Empresaria Group Regulatory News (EMR)

25 Sep 2006 07:03

Empresaria Group PLC25 September 2006 Empresaria Group plc Chairman's report on the unaudited interim results for the six months ending on 30th June 2006 Empresaria Group plc ("Empresaria" or "the Group") is pleased to announce itsunaudited interim results for the six months ended 30th June 2006 Financial highlights • Turnover of £33.9m (2005 £24.5m), up 38% • Net fee income of £9.9m (2005 £7.0m), up 41% • Adjusted operating profit of £1.15m (2005 £0.89k), up 29%* • Adjusted profit before tax of £0.95m (2005 £0.75m) up 27%* • Adjusted earnings per share 2.3p (2005 1.8p) up 28%* Operating highlights • Strong organic growth both in UK and overseas. • Japanese subsidiary performing well ahead of expectations. • New operations established in China, India and Indonesia. • Senior management appointment in Europe. Commenting on the results, Chairman Tony Martin said: "Our strong growth through the first half has positioned us well for a positivesecond half, when we traditionally make the majority of our profit. The Group'soperational, geographical and sector diversification means that no single one ofour companies accounts for more than 12% of Group net fee income, while ourinternational development programme is beginning to build momentum, and is nowcontributing over 20% of net Group monthly income. We continue to maintain acareful balance between temporary and permanent staffing operations, with ourexpansion underpinned by a balanced mix of organic and acquired growth." * Figures based on underlying profits, adjusted for goodwill amortisation andexceptional items. There were no exceptional items in the period to 30th June2006. The directors of the issuer accept responsibility for this announcement. Press Contacts Empresaria Group Plc 01293 649900 Tony Martin (Chairman) Miles Hunt (Chief Executive) Nick Hall-Palmer (Finance Director) Bridgewell Limited 0207 0033000 James Wellesley-Wesley Notes for editors: Empresaria Group plc (sector Support Services, staffing) provides specialiststaffing services across nine countries through 30 trading subsidiaries.Empresaria was formed in 1996 by Miles Hunt and its business model is based onthe philosophy of management equity which allows founder managers and key staffwithin Empresaria's subsidiaries to acquire or retain a meaningful stake in thebusinesses they run or work in. Chairman's Statement Results In the six month period to June 2006 the Group once again produced an excellentset of results with EPS growth of 28% adjusted to exclude goodwill amortisationand exceptional costs. This earnings growth was driven by turnover up 38% to£33.9m (2005: £24.5m), an increase in gross profit, or net fee income, of 41% to£9.9m (2005: £7.0m) and an increase in adjusted pre-tax profit of 27% to £948k(2005: £749k). The organic turnover growth rate in the period was 16% and adjusted profitbefore tax on the same basis grew by 20%. Diluted earnings per share before amortisation of goodwill were 2.3p (2005:1.8p). Diluted earnings per share after amortisation of goodwill were 1.0p.There were no exceptional costs in the period. Dividend The Board is not recommending the payment of an interim dividend for the sixmonths to 30 June 2006 (2005: nil). Strategy Empresaria is a specialist staffing group seeking to sustain high growth ratesat the same time as managing business risk. Its approach is to apply acombination of a management equity philosophy, a decentralised managementstructure, a balanced business mix (between temporary and permanent staffingoperations as well as between industry sectors) and an international expansionprogramme. Each of the companies in the group is run by managers holding significant equitystakes in their own businesses or alternatively in Empresaria itself. Thecentral group functions are focussed on financial management and groupdevelopment. A combination of this equity philosophy and freedom of operationattracts, motivates and retains good managers. The diversification of investment across different operations, industry sectorsand geographies manages risks relating to individual people, clients, companiesand markets. No one company accounts for more than 12% of group net fee incomeand no one client accounts for more than 6% of group revenues. Empresaria's international development programme, launched less than two yearsago, is beginning to build momentum. In the whole of 2005 the Group'sinternational businesses contributed 3% towards total net fee income. Since Maythis year, despite strong organic growth in the UK, Empresaria's overseasbusinesses have been contributing over 20% of Group net fee income on a monthlybasis. With a continued focus on international development, the mix between UKand overseas financial contribution is expected to change rapidly. The Group enjoys a balance between temporary and permanent staffing operationswith 52% of net fee income being derived from temporary staffing business. Inthe medium term it is anticipated that this percentage contribution from themore stable temporary operations will increase. UK In total, turnover in the UK increased by 16% to £28.3m (2005: £24.5m) and netfee income increased by 9% to £7.6m (2005: £7m). The UK operations saw strongorganic growth and contribution from the Financial Services and PropertyServices and Construction sectors. After a relatively poor performance in 2005, all the Financial Service companieshave demonstrated an improvement in profitability with particular headway beingmade in the investment banking and asset management market sectors. Within the Property Services and Construction markets our FastTrack brandcontinues to grow both in absolute terms as well as in market share. During theperiod the FastTrack cost base increased by over £500k as the business investedin both consultants and branch network. In July it opened a new office inStratford, East London, to take advantage of opportunities presented by the 2012Olympics. It is expected that the revenue and profit effects of this expansionwill be felt in full in 2007. The overall UK growth rate was reduced by weakness within the Public Sectorbusinesses, particularly within the Allied Healthcare market which was affectedby a substantial slowdown in NHS spending. Reacting to this, the Board hasdecided to merge our Allied Healthcare, Nursing and Social Care operations. Newmanagement has been recruited and the sector is expected to return toprofitability during the course of the second half of 2006 once the integrationprocess has been completed. Public Sector net fee income accounts for less than4.5% of Group total. If the Public Sector performance was excluded from likefor like financial analysis, underlying year on year turnover growth in the UKwould have been 25%. International Empresaria's international businesses contributed £4.5m of turnover and £2.1m ofnet fee income in the period. There are no comparable figures for 2005 ascontributions from overseas subsidiaries commenced only towards the end of lastyear. The Group benefits from increased exposure to a number of fast growinginternational staffing markets. In Japan, the Skillhouse operation (IT andsupport services staffing) has grown rapidly from start up at the end of 2004 tobecome a significant profit contributor this year. The Japanese staffing marketcontinues to benefit from the effect of an improved economic environment andstructural changes to the staffing industry. In addition, the Group is seeingevidence of similar growth opportunities with the new India and Chinainvestments made earlier this year. 2006 has also seen the Group make its first investment in continental Europewith its acquisition of the GiT operation giving it a foothold in both the CzechRepublic and Slovakia. GiT has traded profitably, in line with our expectations,in the first half of 2006. The Group believes that Eastern Europe offersexcellent opportunities for future growth and is actively investigatingopportunities in this region as well as in those more mature European marketswith growth potential. In the six months to June 2006, the Group has invested nearly £1m in developingits network of international businesses and the primary focus of management inthe second half of 2006 and throughout 2007 will continue to be increasing theexposure of the Group to high growth international staffing markets. Management In June we announced the appointment of Armin Preisig to Empresaria's seniormanagement team. Armin was until April this year on the Board of Management ofVedior and responsible for the majority of that group's European operations. Hepreviously fulfilled a similar role for Select Appointments. Armin brings withhim a wealth of experience and knowledge of European staffing operations, whichis expected to be of great benefit to Empresaria. Prospects The Group performed strongly over the first six months of 2006 and has continuedto perform well in the intervening months. Organic growth continues to bedriven by established operations supplemented increasingly by recent start-upsand supportive acquisitions. As Empresaria has historically made the majorityof its profit in the second half of the year it is anticipated that this trendwill continue in 2006. The Board is positive as to the outlook for the year. Tony Martin Chairman 25th September 2006 CONSOLIDATED PROFIT AND LOSS ACCOUNT For the 6 months to 30th June 2006 Half Year Half Year Full Year 2006 2005 2005 £ 000 £ 000 £ 000 (unaudited) (unaudited) (audited) TurnoverExisting operations 33,157 22,679 48,342Acquisitions 743 1,848 5,718Continuing Operations 33,900 24,527 54,060Discontinued operations - - -Total turnover 33,900 24,527 54,060 Cost of Sales (23,986) (17,507) (38,667) Gross Profit 9,914 7,020 15,393 Administrative Expenses (9,102) (6,366) (13,749) Operating profitExisting operations 739 493 1,217Acquisitions 73 183 697Continuing operations 812 676 1,914Discontinued operations - (22) - Group operating profit 812 654 1,914 Share of operating profit in associated company (38) (34) (44) 774 620 1,870 Interest receivable and similar incomeInterest payable and similar charges (168) (112) (263) Profit on ordinary activities before taxation 606 508 1,607 Tax on profit on ordinary activities (250) (225) (726) Profit on ordinary activities after taxation 356 283 881 Minority equity interests (137) (101) (233) Profit on ordinary activities attributable tothe members of Empresaria Group plc 