Final Results

RNS Number : 1445J

Empresaria Group PLC

25 March 2010

EMPRESARIA GROUP PLC PRESS RELEASE

Crawley, UK: 25 March 2010:- Empresaria Group plc, the AIM-quoted international specialist staffing company, today announced its results for the year ended 31 December 2009. After the sharp downturn experienced in the first six months of the year, trading performance has improved and the Group has experienced both an encouraging second half in 2009 and start to 2010.

Revenue decreased by 6% to £195.2m, net fee income was down 20% to £41.4m and adjusted profit before tax reduced by 50% to £3.2m. Adjusted earnings per share reduced from 8.6p to 3.1p, partly due to a higher number of shares in issue.

Net debt improved by £1.1m to £8.0m driven by an improved second half where borrowings reduced by £3.3m.

65% of net fee income in 2009 was generated outside of the UK, up from 59% in 2008.

Empresaria has operations in 17 countries through more than 130 offices and approximately 800 staff.

Chief Executive Miles Hunt commented:

"For the first time in 13 years, our revenue and net fee income reduced. In particular the trading conditions in the first half of the year in Germany, the UK and Japan, our three largest markets, were incredibly challenging.

Overall, however, given difficult market conditions, we delivered a performance for the year which reflects the resilience of our business model - underpinned by our equity ownership philosophy, our focus on temporary staffing operations and a strategy of risk diversification across different sectors and geographies.

Whilst the macro-economic environment remains fragile, we have confidence in our prospects for the current year. In recent months we have experienced a growing demand for both temporary and permanent staffing solutions and since January both revenues and net fee income have been significantly higher than in the same period in 2009. We are encouraged by the progress now being made by operations in emerging markets, particularly in Asia, which are expected to generate a significantly greater contribution to Group profits in 2010. In addition, as with previous market downturns, the demand from clients for the flexibility offered by temporary staffing solutions is strong and we are seeing this reflected in growing temp numbers particularly in the UK and Germany. Although we retain a cautious view of the economic recovery, Empresaria is well positioned to take advantage of the current market trends and the opportunities that they present for our companies."

A presentation of these results will be made to analysts and investors at 9.00am on 25 March 2010 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:

Miles Hunt, Chief Executive, Empresaria Group plc:

01293 649 900

Stuart Kilpatrick, Group Finance Director, Empresaria Group plc:

01293 649 900

Nicholas How, Singer Capital Markets Ltd:

020 3205 5000

Full Stock Exchange announcement follows:

Empresaria Group plc

Preliminary Announcement for the Year Ended 31December 2009

Headlines 2009

Financial headlines

§ Revenues of £195.2m (2008: £207.7m)

§ Gross profit of £41.4m (2008: £51.5m)

§ Adjusted profit before tax* £3.2m (2008: £6.4m)

§ Adjusted operating profit* £4.1m (2008: £7.5m)

§ Adjusted earnings per share* 3.1p (2008: 8.6p)

§ Operating loss of £2.5m (2008: profit of £2.4m)

§ Loss before tax of £3.4m (2008: profit of £1.3m)

§ Loss per share of 12.4p (2008: (4.8p))

§ Group net debt at year end £8.0m (2008: £9.1m)

§ Proposed dividend of 0.35p (2008: 0.35p)

Operational headlines

§ 19% increase in second half net fee income compared to first half (2008: 4%)

§ Decisive action to reduce costs and rationalise business portfolio taken in first half of 2009 resulted in a 15% reduction in administrative costs

§ 80% of gross profit from more resilient temporary staffing

§ Increased focus on specialist divisions in German operations drive improved revenues and margins in second half 2009

§ Growth enjoyed by our Indian, SE Asian, Chinese and UK construction businesses

§ Strong performance from healthcare businesses purchased in 2008

§ Reduction in net debt of £3.3m in second half

*Figures based on underlying profits excluding amortisation of intangible assets and exceptional items. See reconciliation in note 5

Our Business

Financial summary by region

In accordance with our strategy of creating a diversified international specialist staffing business we review the regional performance of our operations, a summary of which is provided below.

UK	Financial highlights	2009	2008

The UK Group provides permanent and temporary staffing solutions across four main sectors; Construction and Property Services, Financial Services, Supply Chain and Other Brands.	Revenue (£m)	75.7	83.6
	Net fee income (£m) ¹	14.8	20.9
	Adjusted operating profit (£m) ²	2.0	3.8
	Number of trading companies	13	18
	Average number of employees	207	281



Continental Europe	Financial highlights	2009	2008

Following the acquisition of headwayholdings GmbH ("Headway") in May 2007, the Group has a significant foothold in the German recruitment market. In addition the Group has interests in companies based in Holland, Finland, Slovakia and the Czech Republic.	Revenue (£m)	84.8	92.1
	Net fee income (£m) ¹	18.9	22.9
	Adjusted operating profit (£m) ²	1.8	3.0
	Number of trading companies	7	13
	Average number of employees	205	278




Rest of the World	Financial highlights	2009	2008

The Group has interests in companies based in Japan, South East Asia, Australia, India, China and South America.	Revenue (£m)	34.7	32.0
	Net fee income (£m) ¹	7.7	7.7
	Adjusted operating profit (£m) ²	0.3	0.7
	Number of trading companies	13	21
	Average number of employees	351	342

¹ Net fee income is equivalent to gross profit

² Figures based on underlying profits excluding amortisation of intangible assets and exceptional items. See reconciliation in note 5

Chairman's Statement

Overview 2009

2009 has been the first year in the thirteen year history of the Group in which revenues and net fee income have declined, reflecting the challenges presented by global economic and market environments faced by the Group during the year. The fact, however, that revenues and margins were maintained at relatively high levels reflects the benefit of our international development programme and the strength of our diversified portfolio of operations.

