Final Results

RNS Number : 9792R

Impellam Group plc

11 May 2009

 



PRELIMINARY RESULTS
FOR THE PERIOD ENDED 31 DECEMBER 2008

Impellam Group plc ('Impellam' or 'the Group') announces its preliminary results for the period ended 31 December 2008. 

Financial highlights - pro forma basis

• Turnover up 9.7% to £1,070.0 million (December 2007: £975.3 million)

• Gross profit up 1.7% to £189.6 million (December 2007: £186.3 million)

• Operating profit, before exceptional items and amortisation of intangible assets, £11.9 million (December 2007: £15.5 million)

• Operating loss £2.4 million (December 2007: loss £3.4 million)

• Net debt reduced to £61.8 million (December 2007: £63.3 million)

• Adjusted earnings per share of 16.1p (December 2007: 30.5p)**

Financial highlights - statutory basis 

• Turnover up 87.1% to £755.6 million (year ended 31 March 2008: £403.8 million)

• Gross profit up 76.1% to £131.9 million (year ended 31 March 2008: £74.9 million)

• Operating profit, before exceptional items and amortisation of intangible assets, £8.8 million (year ended 31 March 2008: £3.8 million)

• Operating loss £3.8 million (March 2008: profit £2.2 million)

• Adjusted earnings per share of 10.7p (year ended 31 March 2008: 12.1p)**

Operational highlights - pro forma basis

• Merger of Carlisle and CSG completed. Impellam now one of the largest UK quoted staffing business as measured by net fee income.

• Merger synergies of £10.3 million identified and implemented.

• Annualised cost base entering 2009 is £20.0 million lower than the cost base entering 2008.

• Positive cash generation from operations, and net debt reduced.

Recruit Event Services Limited update

• Discovery of accounting irregularities in Recruit Event Services Limited dating back to the start of 2007.  Investigation completed and increased central control being introduced.

Desmond Doyle, Chief Executive Officer of Impellam, commented: 

'Considering the extraordinary economic conditions in our key markets of the USA and UK I believe these are solid results. The business rationale for the merger of Carlisle and CSG has not changed and we continue to review our portfolio of businesses to ensure we have a strong focused Group well placed to benefit when the economic environment improves.'

** before exceptional items and the amortisation of intangible assets

For further information please contact:

Impellam Group plc
Desmond Doyle, Chief Executive Officer	Tel: [phone]
Andrew Burchall, Group Finance Director	Tel: [phone]
Naomi Stuart, Marketing and Communications Manager	Tel: [phone]
Cenkos Securities plc (Nominated Advisor and Broker to Impellam)
Nicholas Wells	Tel: [phone]
Beth McKiernan	Tel: [phone]
Threadneedle Communications
John Coles	Tel: [phone]
Josh Royston	Tel: [phone]

Notes to Editors:

Impellam Group plc, listed on AIM, has operations in the UK and the USA, as well as smaller operations in Australia, Ireland, New Zealand and Switzerland. The Group operates across a broad range of staffing sectors and is complemented by businesses in the outsourced support services sector.  

Overview 2008

The year just ended saw the formation of Impellam Group plc ('Impellam' or 'the Group') through the merger of The Corporate Services Group plc ('CSG') and Carlisle Group Limited ('Carlisle'). The merger has created one of the largest UK quoted staffing businesses as measured by net fee income, and also a Group with a diverse portfolio of brands which are well placed to capitalise on opportunities in their respective market places.  

In the UK, Impellam has a presence in each of the eleven staffing sectors identified by the Recruitment and Employment Confederation and also operates in the support services market place where the longer term nature of the contracts offer better visibility in earnings and some resilience to the economic cycle.  Impellam also has a sizeable geographic presence in North America across a number of industry verticals.

Reflecting the extraordinary economic conditions which we are seeing in our two largest geographical markets, the Board continues to review the businesses in its portfolio, at both a strategic and a tactical level, to ensure that each of them have the longer term plans and vision together with management teams and structures capable of delivering profitable growth and the creation of shareholder value.  This has resulted in a number of changes in organisation and management in 2008 and we expect this review to continue throughout the first half of 2009. The Board is confident that, when complete, these changes will result in a stronger more focused Group which is better positioned to face the economic and market challenges that the rest of this year is expected to bring. 

Recruit Event Services

As we announced on 16 April 2009, accounting irregularities dating back to the start of 2007 have been identified, post merger, in respect of Recruit Event Services Limited, a business within our Support Services segment. This business provides stewarding and ancillary services to sporting and entertainment venues in the UK. These irregularities relate to the overstatement of revenues and associated billed and unbilled receivables over a sustained period. The circumstances around the overstatement have been independently investigated and the business restructured and reorganised under new senior management and increased central control is being introduced. The investigation is complete and provisions amounting to £6.5 million have been made against revenues and associated billed and unbilled receivables of which £2.4 million falls in the pro forma period to 31 December 2007. This amount is slightly higher than expected at the time of our initial announcement.

Strategy

Integration

A key feature of the merger was the limited overlap in markets in which we operate. As we reported at the interim stage, our initial focus was to remove the duplication in our customer offering in the Healthcare and Commercial staffing business segments in the UK. More recently, the integration focus has been on the merger of the two former head offices and the rationalisation, where appropriate, of back office systems and processes and consequent reduction in staff numbers. Substantial progress has been made in this area with the former Carlisle head office vacated completely and all support staff now housed in one location. The integration has allowed the Group to reduce the cost base, on a pro forma basis by £10.3 million of which £2.6 million was delivered in 2008. An exceptional charge of £5.7 million has been incurred in the period, relating principally to the elimination of duplicated roles together with provisions for vacated space and redundant assets.

Improved operational performance

Towards the end of 2008, and in common with a number of our competitors, we saw a marked tightening in the recruitment market place. The traditionally strong finish to the year in a number of our businesses was not as marked as we would have normally expected. Accordingly, we instigated a cost reduction exercise across the Group and further reduced our cost base by £6.2 million. An exceptional charge of £2.4 million was incurred in this exercise, again related to the elimination of roles and the vacation of surplus office capacity. This programme of rationalisation will continue through the first half of 2009 as we better align the business to the market opportunities that exist. 

On a pro forma basis, the conversion ratio (defined as the conversion of gross profit into operating profit) was 6.3% in 2008, a decrease from 8.3% in 2007. Given the operational and synergy savings identified, our mix of business and our strategic intent to target more specialist business, the Board believes that over the medium term there is scope to increase the conversion ratio significantly to approach levels of performance more in line with our peer group. This will continue to be a key objective for Impellam as the newly combined Group looks to the future.

Portfolio

A key aim of the Board is to reduce Group indebtedness to more normal commercial levels through the disposal of non-core businesses. At the interim stage, we had identified a number of businesses within our portfolio for possible disposal. Only where we are able to achieve suitable valuations for these businesses which the Board believe to be in the best interests of shareholders will a disposal be pursued.  Our attention is on ensuring that all businesses within our portfolio are managed to deliver profitable growth and are capable of delivering a superior return to shareholders.

Vision

It continues to be the Group's longer term intention to increase both the number of sectors and the geographies in which it operates. The merger which created Impellam was driven in part by this rationale.  Impellam will seek to manage its portfolio of brands to respond to these trends by looking to expand operations through planned investment in people and brands, particularly in the healthcare and specialist professional & technical markets. In time this will be accompanied by acquisitions where the Group sees opportunities at sensible valuations.  To this end, Medacs acquired a small permanent placement business in Australia in December 2008 to take advantage of the increased internationalisation of medical recruitment.

Statutory financial information

The statutory results of the Group comprise the results of Impellam from incorporation, Carlisle for three quarters of the year and CSG from the date of acquisition.  The comparative financial information represents the unaudited 12 months period of Carlisle for the year ended 31 March 2008. These comparative figures include an adjustment of £3.3 million to restate them for the accounting irregularities identified with Recruit Event Services relating to the overstatement of revenues and associated billed and unbilled receivables.

