Final Results

RNS Number : 9660D

Empresaria Group PLC

31 March 2011

EMPRESARIA GROUP PLC

Results for the year ended 31 December 2010

Strong performance with growth across all reporting regions

Financial Highlights

	2010	2009 Restated	% change	% change (constant currency)
Revenue	£223.4m	£190.5m	+17%	+14%
Net fee income	£49.0m	£40.6m	+21%	+20%
Operating profit/(loss)	£7.5m	(£1.0m)
Adjusted operating profit	£7.8m	£4.3m	+81%
Profit/(loss) before tax	£6.7m	(£1.5m)
Adjusted profit before tax	£6.8m	£3.5m	+94%
Earnings/(loss) per share	7.0p	(11.6p)
Adjusted earnings per share	6.2p	3.1p	+100%

· 58% growth in permanent revenue

· 15% growth in temporary revenue

· Conversion ratio improved to 16%

· Strong cash generation with cash generated from operations of £8.3m

· Net debt reduced by £1.9m to £6.1m# despite investment of £2m in minority share purchases and investment in working capital for growth

# Net debt, as disclosed in the trading update released on 31 January 2011 was £5.5m, which included an adjustment of £0.6m for cash in transit

Note: Adjusted results exclude amortisation of intangible assets, movements on values of put and call options and exceptional items

Operational Highlights

· Operational focus on strengthening and investing in existing operations as well as adding new capabilities

· NFI growth across all reporting regions

o +31% in Rest of World

o +21% in Continental Europe

o +15% in UK

· Development of incubator concept in Asia with first "hub" established in Singapore with support from four group brands

· Empresaria has operations in 18 countries through more than 100 offices and approximately 900 staff

Tony Martin Chairman commented,

"The Group performed strongly in the year, in line with expectations that were revised upwards on a number of occasions. The focus during 2010 has been on strengthening our operations throughout the world through investment in new capabilities and resources within our existing businesses. This approach has paid dividends in the form of impressive net fee income and profit growth, with revenues and profit before tax in the year exceeding previous highs.

Group operations around the world continue to benefit from broadly positive market environments. Our South East Asia markets have been particularly strong in recent months. The two geographies where we are experiencing some challenges and market uncertainty are Japan and Germany. In the case of Japan, our two trading companies have both been adversely affected by the earthquake and tsunami and we do expect some months of further disruption. In the case of Germany, recent legal challenges to certain collective labour agreements have created some short term market turbulence and gross margin erosion as well as exposed a significant number of staffing companies operating in Germany to possible future claims from third parties.

Forward visibility, as ever, remains somewhat limited but the Group is well positioned to benefit from its exposure to growing markets as well as from its continued investment in people and capabilities."

A presentation of these results will be made to analysts and investors at 9.00am on 31 March 2011 and an edited copy of this will be made available later that morning on the Empresaria Group plc website: www.empresaria.com

For further information contact:

Empresaria Group plc 01342 711430

Miles Hunt, Chief Executive

Spencer Wreford, Group Finance Director

Altium 0207 484 4040

Tim Richardson

Cameron Duncan

Chairman's statement

Overview 2010

The Group performed strongly in the year, in line with expectations that were revised upwards on a number of occasions. The focus during 2010 has been on strengthening our operations throughout the world through investment in new capabilities and resources within our existing businesses. This approach has paid dividends in the form of impressive net fee income and profit growth, with revenues and profit before tax in the year exceeding previous highs.

Group strategy

Group strategy is to continue to develop an international, multi-sector specialist staffing group balanced both in terms of sector and geographical coverage, with an investment focus on developing staffing markets and emerging economies. This combination of diversification and international market focus is designed to mitigate market volatility at the same time as creating greater growth opportunities. Underpinning this strategy is the philosophy of management equity, with operating company management teams investing directly in their own businesses, thereby aligning management and shareholder interests.

Since moving to AiM in late 2004 Empresaria has taken a number of steps in the implementation of this strategy. It has moved from being 100% UK focused to now having only one third of its net fee income generated in the UK, with meaningful exposure to some of the fastest growing staffing markets in the world. The Group has still though some way to go to achieve its strategic objectives. Focus will be on continuing to strengthen and expand our existing brands and capabilities, on re-shaping the Group to increase the contribution from professional staffing operations, and on expanding into new geographies with growth potential.

Financial performance

Revenue for the year grew 17% to £223.4m (2009: £190.5m) and net fee income increased 21% to £49.0m (2009: £40.6m). Profit before tax (adjusted for intangible amortisation and exceptional items) increased 94% to £6.8m (2009: £3.5m). There were no exceptional items in the current year.

Revenue, net fee income and profits grew across all reporting regions. The significant increase in profit contribution from companies operating in Asia reflects the maturing nature of these companies, almost all green field start ups of recent years, and of their future growth potential.

