Final Results

RNS Number : 5148X

Impellam Group plc

16 February 2012

 



REPORT FOR THE 52 WEEKS ENDED 30 DECEMBER 2011

 Preliminary Results - Unaudited

Key Strategic Highlights

Ø EBITDA increased 13.9% to £47.5 million (2010: £41.7 million)

Ø Operating profit increased 13.4% to £34.8 million (2010: £30.7 million)

Ø Adjusted operating profit increased 16.2% to £38.7 million (2010: £33.3 million)

Ø Conversion of gross margin to operating profit increased to 19.1% (2010: 16.8%)

Ø Basic earnings per share increased 15.6% to 54.0p (2010: 46.7p)

Ø Net cash of £1.8 million at 30 December 2011 (31 December 2010: Net debt of £17.8 million)

               * Adjusted operating profit excludes amortisation of client relationships and non-recurring items

Cheryl Jones, Chairman commented:

"I am pleased to announce Impellam Group plc concluded 2011 with a strong set of financial results whilst at the same time completing several important milestones in support of repositioning the Group's businesses. Our strategy is built on the premise of 'Unlocking the Value of the Impellam Group of Companies' for our shareholders, our clients, management teams and employees.

First, the financial structuring of the Group has been critical for the Company in that a highly leveraged historic debt position had to be addressed. Conversion of margin to profit and through to cash flows has been an imperative in this regard and remains so going forward. 

In 2011, the Group's operating profit increased by 13.4%, aligned in part to an increase in the conversion ratio of 2.3%, whilst EBITDA improved by 13.9% to £47.5 million on increased revenues of 1.6%.  Basic earnings per share improved by 15.6%. At the year-end the Group was in a net cash position.

Execution of the strategy in 2010/2011 has allowed the Group to repay in full and on the due date in 2011 its final obligations under the £20 million guaranteed secured loan notes; and both of the Group's UK and US financing facilities were also successfully renewed during the year.  

During the year, taking the opportunity of market conditions, Impellam purchased 360,500 of its own shares at a cost of £1.2m. On an annualised basis this provides shareholders with an approximate 1% increase in value, as measured through earnings per share. The Board will continue to look to purchase its own shares going forward, as well as reviewing potential acquisitions where they are accretive and fit with the Group's overall strategy.

Second, the strategy requires the Group to align its brands into focused market-facing businesses.  To support this divisional and group strategy, two new holding companies have been established in 2011 to house the realigned Medacs Healthcare and Carlisle Support Services brands.

The UK and US Staffing businesses have begun the realignment of their brands to support accelerated development of evolving client requirements for Managed Service Offerings and Client Innovation; moreover, accelerated development of the Science, Engineering and Technology related brand activities is also key. Restructuring of these businesses is underway.

The accomplishments in 2011 were critical to the transformational strategy of the Group. The primary trading markets of the UK and US are anticipated to continue to show tough conditions, but the Group remains focused in delivering the most efficient and innovative service offerings. Establishing consistency of reliability and a sustainable competitive advantage are key elements for our current and prospective clients. The Group will continue to develop in 2012 in all its key businesses and markets.

The Board remains focussed on maximising shareholder value and unlocking the value of the Impellam Group of Companies. This will include the payment of dividends when appropriate.

To this end, Impellam will shortly be seeking shareholder and court approval for a capital reorganisation.  Contingent on such approval, the Company will then have sufficient distributable reserves to be in a position to pay a cash dividend starting with the 2012 interims. The capital reorganisation will also provide for other forms of capital transactions capable of delivering value to the shareholders.  Further details will be sent to shareholders in due course."

Financial results for the fifty two weeks to 30 December 2011

The table below sets out the results for the Group by segment for the fifty two weeks to 30 December 2011.

Group results	Revenue			Gross profit			Operating profit
	Unaudited	Audited		Unaudited	Audited		Unaudited	Audited
£million	2011	2010	% change	2011	2010	% change	2011	2010
UK Staffing - Commercial	496.1	472.9	4.9	75.6	73.6	2.7	19.8	14.9
UK Staffing - Professional & Technical	193.1	168.1	14.9	31.8	28.5	11.6	7.8	4.3
US Staffing	166.6	164.9	5.0*	34.7	34.9	3.3*	4.7	4.0
Medacs Healthcare Group	186.8	202.4	(7.7)	27.9	32.0	(12.8)	9.1	11.6
Carlisle Support Services	88.8	105.3	(15.7)	12.3	13.2	(6.8)	2.0	2.4
	1,131.4	1,113.6	1.6	182.3	182.2	0.1	43.4	37.2
Depreciation and amortisation							4.1	4.5
EBITDA							47.5	41.7
Central costs							(4.7)	(3.9)
Operating profit before amortisation of client relationships and non-recurring items (Adjusted operating profit)							38.7	33.3
Amortisation of client relationships							(2.0)	(2.6)
Non-recurring items							(1.9)	-
Operating profit							34.8	30.7

* % change measured in local currency

Cash Flow, Debt and Net Assets

The Group generated £28.4 million of cash from operating activities in the year (2010: £57.5 million).  Days sales outstanding (DSO) for the Group was 35.3 at 30 December 2011 compared to 36.0 at 31 December 2010.