On a statutory basis, Group turnover for the period ended 31 December 2008 increased by 87.1% to £755.6 million (year ended 31 March 2008: £403.8 million). Overall gross profit increased 76.1% to £131.9 million (year ended 31 March 2008: £74.9 million), with the Group's gross profit margin reduced at 17.5% (year ended 31 March 2008: 18.5%).  Administrative expenses, including normal charges for depreciation and amortisation but before amortisation of intangibles arising from the fair values attributed to CSG customer relationships and exceptional items, increased by 73.1% to £123.1 million during the period (year ended 31 March 2008: £71.1 million). 

After deducting these expenses, the resulting operating profit, before amortisation of intangibles and exceptional items, increased by £5.0 million to £8.8 million (year ended 31 March 2008: £3.8 million). After deducting net exceptional items of £9.9 million (year ended 31 March 2008: £1.6 million), reflecting professional costs in relation to the merger and the costs of the transition and integration, and amortisation of intangibles relating to CSG's customer relationships of £2.7 million (year ended 31 March 2008: £nil ), the loss before interest and taxation was £3.8 million (year ended 31 March 2008: profit of £2.2 million). Once net finance expense of £4.0 million (year ended 31 March 2008: £1.0 million) and taxation of £1.0 million (year ended 31 March 2008: £nil) have been deducted the loss for the period was £8.8 million (year ended 31 March 2008: profit of £1.2 million). The adjusted earnings per share was 10.7p (year ended 31 March 2008: 12.1p); the unadjusted loss per share was 25.0p (year ended 31 March 2008: earnings of 5.2p).

Pro forma financial information

To enable a more meaningful comparison to be made, the financial information included in this report incorporates certain unaudited pro forma income statement, balance sheet and cash flow information for Impellam as if the merger of Carlisle and CSG had taken place on 1 January 2007 rather than in May 2008. 

This unaudited pro forma information is provided in order to give shareholders a clearer indication of the underlying trading of the newly formed Group rather than purely statutory information which includes the results of Impellam from incorporation, Carlisle for three quarters of the period and CSG from the date of acquisition. Further reference should be made to note 1 'Pro forma information'.

Pro forma financial results for the year to 31 December 

Although operated independently, the UK staffing brands have been aggregated, for reporting purposes into: 

• Commercial;

• Professional & Technical; and

• Healthcare

These reflect common attributes, either in the nature of the candidates and clients, or in the manner in which they conduct business. The table below sets out the pro forma results for the Group by segment, excluding amortisation and exceptional items, for the full year of 2008 with comparisons against the full prior year.

Group results - pro forma basis	Turnover			Gross profit			Operating profit
£'million	2008	2007	% change*	2008	2007	% change*	2008	2007
UK Staffing - Commercial	457.4	407.4	12.3	77.0	75.0	2.5	6.8	6.3
UK Staffing - Professional & Technical	177.1	151.4	17.0	33.1	31.9	3.8	2.1	3.0
UK Staffing - Healthcare	143.9	110.1	30.7	22.3	19.1	16.8	5.8	3.8
US Staffing	175.8	187.8	(13.2)	35.9	37.7	(11.7)	0.7	4.7
Support services	116.9	119.3	(2.0)	21.3	22.6	(5.9)	1.4	3.5
Intercompany revenue	(1.1)	(0.7)		-	-		-	-
	1,070.0	975.3	9.7	189.6	186.3	1.7	16.8	21.3
Central costs							(4.9)	(5.8)
Operating profit before amortisation of intangibles and exceptional items							11.9	15.5
Amortisation of intangibles							(2.7)	-
Exceptional items							(11.6)	(18.9)
Operating loss							(2.4)	(3.4)

* measured in local currency

On a pro forma basis, Group turnover for the year ended 31 December 2008 increased 9.7% to £1,070.0 million (December 2007: £975.3 million). Overall gross profit on a pro forma basis increased 1.7% to £189.6 million (December 2007: £186.3 million), with the Group's gross profit margin reduced on last year at 17.7% (December 2007: 19.1%). This reduction in gross profit margin, in part, reflects a change in the mix of temporary and permanent recruitment.  Permanent placements accounted for 14.8% of the Group's gross profit in 2008, (December 2007: 16.8%). The reduction in permanent placement business was particularly noticeable in our professional markets and across the majority of our businesses in quarter four.  The gross profit margin on our temporary business has also reduced slightly as our balance has moved away from the traditional high street market place into more longer term professional and technical assignments. 

Administrative expenses, including normal charges for depreciation and amortisation but before amortisation of intangibles arising from the fair values attributed to CSG customer relationships and exceptional items, increased 4.0% to £177.7 million (December 2007: £170.8 million). During 2008 the Group saw its cost base increase initially, reflecting the full year impact of acquisitions made during 2007 together with planned investment in headcount.  This was followed by a reduction in quarter three as costs were removed following the merger and also in quarter four as the cost base was further rationalised in the face of our key markets tightening.  Consequently we entered 2009 with an annualised cost base some £20.0 million lower than we started 2008, even after taking into account the adverse impact of the strengthening US dollar. After deducting these expenses, the resulting operating profit, before amortisation of intangibles and exceptional items, decreased by £3.6 million to £11.9 million (December 2007: £15.5 million). 

After deducting net exceptional items of £11.6 million (December 2007: £18.9 million), largely attributable to professional costs relating to the merger of £2.8 million, the costs of transition and integration of £8.1 million, as well as amortisation of intangibles relating to CSG's customer relationships of £2.7 million (December 2007: £nil), the loss before interest and taxation was £2.4 million (December 2007: £3.4 million). Once net finance expense of £5.6 million (December 2007: £6.6 million), which includes an exceptional charge of £0.4 million (December 2007: £0.9 million), and taxation of £1.0 million (December 2007: credit of £1.0 million) have been deducted the loss for the period was £9.0 million (December 2007: £9.0 million). The adjusted earnings per share was 16.1p (December 2007: 30.5p); the unadjusted loss per share was 25.5p (December 2007: 25.5p).

Cash flow 

On a pro forma basis, the net cash generated by operations in the year was £18.0 million (2007: £14.3 million) reflecting the operating result, before exceptional items, for the year.  

After net interest payments of £4.4 million (2007: £6.1 million), tax paid of £0.6 million (2007: £0.6 million), net acquisition cost of £4.4 million (2007: £2.7 million), dividends of £4.0 million (2007: £3.0 million), and net capital expenditure of £6.2 million (2007: £5.1 million), net cash outflow in the year amounted to £1.5 million (2007: inflow £0.4 million). After the impact of foreign exchange on the Group's US indebtedness, net debt reduced by £1.5 million to £61.8 million (December 2007: £63.3 million).

Days' sales outstanding at 31 December 2008, which is our principal working capital measurement, decreased 1.9 days to 38.3 days (2007: 40.2 days). This reflects a continued focus on cash collection and debtor management. Both of the staffing businesses which merged to form Impellam had strong cash collection protocols and this ethos has continued with Impellam. It remains a key focus of the Board to monitor and maintain DSO and to ensure that cash collection and credit risk is managed properly throughout the organisation.   

UK Staffing - Commercial

Our Commercial staffing segment includes those staffing brands that operate in the main clerical and industrial markets through a network of branches.  The principal brands include ABC Contract Services (construction), Blue Arrow (catering, managed services, office and industrial), Carlisle Managed Solutions and Tate (office). Following the merger, the former Carlisle Recruit Employment Services brand was combined with the Blue Arrow business allowing us to remove duplication of branches and management structures so significantly reducing the cost base of the combined businesses.  

The pro forma results for this segment are as follows: 

Year ended 31 December	2008	2007	Growth
	£m	£m	%
Turnover	457.4	407.4	12.3
Gross profit	77.0	75.0	2.5
Administrative expenses	70.2	68.7	2.1
EBIT**	6.8	6.3	6.5
Gross profit percentage %	16.8%	18.4%
EBITDA return on sale %	1.9%	2.1%
Conversion ratio (EBIT as a % of Gross Profit)	8.8%	8.5%
Permanent fees % GP	17.6%	19.7%

 ** before exceptional items and the amortisation of intangible assets

Overall turnover in this segment increased 12.3% to £457.4 million in 2008 (December 2007: £407.4 million) reflecting the annualised effect of wins in our on-site and managed services businesses. This change in business mix, coupled with a reduction in permanent placements, which accounted for 17.6% of gross profit (2007: 19.7%), is reflected in the lower gross profit margin percentage of 16.8% (2007: 18.4%). Gross profit has increased by 2.5% to £77.0 million (December 2007: £75.0 million).  