The Group was strongly cash generative in the year such that, despite investments in working capital to support growth and the acquisition of minority shareholdings, reported net debt reduced by £1.9m to £6.1m at the year end (2009: £8.0m).

Dividend

For the year ended 31 December 2010, the Board is proposing a dividend of 0.35p per share (2009: 0.35p per share) which, if approved by shareholders at the Company's Annual General Meeting, will be paid on 15 August 2011 to shareholders on the register on 15 July 2011.

Empresaria people

The number of people working within the Group, across the world, grew in 2010 from 763 to 883 at the year end. Empresaria's success is largely dependent on their efforts and contribution. We recognise the importance of our people and seek to demonstrate this at Group level in a number of ways. These include the promotion of the newly launched International Recruitment MBA programme within the Group and the development of consultant exchange programmes between companies and countries. The board would like to thank them for all of their hard work and achievement in the year.

Current trading and outlook

Chief Executive's operating review

Group results

The Group has delivered a strong performance in the year under review, reporting a 17% increase in revenue to £223.4m, and a 21% increase in net fee income (gross profit) to £49.0m. These results reflect a combination of improved market conditions generally, plus growth in demand for our services in our key staffing markets.

Each of our reporting regions delivered improved performances, most notably the Rest of the World region, where our maturing Asian businesses helped to contribute to a 31% increase in net fee income over 2009. The Asian economies were not as severely affected by the worldwide economic decline in 2009 and our investments over the past five years are now generating material profits. The region continues to be a focus for Group expansion. In January 2011 we opened a new hub office in Singapore which has allowed Group companies to enter this market at a lower cost and risk. At launch there were four brands operating for the first time in Singapore.

Our Continental Europe region also performed well, helped predominantly by the strength of the recovery of the German economy and by growing demand for healthcare workers in Scandinavia. Net fee income in this region grew by 21% to £21.9m (2009: £18.1m).

Growth was more modest in the UK, reflecting the maturity of the staffing market and the relatively poor economic environment. Despite this, net fee income still grew by 15% to £17.0m (2009: £14.8m).

Overall gross margin for 2010 was 22% (2009: 21%). This increase was mainly driven by growth in our permanent revenue, which increased by 58% over 2009 and contributed 26% of Group net fee income (2009: 20%). The Group's temporary revenue increased by 15%, with margins maintained at 18% despite some margin erosion in Germany.

Administrative costs increased by 13% to £41.2m (2009: £36.3m), a lower rate than the increase in net fee income, mainly as a result of higher staff costs, due to performance related commissions and bonuses and the start of investments in headcount to drive future growth in the business.

Cash generated from operations in the year was £8.3m (2009: £3.4m). After accounting for tax and interest, the Group generated free cash flow of £5.1m, with £2.9m used to acquire management equity and fixed assets and £1.1m to pay dividends to shareholders and to holders of minority interests in the subsidiaries. Group net debt reduced to £6.1m at the end of 2010 (2009: £8.0m).

Regional review

United Kingdom

A good performance in the year with net fee income growth of 15%, despite continued economic uncertainty.


£'m	2010	2009
Revenue	81.0	75.7
Net fee income	17.0	14.8
Adjusted operating profit	2.2	2.0
% of Group net fee income	35%	35%

Revenue increased 7% to £81.0m (2009: £75.7m) and net fee income grew by 15% to £17.0m (2009: £14.8m), driven largely by a 41% increase in permanent revenues to £6.2m (2009: £4.4m). As a result, the gross profit percentage for UK operations increased from 19.5% to 21%. Temporary staffing accounted for 64% of net fee income (2009: 70%), reflecting the improved permanent market and a steady temp market. Adjusted operating profit increased by 10% to £2.2m (2009: £2.0m).

The improved market conditions experienced towards the end of 2009 continued in 2010. Growth rates slowed slightly in the second half of the year, largely reflecting the effect of the inclement weather on our Construction and Supply Chain operations.

Our Financial Services business experienced a strong rebound in demand, particularly for permanent positions. Banking and insurance markets performed particularly well and the life and pensions markets recovered after a difficult 2009.

Our Supply Chain operations showed an improved performance on 2009, with both permanent and temporary revenue contributing to a strong increase in net fee income. The medium term outlook for this sector, which is heavily dependent on the retail market, is uncertain and we are reviewing how best to address the challenges that this uncertainty represents.

Our Property Services and Engineering businesses experienced a small reduction in temporary net fee income reflecting lower volumes in publicly sponsored infrastructure work, partially offset by steadily improving permanent revenue.

All businesses in our Other Brands category contributed to net fee income growth in the year, with noteworthy contributions from McCall, reflective of the general recovery in the recruitment to recruitment market and our creative brand, Become, which experienced a strong performance in both its UK and Australian markets.