Net debt reduced by £19.6 million to a net cash position of £1.8 million as at 30 December 2011 (31 December 2010: £17.8 million net debt).  In addition, the Group has outstanding letters of credit drawn against its US borrowing facilities amounting to £3.6 million (31 December 2010: £3.4 million).

At 30 December 2011, the Group had net assets of £129.3 million (31 December 2010: £106.8 million).

Business Segment Review

UK Staffing - Commercial:

In 2011, the Commercial Staffing segment included the key brands of Blue Arrow Catering, Blue Arrow Staffing Solutions, Blue Arrow Managed Services, ABC, Tate, Comensura and CMS. Many of the traditional markets for these brands were under significant economic pressure as demand for their traditional services declined or remained depressed.

The overall strategy of the Group is to realign the brands to the ever-changing market requirements. Technology programmes to support AWR, Agency Workers Regulations, has also been implemented, to provide efficiencies going forward whilst adhering to tight compliance standards.

Focus on the evolving managed services market has supported much of the revenue growth in these businesses. Both Tate and Blue Arrow Catering had reduced revenues year-on-year, resulting from the market-related conditions. The repositioning of these brands is ongoing.

Overall, turnover increased a creditable 4.9% to £496.1 million for the year. EBITDA showed a reported 25% increase in 2011 to £22.5 million.  Reported operating profit was £19.8 million in 2011 compared to £14.9 million in 2010.

UK Staffing - Professional & Technical: 

In 2011, the Professional and Technical Staffing segment comprised the Science and Technology and Professional parts of the business. As part of the overall strategy, during the year initiatives were put in place to disaggregate the businesses and re-evaluate the changing market requirements, so as to implement service delivery efficiencies and drive strategic sales processes.

Science and Technology sectors, through the SRG and Scom brands, had a 16.3% increase in revenues reflecting the focus to this sector and the higher demand for services. The Professional brands achieved an 8.8% improvement in revenues as the client service offering was expanded to support managed service requirements in the market.

Overall this group of brands achieved an aggregate 14.9% increase in turnover to £193.1 million. EBITDA increased by £3.5 million in 2011 to £8.0 million; whilst operating profit was £7.8 million in 2011 compared to £4.3 million in the prior year.

US Staffing:

The US Staffing segment continued to expand its current client base and to emphasise its managed service offerings to clients so as to meet the evolving demand for strategic solutions in the marketplace. During the year, Guidant Group was relocated to an expanded headquarters and operational environment, allowing increased scalable expertise in the managed services segment, including expanded payroll service programmes to its client base.

The US operations faced tough economic challenges, whilst completing efficiency programmes planned for the end of the year so as to continue to lower their cost of service delivery.

Turnover for the segment increased 5.0%* in the year to £166.6 million. EBITDA increased by £0.6 million to £5.1 million in 2011 and operating profit was £4.7 million compared to £4.0 million in 2010.                                                                       

Medacs Healthcare Group: 

Medacs Healthcare Group experienced an anticipated reduction in demand in the doctors' staffing business in the UK during 2011.  During the year, orders for doctor assignments declined 14.5% and average hours for these assignments declined 17.6%. By increasing client density and fill rates, Medacs limited overall shrinkage in invoiced doctor hours to 8.8%. The nursing and social care sectors increased invoiced hours by 6.6% and 7.0% respectively.

In 2011, some £1.3 million was invested in the development of an expanded contact centre designed to allow efficient consolidation and increased specialisation in recruitment and client service activities.

Medacs reported turnover of £186.8 million in 2011, a 7.7% decline over the prior year. EBITDA and operating profit was £9.6 million and £9.1 million, respectively, compared to £12.0 million and £11.6 million, respectively, in the prior year.

Carlisle Support Services:

Carlisle Support Services' full year performance is a result of the emphasis to deleverage the historic dependence on the retail sector, initiatives to improve labour management and the timing of a change in emphasis in the service portfolio to increasingly complex client environments. Whilst certain key client relationships were added in the year, the full impact of these will not be seen until 2012.

