Companies: EMR   

According to a recent report from the Ernst & Young ITEM Club, the UK’s economy would be a lot weaker had we not benefited from an influx of immigrant workers from EU accession countries (such as Poland) since 2004. In fact, the economic forecaster believes that interest rates would be as much as 0.5 per cent higher had we not let these workers in. That fewer than 300,000 new workers (less than one per cent of the working population) have had such a significant effect on our economy over such a short period illustrates how important it is for organisations to be able to hire workers as soon as they need them.

Empresaria Group is a recruitment business that understands this. It runs a collection of operations that focus on specialised sectors, from lorry drivers and maintenance workers to insurance clerks and butlers, aiming to find the right people to fill both temporary and permanent positions.

The group, which is quoted on AIM, supplies recruitment services to five distinct markets: financial services; supply chain; construction, property services and engineering; public sector; and ‘specialised brands’. By operating in a number of different markets Empresaria reduces the risk of being exposed to any one sector, while benefiting from the growth that can be achieved by focusing on niche and emerging recruitment markets.

In the medium-to-long term, Empresaria’s plan is to develop an international staffing group with revenues distributed across a range of economies. It has already made a start by moving into the US, Australia and the Far East. ‘Going abroad is just an extension of that strategy of growth and managing risk,’ says chief executive Miles Hunt.

Hunt is particularly excited about Empresaria’s move into Japan, where temporary staffing is still an immature market even though it grew from virtually nothing in the late 1990s to being two-thirds the size of the UK’s temporary staffing market in 2003.
Recent results show the group increased its turnover last year to £54.1 million, with income of £5.7 million from acquisitions masking organic revenue growth of 10.6 per cent. Adjusted pre-tax profits came in 60.1 per cent greater at £2.2 million, which translated to earnings per share of 6.5p (2004: 4.6p). But the dividend was increased only to 0.45p per share from 0.4p a year earlier. The dividend is paid, says Hunt, to demonstrate that the group is cash generative but ‘first and foremost we’re a growth company’.

The consensus forecast for this year shows that earnings are set to increase by around 12 per cent to 7.2p per share, putting the company on a price-to-earnings rating of 14.6. This is fair for an AIM-quoted recruitment business, but significant earnings growth is set to take place in 2007 when Empresaria is expected to report EPS of 9p – which would be an increase of 25 per cent. Buy for the long term.