A number of investments were made by UK businesses outside the UK. At the end of the year our Financial Services brands, LMA and Mansion House, as well as our Recruitment to Recruitment brand, McCall, all commenced operations in our Singapore hub.

Continental Europe

The strength of the German market helped net fee income grow by 21%.


£'m	2010	2009
Revenue	99.4	80.1
Net fee income	21.9	18.1
Adjusted operating profit	3.9	2.0
% of Group net fee income	45%	46%

Revenue increased by 24% to £99.4m (2009: £80.1m) and net fee income by 21% to £21.9m (2009: £18.1m). Some pressure on temporary gross margins resulted in the gross margin declining from 22.3% to 22.0%. Despite this, adjusted operating profit increased 95% to £3.9m (2009: £2.0m).

Our German operations benefitted from improved market conditions, particularly in exporting industries, and continued demand for their services. The staffing industry as a whole proved once more to be a very effective solution to meet the increased demand for skills with most new jobs created being filled by temporary staff.

We experienced growth across all sectors in Germany, particularly within the Logistics and Engineering divisions. During the course of the year we also invested in new Healthcare and Training divisions.

In December 2010 the German federal labour court held that a collective labour agreement applied by a large number of staffing companies operating in Germany, including a number of Headway companies, was invalid. This ruling was published on 25^th February 2011. As a result of this ruling Headway may be subject to claims from temporary workers as well as from the German government. It is not clear at this time whether the ruling will be applied retroactively or how any potential liability could be quantified. For this reason, no provision for any liability has been made. From January 2011 these Headway operating companies have changed to another collective labour agreement which has increased pay for temporary workers and is having a short term impact on gross margins pending renegotiation of billing rates with clients.

Our Healthcare staffing operations based in Finland and Estonia, continued to perform very strongly in 2010, increasing sales, net fee income and profits despite further investment in internal staff, recruitment activities and training. The structural shortage of healthcare staff in Finland is expected to worsen owing to the aging population of existing healthcare specialists.

GIT, our specialist IT, Telecoms and Banking agencies, experienced the recovery in the hard hit economies of the Czech Republic and Slovakia towards the end of the year and are well positioned to benefit from any further economic growth in 2011.

Rest of the World

This region is seeing maturing businesses deliver material profits, with net fee income growth of 31%.


£'m	2010	2009
Revenue	43.0	34.7
Net fee income	10.1	7.7
Adjusted operating profit	1.6	0.3
% of Group net fee income	21%	19%

Revenue increased by 24% to £43.0m (2009: £34.7m) and net fee income increased by 31% to £10.1m (2009: £7.7m). Net fee income from this region represents 21% of the Group total (2009: 19%) and has grown at the fastest rate. For the first time this region contributed materially to Group profitability with adjusted operating profit in the year of £1.6m (2009: £0.3m).

In 2010 all of our Asian operations benefitted from improved market conditions and have shown robust revenue and profit growth.

Our Japanese temporary staffing companies recovered from the downturn that negatively affected the Japanese IT and Retail markets in 2009. Although net fee income growth was modest, profitability strongly improved in 2010 compared to 2009. Trading conditions returned to a more stable situation during the year. The recent earthquake and tsunami in Japan is having a disruptive effect on operations and the overall financial impact will be dependent on the speed of recovery in confidence. In the year to 31 December 2010 Japan accounted for 6% of the Group net fee income. Based on our experience in Chile in 2010, we anticipate several months' disruption in demand before normal business activity resumes. It is still too early to gauge the effect on the wider Japanese economy.

Within the South East Asian region, strong revenue and profit growth continued in 2010, particularly in Indonesia where we benefited from high demand for our executive recruitment and corporate training services.

In the second half of the year we initiated a new incubator concept to support the growth of the Group within the Asian region. The Group's recruitment hub is a shared full service facility that gives all Group companies the opportunity to establish a presence in new pockets of growth at minimum cost. The first hub was launched in January 2011 in Singapore, resulting in four Group brands (three from outside the Asia region) entering the Singapore market.

We continued to invest in the service capabilities and geographic reach of IMS, our Indian operation. The business experienced growth in both its domestic market as well as for its Recruitment Process Outsourcing operations abroad. IMS now services clients in the UK, Australia, the US and in East Africa and offers a range of recruitment and HR related solutions.

Our operations in China also grew revenue, net fee income and profitability as well as headcount, capabilities and coverage. In the second half of 2010 we invested in a new office in Tianjin.

In South America, our retail and telecommunications focused operations were affected by the earthquake in Chile early in 2010. Our office in Concepcion was destroyed and a number of employees and contractors suffered loss of property and possessions. Clients, staff, suppliers and colleagues around the Group all contributed to the recovery effort. Both the Chilean economy and our operations in the country are fully recovered and performing in line with expectations.