Group financial performance in 2009 was a tale of two halves. In the first half of the year the focus was on managing the continued decline in demand that had commenced in late 2008. Not all businesses were affected, with some operations in developing economies (such as Indonesia) or in specific market sectors (such as construction infrastructure) continuing to thrive. In the majority of our markets, however, remedial action was necessary, resulting in a 15% reduction in our cost base and underlying operating profits at break even in the first half. In the second half of the year a combination of market stability, with improved trading conditions in some countries and sectors, and a lower cost base resulted in underlying operating profits of £4.1m. More importantly, the recovery experienced in the second half of 2009 reflects a growing momentum within the Group's temporary staffing operations which has continued into the first months of 2010. As enterprises examine the flexibility of their cost base to accommodate new economic challenges and respond quickly to new opportunities, they continue to appreciate the potential value from temporary and outsourced staffing models. This in turn will create opportunities for organisations such as Empresaria that provide entrepreneurial and flexible staffing solutions.

Group strategy

Group strategy, following the move to AiM in late 2004, has been to develop a specialist international staffing group balanced both in terms of sector focus and geographical coverage. This diversification strategy is designed to reduce the impact over time of market volatility and gain access to higher growth economies and staffing markets.

The development programme implemented between 2004 and early 2008 focused on a combination of green field investments in emerging economies, and investments in existing businesses in more developed staffing markets where economies of scale or barriers to entry justified this approach. In each case investments have been made alongside local management teams who have acquired or retained a material equity stake in their business. Empresaria currently operates in 17 countries and has approximately 800 internal staff.

The change in market conditions has generated a change in the development approach, with management and financial resources being concentrated on supporting existing Group businesses. Having planted investment seeds in a number of emerging markets over recent years, we are now concentrating on fulfilling this growth potential. Issuing new shares and raising new funds in May 2009 has allowed the Group to provide increased financial support for our developing operations in countries such as India and Indonesia at the same time as supporting the working capital requirements of staffing operations across the rest of the Group.

Financial performance

Revenues declined in the year by 6% to £195.2m (2008: £207.7m). Net fee income declined 20% to £41.4m (2008: £51.5m). Profit before tax (adjusted for intangible amortisation and exceptional items) reduced to £3.2m from £6.4m in the previous year. The Group incurred exceptional cash expenditure of £1.2m in the year, the bulk of which was booked in the first half of the year as part of a restructuring process. As indicated when reporting on the 2009 interim results, this restructuring process has now been largely concluded and, although we will continue to review our portfolio of operations, unless there is a dramatic deterioration in current market conditions there is no expectation of material restructuring charges in the current year. In a similar vein, the reduction in profitability in a number of Group companies in 2009 and subsequent review of goodwill carrying values has led to goodwill impairment charges of £4.6m. As with cash related restructuring costs, unless there is a material change in circumstances or market conditions, there is no expectation of further goodwill impairment charges in 2010.

Group net borrowings decreased by £1.1m in the year to £8.0m and by £3.3m in the six months to December 2009. The balance sheet is expected to continue to strengthen in 2010 as cash inflows from trading are used to fund working capital requirements and continue to reduce overall Group debt over the full year.

Empresaria people

The challenges faced by the Group in 2009 were reflected in the constant pressure on all of our people who have each had to deal with uncertain and often difficult trading conditions. 2009 was a year of change and of personal challenge and sacrifice. It was also though a year of entrepreneurial flair and endeavour, the benefit of which will be felt in the future. We thank them all for their creativity, forbearance and perseverance in a difficult year.

Current trading and outlook

We have seen an improved trading environment in recent months, although any forward view is clouded by uncertainty as to the macro-economic outlook.

A number of internal indicators suggest that the outlook for Empresaria in 2010 is a positive one. We finished 2009 with strengthening financial performances from all three of our regions. This has been driven by a combination of three key factors: stable and growing temp numbers in the UK and Germany, increased permanent recruitment activity and increased profits from maturing companies in emerging economies. This positive momentum has continued into the first months of 2010 with both revenues and net fee income significantly higher than in 2009 and on a materially lower cost base, giving confidence as to the full year outlook.

Tony Martin

Chairman

24 March 2010

Operating and Financial Review

Group results

The Group, having broken even in the first half, achieved an operating profit for the full year, before exceptional items and amortisation, of £4.1m. Net borrowings reduced by £1.1m over the year, driven by an improved second half where net borrowings reduced by £3.3m.

During the latter part of 2008 and first quarter of 2009, Empresaria experienced a sharp decline in revenues and net fee income and responded quickly to reduce costs and refine its portfolio of businesses. In the second quarter, markets stabilised and we experienced some improvement in trading conditions. The Group has enjoyed increases to net fee income in Q3 and Q4 2009, culminating in an overall increase of 19% (2008: 4%) over the first half. This trend, combined with a lower cost base following the restructuring in the early part of the year, resulted in the strong improvement in profitability.