The impact of the weakening UK economy was evident with the traditional seasonal strength in quarter four not being seen. As a result, the business segment saw a year-on-year reduction in gross margin in quarter four after year-on-year growth in each of the other three quarters of the year. Of particular note was the impact on our managed services business of the contraction in UK car manufacturing and also the impact on our catering business as discretionary spend was curtailed. 

Administrative costs were well controlled, increasing by only 2.1% to £70.2 million (December 2007: £68.7 million). In the second half, costs were reduced and we entered 2009 with a cost base, on an annualised basis, some £12.0 million lower than we entered 2008.  As market conditions have deteriorated, headcount has been actively reduced and costs are being closely controlled with a focus on maintaining, and where possible, improving conversion. Operating profit for the segment was £6.8 million, a marginal increase from £6.3 million in the comparable period in 2007 with a conversion ratio of 8.8% (2007: 8.5%).

UK Staffing - Professional and Technical

Our Professional & Technical staffing segment comprises the following principal brands: Celsian (education); Chadwick Nott (legal); Hewitson Walker (accounting); Indigo City (banking); IRC (Ireland); S.Com (technical); and SRG (scientific).  

Year ended 31 December	2008	2007	Growth
	£m	£m	%
Turnover	177.1	151.4	17.0
Gross profit	33.1	31.9	3.8
Administrative expenses	31.0	28.9	7.2
EBIT	2.1	3.0	(29.0)
Gross profit percentage %	18.7%	21.1%
EBITDA return on sale %	1.7%	2.5%
Conversion ratio (EBIT as a % of Gross Profit)	6.4%	9.4%
Permanent fees % GP	33.8%	41.2%

Overall turnover in the segment increased 17.0% to £177.1 million in 2008 (December 2007: £151.4 million) principally reflecting contract wins in our S.Com business. Gross profit increased 3.8% to £33.1 million (December 2007: £31.9 million) with permanent recruitment accounting for 33.8% of gross profit in the year (2007: 41.2%). 

As 2008 progressed the markets for our legal, banking and accounting businesses have become increasingly tougher. Quarter four in particular saw real challenges as the full impact of the UK banking crisis began to be felt. However our education, technical and scientific businesses have continued to show underlying resilience driven by longer term contracts with organisations operating in less cyclical markets. 

Administrative costs in the segment have increased 7.2% to £31.0 million (December 2007: £28.9 million). This reflects planned investment to support the growth we have seen in our technical business, particularly in the aviation sector, partially offset by reductions in costs in our professional brands as we have downsized to better match the volume of permanent activity in the market place.  Accordingly, the segment has seen operating profit reduce by 29.0% to £2.1 million (December 2007: £3.0 million). The conversion ratio within this segment has also reduced to 6.4% from 9.4%.  

UK Staffing - Healthcare

Our Healthcare staffing segment comprises Medacs (doctors, nursing, international recruitment and managed healthcare) and Chrysalis Care (domiciliary care). These operations are under the direction of a single focused management team with synergies from the merger already delivered in the form of people, IT applications and locations.  

Year ended 31 December	2008	2007	Growth
	£m	£m	%
Turnover	143.9	110.1	30.7
Gross profit	22.3	19.1	16.8
Administrative expenses	16.5	15.3	7.6
EBIT**	5.8	3.8	54.1
Gross profit percentage %	15.5%	17.3%
EBITDA return on sale %	4.3%	3.8%
Conversion ratio (EBIT as a % of Gross Profit)	26.1%	19.8%
Permanent fees % GP	4.6%	7.2%

 ** before exceptional items and the amortisation of intangible assets

Overall turnover in the sector increased 30.7% to £143.9 million in 2008 (December 2007: £110.1 million) driven by continued strong demand for healthcare professionals in general. Medacs was successful in retaining its position on the new National Framework for locum doctors which commenced on 1 July 2008 and was also successful in securing a place on the framework agreements for nursing and allied health professionals which were retendered in the second half of the year. In the domiciliary care business, the combination of the Celsian business with Chrysalis has delivered synergy benefits, particularly in the front office application and candidate databases. 

Gross profit in this segment increased 16.8% to £22.3 million in 2008 (December 2007: £19.1 million). However, the gross profit margin percentage has declined from 17.3% to 15.5% reflecting not only continued pressure on margins within the framework environments but also increasing pay rates to temporary medical staff.  

Permanent placement remains a significant opportunity to expand the healthcare business, particularly to facilitate candidate movement from overseas. In December 2008 we completed the purchase of Qantum Recruitment; an Australian business with a focus on permanent placement, particularly in the doctor market place. Through this acquisition, we have already been able to capitalise on our UK doctor locum data base, one of the largest in the industry, to maximise the placement opportunities that exist in the Australasian market place. Permanent placements represented 4.6% of gross profit in 2008 (2007: 7.2%). It is our intention to increase this percentage.  

After deduction of costs of £16.5 million (December 2007: £15.3 million) operating profit was £5.8 million (December 2007: £3.8 million), a 54.1% increase on the same period in 2007. The resultant conversion ratio has increased to 26.1% (2007: 19.8%).

US Staffing

This segment, which comprises all of Impellam's North American interests consists of: Corestaff (clerical, office and industrial), Guidant (on-site vendor neutral), S.Com (technical), Specialty Services Group (IT) and SRG Woolf (scientific). The management of these operations has been brought under a new country CEO, Jim Boone, who joined the Group in January 2009.  

Year ended 31 December	2008	2007	Growth in local currency
	£m	£m	%
Turnover	175.8	187.8	(13.2)
Gross profit	35.9	37.7	(11.7)
Administrative expenses	35.2	33.0	(1.3)
EBIT**	0.7	4.7	(85.6)
Gross profit percentage	20.4%	20.1%
EBITDA return on sale %	0.9%	2.9%
Conversion ratio (EBIT as a % of Gross Profit)	2.0%	12.3%
Permanent fees % GP	6.2%	5.6%

** before exceptional items and the amortisation of intangible assets

Overall turnover in the segment reduced 13.2%, as measured in local currency, to £175.8 million in 2008 (December 2007: £187.8 million) with gross profit reducing 11.7%, as measured in local currency, to £35.9 million (December 2007: £37.7million).

These reductions, which started in quarter two and became increasingly pronounced in quarter four, reflect the impact of the continued weakness in the US economy which has principally been felt by the more traditional Corestaff businesses.  Consistent with trends seen all year, whilst we did not experience contract losses and we continued to win new business, our existing client base progressively reduced the volume of its temporary staffing requirements in response to weakness in their own market places. Only our Guidant business, which principally serves the more resilient utility sector, has seen an increase in gross profit. This change in mix together with an increase in permanent placements which accounted for 6.2% of gross profit (2007: 5.6%) is reflected in our gross profit margin percentage which improved to 20.4% (December 2007: 20.1%).

Administrative costs decreased by 1.3%, as measured in local currency, as we continued to review and adjust our cost base in response to the reductions in volume which we saw in the year.  Changes made in quarter four mean that the cost base of this business segment, on an annualised basis as measured in local currency, was approximately 15% lower entering 2009 than it was entering 2008.  Underlying operating profit of the segment reduced to £0.7 million (2007: £4.7 million). The conversion ratio was 2.0% (2007: 12.3%). 

Our new CEO is undertaking a review of the organisation structure of the business in order to better position it for the increasingly difficult market conditions expected in the future, through significantly reducing its cost base whilst retaining its geographic and market sector coverage. The costs of this reorganisation will be taken in the first half of 2009.  

Support services 

The Support services segment, which is entirely UK based, comprises the Carlisle (cleaning and security), Comensura (vendor neutral procurement) and the Recruit (retail merchandising and events) businesses. 