Financial review

Revenue and gross profit

Revenue for the year was £223.4m (2009: £190.5m), a 17% increase. Gross profit increased 21% to £49.0m (2009: £40.6m). Gross margin was 21.9% (2009: 21.3%). This is due to a change in the mix of permanent and temporary sales. Permanent sales grew by 58% and accounted for 26% of the gross profit (2009: 20%). Temporary revenue increased by 15%. The margin on temporary revenues was 17.6% (2009: 17.8%).

The proportion of net fee income from non-UK operations remained at 65% (2009: 65%). On a constant currency basis the net fee income increased by 20% over 2009.

Group trading summary

From continuing operations	2010	2009	% change
		Restated
	£m	£m
Revenue	223.4	190.5	17%
Gross profit	49.0	40.6	21%
Administrative costs	(41.2)	(36.3)	13%
Adjusted operating profit	7.8	4.3	81%
Net interest payable and receivable	(1.0)	(0.8)	25%
Adjusted profit before tax	6.8	3.5	94%

The adjusted operating profit and adjusted profit before tax figures exclude exceptional items, intangible amortisation and movements in the values of put and call options.

Operating profit

Administrative costs increased by 13% to £41.2m, mainly due to higher salary and commission costs, following the improved trading performance. Adjusted operating profit was £7.8m, an increase of 81% over the prior year. The conversion ratio improved to 15.9% (2009: 10.6%).

Operating profit, after intangible amortisation and exceptional items was £7.5m (2009: loss of £1.0m). In 2010 there were no exceptional items (2009: £5.0m).

Finance income and costs

Finance income in the year was £0.4m (2009: £0.7m). Bank interest income was £0.1m (2009: £0.2m). Finance costs were £0.8m (2009: £1.2m). Interest payable on invoice discounting and bank loans and overdrafts was £1.1m (2009: £1.0m). There was a net gain of £0.2m from the movement in the fair value of put and call options over minority shares in Group companies (2009: £0.3m).

Taxation

The total tax charge for the year was £2.3m (2009: £0.8m) representing an effective tax rate of 34% (2009: loss before tax). This is unusually high due to a combination of prior year tax charges, unrelieved withholding taxes and the mix of profits in the different jurisdictions in which the Group operates.

Discontinued operations

On 14 April 2010, the Group disposed of EAR Holdings BV ("EAR"), which carried out operations in the Netherlands. A profit of £0.3m arose on the disposal of EAR, being the costs of disposal less the carrying amount of the subsidiary's net liabilities and attributable goodwill. Consideration received was €1, with payments due to the buyer of €175,000. This has been accounted for as a discontinued operation.

Earnings per share

Earnings per share from continuing and discontinued operations was 7.0p (2009: loss of 11.6p).

The Group achieved an adjusted earnings per share of 6.2p (2009: 3.1p). This measure excludes exceptional items and intangible amortisation and provides a better understanding of underlying trading. There were no exceptional items in the year.

There were no movements in the number of shares in issue during the year.

Dividend

During the year the Group paid a dividend of £0.2m in respect of the year ended 31 December 2009, being 0.35p per share. For the year ended 31 December 2010, the Board is proposing a dividend of 0.35p per share which, if approved by shareholders at the Annual General Meeting, will be paid on 15 August 2011 to shareholders on the register on 15 July 2011.

Treasury

The Group maintains a range of facilities appropriate to manage its working capital and medium term financing requirements. At the year end the Group had banking facilities totalling £30.1m (2009: £29.4m).

Bank facilities at 31 December	2010	2009
	£m	£m
Overdrafts, loans and other bank debt	16.5	15.8
Invoice financing facilities	13.5	13.5
Other debt	0.1	0.1
	30.1	29.4

The Group renewed its bank facilities in March 2011. The overdraft facility has increased to £6.1m from £4.8m and is renewable annually, the revolving credit facility has reduced to £6.25m from £7.25m and is for a 5 year term and a new term loan of £3.0m has been provided for 5 years, in addition to the remaining balances of the current term loans which continue to amortise on the same basis as before.

Cash flow

Net borrowings decreased by £1.9m in the year to £6.1m at the year end (2009: £8.0m). There was a cash inflow from working capital movements of £2.2m and a cash outflow on investments of £2.1m, being £1.9m for the acquisition of minority shares in Group companies and £0.2m of deferred consideration for Saleslink in the UK. Tax payments were £2.1m and there were cash outflows of £1.0m on net interest costs and £0.8m on capital expenditure. Dividends payable to minority shareholders represented £0.9m with a further £0.2m of dividend paid to Group shareholders.