The Group derives the majority of its revenues from placing people in permanent and temporary positions of employment with its clients. For the placement of permanent staff ("permanent sales"), a one-time fee is charged on commencement of employment; for temporary placements ("temporary sales") the client is charged an hourly or daily rate which includes payroll and associated costs (tax, insurance etc.) borne by the Group plus a profit margin. Gross profit ("net fee income") comprises the gross value of permanent sales plus the profit margin earned on temporary sales.

Overall in the year revenue was 6% lower in 2009 at £195.2m (2008: £207.7m) due to a 4% fall in temporary sales and a 34% decline in permanent sales. A substantial proportion of the Group's business is conducted overseas and after adjusting for movements in exchange rates and changes in the business portfolio, like for like revenues were 11% lower.

Gross profit or net fee income was 20% lower at £41.4m (2008: £51.5m) due to a combination of lower permanent sales, idle time costs incurred in Continental Europe in the first quarter of 2009 and some price pressure on temporary sales margin during the year. After adjusting for movement in exchange rates and changes in the business portfolio, like for like net fee income was 24% lower than previous year.

Gross margin, the ratio of net fee income to revenue, was 21.2% in 2009 (2008: 24.8%). Lower permanent sales gave rise to approximately half of the fall in margin and this combined with idle time in Continental Europe in the first quarter represented the majority of the decrease. Gross margin in the second half of 2009 improved by 1.6 percentage points to 22.0% (1^st half: 20.4%).

Administrative costs, before intangible amortisation and exceptional items, reduced by 15%, or £6.7m, to £37.3m (2008: £44.0m). After adjusting for movements in exchange rates and portfolio changes in the year, the like for like reduction in costs was 17% or £7.4m. Operating profit, adjusted for exceptional items and intangible amortisation, was £4.1m (2008: £7.5m).

Market and Business Overview

Revenues decreased by 9% to £75.7m (2008: £83.6m) and net fee income decreased by 29% to £14.8m (2008: £20.9m). Net fee income showed a far sharper decline than revenues mainly because permanent sales fell by 51% to £4.4m (2008: £8.9m) compared with a 5% reduction in temporary sales, where the gross margin on temporary sales also fell to 14.5% from 16%. As a result, the gross profit percentage for UK operations fell from 25% to 19% and temporary staffing contributed a significantly greater proportion of net fee income (70% of the total in 2009 against 57% in 2008).

At the end of 2008 and in the first quarter to 2009, we acted quickly to reduce the UK cost base. As a result total costs, before intangible amortisation and exceptional items, fell by 25% to £12.8m from £17.1m in 2008. These reductions were achieved largely through lower remuneration costs, rationalising the UK property portfolio and by merging a number of smaller operations. These measures helped the UK Group to an adjusted operating profit of £2.0m which, although down 47% from the 2008 figure of £3.8m, was a significant achievement given difficult market conditions.

Cost reductions have enabled the UK Group to benefit from the somewhat improved market conditions in the second half of the year and have positioned it well for a sustained recovery. From July to December, year on year net fee income fell by 25%, compared with 34% in the first six months. The trend was most noticeable in Q4, where net fee income was 17% down on 2008.

Our Property Services and Engineering Sector performed extremely well in the year, with revenue and net fee income growth driven by a focus on infrastructure work, especially rail and airport projects.

With a marked reduction in permanent sales, most of the other UK operations found market conditions challenging, although almost all delivered an operating profit by the end of the year and look well placed to benefit from improved activity levels in the first months of 2010, with evidence of growing temporary sales and indications of increased demand for permanent staff.

Continental Europe

Revenues decreased by 8% to £84.8m (2008: £92.1m) and net fee income declined 17% to £18.9m (2008: £22.9m). During 2009, the gross margin on temporary sales reduced by 3% to 22% (2008: 25%).

2009 was an unprecedented year in the European staffing industry with rapid and severe revenue declines across most industry sectors. Empresaria's revenues in the region declined in the first half of the year by 14%. These results significantly improved in the second half with revenues in Q4 being up 4% on the same period in 2008 and 8% up on Q3 performance.

The drop in net fee income was driven largely by margin reductions in our core German market, where a combination of pricing pressure and idle time costs incurred in the first quarter of the year reduced percentage gross margins from 24% to 20%. The second half of the year did, however, see margins improving to 24%, with overall gross margin for the year being 22%.

To compensate for the decline in revenues, operating companies reduced their cost base by a total of 15% in local currency terms. Restructuring initiatives did, however, result in one off exceptional costs related to staff redundancy pay.