219 182 648 Equity dividends paid - - (80) Retained profit for the period 219 182 568 Earnings per share (pence) basic and diluted 1.0 0.9 3.1 CONSOLIDATED BALANCE SHEET As at 30th June 2006 June- June- December 2006 2005 2005 £ 000 £ 000 £ 000 (unaudited) (unaudited)Fixed AssetsIntangible Assets 8,672 6,042 7,981Tangible Assets 648 301 535Investment in associates 664 274 39 9,984 6,617 8,555Current AssetsTrade and other debtors 13,817 10,393 10,169Cash 2,135 1,658 2,405 15,952 12,051 12,574 CreditorsAmounts falling due within one year (14,349) (9,309) (10,992) Net current assets 1,603 2,742 1,582 CreditorsAmounts falling due after more than one year (1,323) (1,595) (1,449) Total net assets 10,263 7,764 8,688 Capital and reservesCalled up share capital 1,175 1,037 1,113Other reserve 1,516 991 1,539Share premium 4,980 3,463 3,822Profit and loss account 1,665 1,291 1,447 Equity Shareholders' Funds 9,336 6,782 7,921 Minority interests 927 982 767 10,263 7,764 8,688 CONSOLIDATED CASH FLOW STATEMENT For the 6 months ended 30th June 2006 June June December 2006 2005 2005 Note £ 000 £ 000 £ 000 Unaudited UnauditedNet cash inflow from operating activities 1 287 35 2,500 Returns on investments and servicing of financeInterest paid (168) (112) (263)Dividends paid to minority shareholders in (61) (33) (196)subsidiary companiesNet cash outflow for returns on investments and (229) (145) (459)servicing of finance Taxation - Corporation Tax Paid (245) (95) (586) Capital expenditure and financial investment Payments to acquire tangible assets (298) (189) (413) Net cash outflow for capital expenditure (298) (189) (413) Acquisitions and disposals Purchase of subsidiaries (741) (1,134) (1,993)Cash/overdraft acquired with subsidiary (14) 324 462Purchase of associates (593) (162) (21)Net cash outflow for acquisitions and disposals (1,348) (972) (1,552) Equity dividends paid - - (84) Net cash (outflow)/inflow before financing (1,833) (1,366) (594) Financing Issue of shares 920 -Issue of loan stock -Raising of Long term Loan -Repayment Of Loan (105) (96) (238)Increase/(Decrease) in invoice discounting 748 199 316balancesCapital elements of hire purchase contracts - Net cash (outflow)/inflow from financing 1,563 103 78 (Decrease)/increase in cash in the period 3 (270) (1,263) (516) 1 Reconciliation of operating profit to net cash inflow from operating activities June June December 2006 2005 2005Operating profit 812 654 1,914Loss on disposal of tangible fixed assets - - 73Depreciation of tangible assets 167 136 262Amortisation of goodwill 342 240 618Increase in debtors (3,424) (1,225) (433)Decrease in creditors 2,390 230 66 Net cash inflow from operating activities 287 35 2,500 2 Reconciliation of net cash flow to movement in net debt June June December 2006 2005 2005 £000's £000's £000's (Decease)/increase in cash in the period (270) (1,263) (516)Cash inflow from increase in debt (643) (103) (78) Change in net debt resulting from cash flows (913) (1,366) (594)Factoring debt acquired - - (286) (913) (1,366) (880)Opening net debt (2,447) (1,567) (1,567) Closing net debt (3,360) (2,933) (2,447)3 Analysis of net debt Other 31 December non-cash 30 June 2005 Cash flow Changes 2006 £000's £000's £000's £000's Cash at bank and in hand 2,405 (270) - 2,135Amounts owed to factors (3,302) (748) - (4,050)Long term LoansDue within one year (225) (20) - (245)Due after one year (1,325) 125 - (1,200) (2,447) (913) - (3,360) 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 2005. 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 2005, 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 2006 with comparative information for the year ended 31 December 2005 and for the 6 months ended 30 June 2005; • Balance sheet as at 30 June 2006 with comparative information at 31 December 2005 and at 30 June 2005; • Cash flow statement for the 6 months ended 30 June 2006 with comparative information for the year ended 31 December 2005 and the 6 months ended 30 June 2005; 2. Dividend The directors do not propose the payment of a dividend for the period. 3. Earnings per share (basic and diluted) Basic earnings per share are calculated by dividing the retained profit for eachperiod by the average number of shares in issue, 22,478,049 (December 2005:20,798,075; June 2005: 20,370,877). Based on current trading conditions, the Directors are of the opinion that therewould be no dilution to the earnings per share figure resulting from subsidiaryminority shareholders trading up. 4. Reconciliation of basic to adjusted EPS 6 Months 6 Months Year ended ended ended June June Dec 2006 2005 2005 pence pence pence Headline EPS 1.0 0.9 3.1 Effect of goodwill amortisation 1.3 0.9 2.6 Effect of exceptional items - - - Adjusted EPS 2.3 1.8 5.7 5. Reconciliation of adjusted profits 6 Months 6 Months Year ended ended ended June June Dec 2006 2005 2005 £ 000's £ 000's £ 000's Operating profit 812 654 1,870Profit before tax 606 508 1,607 Goodwill amortisation 342 241 618Exceptional operating items - - 342 241 618 Exceptional non-operating items - - - Adjusted operating profit 1,154 895 2,488Adjusted profit before tax 948 749 2,225 This information is provided by RNS The company news service from the London Stock Exchange