Bank facilities

Group net debt decreased from £8.0m at 31 December 2009 to £6.1m at 31 December 2010, as detailed below:

	2010	2009
	£m	£m
Cash at bank and in hand	7.1	4.9
Overdraft facilities	(3.8)	(2.1)
Invoice financing (with recourse)	(0.8)	(1.4)
Bank loans	(8.6)	(9.3)
Leases	-	(0.1)
	(6.1)	(8.0)

The Group's bank covenant tests at 31 December 2010 were net debt:EBITDA of 0.7 times (covenant < 2.5 times), interest cover of 8.6 times (covenant > 3 times) and debt service cover of 3.1 times (covenant >1.25 times). The same covenants apply for the renewed facilities.

Acquisitions

In October 2010 the Group acquired 28% of the shares in FastTrack Management Services (London) Limited for £1.8m. The total consideration is up to a maximum of £2.0m, with contingent consideration of up to £163,000, payable in 2011 if certain performance criteria are met.

The Group has also made payments of contingent consideration for the Saleslink business, acquired in 2009, of £0.2m.

Balance sheet

The Group's net assets as at 31 December 2010 were £29.2m (31 December 2009: £26.9m). The increase was due to higher trade receivables of £2.5m, a decrease in the net debt of £1.9m, a higher deferred tax asset of £0.5m, an increase in the put and call net asset of £0.2m, less an increase in trade and other payables of £2.5m.

Going concern

The Board has undertaken a recent and thorough review of the Group's budget, forecasts and associated risks and sensitivities. Despite the uncertainty in the economy and its inherent risk and impact on the business, the Board has concluded, given the level of borrowings and bank facilities, that 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.

Consolidated Income Statement

		2010	2009
			Restated
	Note	£m	£m
Continuing operations
Revenue	2	223.4	190.5
Cost of sales		(174.4)	(149.9)
Gross profit	2	49.0	40.6
Administrative costs		(41.2)	(36.3)
Operating profit before exceptional items and intangible amortisation		7.8	4.3
Exceptional items		-	(5.0)
Intangible amortisation		(0.3)	(0.3)
Operating profit / (loss)		7.5	(1.0)
Finance income	3	0.4	0.7
Finance costs	3	(1.2)	(1.2)
Profit / (loss) before tax	5	6.7	(1.5)
Income tax	4	(2.3)	(0.8)
Profit / (loss) for the period from continued operations		4.4	(2.3)

Discontinued operations
Profit / (loss) for the period from discontinued operations		0.2	(1.6)

Profit / (loss) for the year		4.6	(3.9)

Attributable to:
Equity holders of the parent		3.1	(4.7)
Non-controlling interest		1.5	0.8
		4.6	(3.9)
Earnings/(loss) per share :
From continuing operations
Basic and diluted (pence)	6	6.5	(7.6)
Adjusted earnings per share (pence)	6	6.4	3.9

From continuing and discontinued operations
Basic and diluted (pence)	6	7.0	(11.6)
Adjusted earnings per share (pence)	6	6.2	3.1

Details of the restatement can be seen in note 9.

Consolidated Statement of Comprehensive Income

	2010	2009
	£m	£m
		Restated

Exchange differences on translation of foreign operations	0.6	(2.5)
Net income / (expense) recognised directly in equity	0.6	(2.5)
Profit / (loss) for the year	4.6	(3.9)
Total comprehensive income / (expense) for the year	5.2	(6.4)



Attributable to:
Equity holders of the parent	3.4	(7.2)
Non-controlling interest	1.8	0.8
	5.2	(6.4)

Details of the restatement can be seen in note 9.

Consolidated Balance Sheet

		2010	2009	2008
	Note	£m	£m	£m
			Restated	Restated
ASSETS
Non-current assets
Property, plant and equipment		1.9	2.0	2.3
Goodwill		26.4	26.5	31.2
Other intangible assets		2.5	2.7	3.2
Interest in associates		-	-	0.1
Deferred tax assets		1.0	0.5	0.5
Call option asset		0.9	0.5	0.8
		32.7	32.2	38.1

Current assets
Trade and other receivables		31.0	28.5	33.3
Cash and cash equivalents		7.1	4.9	5.7
		38.1	33.4	39.0
Total assets		70.8	65.6	77.1

LIABILITIES
Current liabilities
Trade and other payables		25.0	22.3	26.4
Current tax liabilities		1.8	1.8	2.6
Borrowings	7	12.7	4.3	5.4
Put option liability		1.0	0.9	1.4
		40.5	29.3	35.8

Non-current liabilities
Borrowings	7	0.5	8.6	9.4
Other creditors		-	0.2	-
Deferred tax liabilities		0.6	0.6	0.6
Total non-current liabilities		1.1	9.4	10.0
Total liabilities		41.6	38.7	45.8
Net assets		29.2	26.9	31.3

EQUITY
Share capital		2.2	2.2	1.7
Share premium account		19.4	19.4	17.0
Merger reserve		1.5	1.5	1.5
Retranslation reserve		4.1	3.9	5.6
Option reserve		(0.6)	(0.6)	(0.6)
Equity reserve		(1.9)	-	-
Other reserves		(0.6)	(0.7)	0.1
Retained earnings		1.5	(1.5)	3.4
Equity attributable to owners of the company		25.6	24.2	28.7
Non-controlling interest		3.6	2.7	2.6
Total equity		29.2	26.9	31.3

Details of the restatement can be seen in note 9.