Our German operations account for approximately 88% (2008: 88%) of Group revenues in Continental Europe. Although a developed economy, the German staffing market is immature, having grown rapidly from a small base since the Hartz reforms to the labour market in 2004. Being relatively under developed compared to other European staffing markets, there is still a predominance of blue collar operations. Our Headway brand operates mainly within the Engineering and Logistics sectors and, as with many German temporary staffing companies, had a proportion of skilled/semi-skilled temporary workers on its books in late 2008. The extended factory closures over the winter of 2008/9 resulted in a dramatic fall in demand for these workers and the consequent need to reduce costs. As with all temporary markets, however, the economic downturn acted as a stimulus for employers to consider the benefits of increasing flexibility within the workforce. Although the German economy has stabilised rather than entered a phase of recovery, the German staffing market and the performance of our Headway operations, particularly in the second half of 2009, have been positive. Revenues generated in the final quarter of 2009 were comparable to those in the same period of 2008 but on a much lower cost base and with a greater proportionate contribution from the specialist divisions and, in particular, from longer term outsourcing contracts. The growth and success of the Headway Logistics operations, specifically in the outsourcing of warehouse management and staffing, have led to the management teams of both Headway and the UK's Logistics operations agreeing to form a joint venture in the UK, to offer a combination of Headway expertise and UK management market knowledge.

Our companies in Holland, Czech Republic and Slovakia were also affected by the change in market conditions. In the former due to a dependency on the Dutch construction sector and a drop in demand for technical temporary staff and in the latter two markets it was due to a predominance of permanent recruitment in the operational mix. There are indications of improved trading in the Czech Republic and Slovakia, although the outlook for the Dutch staffing market, where we have a relatively small presence, remains a concern.

MediradiX, our healthcare staffing operation in Finland and Estonia performed well throughout the year, growing revenues, net fee income and operating profit. The outlook for this business is excellent as the structural scarcity of doctors and dentists in the Nordic region is expected to remain for years to come.

Rest of the World

Revenues increased by 8% to £34.7m (2008: £32.0m) and net fee income remained constant at £7.7m (2008: £7.7m). Temporary sales increased by 9% in the period but the gross margin percentage reduced from 16% to 14% mainly as a consequence of changing the mix of temporary staffing sales with growth from lower margin sectors and operations being offset by declines in higher margin operations.

Reviewing year-on-year comparisons, the results in the Rest of the World region, made up primarily of operations in Asia and South America, have been stable in the face of more difficult market conditions. Looking at our operations in more detail, there were a range of outcomes and company performances in the region as well as a change from dependency on a small number of key markets to a broader portfolio of contributing businesses. In 2008, 64% of regional net fee income was derived from Japan and Chile. In 2009 this reduced to 58% due both to volume declines in these markets caused by market deterioration and to the influence of growing operations in India and SE Asia. Year-on-year comparisons are also skewed by reason of the decision to sell our underperforming People Intelligence business in Australia to the management team in April 2009. This business contributed £0.1m of net fee income in 2009 (2008: £1.1m).

Within our principal regional markets, our Japanese temporary staffing companies (Skillhouse and FINES) were both severely impacted by the downturn in the Japanese IT and Retail markets although there was evidence of more stable trading conditions during the second half of the year. Our Chilean operations, also retail focused, suffered a drop in demand during the first half of the year, although there was evidence of recovery and a return to growth in later months and the outlook for this market, despite considerable disruption caused by the recent earthquake, is positive in 2010.

The compensation for this drop in net fee income came from our growing Indian, SE Asian and Chinese operations. In particular, our Monroe Consulting (executive recruitment) and Learning Resources (corporate training) operations in Indonesia saw strong revenue and profit growth. In the case of Learning Resources, growth was underpinned by a series of new eLearning products launched early in the year. IMS, our Indian operation, both grew revenues in the year and improved profitability through expanding its Recruitment Process Outsourcing operations to cover new markets, including Australia and East Africa. In addition, on the back of demand for its services in the UK, it opened its first overseas branch there in January 2010. Shanghai HR Intelligence, our operation in mainland China, also grew as a result of new HR outsourcing contracts as well as increased demand for permanent staff.

Exceptional items

International Financial Reporting Standards (IFRS) require that items of income and expenditure that are material in terms of their nature or amount be disclosed separately. Such items have been disclosed as exceptional within this report and the Board considers that the information presented in this report provides useful additional information relating to the underlying performance of the Group. This information should not be considered as an alternative but as supplementary to the full IFRS income statement on page 14.

An exceptional charge of £6.3m (2008: £4.8m) comprises £4.6m of impairments to goodwill and £1.7m of redundancy, restructuring and business disposal costs. The annual goodwill impairment review compares the discounted cash flow valuation of a cash generating unit ('CGU') to the carrying value of goodwill. Having carried out sensitivity analysis and taking a medium term view of the markets in which some of our businesses operate, impairments of £1.2m in the UK, £1.3m in Continental Europe and £2.1m in the Rest of the World region have been charged. The impairments primarily relate to our retail business in Tokyo, Japan, the UK Logistics business and EAR in the Netherlands. There are no current year cash outflows in relation to the impairment charge.

Exceptional restructuring costs amounted to £1.1m in the year and these were incurred in the UK and in Continental Europe, primarily in the first quarter of 2009 when the Group reacted quickly to reduce its cost base due to the economic downturn. In addition the Group incurred one-off asset write downs and closure costs of £0.6m as it adjusted its portfolio of businesses to reflect market conditions. Cash spent in the year on restructuring and reorganisation was £1.2m.

Taxation

The total tax charge for the year was £0.8m (2008: £1.8m). Tax on adjusted profits before exceptional items and goodwill amortisation was £1.0m representing an effective rate of 31.3% (2008: 32.8%). This is higher than the standard rate in the UK of 28.0% due to a combination of unrelieved losses and the mix of profits in the different jurisdictions in which the Group operates.