Accounting irregularities dating back to the start of 2007 have been identified, post merger, in respect of Recruit Event Services Limited. This business provides stewarding and ancillary services to sporting and entertainment venues in the UK. These irregularities relate to the overstatement of revenues and associated billed and unbilled receivables over a sustained period. The circumstances around the overstatement have been independently investigated and the business restructured and reorganised under new senior management and increased central control is being introduced. The investigation is complete and provisions amounting to £6.5 million have been made against revenues and associated billed and unbilled receivables of which £2.4 million falls in the pro forma period to 31 December 2007. 

On 28 May 2008 the Group sold its 50% interest in a loss making manned guarding security joint venture in Ireland, Carlisle Security Plus, for a nominal consideration to the joint venture partner. The loss on disposal amounted to £0.6 million. 

Year ended 31 December	2008	2007	Growth
	£m	£m	%
Turnover	116.9	119.3	(2.0)
Net fee income	21.3	22.6	(5.9)
Administrative expenses	19.9	19.1	4.3
EBIT**	1.4	3.5	(60.8)
Gross profit percentage	18.2%	19.0%
EBITDA return on sale %	1.7%	3.3%
Conversion ratio (EBIT as a % of Gross Profit)	6.5%	15.7%

** before exceptional items and the amortisation of intangible assets

Overall turnover for the segment was slightly down at £116.9 million in 2008 (December 2007: £119.3 million). There were a number of contract wins in the year. Our cleaning business was successful in winning new business at a number of UK airports creating a successful new sector for that business although profitability took some time to come through due to start up costs. Comensura has also added a number of new clients, both in the private and public sectors during the year as well as successfully renewing the majority of its existing contracts.  It was also successful in winning its first contract in Australia which went live at the start of 2009. Only in the retail merchandising business did we see a reduction in turnover as a direct result of weakness in the UK retail sector as consumers limit spending. As noted above, accounting irregularities in the Events business also adversely impacted 2008 earnings. Net fee income reduced by 5.9% to £21.3 million (December 2007: £22.6 million) with the gross profit percentage dropping to 18.2% (December 2007: 19.0%).  

Administrative costs in this segment increased by 4.3% to £19.9 million (December 2007: £19.1 million) reflecting planned up front investments in Comensura and Cleaning to support new business.  Accordingly, operating profit has decreased to £1.4 million (December 2007: £3.5 million). The conversion ratio is 6.5% (2007: 15.7%). 

Board

The Board of Impellam underwent a number of changes during the period. Cheryl Jones joined the Board in August 2008, initially as a Non-executive Director and then in November 2008 took over as Chairman from Kevin Mahoney who stepped down to be a Non-executive Director. John Rowley also became a Non-executive Director in October 2008 having previously been Group Development Director. Richard Bradford and Adrian Carey both left the Board in July 2008, the former stepping down as Chief Operating Officer, and the latter as a Non-executive Director. Following these changes the Board is now confident that it has the necessary people in place with the requisite skills to deliver on the Group's strategy. 

Current Group trading and prospects

Trading in the first quarter of the year has been in line with the Board's expectations. Whilst revenues are below the prior year, particularly in permanent placements and, to a lesser extent temporary placements the actions that have been taken to reduce the cost base mean that operating profit for the first quarter is in line with the same period last year. 

Whilst visibility of revenues is limited in any recruitment business, the Board believes that the breadth of the Impellam portfolio provides the Group with a degree of trading resilience. In addition, the reductions in the cost base, both as a result of the merger and subsequent actions, which have been achieved to date and which will be enacted in the first half, will provide some further protection to earnings if trading weakens further.

Desmond Doyle    

Chief Executive Officer

8 May 2009

Consolidated income statement For the year ended 31 December 2008		Unaudited Pro forma basis
		12 months	12 months
		2008	2007
	Notes	£ m	£ m
Continuing operations
Revenue	2	1,070.0	975.3
Cost of sales		(880.4)	(789.0)
		_________	_________
Gross profit		189.6	186.3
Administrative expenses (including exceptional items)		(192.0)	(189.7)
		_________	_________
Operating loss	2	(2.4)	(3.4)
Operating profit before amortisation and exceptional items		11.9	15.5
Amortisation of customer relationships		(2.7)	-
Exceptional items	3	(11.6)	(18.9)
		_________	_________
Operating loss		(2.4)	(3.4)
Finance income	4	0.5	0.5
Finance expense	4	(5.7)	(6.2)
Exceptional finance expense	3	(0.4)	(0.9)
		_________	_________
Loss before taxation		(8.0)	(10.0)
Taxation		(1.0)	1.0
		_________	_________
Loss for the period		(9.0)	(9.0)
		_________	_________

(Loss)/earnings per share - basic	5
Unadjusted		(25.5)p	(25.5)p
Adjusted		16.1p	30.5p

Consolidated balance sheet		Statutory	Unaudited Pro forma basis
At 31 December 2008		31 December	31 December
		2008	2007
		£ m	£ m
Non-current assets
Property, plant and equipment		8.6	10.0
Goodwill		59.9	83.7
Other intangible assets		55.0	3.0
Deferred tax asset		4.0	1.3
Financial assets		4.8	4.8
		_________	_________
		132.3	102.8
		_________	_________
Current assets
Trade and other receivables		185.4	189.5
Deferred tax asset		0.3	0.2
Cash at hand and in bank		11.3	8.3
		_________	_________
		197.0	198.0
		_________	_________
Total assets		329.3	300.8
		_________	_________
Current liabilities
Trade and other payables		147.5	141.2
Taxation liabilities		0.3	0.6
Bank overdrafts and other short-term borrowings		51.5	39.6
Derivative financial instruments		0.5	0.1
Provisions		6.3	-
Deferred taxation liability		1.0	2.0
		_________	_________
		207.1	183.5
		_________	_________
Net current assets		(10.1)	14.5
		_________	_________
Non-current liabilities
Long-term borrowings		21.6	32.0
Other liabilities due in greater than 1 year		2.0	1.3
Provisions		8.4	1.2
Deferred taxation liability		15.0	-
		_________	_________
		47.0	34.5
		_________	_________
Total liabilities		254.1	218.0
		_________	_________
Net assets		75.2	82.8
		_________	_________

Consolidated cash flow statement For the year ended 31 December 2008		Unaudited Pro forma
		12 months	12 months
		2008	2007
		£ m	£ m
Cash flows from operating activities
Loss before taxation		(8.0)	(10.0)
Adjustments for non-cash items:
Net interest charge		5.2	5.7
Exceptional finance expense		0.4	0.9
Depreciation of property, plant and equipment		3.7	3.1
Amortisation of licences		1.4	1.6
Impairment of goodwill		-	19.1
Amortisation of customer relationships		2.7	-
Loss/(profit) on disposal of subsidiary		0.6	(0.2)
Loss on disposal of property, plant and equipment		0.6	-
Share based payment charge		0.1	0.4
Loss/(gain) on disposal of investments		0.1	(0.1)
Non-cash impact of exceptional items		2.3	-
		_________	_________
		9.1	20.5
Increase/(decrease) in trade and other receivables		16.7	(32.4)
(Decrease)/increase in trade and other payables		(6.8)	27.3
Decrease in provisions		(1.0)	(1.1)
		_________	_________
Cash generated by operations		18.0	14.3
Taxation paid		(0.6)	(0.6)
		_________	_________
Net cash generated by operating activities		17.4	13.7
		_________	_________
Cash flows from investing activities
Costs associated with acquisition of CSG		(2.5)	-
Acquisition of subsidiaries (net of cash acquired)		(1.9)	(3.1)
Purchase of property, plant and equipment		(3.8)	(3.6)
Purchase of intangible assets		(2.4)	(1.6)
Proceeds from sale of property, plant and equipment		-	0.1
Proceeds from sale of subsidiary		-	0.4
Decrease in other financial assets		0.4	0.2
Finance income received		0.4	0.3
		_________	_________
Net cash utilised on investing activities		(9.8)	(7.3)
		_________	_________

Consolidated cash flow statement For the year ended 31 December 2008		Unaudited Pro forma
		12 months	12 months
		2008	2007
		£ m	£ m
Cash flows from financing activities
Purchase of own shares		-	(0.3)
Net movement in other long-term borrowings		(10.9)	(2.4)
Net movement in short-term borrowings		10.8	6.4
Capital element of finance lease payments		(0.2)	(0.3)
Finance expense paid		(4.8)	(5.6)
Exceptional finance expense		-	(0.8)
Dividends		(4.0)	(3.0)
		_________	_________
Net cash outflow from financing activities		(9.1)	(6.0)
		_________	_________
Net (outflow)/inflow in cash and cash equivalents		(1.5)	0.4
Opening cash and cash equivalents		5.9	5.5
Foreign exchange gains on cash and cash equivalents		4.2	-
		_________	_________
Closing cash and cash equivalents		8.6	5.9
		_________	_________

Notes to the consolidated financial statements - pro forma 

For the year ended 31 December 2008 

1              Pro forma information

In order to enable a more meaningful comparison to be made the Directors have included certain unaudited pro forma financial information and have commented on these pro forma results. This incorporates unaudited pro forma income statement, balance sheet and cash flow information for Impellam as if the merger of Carlisle and CSG had taken place on 1 January 2007 rather than in May 2008. 