Consolidated Statement of Changes in Equity

	Share capital	Share premium account	Merger reserve	Retranslation reserve	Option reserve	Equity reserve	Other reserves	Retained earnings	Non-controlling interest	Total equity
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Balance at 1 January 2008	1.7	16.6	1.5	1.0	-	-	(0.1)	5.3	2.7	28.7
Issue of share capital	-	0.4	-	-	-	-	-	-	-	0.4
Loss for the year	-	-	-	-	-	-	-	(1.6)	1.1	(0.5)
Dividend	-	-	-	-	-	-	-	(0.2)	-	(0.2)
Currency translation differences	-	-	-	4.6	-	-	0.1	-	-	4.7
Recognising option value in equity	-	-	-	-	(0.6)	-	-	-	-	(0.6)
Non-controlling interest acquired during the year	-	-	-	-	-	-	0.1	(0.1)	(0.4)	(0.4)
Dividend paid to non-controlling interest	-	-	-	-	-	-	-	-	(0.8)	(0.8)

Balance at 1 January 2009 (Restated)	1.7	17.0	1.5	5.6	(0.6)	-	0.1	3.4	2.6	31.3
Issue of share capital	0.5	2.4	-	-	-	-	-	-	-	2.9
(Loss) / profit for the year	-	-	-	-	-	-	-	(4.7)	0.8	(3.9)
Dividend	-	-	-	-	-	-	-	(0.2)	-	(0.2)
Currency translation differences	-	-	-	(1.7)	-	-	(0.8)	-	-	(2.5)
Dividend paid to non-controlling interest	-	-	-	-	-	-	-	-	(0.7)	(0.7)
Balance at 31 December 2009 (Restated)	2.2	19.4	1.5	3.9	(0.6)	-	(0.7)	(1.5)	2.7	26.9

Consolidated Statement of Changes in Equity continued...

	Share capital	Share premium account	Merger reserve	Retranslation reserve	Option reserve	Equity reserve	Other reserves	Retained earnings	Non-controlling interest	Total equity
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Balance at 31 December 2009 (Restated)	2.2	19.4	1.5	3.9	(0.6)	-	(0.7)	(1.5)	2.7	26.9
Profit for the year	-	-	-	-	-	-	-	3.1	1.5	4.6
Dividend	-	-	-	-	-	-	-	(0.2)	-	(0.2)
Currency translation differences	-	-	-	0.2	-	-	0.1	-	0.3	0.6
Disposal of subsidiary	-	-	-	-	-	-	-	-	0.1	0.1
Non-controlling interest acquired during the year	-	-	-	-	-	(1.9)	-	-	(0.1)	(2.0)
Dividend paid to non-controlling interest	-	-	-	-	-	-	-	-	(0.9)	(0.9)

Balance at 31 December 2010	2.2	19.4	1.5	4.1	(0.6)	(1.9)	(0.6)	1.5	3.6	29.2

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.

• "Option reserve" relates to the initial recorded value of the liability relating to the put options held by non-controlling interests over the shares in the subsidiary companies net of the initial recorded value of the call options held by the Group over shares held by non-controlling interests.•

• "Equity reserve" represents movement in equity due to acquisition of non-controlling interests under IFRS 3 (2008).

• "Other reserves" represents exchange differences on intercompany long-term receivables which are treated as a net
investment in foreign operations.

• "Retained earnings" represents accumulated profits from incorporation.

Consolidated Cash Flow Statement

		2010	2009
			Restated
	Note	£m	£m

Profit/(loss) for the year		4.6	(3.9)
Adjustments for:
Depreciation		0.8	0.9
Intangible amortisation		0.3	0.3
Taxation expense recognised in income statement		2.3	0.8
Exceptional charges and impairments		-	6.3
Gain on disposal of subsidiary		(0.3)	-
Cash paid for exceptional items		-	(1.2)
Net finance charge		0.8	0.6
Operating cash flows before movement in working capital		8.5	3.8
(Decrease) / increase in invoice discounting		(2.4)	1.7
(Increase) / decrease in trade receivables		(1.5)	1.3
Increase / (decrease) in trade payables		3.7	(3.4)

Cash generated from operations		8.3	3.4
Interest paid		(1.1)	(1.0)
Income taxes paid		(2.1)	(1.7)

Net cash from operating activities		5.1	0.7

Cash flows from investing activities
Further shares acquired in existing subsidiaries		(2.1)	(0.2)
Disposal of subsidiary		(0.2)	-
Purchase of property, plant and equipment		(0.8)	(0.6)
Finance income		0.1	0.2