(Loss) / earnings per share

Reported earnings per share from continuing operations, under IFRS, was a loss of 12.4p (2008: (4.8p)). This is due mainly to goodwill impairments which do not attract tax relief or an adjustment for minority interest. To gain a better understanding of underlying performance for the year, the Group also reports earnings per share adjusted for items classified as exceptional and for intangible amortisation. Adjusted earnings per share decreased to 3.1p (2008: 8.6p) due to the lower adjusted profit before taxation and a higher number of shares in issue.

Dividend

During the year the Group paid a dividend in respect of the year ended 31 December 2008 of 0.35p per share. For the year ended 31 December 2009, the Board is proposing a dividend of 0.35p per share which, if approved, will be paid on 16 August 2010 to shareholders on the register on 16 July 2010.

Cash flow

Net borrowings decreased by £1.1m in the year to £8.0m and by £3.3m in the period since 30 June 2009. The cash generated in the second half was due to the operating profit (before exceptional items and goodwill amortisation) and a net reduction in working capital of £1.1m due to a continued focus on debtor collection, with good results at Headway, Germany and Alternattiva, Chile.

The cash outflow from investments during the year comprised £0.4m of deferred consideration in relation to Headway, Germany net of £0.2m cash consolidated on conversion of an associate to a subsidiary.

The Group raised additional cash of £2.7m net of expenses in May 2009 from a share placing which strengthened the balance sheet and ensures that the Group can continue to capitalise on its medium term growth opportunities.

Balance sheet

IAS 8 requires that where a newly issued or modified IFRS does not include transitional provisions, a resultant change in accounting policy must be applied retrospectively. As a result of a modification of IAS 38, which relates to expenditure on promotional and advertising activities, the Group has restated its prior year balance sheets to reflect adjustments to the fair value as at the date of acquisition. The effect of the change of accounting policy is set out in note 7.

Bank facilities

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 £29.4m (2008: £30.2m).

The Group's bank covenant tests at 31 December 2009 were net debt:EBITDA of 1.6 times (covenant < 2.5 times), interest cover of 5.6 times (covenant > 3 times) and debt service cover of 2.1 times (covenant >1.25 times).

Principal risks and uncertainties

The Group has a process that identifies certain risks that could affect business operations and hence the financial results of Empresaria. Further information on this process is set out in the Corporate Governance report in the Group's 2009 Annual Report to be published shortly.

Dependence on key executives and personnel

The Group's future success is substantially dependent on retaining and incentivising its senior management and certain key employees. The loss of the service of key personnel may have an adverse impact on the Group's business and relationships. However, the Group's philosophy of management equity ensures that key management is appropriately incentivised through equity ownership. In addition, as the Group grows and diversifies geographically, its reliance on any one company and the individuals associated with that company reduces.

Operational risks

Empresaria's businesses are highly dependent on IT systems for the day to day running of their operations. As a consequence there is an ongoing review process to ensure that systems are maintained adequately and that repairs and upgrades are made as necessary. It is Group policy that each business has a process in place to protect against potential malicious attacks to its IT systems. In common with many organisations, although preventative procedures are in place, there remains a residual risk of disruption to voice and data infrastructure.

Financial risks

The Group maintains a comprehensive insurance programme with limits and deductibles that are set so as to optimise the total cost of risk borne by the Group. Empresaria works with underwriters and insurance brokers to ensure appropriate cover is in place. As with all businesses there is the risk of failure of financial controls. The Group's internal control framework is set out in the Corporate Governance report in the Group's 2009 Annual Report to be published shortly.

Growth management

The Group's strategy includes investing in new businesses and managing start-ups. This strategy has certain inherent risks and failure to quickly address underperformance in start-up businesses and or acquired businesses may adversely impact results, including the Group's cash flow. Failure to ensure the Group has sufficient senior management resources to manage and control its growth could adversely impact its profitability. The Board regularly assesses the number and suitability of its senior management resources and adapts this resource to the needs of the Group.

Market risks

Political environment

A change in government policy may impact on the level of public spending in the key sectors in which the Group operates. Changes of this nature in the macro-economic environment could adversely affect the financial performance of the Company.

Economic environment

The performance of staffing businesses has historically shown a strong correlation with performance of the economies in which they operate. Empresaria's strategy of diversification within individual geographic markets and its expansion internationally is designed to mitigate the effect of a downturn in any one economy. Nevertheless, a significant global economic downturn, such as we experienced in 2009, has resulted in reduced revenues and profits for the Group.

Legislative change

The Group's business is subject to European, UK and overseas employment legislation. Any changes to this may impact on the manner in which Empresaria conducts its business and could therefore affect the financial performance of the Group.

Currency exposures

The Group operates in 17 countries and is exposed to potential changes in the values of 13 different currencies. The revenues and costs of each of the Group's businesses are typically in the currency of operation and Empresaria has little exposure to transactional risk. The Group's reporting currency is sterling and the results of each business are translated into sterling at average rates for the year. Empresaria does not seek to hedge translation risk as there is to some degree a natural hedge from operating in a wide range of countries.