The unaudited pro forma results and cashflows in this section therefore reflect the results of Impellam, Carlisle and CSG as though they merged on 1 January 2007. The comparatives have been shown on a similar basis.

This treatment does not reflect the requirements of IAS 1, Presentation of Financial Statements, IAS 27, Consolidated and Separate Financial Statements and IFRS 3, Business Combinations and have been included in addition to the statutory information prepared in accordance with the note above.  

The unaudited pro forma financial information has been prepared for illustrative purposes only, through the aggregation of statutory and internal management financial information of Carlisle and CSG which has otherwise been prepared in accordance with IFRS. It has not been designed to, and nor does it, give a presentation of the income statement and balance sheet of the Group that would have been reported in accordance with IFRS had the combination actually taken place on 1 January 2007.

The current year financial information presented in the income statement and cash flow statement represents the full twelve month period from 1 January 2008 to 31 December 2008 for the combined businesses, the comparative financial information similarly represents the twelve month period from 1 January 2007 to 31 December 2007 for the combined businesses, all as if the business combinations had taken place on 1 January 2007.

2    Segment information

Geographic segments

Year ended 31 December 2008

	Unaudited - Pro forma basis
Continuing operations	United Kingdom & Europe	United States	Operations Total	Corporate costs  - UK	Group Total
	£ m	£ m	£ m	£ m	£ m
Segment revenue	894.2	175.8	1,070.0	-	1,070.0
	_______	_______	_______	_______	_______
Result
Segment result before depreciation,  amortisation and exceptional items	19.9	1.5	21.4	(4.9)	16.5
Depreciation *	(2.8)	(0.4)	(3.2)	-	(3.2)
Amortisation of software	(1.0)	(0.4)	(1.4)	-	(1.4)
	_______	_______	_______	_______	_______
Segment result / operating profit/(loss) before amortisation and exceptional items	16.1	0.7	16.8	(4.9)	11.9
Amortisation of customer relationships	(1.3)	(1.4)	(2.7)	-	(2.7)
Exceptional items	(5.7)	(0.4)	(6.1)	(5.5)	(11.6)
	_______	_______	_______	_______	_______
Segment result /	9.1	(1.1)	8.0	(10.4)	(2.4)
	_______	_______	_______	_______
Finance costs - net					(5.2)
Exceptional finance expense					(0.4)
					_______
Loss before taxation					(8.0)
Taxation					(1.0)
					_______
Loss for the year					(9.0)
					_______

* a further £0.5 million depreciation charge relating to the UK support services business is charged above the line in cost of sales

Year ended 31 December 2007

	Unaudited - Pro forma basis
	United Kingdom	United States	Operations Total	Corporate costs - UK	Group Total
	£ m	£ m	£ m	£ m	£ m
Segment revenue	787.5	187.8	975.3	-	975.3
	_______	_______	_______	_______	_______
Result
Segment result before depreciation,  amortisation and exceptional items	20.3	5.4	25.7	(5.8)	19.9
Depreciation *	(2.5)	(0.3)	(2.8)	-	(2.8)
Amortisation of software	(1.2)	(0.4)	(1.6)	-	(1.6)
	_______	_______	_______	_______	_______
Segment result / operating profit/(loss) before amortisation and exceptional items	16.6	4.7	21.3	(5.8)	15.5
Exceptional items	0.2	-	0.2	(19.1)	(18.9)
	_______	_______	_______	_______	_______
Segment result /	16.8	4.7	21.5	(24.9)	(3.4)
	_______	_______	_______	_______
Finance costs - net					(5.7)
Exceptional finance expense					(0.9)
					_______
Loss before taxation					(10.0)
Taxation					1.0
					_______
Loss for the year					(9.0)
					_______

a further £0.3 million depreciation charge relating to the UK support services business is charged above the line in cost of sales

Business segments 

Continuing operations

Year ended 31 December 2008

	Unaudited - Pro forma basis
	Commercial staffing	Professional & technical staffing	Healthcare staffing	Support services	Group Total
	£ m	£ m	£ m	£ m	£ m
Segment revenue	632.1	177.1	143.9	116.9	1,070.0
	_______	_______	_______	_______	_______
Result
Segment result before depreciation, amortisation and exceptional items	10.3	3.0	6.1	2.0	21.4
Depreciation *	(1.7)	(0.8)	(0.1)	(0.6)	(3.2)
Amortisation of software	(1.1)	(0.1)	(0.2)	-	(1.4)
	_______	_______	_______	_______	_______
Segment result /	7.5	2.1	5.8	1.4	16.8
Amortisation of customer relationships	(2.2)	-	(0.3)	(0.2)	(2.7)
Exceptional items	(5.3)	(0.2)	(0.2)	(0.4)	(6.1)
	_______	_______	_______	_______	_______
Segment result /	-	1.9	5.3	0.8	8.0
	_______	_______	_______	_______
Unallocated - corporate cost					(4.9)
Unallocated - exceptional items					(5.5)
					_______
Operating loss					(2.4)
					_______

* a further £0.5 million depreciation charge relating to the UK support services business is charged above the line in cost of sales

 Year ended 31 December 2007

	Unaudited - Pro forma basis
	Commercial staffing	Professional & technical staffing	Healthcare staffing	Support services	Group Total
	£ m	£ m	£ m	£ m	£ m
Segment revenue	594.5	151.4	110.1	119.3	975.3
	_______	_______	_______	_______	_______
Result
Segment result before depreciation, amortisation and exceptional items	13.9	3.8	4.1	3.9	25.7
Depreciation *	(1.5)	(0.7)	(0.2)	(0.4)	(2.8)
Amortisation of software	(1.4)	(0.1)	(0.1)	-	(1.6)
	_______	_______	_______	_______	_______
Segment result /  operating profit before exceptional items	11.0	3.0	3.8	3.5	21.3
Exceptional items	-	-	0.2	-	0.2
	_______	_______	_______	_______	_______
Segment result / ting profit	11.0	3.0	4.0	3.5	21.5
	_______	_______	_______	_______
Unallocated - corporate cost					(5.8)
Exceptional - corporate cost					(19.1)
					_______
Operating loss					(3.4)
					_______

* a further £0.3 million depreciation charge relating to the UK support services business is charged above the line in cost of sales

3    Exceptional items

	Unaudited Pro forma
	Year ended 31 December
	12 months	12 months
	2008	2007
	£m	£m
Impairment of goodwill	-	19.1
Cost associated with the merger	2.8	-
Loss/(profit) on disposal of subsidiary	0.6	(0.2)
Restructuring and other costs	8.1	-
Investments written off	0.1	-
	____	____
Total exceptional items included in operating profit	11.6	18.9
Financing expenses written off on merger	0.4	-
Financing expense on early redemption of loan notes	-	0.9
	____	____
Total exceptional items	12.0	19.8
Taxation	-	-
	____	____
Total exceptional items	12.0	19.8
	____	____

An impairment charge of £19.1 million was recognised in December 2007's income statement following a review of The Corporate Services Group plc's US business, its medium-term economic outlook and increases in the cost of capital.

Costs associated with the merger relate to the various legal and professional costs incurred by both Carlisle Group Limited and The Corporate Services Group plc to effect the merger of the two businesses under the name of Impellam Group plc.