Net cash used in investing activities		(3.0)	(0.6)

Cash flows from financing activities
Proceeds from issue of share capital		-	2.7
Increase / (decrease) in borrowings		1.8	(2.2)
Proceeds from bank loan		-	0.3
Repayment of bank and other loans		(0.8)	(0.5)
Dividends paid		(0.2)	(0.2)
Dividends paid to non-controlling interest		(0.9)	(0.7)

Net cash from financing activities		(0.1)	(0.6)

Net increase / (decrease) in cash and cash equivalents		2.0	(0.5)
Effect of foreign exchange rate changes		0.2	(0.3)
Cash and cash equivalents at beginning of period		4.9	5.7

Cash and cash equivalents at end of period	7	7.1	4.9

1 Basis of preparation and general information

The financial information has been abridged from the audited financial information for the year ended 31 December 2010.

The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2010 or 2009, but is derived from those accounts. Statutory accounts for 2009 have been delivered to the Registrar of Companies and those for 2010 will be delivered following the Company's Annual General Meeting. The Auditors have reported on those accounts; their reportswere unqualified, did notdraw 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 2009 and 2010.

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 May 2011.

2 Segment analysis

The revenue and profit before taxation are attributable to the Group's one principal activity, the provision of staffing and recruitment services, and can be analysed by geographic segment as follows. The Group's reportable segments are business units based in different geographic regions. Each unit is managed separately with local management responsible for determining local strategy.

Information reported to the Group's Chief Executive for the purpose of resource allocation and assessment of segment performance is based on profit or loss from operations before amortisation of intangible assets and exceptional items.

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

Year ended 31st December 2010	UK	Continental Europe	Rest of the World	Total
	£m	£m	£m	£m
Revenue	81.0	99.4	43.0	223.4
Gross profit	17.0	21.9	10.1	49.0
Adjusted operating profit*	2.2	3.9	1.7	7.8
Operating profit	2.2	3.7	1.6	7.5
* Adjusted operating profit represents operating profit before exceptional items and intangible amortisation

Year ended 31st December 2009 (Restated)	UK	Continental Europe	Rest of the World	Total
	£m	£m	£m	£m
Revenue	75.7	80.1	34.7	190.5
Gross profit	14.8	18.1	7.7	40.6
Adjusted operating profit	2.0	2.0	0.3	4.3
Operating profit / (loss)	0.5	0.7	(2.2)	(1.0)

3 Finance income and cost

	2010	2009
	£m	£m
		Restated
Finance income
Bank interest receivable	0.1	0.2
Movement in put option liability	-	0.5
Movement in call option assets	0.3	-
	0.4	0.7

Finance cost
On amounts payable to invoice discounters	(0.3)	(0.3)
Bank loans and overdrafts	(0.8)	(0.7)
Movement in put option liability	(0.1)	-
Movement in call option assets	-	(0.2)
	(1.2)	(1.2)
Net finance cost	(0.8)	(0.5)

4 Taxation

	2010	2009
	£m	£m
Current taxation

Current tax	(2.4)	(0.8)
Adjustment to tax charges in respect of previous periods	(0.3)	(0.1)
	(2.7)	(0.9)
Deferred tax	0.4	0.1

Total income tax expense in the income statement	(2.3)	(0.8)

5 Reconciliation of adjusted profit before tax to profit before tax

	2010	2009
	£m	£m
		Restated

Profit/(loss) before tax	6.7	(1.5)
Amortisation of intangibles	0.3	0.3
Exceptional items	-	5.0
Movement in put option liability	0.1	(0.5)
Movement in fair value of call option assets	(0.3)	0.2
Adjusted profit before tax from continuing operations	6.8	3.5

6 Earnings/(loss) 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. Based on current trading conditions, the Directors are of the opinion that there would be no dilution to the earnings per share figure resulting from subsidiary minority shareholders trading up. A reconciliation of the earnings and weighted average number of shares used in the calculations are set out below.

a) From continuing and discontinued operations

	2010	2009
	£m	£m
		Restated
Earnings
Earnings/(loss) attributable to equity holders of the parent	3.1	(4.7)
Adjustments :
Exceptional items	-	6.3
Gain on business disposal	(0.3)	-
Movement in Put option liability	0.1	(0.5)
Movement in fair value of Call option asset	(0.3)	0.2
Amortisation of intangible assets	0.3	0.3
Tax on exceptional items and intangible amortisation	-	(0.2)
Non-controlling interest in intangible amortisation and exceptional items	(0.1)	(0.1)
Earnings for the purpose of adjusted earnings per share	2.8	1.3

Number of shares	millions	millions
Weighted average number of shares - basic and diluted	44.6	40.6