Treasury risks

The Group operates a central treasury function which manages and monitors external and internal funding requirements and the following treasury risks:

i) Credit risk

ii) Liquidity risk

iii) Market risk

The Group's policies and procedures to manage these risks are set out in the Group's 2009 Annual Report to be published shortly.

Going concern

The Board has undertaken a recent and thorough review of the Group's budget, forecasts and associated risks and sensitivities. Despite the significant 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. Further details on going concern are found in the Group's 2009 Annual Report to be published shortly.

Miles Hunt Stuart Kilpatrick

Chief Executive Group Finance Director

24 March 2010 24 March 2010

Consolidated Income Statement

			2009			2008
	Before intangible amortisation & exceptional items	Intangible amortisation & exceptional items (note 3)	Total	Before intangible amortisation & exceptional items	Intangible amortisation & exceptional items (note 3)	Total
	£m	£m	£m	£m	£m	£m
Continuing operations
Revenue	195.2	-	195.2	207.7	-	207.7
Cost of sales	(153.8)	-	(153.8)	(156.2)	-	(156.2)

Gross profit	41.4	-	41.4	51.5	-	51.5
Intangible amortisation	-	(0.3)	(0.3)	-	(0.3)	(0.3)
Administrative costs	(37.3)	(6.3)	(43.6)	(44.0)	(4.8)	(48.8)

Operating profit / (loss)	4.1	(6.6)	(2.5)	7.5	(5.1)	2.4
Finance income	0.2	-	0.2	0.3	-	0.3
Finance costs	(1.1)	-	(1.1)	(1.3)	-	(1.3)
Share of operating loss from associates	-	-	-	(0.1)	-	(0.1)

Profit / (loss) before tax	3.2	(6.6)	(3.4)	6.4	(5.1)	1.3
Income tax	(1.0)	0.2	(0.8)	(2.1)	0.3	(1.8)
Profit / (loss) for the year	2.2	(6.4)	(4.2)	4.3	(4.8)	(0.5)

Attributable to:
Equity holders of the parent	1.3	(6.3)	(5.0)	3.0	(4.6)	(1.6)
Minority interest	0.9	(0.1)	0.8	1.3	(0.2)	1.1
	2.2	(6.4)	(4.2)	4.3	(4.8)	(0.5)
Loss per share from
continuing operations (pence)			(12.4)			(4.8)

Adjusted earnings per share from
continuing operations (pence)			3.1			8.6

Consolidated Statement of Comprehensive Income

	2009	2008
	£m	£m
Available-for-sale investments: valuation gains taken to equity	-	0.1
Exchange difference on net assets of overseas subsidiaries	(2.5)	4.5
Net (expense) / income recognised directly in equity	(2.5)	4.6
(Loss) for the period	(4.2)	(0.5)
Total recognised income and expense for the period	(6.7)	4.1

Attributable to:
Equity holders of the parent	(7.5)	3.0
Minority interest	0.8	1.1
	(6.7)	4.1

Consolidated BalanceSheet

	2009	2008	2007
	£m	£m	£m
ASSETS		Restated	Restated
Non-current assets
Property, plant and equipment	2.0	2.3	1.9
Goodwill	26.5	31.2	22.6
Other intangible assets	2.7	3.2	2.7
Interests in associates	-	0.1	1.0
Deferred tax assets	0.5	0.5	1.0
	31.7	37.3	29.2

Current assets
Trade and other receivables	28.5	33.3	32.2
Cash and bank balance	4.9	5.7	4.1
	33.4	39.0	36.3
Total assets	65.1	76.3	65.5

LIABILITIES
Current liabilities
Trade and other payables	22.4	26.4	25.5
Current tax liabilities	1.8	2.6	2.1
Short-term borrowings	4.3	5.4	6.2
	28.5	34.4	33.8

Non-current liabilities
Long-term borrowings	8.6	9.4	2.1
Other creditors	0.2	-	-
Deferred tax liabilities	0.6	0.6	0.9
Total non-current liabilities	9.4	10.0	3.0
Total liabilities	37.9	44.4	36.8
Net assets	27.2	31.9	28.7

EQUITY
Share capital	2.2	1.7	1.7
Share premium account	19.4	17.0	16.6
Merger reserve	1.5	1.5	1.5
Translation reserve	3.9	5.6	1.0
Other reserves	(0.7)	0.1	(0.1)
Retained earnings	(1.8)	3.4	5.3
Equity attributable to equity holders of the parent	24.5	29.3	26.0
Minority interest	2.7	2.6	2.7
Total equity	27.2	31.9	28.7