On 28 May 2008 the Group sold its 50% interest in a loss making manned guarding security joint venture in Ireland, Carlisle Security Plus, for a nominal consideration to the joint venture partner. The loss on disposal amounted to £0.6 million including costs of disposal and net cash outflow was £0.1million.

In 2007 this relates to the disposal of Euromedica, a pharmaceutical search business.

Restructure costs relate to reorganisation and redundancy costs following the combination of the two businesses to form the Impellam Group plc.

The impairment of investment relates to the write down of the carrying value of the Group's investment in Clear Technology Inc, an unlisted US software development company.

Finance expenses written off relate to the costs associated with The Corporate Services Group plc's restructure of debt in 2007 which were being amortised over the period of the loans and which on replacement by the new arrangements for Impellam Group plc have been accelerated and written off in full.

On 30 May 2007 The Corporate Services Group plc redeemed £15.0 million of its outstanding £35.0 million 10% Guaranteed Loan Notes due 2011. This redemption was funded by three-year bank term loans and increased borrowings from the Group's existing senior lenders. The one-off cost attributable to this early redemption of £0.9 million has been shown on a separate line of the consolidated income statement.

4    Finance income and expense

	Unaudited Pro forma
	Year ended 31 December
	2008	2007
	£ m	£ m
Total interest income for financial assets not at fair value through the income statement - bank interest receivable	0.4	0.4
Net foreign exchange gains on monetary assets and liabilities	0.1	-
Unrealised gain on investments designated as held at fair value through the income statement	-	0.1
	_________	_________
Finance income	0.5	0.5
	_________	_________

	Unaudited Pro forma
	Year ended 31 December
	2008	2007
	£ m	£ m
Loan notes	2.0	2.6
Revolving credit facilities	2.5	2.5
Finance charges payable under finance lease contracts	0.1	0.1
Bank loans and overdrafts	0.2	0.5
Other interest payable	-	0.2
	_________	_________
Total interest payable for financial liabilities not at fair value through the income statement	4.8	5.9
Unwinding of discount on provisions	0.4	0.2
Fair value charge on derivative financial instruments classified as held for trading	0.5	0.1
	_________	_________
Finance expense	5.7	6.2
	_________	_________

5    Earnings/(loss) per share

Basic earnings per share amounts are calculated by dividing the profit for the year attributable to the equity holders of the Company by the weighted average number of ordinary shares outstanding during the year.

The weighted average number of shares in 2008 from incorporation to 31 December 2008 is 35,348,930 excluding the shares owned by the Corporate Services Group plc Employee Share Trust.

The calculations of (loss)/earnings per share are based upon the following consolidated income statement data:

	Unaudited - Pro forma
	(Loss)/profit for the year		(Loss)/earnings per share
	Year ended 31 December		Year ended 31 December
	2008	2007	2008	2007
	£ m	£ m	Pence	Pence
Basic
Loss for the year	(9.0)	(9.0)	(25.5)	(25.5)
Exceptional items	12.0	19.8	34.0	56.0
Amortisation of customer relationships	2.7	-	7.6	-
	_________	_________	_________	_________
Adjusted profit for the year	5.7	10.8	16.1	30.5
	_________	_________	_________	_________

6    Net Debt

	Unaudited - Pro forma
	1 January 2008	Cash flow	Foreign exchange	Other non-cash changes	31December 2008
	£ m	£ m	£ m	£ m	£ m
Cash at bank and short-term deposits	8.3	(1.2)	4.2	-	11.3
Bank overdrafts	(2.4)	(0.3)	-	-	(2.7)
	__________	__________	_________	__________	__________
	5.9	(1.5)	4.2	-	8.6
	__________	__________	_________	__________	__________
Guaranteed secured loan note	(19.8)	-	-	(0.1)	(19.9)
Bank loans	(12.8)	10.9	(0.8)	-	(2.7)
Finance leases	(0.4)	0.2	-	(0.3)	(0.5)
Revolving credit	(36.2)	(10.8)	(0.3)	-	(47.3)
	__________	__________	_________	__________	__________
	(69.2)	0.3	(1.1)	(0.4)	(70.4)
	__________	__________	_________	_________	__________
	(63.3)	(1.2)	3.1	(0.4)	(61.8)
	__________	__________	_________	__________	__________

Non-cash movements

Non-cash movements include £0.1 million (2007: £0.4 million) relating to the amortisation of issue costs relating to the loan notes and bank term loans (2007 including accelerated amortisation of the £15 million loan note redemption) and £0.3 million relating to the inception of new finance leases on the acquisition of fixtures and fittings during the year.

Consolidated income statement For the period ended  31 December 2008		Statutory basis
		* Period ended 31 December	Unaudited Year ended 31 March
		2008	2008
		£ m	£ m
Continuing operations
Revenue		755.6	403.8
Cost of sales		(623.7)	(328.9)
		_________	_________
Gross profit		131.9	74.9
Administrative expenses (including exceptional items)		(135.7)	(72.7)
		_________	_________
Operating (loss)/profit		(3.8)	2.2
Operating profit before amortisation and exceptional items		8.8	3.8
Amortisation of customer relationships		(2.7)	-
Exceptional items		(9.9)	(1.6)
		_________	_________
Operating (loss)/profit		(3.8)	2.2
Finance income		0.4	0.1
Finance expense		(4.4)	(1.1)
		_________	_________
(Loss)/profit before taxation		(7.8)	1.2
Taxation		(1.0)	-
		_________	_________
(Loss)/profit for the period (attributable to equity holders of the parent Company)		(8.8)	1.2
		_________	_________

(Loss)/earnings per share - basic	4
Unadjusted		(25.0)p	5.2p
Adjusted		10.7p	12.1p
Earnings/(loss) per share - diluted **	4
Unadjusted			5.0p
Adjusted			11.6p

* Various periods due to merger and acquisition of underlying businesses see basis of preparation (note 1).

** At 31 December 2008, as the Group is loss-making for the period, any share options in issue are considered to be 'anti-dilutive' and as such, there is no separate calculation for diluted earnings per share.

Consolidated balance sheet At 31 December 2008		Statutory basis
		31 December 2008	Unaudited 31 March 2008
		£ m	£ m
Non-current assets
Property, plant and equipment		8.6	4.7
Goodwill		59.9	57.7
Other intangible assets		55.0	1.4
Deferred tax assets		4.0	0.3
Financial assets		4.8	-
		_________	_________
		132.3	64.1
		_________	_________
Current assets
Trade and other receivables		185.4	64.0
Deferred tax assets		0.3	0.3
Cash at hand and in bank		11.3	6.5
		_________	_________
		197.0	70.8
		_________	_________
Total assets		329.3	134.9
		_________	_________
Current liabilities
Trade and other payables		147.5	50.3
Taxation liabilities		0.3	0.4
Bank overdrafts and other short-term borrowings		51.5	10.0
Other financial liabilities		0.5	-
Provisions		6.3	0.4
Deferred taxation liability		1.0	-
		_________	_________
		207.1	61.1
		_________	_________
Net current (liabilities) / assets		(10.1)	9.7
		_________	_________
Non-current liabilities
Long-term borrowings		21.6	0.1
Other liabilities due in greater than 1 year		2.0	1.2
Provisions		8.4	1.4
Deferred taxation liability		15.0	-
		_________	_________
		47.0	2.7
		_________	_________
Total liabilities		254.1	63.8
		_________	_________
Net assets		75.2	71.1
		_________	_________

		31 December 2008	Unaudited 31 March 2008
	Notes	£ m	£ m
Equity
Issued share capital	5	0.4	2.4
Share premium account	5	15.5	-
		_________	_________
		15.9	2.4
Other reserves		93.1	90.0
Retained deficit		(34.0)	(21.3)
		_________	_________
Total equity attributable to equity holders of the parent Company		75.0	71.1
Minority interest		0.2	-
		_________	_________
Total equity		75.2	71.1
		_________	_________