Earnings/(loss) per share
Basic and diluted	7.0	(11.6)
Adjusted earnings per share	6.2	3.1

b) From continuing operations

	2010	2009
	£m	£m
		Restated
Earnings
Earnings/(loss) attributable to equity holders of the parent	3.1	(4.7)
Adjustments to exclude (profit)/loss from discontinued operations	(0.2)	1.6
Earnings from continuing operations for the purpose of basic and diluted earnings per share	2.9	(3.1)
Adjustments :
Exceptional items	-	5.0
Movement in Put option liability	0.1	(0.5)
Movement in fair value of Call option asset	(0.3)	0.2
Amortisation of intangible assets	0.3	0.3
Tax on exceptional items and intangible amortisation	-	(0.2)
Non-controlling interest in intangible amortisation and exceptional items	(0.1)	(0.1)
Earnings for the purpose of adjusted earnings per share	2.9	1.6

Number of shares	millions	millions
Weighted average number of shares - basic and diluted	44.6	40.6
Earnings/(loss) per share
Basic and diluted	6.5	(7.6)
Adjusted earnings per share	6.4	3.9

7 Financial liabilities

a) Borrowings	2010	2009	2008
	£m	£m	£m
Current
Bank overdrafts	3.8	2.1	2.6
Amounts related to invoice financing	0.8	1.4	2.2
Current portion of bank loans	8.1	0.8	0.6
	12.7	4.3	5.4

Non-current
Bank loans	0.5	8.5	8.6
Other loan creditors	-	0.1	0.8
	0.5	8.6	9.4
Total financial liabilities	13.2	12.9	14.8

b) Movement in net borrowings	2010	2009	2008
	£m	£m	£m
As at 1 January	(8.0)	(9.1)	(4.2)
Net increase/(decrease) in cash and cash equivalents	2.0	(0.5)	0.5
(Increase)/decrease in loans	(1.0)	1.6	(5.7)
Decrease in invoice financing	0.5	0.8	-
On acquisition of business	-	(0.7)	(0.2)
On disposal of business	0.3	-	-
Currency translation differences	0.1	(0.1)	0.5
As at 31 December	(6.1)	(8.0)	(9.1)

c) Analysis of net borrowings	2010	2009	2008
	£m	£m	£m

Financial liabilities - borrowings	(13.2)	(12.9)	(14.8)
Cash and cash equivalents	7.1	4.9	5.7
As at 31 December	(6.1)	(8.0)	(9.1)

8 Dividends

	2010	2009
	£000	£000
Amount recognised as distribution to equity holders in the period :
Final dividend for the year ended 31 December 2009 of 0.35 pence (2008 : 0.35 pence) per share	156	153

Proposed final dividend for the year ended 31 December 2010 is 0.35 pence (2009 : 0.35 pence) per share	156	156

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.

9 Prior year restatement

Following a review of the Group's accounting for the put and call arrangement relating to the Headway acquisition the accounting for the option arrangement has been amended with a restatement of the prior year amounts. Under the revised accounting treatment the Group has recognised a put option liability arising from the put options held by minority shareholders over the shares in subsidiary companies. The amount of this liability is reviewed at each period end and adjusted to reflect the amount that is considered will become payable to the minority shareholders based on the terms of the put option. The debit arising from the initial recognition of the put option liability has been taken to reserves with the subsequent movement in the liability being recognised in finance income/(expense). The put option liability has not been discounted as any adjustment to the liability would not be material. Under the revised accounting the Group has also recognised the fair value of the call option asset, being the fair value of the call option held by the Group over shares held by minority interest shareholders. The fair value has been established based on the terms of the call option using a Black Scholes option pricing model. The credit arising from the initial recognition of the call option asset has been taken to reserves with the subsequent movement in the fair value of the asset being recognised in finance income/(expense).

The impact of the restatement as of the following dates and for the financial periods ended on those dates is summarised below.

		Finance income	Finance cost	Call option asset	Put option liability	Option reserve	Retained earnings
31 December 2008
As disclosed	£m	(0.3)	1.3	-	-	-	(3.4)
Adjustment	£m	-	-	0.8	(1.4)	0.6	-
Restated	£m	(0.3)	1.3	0.8	(1.4)	0.6	(3.4)

		Finance income	Finance cost	Call option asset	Put option liability	Option reserve	Retained earnings
31 December 2009
As disclosed	£m	(0.2)	1.0	-	-	-	1.8
Adjustment	£m	(0.5)	0.2	0.5	(0.9)	0.6	(0.3)
Restated	£m	(0.7)	1.2	0.5	(0.9)	0.6	1.5

The impact of the restatement on earnings/(loss) per share is as below:

31 December 2009		Continuing operations	Continuing and discontinued operations
Basic and diluted
As disclosed	(pence)	(8.4)	(12.4)
Adjustment	(pence)	0.8	0.8
Restated	(pence)	(7.6)	(11.6)