Welcome to the Empresaria Group plc Interim Results Investor Presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged, and they can be submitted at any time using the Q&A tab situated on the right-hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question received during the meeting itself and will not be answering questions regarding the offer. The company can review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I would like to submit the following poll. I would now like to hand you over to CEO Rhona Driggs. Good morning.
Thank you. Good morning. Thank you all for joining us this morning for our interim results presentation. I'll take a few minutes to walk you through some key financial metrics for the first half and provide a bit of color behind the numbers. We saw a return to growth in net fee income in half one, underpinned by steady, progressive improvement across the half. On a constant currency like-for-like basis, net fee income was up 0.1% year-on-year. Modest growth, but an encouraging signal, particularly given macro pressures in some of our markets. The headline growth was driven by strong performance in our core operations, most notably the U.S., which delivered a 38% year-on-year increase in net fee income, alongside offshore services, who performed well with net fee income up 11%. These gains helped more than offset a 9% decline in the U.K., which remains a difficult operating environment.
Importantly, we delivered year-on-year growth in Q2 with net fee income up 2%. This reversed the 1.9% decline we saw in Q1, bringing us back into positive territory for the half overall. On a sequential basis, Q2 net fee income was 7% higher than Q1. This is a particularly important trend to highlight, as it shows that momentum is improving as we move through the year. On a reported basis, net fee income declined by 8% to GBP 23.4 million. This was primarily due to foreign exchange headwinds and the impact of strategic business exits earlier in the year, which we previously communicated. Excluding these factors, the underlying operational picture is much more positive. We are also seeing clear benefits from our continued cost control and operational efficiency efforts. Adjusted operating profit grew 55% on a constant currency like-for-like basis and 70% on a reported basis, reaching GBP 1.7 million.
As a result, our adjusted diluted loss per share reduced to GBP 0.008, an improvement year-on-year. Our net debt stood at GBP 16.1 million at the end of the half, up from GBP 15.3 million at December 31, 2024. This increase was mainly due to adverse foreign exchange movements. In summary, while the market conditions remain mixed, we're encouraged by the directional improvements we're seeing, especially in our core operations. The combination of improving momentum and tight cost control has allowed us to deliver stronger profitability in H1, and we believe this sets a solid foundation for continued progress in the second half. Now, let's turn to our strategic and operational progress for the period. We delivered a resilient performance despite continued macroeconomic headwinds. These challenges remain across many of our markets, but our underlying execution and strategic focus have allowed us to gain some momentum.
In offshore services, we've made continued progress in diversifying both our service offering and our client base. This is an important lever for us in accelerating growth and improving the resilience of the business over time. We're focused on evolving from single-service relationships to more comprehensive solutions and expanding into higher-value verticals. In our core U.K. and U.S. businesses, we've prioritized investments to drive future performance. We've delivered comprehensive sales training through a leading external provider, designed not only to boost individual performance but to also embed a consistent, structured sales methodology across these core markets. Our brand transformation remains on track for launch by the end of the year. This is a significant initiative that will strengthen our market positioning and streamline the client and candidate experience. It also supports a clearer, unified identity across these markets.
We've also invested in modern communication platforms to improve the effectiveness of our outreach, enhancing how we both engage with clients and candidates. Finally, on non-core asset divestments, we're progressing well with a number of active processes and ongoing discussions with interested parties. Overall, we remain firmly on track and executing against our strategy. While market conditions vary by region, our investment priorities are clear and our operational actions are supporting improved performance. I'll now turn it over to Tim to walk you through the financial review.
Thanks, Rhona. Just looking at the income statement overall, Rhona has covered off most of the key figures on here. Just to note that revenue was up 3% on a constant currency like-for-like basis, and that reflects strength, particularly in some of our commercial operations where they're high in revenue but low in margin. Also to highlight within adjusted operating profit, if you look at the split between core and non-core, we've seen some extremely strong growth within core, and that's across all of the core operations we've seen profit improvement, although we have seen across non-core some reductions in those, which we'll talk through in more detail in a moment. Just touching on net debt, net debt did increase slightly during the period. That does include a significant adverse foreign exchange movement, particularly on our cash balances in India.
As an average, actually, our net debt was fairly stable through the period. You can see the average was GBP 15.1 million. Headroom is also stable at GBP 3.7 million, and we do continue to have significant cash in overseas entities that we could access should we need to, albeit at a time that does come with a withholding tax cost. Net finance costs were unchanged despite that high net debt. Efficiencies in how we manage cash under lower interest rates have offset the higher average debt position compared to the prior year. Looking at the businesses individually, in the U.K., overall net fee income was down 9%. We did see some permanent placement improvement, up quite significantly, 31% higher, but it's too early to say whether this is a positive trend.
Of course, permanent placement and FI falls have been one of the big drivers of the challenges in the staffing market over the last couple of years. Temporary contract did fall down 19%, and we saw a key client move into an MSP relationship last year, and that has flowed through to a reduction in worker numbers for our operation. Costs have been extremely well controlled with significant reductions in overheads, and as a result, although we've still made a small loss in the U.K., that is much reduced from the previous year. Moving on to the U.S., we've seen very good growth in the first half. Net fee income up to 38%, driven by healthcare. That's been the main driver of growth in revenue and net fee income. We have been investing in our sales capacity, particularly in our IT and professional operations.