Consolidated cash flow statement For the period ended 31 December 2008		Statutory basis
		Period ended 31 December	Unaudited Year ended 31 March
		2008	2008
		£ m	£ m
Cash flows from operating activities
(Loss)/profit before taxation		(7.8)	1.2
Adjustments for non-cash items:
Net interest charge		4.0	1.0
Exceptional items - non cash		2.3	-
Depreciation of property, plant and equipment		2.5	1.8
Impairment of property, plant and equipment		0.2	-
Amortisation of licences and customer relationships		3.9	0.6
Loss on disposal of subsidiary		0.6	-
Loss on disposal of property, plant and equipment		0.4	-
Loss on disposal of intangible assets		0.1	-
Share based payment charge/(credit)		0.1	0.3
		_________	_________
		6.3	4.9
Decrease/(increase) in trade and other receivables		3.0	(0.7)
(Decrease)/increase in trade and other payables		(4.4)	4.3
Decrease in provisions		(0.3)	-
		_________	_________
Cash generated by operations		4.6	8.5
Taxation paid		(0.5)	(0.4)
		_________	_________
Net cash generated by operating activities		4.1	8.1
		_________	_________
Cash flows from investing activities
Acquisition of subsidiary - CSG - net of £3.4 million cash acquired		0.9	-
Acquisition of subsidiary - other		(1.9)	(1.6)
Purchase of property, plant and equipment		(2.3)	(2.1)
Purchase of intangible assets		(1.8)	(0.8)
Proceeds from sale of subsidiary (net of cash disposed)		-	0.3
Net movement in other financial assets		0.7	-
Finance income received		0.2	0.1
		_________	_________
Net cash utilised on investing activities		(4.2)	(4.1)
		_________	_________

Consolidated cash flow statement (continued)

For the period ended 31 December 2008

		Statutory basis
		Period ended 31 December	Unaudited Year ended 31 March
		2008	2008
		£ m	£ m
Cash flows from financing activities
Purchase of own shares		-	(0.1)
Net movement in other long-term borrowings		(10.7)	-
Net movement in short-term borrowings		18.2	4.8
Capital element of finance lease payments		(0.1)	(0.4)
Finance expense paid		(3.1)	(1.0)
Dividend in specie via disposal of subsidiary (note 3)		(4.0)	(3.0)
		_________	_________
Net cash inflow from financing activities		0.3	0.3
		_________	_________
Net increase in cash and cash equivalents		0.2	4.3
Opening cash and cash equivalents		6.5	2.1
Foreign exchange losses on cash and cash equivalents		1.9	0.1
		_________	_________
Closing cash and cash equivalents *		8.6	6.5
		_________	_________

 * Unrestricted cash, available to the Group

Consolidated statement of changes in equity For the period ended 31 December 2008	Statutory basis
	Total share capital and share premium	Other reserves (note 27)	Retained deficit	Minority interest	Total equity
	£ m	£ m	£ m	£ m	£ m
1 April 2007	2.4	89.7	(19.8)	-	72.3
	______	______	______	______	______
Currency translation differences	-	0.4	-	-	0.4
	______	______	______	______	______
Total income and expense recognised in equity	-	0.4	-	-	0.4
Profit for the year	-	-	1.2	-	1.2
	______	______	______	______	______
Total income and expense for the year	-	0.4	1.2	-	1.6
Purchase of own shares	-	(0.1)	-	-	(0.1)
Share based payments	-	-	0.3	-	0.3
Dividend in specie via disposal of subsidiary	-	-	(3.0)	-	(3.0)
	______	______	______	______	______
Total movement in year	-	0.3	(1.5)	-	(1.2)
	______	______	______	______	______
31 March 2008	2.4	90.0	(21.3)	-	71.1
	______	______	______	______	______
Currency translation differences	-	0.9	-	-	0.9
Minority interest on acquisition	-	-	-	0.2	0.2
	______	______	______	______	______
Total income and expense recognised in equity	-	0.9	-	0.2	1.1
Loss for the period	-	-	(8.8)	-	(8.8)
	______	______	______	______	______
Total income and expense for the period	-	0.9	(8.8)	0.2	(7.7)
Reduction of share capital as part of scheme of arrangement and merger	(2.2)	2.2	-	-	-
Shares issued on acquisition of CSG	15.7	-	-	-	15.7
Share based payments	-	-	0.1	-	0.1
Dividend in specie via disposal of subsidiary (note 3)	-	-	(4.0)	-	(4.0)
	______	______	______	______	______
Total movement in period	13.5	3.1	(12.7)	0.2	4.1
	______	______	______	______	______
31 December 2008	15.9	93.1	(34.0)	0.2	75.2
	______	______	______	______	______

1    Basis of preparation

The statutory information within the preliminary announcement for the period ended 31 December 2008 has been prepared in accordance with International Financial Reporting Standards as adopted by the European Union. Details of the accounting policies applied will be set out in Impellam Group plc's 2008 Annual Report. The annual financial information presented in this preliminary announcement for the period ended 31 December 2008 is based on, and is consistent with, that in the Group's audited financial statements for the period ended 31 December 2008, and those financial statements will be delivered to the Registrar of Companies following the Company's Annual General Meeting. The independent auditors' report on those financial statements is unqualified and does not contain any statement under section 237 (2) or (3) of the Companies Act 1985.

The financial statements, and this preliminary statement, of Impellam Group plc (the Group) for the year ended 31 December 2008 were authorised for issue by the Board of Directors on 8 May 2008 and the balance sheet was signed on behalf of the Board by Andrew Burchall.

Basis of consolidation

The consolidated financial statements comprise the financial statements of Impellam Group plc and all of its subsidiaries as at 31 December. The financial statements of subsidiaries are prepared for the same reporting period as the parent company. Each company, including the parent, use locally applicable UK and US generally accepted accounting practice (GAAP) and Companies Act requirements for the preparation of their individual financial statements. Adjustments are made to bring these into line with the IFRS policies adopted by the Group, as required.

Subsidiaries are consolidated from the date on which the Group obtains control and cease to be consolidated from the date on which the Group ceases its control.

Statutory information

In May 2008, the current Impellam Group plc ('Impellam') was formed through a business combination of Carlisle Group Limited ('Carlisle') and The Corporate Services Group plc ('CSG'). This business combination was effected by the statutory merger, on 6 May 2008, of the recently incorporated Impellam and Carlisle under Belize law. As required by entities under common control this is outside the scope of IFRS3 and the Directors have chosen to apply a policy of merger accounting for this transaction. This company then acquired, on 7 May 2008, the entire share capital of CSG under a scheme of arrangement.

The statutory financial information comprises the trading of Impellam since its date of incorporation on 21 February 2008, the trading of the consolidated Carlisle for the period since it's last published financial statements on 31 March 2008 and the consolidated results of CSG from its date of acquisition, 7 May 2008. 

The comparative figures represent the consolidated results of Carlisle, a company incorporated in Belize under the IBCA which ceased to exist following the merger with Impellam. Accordingly, the comparative figures for the year ended 31 March 2008 are unaudited.

2    Business combinations

Carlisle Group Limited

On 6 May 2008, Impellam Group plc ('Impellam') combined with Carlisle Group Limited ('Carlisle') through a statutory merger under Belize law, in accordance with Part VII of the IBCA. Impellam is the surviving company resulting from the merger (Carlisle ceased to exist) and all rights, assets, properties, obligations and liabilities of Carlisle vested in Impellam. 

The Corporate Services Group plc

On 7 May 2008 Impellam Group plc acquired 100% of the share capital of The Corporate Services Group plc ('CSG'), a public company listed on the London Stock Exchange. The acquisition of CSG was completed by means of a scheme of arrangement under section 425 of the Companies Act 1985 and Part 26 of the Companies Act 2006.

The fair values of the identifiable assets and liabilities of this business at the date of acquisition and the corresponding carrying amounts immediately prior to the acquisition were:

	Fair value recognised on acquisition	Carrying value
	£m	£m
Property plant and equipment	4.3	5.8
Goodwill	-	26.2
Intangible assets - brand values	38.5	-
Intangible assets - customer relationships	14.4	-
Intangible assets - other	1.8	1.8
Financial assets	4.1	4.1
Deferred tax assets	7.8	1.9
Trade and other receivables	112.0	112.4
Cash	3.4	3.4
Trade and other payables	(90.7)	(89.5)
Short term borrowings	(18.7)	(18.7)
Corporation taxes	(0.1)	(0.1)
Long-term borrowings	(32.4)	(32.4)
Provisions	(11.8)	(3.0)
Deferred tax liability	(14.7)	-
	_________	________
Net assets	17.9	11.9
		________
Goodwill arising on acquisition	0.3
	_________
Total consideration	18.2
	_________

The fair value of Property, plant and equipment has been adjusted to reflect an alignment in the depreciation policies in the acquired entities.