Consolidated Statement of Changes in Equity

	Share capital	Share premium account	Merger reserve	Translation reserve	Other reserves	Retained earnings	Attributable to company share holders	Minority interest	Total equity
Group	£m	£m	£m	£m	£m	£m	£m	£m	£m
Balance at 1 January 2007	1.2	5.2	1.5	-	(0.1)	2.9	10.7	0.8	11.5
Issue of share capital	0.5	11.4	-	-	-	-	11.9	-	11.9
Profit for the year	-	-	-	-	-	2.6	2.6	1.6	4.2
Dividend	-	-	-	-	-	(0.2)	(0.2)	-	(0.2)
Currency translation differences	-	-	-	1.0		-	1.0	(0.1)	0.9
Minorities acquired during the year	-	-	-	-	-		-	0.9	0.9
Dividend paid to minority	-	-	-	-	-	-	-	(0.5)	(0.5)
Balance at 31 December 2007	1.7	16.6	1.5	1.0	(0.1)	5.3	26.0	2.7	28.7
Issue of share capital	-	0.4	-	-	-	-	0.4	-	0.4
Loss for the year	-	-	-	-	-	(1.6)	(1.6)	1.1	(0.5)
Dividend	-	-	-	-	-	(0.2)	(0.2)	-	(0.2)
Currency translation differences	-	-	-	4.6	0.1	-	4.7	-	4.7
Minorities acquired during the year	-	-	-	-	0.1	(0.1)	-	(0.4)	(0.4)
Dividend paid to minority	-	-	-	-	-	-	-	(0.8)	(0.8)
Balance at 31 December 2008	1.7	17.0	1.5	5.6	0.1	3.4	29.3	2.6	31.9
Issue of share capital	0.5	2.4	-	-	-	-	2.9	-	2.9
Loss for the year	-	-	-	-	-	(5.0)	(5.0)	0.8	(4.2)
Dividend	-	-	-	-	-	(0.2)	(0.2)	-	(0.2)
Currency translation differences	-	-	-	(1.7)	(0.8)	-	(2.5)	-	(2.5)
Dividend paid to minority	-	-	-	-	-	-	-	(0.7)	(0.7)
Balance at 31 December 2009	2.2	19.4	1.5	3.9	(0.7)	(1.8)	24.5	2.7	27.2

Consolidated Cash Flow Statement

	2009	2008
	£m	£m

Net cash from operating activities	1.7	3.9

Cash flows from investing activities
Acquisition of new subsidiaries	-	(2.2)
Further shares acquired in existing subsidiaries	(0.2)	(1.6)
Forward contract settlement	-	(2.0)
Loans made to associates	-	(0.8)
Purchase of property, plant and equipment	(0.6)	(0.5)
Finance income	0.2	0.3

Net cash used in investing activities	(0.6)	(6.8)

Cash flows from financing activities
Proceeds from issue of share capital	2.7	-
(Decrease) / increase in borrowings	(2.2)	6.0
Proceeds from bank loan	0.3	-
Payment of bank loan	(0.5)	(0.3)
Finance cost	(1.0)	(1.3)
Dividends paid	(0.2)	(0.2)
Dividends paid to minority shareholders in subsidiary undertakings	(0.7)	(0.8)

Net cash from financing activities	(1.6)	3.4

Net (decrease) / increase in cash and cash equivalents	(0.5)	0.5
Foreign exchange	(0.3)	1.1
Cash and cash equivalents at beginning of period	5.7	4.1

Cash and cash equivalents at end of period	4.9	5.7

Notes to the Consolidated

Financial Statements

Year ended 31 December 2009

1 Basis of preparation and general information

The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2009 or 2008, but is derived from those accounts. Statutory accounts for 2008 have beendelivered to the Registrar of Companies and those for 2009 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 the Companies Act 2006, sections 498.

Accounting policies have been consistently applied throughout 2008 and 2009 with the exception of the changes set out in note 7.

The consolidated financial statements are for the twelve months ended 31 December2009. They have been basedon the company's financial statements which are prepared in accordance with International Financial Reporting Standards as adopted for use in the EU. The results were approvedby the Board of Directors on 24 March 2010.

2 Segment analysis

The segmental results are shown below:

	2009	2008
Revenue	£m	£m
United Kingdom	75.7	83.6
Continental Europe	84.8	92.1
Rest of the World	34.7	32.0
	195.2	207.7

Gross profit
United Kingdom	14.8	20.9
Continental Europe	18.9	22.9
Rest of the World	7.7	7.7
	41.4	51.5

Operating (loss) / profit
United Kingdom	0.5	2.2
Continental Europe	(0.8)	0.4
Rest of the World	(2.2)	(0.2)
	(2.5)	2.4

3 Exceptional Items

	2009	2008
	£m	£m
UK
Loss on businesses disposed or closed	-	1.0
Goodwill impairment	1.2	-
Restructuring costs	0.3	0.5
Aborted acquisition costs	-	0.4
	1.5	1.9

Continental Europe
Loss on businesses disposed or closed	0.3	-
Goodwill impairment	1.3	1.4
Restructuring costs	0.8	0.5
	2.4	1.9

Rest of the World
Loss on businesses disposed or closed	0.3	0.4
Goodwill impairment	2.1	-
Impact of significant legislative changes in Chile	-	0.6
	2.4	1.0

Total	6.3	4.8

3 Exceptional Items (continued)

Following the adoption of IFRS items which, in management's judgement, need to be disclosed separately by virtue of their size or incidence arepresented as exceptional items. This separatepresentation is intended to assist the readerin obtaining a betterunderstanding of the financial information.

In the UK, goodwill impairments of £1.2m were recognised on the supply chain businessesand a permanent recruitment business having takena conservative view on the economic conditions likely to prevail in the medium term. In addition, the UK businesses acted quickly in response to the economic downturn to reduce costswhich resulted in a restructuring and redundancy charge of £0.3m.

