propose the payment of a dividend for the period. 3. Earnings per share Basic earnings per share are calculated by dividing the retained profit for each period by the average number of shares in issue, 20,370,877 (December 2004: 16,127,987; June 2004: 15,124,895). 4. Reconciliation of basic to adjusted EPS 6 Months 6 Months Year ended ended ended 30 June 30 June 31 Dec 2005 2004 2004 Basic EPS 0.9 0.6 1.4 Effect of goodwill amortisation 0.9 0.5 1.7 Effect of exceptional items - 0.1 1.1 Adjusted EPS 1.8 1.2 4.2 5. Reconciliation of adjusted profits 6 Months 6 Months Year ended ended ended 30 June 30 June 31 Dec 2005 2004 2004 Operating profit 620 440 1,067Profit before tax 508 304 742 Goodwill amortisation 241 118 345Exceptional operating items - 33 303 241 151 648 Exceptional non-operating items (15) - Adjusted operating profit 861 591 1,715Adjusted profit before tax 749 440 1,390 This information is provided by RNS The company news service from the London Stock Exchange