The goodwill on acquisition has been released as this is now considered to be within the new intangible assets and the new goodwill of the combined group.

The brand valuations have been calculated by reference to various royalty rates discounted over a ten year period. These brands are subject to an annual impairment review rather than regular amortisation.

The fair value of customer relationships have been calculated by viewing the future revenue streams over the expected period in which the historic relationships continue and before new relationships are built. These relationships are being amortised on a reducing balance basis.

The movement of other non-current assets reflect the recognition of individual deferred tax assets within entities on the acquired group that had not been previously recognised.

The fair value provisions include various property provisions which were empty or surplus from the date of acquisition to the end of the relevant lease.

The deferred tax liability reflects the deferred tax on the new intangible assets which had been recognised as part of this business combination.

The total costs associated with the business combination were £2.5 million and comprised costs directly attributable to the combination:

		£m
21,373,330 Shares issued		15.7
Costs associated with the acquisition (settled in cash)		2.5
		________
		18.2
		________

The fair value of the share issued was based on the published share price (1.46p) immediately prior to the completion of the transaction.

From the date of acquisition CSG has contributed £3.5 million profit to the loss after tax of the Group. 

If the combination of Carlisle and CSG had taken place at the beginning of 2008, the loss after tax of the Group would have been £9.0 million and revenue from continuing operations would have been £1,070.0 million.

The goodwill of £0.3 million comprises the fair value of expected synergies which are not separately recognised.

Qantum Recruitment Pty Limited

On 12 December 2008 the Group acquired an 80% interest in an Australian recruitment business operating in the healthcare sector.

The provisional fair values of the identifiable assets and liabilities of this business at the date of acquisition and the corresponding carrying amounts immediately prior to the acquisition were:

	Provisional fair value recognised on acquisition	Carrying value
	£m	£m
Property plant and equipment	-	-
Intangible assets - brand values	0.9	-
Net current assets	0.3	0.3
Deferred tax liability	(0.3)	-
	_________	________
Net assets	0.9	0.3
		________
Minority interest (20%)	(0.2)
Goodwill arising on acquisition	1.2
	_________
Total consideration	1.9
	_________

This acquisition has had no material impact on the results of the Group in the year although had the acquisition taken place at the beginning of the 2008 the Group revenue would have increased by £1.0 million.

The goodwill of £1.2 million comprises the fair value of the added advantages of geographical location and other expected synergies which are not separately recognised.

3    Dividends

In March 2008 Carlisle Group Ltd declared a dividend-in-specie relating to the financial year to 31 March 2008. This comprised shares in its wholly owned subsidiary Shellproof Limited, in which Carlisle Group Limited had previously subscribed for 7,999,999 shares for an aggregate cash subscription price of £4.0 million. This was paid on 4 April 2008.

4     (Loss)/earnings per share

Basic (loss)/earnings per share amounts are calculated by dividing the (loss)/profit for the period attributable to the equity holders of the Company by the weighted average number of ordinary shares outstanding during the year.

Diluted earnings per share amounts are calculated on the same basis but after adjusting the denominator for the effects of dilutive options. The only potentially dilutive shares arise from the share options issued by the Group under its share-based compensation plans.

The weighted average number of shares in 2008 from incorporation to 31 December 2008 is 35,348,930 (31 March 2008: 23,029,000) excluding the shares owned by the Corporate Services Group plc Employee Share Trust and treasury shares.

At 31 December 2008, as the Group is loss-making, any share options in issue are considered to be 'anti-dilutive' and as such, there is no separate calculation for diluted earnings per share.

In March 2008 the weighted average shares for the diluted earnings per share is adjusted by 1,075,000 potentially dilutive shares resulting in a denominator of 24,104,000.

The calculations of (loss)/earnings per share are based upon the following consolidated income statement data:

	Statutory basis
	(Loss)/profit for the year		(Loss)/earnings per share
	Period ended 31 December	Unaudited Year ended 31 March	Period ended 31 December	Unaudited Year ended 31 March
	2008	2008	2008	2008
	£ m	£ m	Pence	Pence
Basic
(Loss)/profit for the year	(8.8)	1.2	(25.0)	5.2
Exceptional items	9.9	1.6	28.1	6.9
Amortisation of customer relationships	2.7	-	7.6	-
	_________	_________	_________	_________
Adjusted profit for the year	3.8	2.8	10.7	12.1
	_________	_________	_________	_________

	Statutory basis
	Profit for the year		Earnings per share
		Unaudited Year ended 31 March		Unaudited Year ended 31 March
		2008		2008
		£ m		Pence
Diluted
Profit for the year		1.2		5.0
Exceptional items		1.6		6.6
		_________		_________
Adjusted profit for the year		2.8		11.6
		_________		_________

5    Issued share capital

	Statutory basis
	Number of issued shares	Issued share capital	Share premium account	Total share capital
	Millions	£m	£m	£m
1 April 2007 and 1 April 2008	24.1	2.4	-	2.4
Exercise of options	0.1	-	-	-
	______	______	______	______
	24.2	2.4	-	2.4
Cancellation of 'own shares'	(1.1)	(0.1)	-	(0.1)
	______	______	______	______
Shares subject to terms of the merger	23.1	2.3	-	2.3
	______	______	______	______
New shares issued on merger	23.1	0.2	-	0.2
Issued pursuant to acquisition (note 2)	21.4	0.2	15.5	15.7
Exercise of options	0.5	-	-	-
	______	______	______	______
31 December 2008	45.0	0.4	15.5	15.9
	______	______	______	______

Carlisle Group Limited

Carlisle Group Limited ('Carlisle') had an authorised share capital of £5,000,000 consisting of 50,000,000 ordinary shares of 10 pence. Its issued share capital was £2,406,666 consisting of 24,066,660 ordinary shares.

During the year ended 31 March 2008, the Group purchased, in the open market, 110,860 of the Group's ordinary shares of 10 pence each for an aggregate cash consideration of £0.1 million. These shares are held in treasury by a subsidiary undertaking, Carlisle Group Treasury Limited. At 31 March 2008, the total number of treasury shares held was 1,055,860,000 with a nominal value of £105,586.

During April 2008 a further 137,200 ordinary share were issued by Carlisle upon the exercise of share options by employees of the company for a total consideration of £5.

On 6 May 2008 the Company merged with Carlisle Group Limited under Belize law on terms of one Impellam share for each Carlisle share. As part of this transaction the shares held in 'Treasury' were cancelled. The equity value of the difference between the 10p shares in Carlisle and the 1 penny shares of the Company has been transferred to other reserves.

  Impellam Group plc

The Company 'Impellam Group plc' was incorporated on 21 February 2008 with an authorised share capital of £30,049,999 represented by 3,000,000,000 ordinary shares of one penny each and 49,999 redeemable preference shares of £1 each. On 3 March 2008 100 ordinary shares of 1 penny were allotted and on 4 March 2008 and 49,999 preference shares of £1 were allotted. 

Both the ordinary and the preference shares were held in 'trust' for the principal shareholder of Carlisle Group Limited until the date of the merger described below. At the completion of the merger, on 6 May 2008, the preference shares were redeemed by the Company.

The 100 ordinary shares held in trust were deducted from the number of shares allotted to the principal shareholder as part of the merger arrangements and transferred to the beneficial ownership of that shareholder.

The Corporate Services Group plc

On 7 May 2008 the Company acquired the entire share capital of The Corporate Services Group plc ('CSG') and under the terms of the acquisition agreement the Company issued 50.4 shares in the Company for each share in CSG. As a result of this transaction an additional 21,373,330 shares were issued; at the date of acquisition these shares had a fair value of £15,727,351.

Share options

Subsequent to the merger and acquisition movements detailed above, a further 477,952 ordinary shares were issued by the Company upon the exercise of share options by employees of the Group for consideration of £9 in total.

 

END

 

 

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