That is meaning we're starting to see some good early momentum in the pipelines, and that improvement in net fee income offset slightly by that investment means losses have reduced in the first half of the year. Moving on to offshore, as Rhona said, net fee income is up 11% on a constant currency like-for-like basis. Adjusted profit is also up strongly, now at GBP 3.2 million for the first half of the year. We have seen some pressure on pricing. As you can imagine, the wider recruitment market remains challenging for a lot of the clients of this operation. There is pricing pressure, but we have seen the weakening of the Indian rupee against GBP and USD more than offset that.
Cost controls have been very strong, although we continue to invest in sales, and we did receive a government subsidy payment that came through the first half of the year that was late but hadn't been recognized in previous years. That's had a benefit on our cost base as well. Together, those have supported some very strong profit growth in the first half, which is up 28% constant currency. Moving on to the non-core operations, we did see some revenue growth here, which was reflecting the lower margin, high volume commercial operations. Net fee income itself did drop by 7% on a constant currency like-for-like basis. Mixed results across commercial, as I say, we did see some really strong growth in Chile and Peru. Net fee income across those as a combined group up 25%. However, Germany and Austria remain challenging, and net fee income there fell by 13%.
Our IT and professional operations in Asia have seen challenging market conditions, and when we spoke in March, we talked about a bit of a lag between Asia versus Europe and the U.S. in terms of those market changes. That's still coming through in Asia, and we've seen sort of a 20% fall in net fee income in our operations there. Our niche businesses did have a solid first half, net fee income up 3% and some fairly consistent performance there. Cost controls have been strong across the group, and that remains the case in non-core as well. That reduced the impact of the overall drop in net fee income or profits, which were down GBP 0.7 million- GBP 1.5 million. I'll hand back to Rhona for a summary.
In summary, we've delivered a resilient performance, particularly given the ongoing challenges in the external environment. A key highlight for the period was the return to net fee income growth in Q2, led by our core operations, especially in the U.S. and offshore. This was accompanied by strong year-on-year growth in operating profit, reflecting both improved top-line performance and disciplined cost control. We've made solid progress on our accelerated strategy, which we announced in February. Targeted investments in our core businesses are now starting to generate positive momentum, particularly in terms of sales capability, brand positioning, and technology enablement. In parallel, our non-core asset sales process is progressing well, with multiple active discussions underway. It is important to note that broader signs of market recovery remain limited. We are not seeing any sustained uplift in demand across the wider recruitment market.
As a result, we're maintaining a clear focus on improving performance within the current environment. In summary, we're encouraged by the progress made so far in H1, both operationally and strategically, and we believe we are well positioned to continue delivering improved performance in the second half, even as external conditions remain mixed. This concludes the formal part of the presentation, and we will now turn it over for questions.
That's great, Rhona. Tim, thank you very much indeed for your presentation. Ladies and gentlemen, please do continue to submit your questions using the Q&A tab situated on the top right corner of your screen. While the company takes a few moments to review those questions submitted today, I would like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A, can be accessed via your investor dashboard. Rhona, Tim, as you can see, we have received a number of questions throughout today's presentation. If I may now hand back to you and kindly ask you to read out the questions where appropriate to do so, I'll pick up from you both at the end. Thank you.
There’s not a huge number of questions, but the first one is asking about the fact that the U.K. remains challenging, and what do we feel we need to do to return that business to profitability?
I'll take that, and Tim, feel free to add in here, but we are very close. I think the U.K. has made some really good progress despite the headwinds in the market. We are continuing to invest in sales teams here in the U.K. and to potentially expand into a few other areas that we are currently not in that are seeing some decent growth.
Another question is just asking about whether there's any further upside from cost optimization initiatives, particularly in non-core. We've done quite a lot on costs across the group, but I would say that we're doing that to manage those businesses in response to the market and the trailing pitches in front of them. I wouldn't suggest there's a huge amount more we're actively trying to do now unless the market changes, because really what we want to make sure is that those businesses are well positioned to grow as and when the market conditions improve. I wouldn't suggest that we're actively trying to take more costs out unless, of course, the market takes a turn for the worst, in which case that is what we'd look at. Rhona, I don't know if you want to add anything else.
No, I think you covered it all.
That really, I think, is everything.
Yes, Rhona, Tim, thank you very much indeed for addressing those questions from investors today. The company can review your questions submitted today, and we'll publish those responses on the Invest in the Company platform. Rhona, before I redirect investors to provide you with their feedback, which I know is particularly important to the company, could I please just ask you for a few closing comments?
If I just think in closing, I want to thank everyone for their time today and, again, pleased to report that we're making some solid progress.
Fantastic, Rhona, Tim. Thank you once again for updating investors today. Could I please ask investors not to close this session, as you will now be automatically redirected to provide your feedback in order that the board can better understand your views and expectations. This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of Empresaria Group plc, we would like to thank you for attending today's presentation, and good morning to you all.