In Continental Europe, goodwill impairments of £1.3m were made in respectof EAR (Holland) and in respect of the Group's Eastern European operations, taking a prudent viewof the likelihood ofan economic recovery in their markets. In addition a small business in the Czech Republic was closed. Restructuring costs of £0.8m were incurred in EAR, the Netherlands (£0.4m) and at Headway, Germany (£0.4m),when the Group reduced cost in response to the economic downturn.

In the Rest of the World region, the Group sold to management its search business in Australia and mothballed operations in Singapore. A goodwill impairment of £2.1m related to the retail business in Tokyo, Japan and to the Monroe group of businesses.

4 Dividends

During 2009 Empresaria Group plc paid a dividend of £0.2m to its equity shareholders (2008:£0.2m). This amounted to 0.35 pence per ordinary share (2008:0.35 pence). Afinal dividend is proposedfor the year ended 31 December 2009 of 0.35 pence per ordinary share (2008: 0.35 pence). The proposed dividend is subject to approval by shareholders at the Annual General Meeting andhas not been included as aliability in these financial statements. If approved, the dividend will be paid on 16 August 2010 to membersregistered on 16 July 2010.

5 (Loss) / earnings per share

The calculation of the basic (loss) / earnings per share is basedon the earnings attributable to ordinary shareholders divided by the weighted 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. There is nodifference between basic and diluted earnings per share.

The earnings and weighted averagenumber of shares are set out below.

	2009	2008

Loss after tax attributable to equity shareholders of the parent (£m)	(5.0)	(1.6)
Weighted average number of shares ('000s)	40,623	33,595
Loss per share (pence)	(12.4)	(4.8)


Adjusted earnings per share	2009	2009
	£m	£m
Loss attributable to equity shareholders of the parent	(5.0)	(1.6)
Add back:
Exceptional items	6.3	4.8
Intangible amortisation	0.3	0.3
Tax on intangible amortisation and exceptional items	(0.2)	(0.3)
Minority interest on intangible amortisation and exceptional items	(0.1)	(0.3)
Adjusted earnings	1.3	2.9
Adjusted earnings per share (pence)	3.1	8.6

6 Notes to cash flow

a) Cash flows from operating activities
	2009	2008
	£m	£m

Loss for the year	(4.2)	(0.5)
Adjustments for:
Depreciation	0.9	0.8
Intangible amortisation	0.3	0.3
Taxation expense recognised in income statement	0.8	1.8
Exceptional charges and impairments	6.3	4.8
Cash paid for exceptional items	(1.2)	(1.3)
Share of losses in associates	-	0.1
Net finance charge	0.9	1.0
Increase in invoice discounting	1.7	1.9
Decrease in trade receivables	1.3	1.1
Decrease in trade payables	(3.4)	(4.3)

Cash generated from operations	3.4	5.7
Income taxes paid	(1.7)	(1.8)

Net cash from operating activities	1.7	3.9

b) Components of cash and cash equivalents
	2009	2009
	£m	£m

Cash at bank	4.9	5.7


c) Movement in net borrowings	2009	2009
	£m	£m
As at 1 January	9.1	4.2
Net decrease / (increase) in cash	0.5	(0.5)
Debt acquired on business acquisition	0.7	0.2
Proceeds from bank loan	0.3	-
Loan repayments	(0.5)	(0.3)
(Decrease) / increase in borrowings	(2.2)	6.0
Foreign exchange	0.1	(0.5)
As at 31 December	8.0	9.1

7 Restatement of prior year balancesheets

The Group is presenting a restated prior year balance sheets due to a modification to IAS 38 which states that for periods beginning on or after 1 January 2009 expenditure on advertising and promotional activities should be recognised as an expense. IAS 8 statesthat where a newly modified IAS does not include transitional provisions (which IAS 38 does not) the accounting change must be applied retrospectively. This results in a restatement of prior year balance sheets. As the change in accounting policy results in a change to fair values at the date of acquisition, an adjustment has been made to goodwill, with corresponding changes to other receivables. In addition, the Group has identified that certain liabilities relating to the statutory rights of temporary employees in Chile to holiday pay and termination payments on redundancy werenot accrued in the prior year balance sheet by the local management team. The obligation for these liabilities existed at the dateof the acquisition of Alternativa (Chile). The amount of the unrecorded liability was £0.8 million as at 31 December 2009, 2008, and 2007 respectively. Deferred tax and minority interests were also adjusted

The impact ofrestatement of prior year balance sheets is disclosed below:

	D Goodwill	eferred tax assets	Trade and other receivables	Trade and other payables	Minority interest
31 December 2007 As disclosed	22.0	0.9	32.4	(24.7)	(3.0)
Adjustment	0.6	0.1	(0.2)	(0.8)	0.3
Restated	22.6	1.0	32.2	(25.5)	(2.7)
31 December 2008 As disclosed	30.6	0.4	33.5	(25.6)	(2.9)
Adjustment	0.6	0.1	(0.2)	(0.8)	0.3
Restated	31.2	0.5	33.3	(26.4)	(2.6)

These was no impact of above changes on the consolidated income statement or consolidated cash flow statement.

8 Annualreport and accounts

The annual report and accounts for the year ended 31 December 2009 will be postedto shareholders shortly. Additional copies will be available from the Company