During 2011, Carlisle relocated its corporate offices to further consolidate its distribution network to five locations going to four in 2012. New scheduling and payroll systems were installed in the business for the 3,500 employee base. These technology changes, combined with office consolidation, allow for further efficiencies through scalability and specialisation of back-office and operational support services, as well as allowing consolidation of sales and account management staff into a more effective environment.

Carlisle reported turnover of £88.8 million in 2011 compared to £105.3 in the prior year. EBITDA declined by £0.4 million to £2.3 million in 2011, whilst operating profit was £2.0 million compared to £2.4 million in 2010.

Consolidated income statement

For the fifty two weeks ended 30 December 2011

		Unaudited 2011	Audited 2010
	Notes	£m	£m
Revenue	2	1,131.4	1,113.6
Cost of sales		(949.1)	(931.4)
		________	________
Gross profit		182.3	182.2
Administrative expenses		(147.5)	(151.5)
		________	________
Operating profit	2	34.8	30.7
Operating profit before non-recurring items		36.7	30.7
Non-recurring items		(1.9)	-
		________	________
Operating profit		34.8	30.7
Finance income		0.4	-
Finance expense		(2.3)	(3.9)
		________	________
Profit before taxation		32.9	26.8
Taxation	3	(8.6)	(5.7)
		________	________
Profit for the period		24.3	21.1
		________	________

Attributable to:
Owners of the parent Company		24.2	21.1
Non-controlling interest		0.1	-
		________	________
		24.3	21.1
		________	________

Earnings per share	4	Pence	Pence
Basic		54.0	46.7
Diluted		53.9	46.7
		________	________

Consolidated statement of comprehensive income

For the fifty two weeks ended 30 December 2011

		Unaudited 2011	Audited 2010
		£m	£m
Profit for the period		24.3	21.1
Other comprehensive income:
Currency translation differences - net of tax		(0.3)	0.3
		________	________
Total comprehensive income for the period		24.0	21.4
		________	________

Attributable to:
Owners of the parent Company		23.9	21.4
Non-controlling interest		0.1	-
		________	________
		24.0	21.4
		________	________

Consolidated balance sheet

As at		Unaudited 30 December 2011	Audited 31 December 2010
		£m	£m
Non-current assets
Property, plant and equipment		5.8	5.9
Goodwill		60.1	60.1
Other intangible assets		48.1	49.4
Deferred tax asset		4.2	6.1
Financial assets		2.4	2.5
		_______	_______
		120.6	124.0
		_______	_______
Current assets
Trade and other receivables		194.3	191.9
Cash and short-term deposits		22.3	13.9
		_______	_______
		216.6	205.8
		_______	_______
Total assets		337.2	329.8
		_______	_______
Current liabilities
Trade and other payables		161.9	163.8
Taxation liabilities		4.0	2.7
Short-term borrowings		20.5	31.7
Provisions		3.8	3.7
		_______	_______
		190.2	201.7
		_______	_______
Net current assets		26.4	4.1
		_______	_______
Non-current liabilities
Other payables		0.9	1.1
Provisions		5.6	7.8
Deferred tax liabilities		11.2	12.4
		_______	_______
		17.7	21.3
		_______	_______
Total liabilities		207.9	223.0
		_______	_______
Net assets		129.3	106.8
		_______	_______

Consolidated balance sheet (continued)

		Unaudited 30 December 2011	Audited 31 December 2010
		£m	£m
Equity
Issued share capital		0.4	0.4
Share premium		15.5	15.5
		_______	_______
		15.9	15.9
Other reserves		92.7	93.0
Retained earnings/(deficit)		20.7	(2.3)
		_______	_______
Total equity attributable to equity holders of the parent Company		129.3	106.6
Non-controlling interest		-	0.2
		_______	_______
Total equity		129.3	106.8
		_______	_______

Consolidated cash flow statement

For the fifty two weeks ended 30 December 2011

		Unaudited 2011	Audited 2010
	Notes	£m	£m
Cash flows from operating activities
Cash generated by operations	5	34.9	61.6
Taxation paid		(6.5)	(4.1)
		______	______
Net cash generated by operating activities		28.4	57.5
		______	______
Cash flows from investing activities
Acquisition of subsidiary (net of cash acquired)		-	(0.6)
Non-controlling interest acquired		(0.3)	-
Purchase of property, plant and equipment		(2.7)	(2.4)
Purchase of intangible assets		(2.5)	(1.7)
Proceeds from disposal of property, plant and equipment		0.2	1.0
Net movement in other financial assets		-	1.0
Finance income received		0.4	-
		______	______
Net cash utilised by investing activities		(4.9)	(2.7)
		______	______
Cash flows from financing activities
Net movement in short-term borrowings		8.9	(44.6)
Repayment of guaranteed secured loan notes		(20.0)	-
Purchase and cancellation of own shares		(1.2)	-
Capital element of finance lease payments		(0.1)	(0.2)
Finance expense paid		(2.3)	(3.6)
		______	______
Net cash outflow from financing activities		(14.7)	(48.4)
		______	______
Net increase in cash and equivalents		8.8	6.4
Opening cash and cash equivalents		13.9	6.5
Foreign exchange (losses)/gains on cash and cash equivalents		(0.4)	1.0
		______	______
Closing cash and cash equivalents		22.3	13.9
		______	______

Consolidated statement of changes in equity

For the fifty two weeks ended 30 December 2011

	Unaudited
	Total share capital and share premium	Other reserves	Retained earnings/(deficit)	Non-controlling interest	Total equity
	£m	£m	£m	£m	£m
1 January 2011	15.9	93.0	(2.3)	0.2	106.8
	______	______	______	______	______
Other comprehensive income	-	(0.3)	-	-	(0.3)
Profit for the period	-	-	24.2	0.1	24.3
Purchase of treasury shares	-	-	(1.2)	-	(1.2)
Non-controlling interest acquired	-	-	-	(0.3)	(0.3)
	______	______	______	______	______
30 December 2011	15.9	92.7	20.7	-	129.3
	______	______	______	______	______

Notes to the financial statements

1          Basis of preparation

I.            Statement of compliance

The financial statements presented in this financial report have been prepared in accordance with International Financial Reporting Standards (IFRS) and International Financial Reporting Interpretations Committee (IFRIC) interpretations as endorsed by the European Union that are applicable to the consolidated financial statements for the period ended 30 December 2011.

II.           Financial information

The financial information, which is unaudited, for the fifty two weeks to 30 December 2011 does not constitute the statutory accounts of the Group for the relevant period within the meaning of section 434 of the Companies Act 2006. Such statutory accounts will be completed in due course and delivered to the Registrar of Companies.

III.          Accounting policies, new IFRS and interpretations

The accounting policies used in this report are consistent with those applied at December 2010. No other new and/or revised IFRS and IFRIC publications that come into force in the period have had any impact on the accounting policies, financial position or performance of the Group.

2          Segment information

Fifty two weeks ended 30 December 2011 - Unaudited

	UK Staffing - Commercial	UK Staffing -Professional & Technical	US Staffing	Medacs Healthcare Group	Carlisle Support Services	Group total
	£m	£m	£m	£m	£m	£m
Revenue	496.1	193.1	166.6	186.8	88.8	1,131.4
	_______	_______	_______	_______	_______	_______
Segmental EBIT	19.8	7.8	4.7	9.1	2.0	43.4
	_______	_______	_______	_______	_______
Unallocated - Corporate cost						(4.7)
						______
Operating profit before amortisation of client relationships and non-recurring items						38.7
Amortisation of client relationships						(2.0)
Non-recurring items*						(1.9)
						______
Operating profit before finance costs and taxation						34.8
Finance costs - net						(1.9)
						______
Profit before taxation						32.9
Taxation charge						(8.6)
						______
Profit for the period						24.3
						______

*Non-recurring items comprise restructuring costs in Medacs Healthcare Group and

certain corporate legal costs.

Fifty two weeks ended 31 December 2010 - Audited

	UK Staffing - Commercial	UK Staffing -Professional & Technical	US Staffing	Medacs Healthcare Group	Carlisle Support Services	Group total
	£m	£m	£m	£m	£m	£m
Revenue	472.9	168.1	164.9	202.4	105.3	1,113.6
	_______	_______	_______	_______	_______	_______
Segmental EBIT	14.9	4.3	4.0	11.6	2.4	37.2
	_______	_______	_______	_______	_______
Unallocated - Corporate cost						(3.9)
						______
Operating profit before amortisation of client relationships						33.3
Amortisation of client relationships						(2.6)
						______
Operating profit before finance costs and taxation						30.7
Finance costs - net						(3.9)
						______
Profit before taxation						26.8
Taxation charge						(5.7)
						______
Profit for the period						21.1
						______

3        Taxation

	Unaudited 2011	Audited 2010
Current income tax
UK corporation tax on results for the period	7.2	6.9
Adjustments in respect of previous periods	(0.1)	(1.4)
	_______	_______
	7.1	5.5
Foreign tax in the period	0.6	0.3
	_______	_______
Total current income tax	7.7	5.8
Deferred tax charge/(credit)	0.9	(0.1)
	_______	_______
Total tax charge in the income statement	8.6	5.7
	_______	_______

 

4          Earnings per share

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

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. There are 83,165 options outstanding as at the balance sheet date (2010: 83,165).

The weighted average number of shares has been calculated for the period from 1 January 2011 to 30 December 2011 as 44,949,595 (December 2010: 45,029,014) excluding the shares owned by The Corporate Services Group Employee Share Trust.

5          Reconciliation of profit before tax to cash generated by operations

	2011	2010
	£m	£m
Profit before taxation	32.9	26.8
Adjustments for:
Net interest charge	1.9	3.9
Depreciation and amortisation	6.3	8.3
Other items	0.1	0.1
	______	______
	41.2	39.1
Increase in trade and other receivables	(2.0)	(1.2)
(Decrease)/increase in trade and other payables	(2.0)	25.6
Decrease in provisions	(2.3)	(1.9)
	______	______
Cash generated by operations	34.9	61.6
	______	______

6        Additional cash flow information

	1 January 2011	Cash flow	Foreign exchange	30 December 2011
	£m	£m	£m	£m
Cash at bank and in hand	13.9	8.8	(0.4)	22.3
	______	______	______	______
Guaranteed secured loan note	(20.0)	20.0	-	-
Finance leases	(0.1)	0.1	-	-
Revolving credit	(11.6)	(8.9)	-	(20.5)
	______	______	______	______
	(31.7)	11.2	-	(20.5)
	______	______	______	______
	(17.8)	20.0	(0.4)	1.8
	______	______	______	_______

 

Enquiries:  For further information please contact the appropriate individual below.

Impellam Group plc
Cheryl Jones, Chairman	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 Adrian Hargrave	Tel: [phone] Tel: [phone]
Threadneedle Communications
John Coles	Tel: [phone]

Note to Editors:

Impellam Group plc, traded on AIM (Symbol: IPEL), is a leading provider of human capital services including innovative solutions for the workforce, business process outsourcing (BPO), expertise in technical, professional and medical talent, flexible workforce consulting, staffing and recruitment.  The Group conducts business primarily in the UK and the US, with smaller operations in Australia, Ireland, New Zealand and mainland Europe. The Group employs nearly 6,000 people, including 2,200 managers and consultants and more than 3,500 support services workers, across a network of 230 branch and regional offices. The Group operates more than 15 specialty brands across a broad range of staffing sectors which are complemented by businesses in the outsourced support services sector. Impellam Group is ranked 15th on the Staffing Industry Analysts' 2010 Top Global Staffing Companies List.

Business Segment	Brand alignment
UK Staffing - Commercial	The UK Commercial Staffing brands provide specialised temporary, permanent and contract recruitment services in commercial staffing sector and include:  Blue Arrow (industrial/manufacturing, distribution/warehousing, driving, office/call centre and catering/cleaning), Tate (office/administrative /HR) and ABC Contract Services (construction and telecoms). Additionally, this segment provides business process outsourcing (BPO), flexible workforce consulting and managed services solutions for clients with complex contingent workforces through the Carlisle Managed Solutions (managed services) brands.
UK Staffing - Professional & Technical	The UK Professional & Technical Staffing brands are leading providers of permanent, contract and temporary recruitment services, specialising in the supply of trained and qualified professionals to specific vertical industries. These brands include: S∙COM (IT/engineering/telecomms), SRG (clinical/ scientific), Chadwick Nott (legal), Hewitson Walker (finance/accounting), Celsian Education (teachers/school support staff) and Austin Benn (sales/marketing).
US Staffing	The US Staffing brands provide temporary staffing and permanent placement in both the commercial and professional/technical sectors and include: CORESTAFF Services and Leafstone (Call centre/customer care, engineering, IT, light industrial, office/clerical, professional, skilled trade and technical), S∙COM (IT/engineering/telecom), SRG Woolf (clinical/scientific), InfoCurrent (information/records management and library services). The Guidant Group provides select BPO services including vendor-on-premise programmes, payroll services and high-touch managed services solutions for contingent workforces that add control and intelligence to all the "people" functions across a client's organisation.
Medacs Healthcare Group	Medacs Healthcare Group is a leading specialist provider of medical and social care staffing and recruitment services, and provides innovative outsourced healthcare solutions in both the public and private sectors.
Carlisle Support Services	Carlisle Support Services provides a outsourced facilities services such as cleaning, security, event support services, retail merchandising services and interiors which allow clients to control costs and focus on their core business activities.

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