Preliminary Results - Unaudited

RNS Number : 8708Q

Impellam Group plc

03 March 2016

 



PRELIMINARY RESULTS- UNAUDITED

Impellam Group plc ("Impellam") - London AIM: IPEL: 3 March 2016

Impellam announces its unaudited final results for the 52 weeks ended 1 January 2016

Key financial highlights                                  

52 Weeks         53 Weeks

                                                                        FY 2015            FY 2014            Inc/(Dec)

Managed Services Spend Under                     £ 2,318.0           £ 1,581.3           46.6%

Management (£ millions)

Group Supply (£ millions)                                £ 998.5             £ 521.2             91.6%

Revenue (£ millions)                                        £ 1,777.3           £ 1,323.4           34.3%

Gross Profit (£ millions)                                    £ 233.7             £ 193.9             20.5%

Managed Services & Specialist Staffing                     

Operating profit*(£ millions)                             £ 55.8               £41.6                34.1%

Profit Conversion* (%)                                      22.6%               19.6%               3.1ppts

Profit before tax (£ millions)                            £ 39.4               £ 31.6               24.7%

Tax rate (%)                                                     9.9                    15.8                  (5.9) ppts

Adjusted EPS (pence)                                      88.6                  68.1                  30.1%

Final dividend (pence)                                     10.0                  7.75                  29.0%

Total dividend (pence)                                     17.0                  14.0                  21.4%

Net debt/EBITDA                                              2.0                    0.3                    567%

DSO (days)                                                       33.5                  40.8                  (7.3) days

*before separately disclosed items and amortisation of customer lists

Key operational highlights

·      Cultural change programme continues to gather pace across the Group resulting in improved customer and staff retention

·      Successfully integrated the 2 UK acquisitions from 2014 into the Group (Lorien and Career Teachers) with strong trading performance in their first full year of ownership

·      2 further acquisitions completed in 2015 (Global Group and Bartech) expanding our geographic, sector and service coverage

·      Total Spend Under Management ('SUM') for our Managed Service customers is now in excess of £4bn per annum

·      New £250m 4 year revolving credit facility taken out in the year to give the Group a flexible capital base to fund its organic growth and support further M&A growth

·      Overall EBITDA growth of 35.8% to £57.7m

·      Organic EBITDA growth of 10.8%

·      Excluding impact of issues in North America Specialist Staffing, organic EBITDA growth of 25%

·      9% reduction in support costs

·      A strong performance in Managed Services with gross profit increasing significantly and the conversion of gross profit into operating profit improving in both the UK and North America

·      Continued focus on segmentation into Specialist Staffing and Managed Services has helped the UK Specialist Staffing businesses to improve gross profit margins from 20.0% to 20.9% and has improved overall conversion from 19.6% to 22.6%

·      Tax rate reduced to 9.9% due to US tax losses

·      DSO reduced to 33.5 days due to impact of Bartech acquisition

Financial results for the 52 weeks ended 1 January 2016 - unaudited

The table below sets out the financial results for the Group by segment for the 52 weeks ended 1 January 2016 (the 2014 financial year comprised 53 weeks)

		Revenue					Gross profit					Operating profit
£'m		2015		2014	% change4		2015		2014		% change4	2015	2014
Spend Under Management 1 - United Kingdom		1,543.6		978.8
Spend Under Management 1- North America		774.4		602.5
Group Supply 2- United Kingdom		941.9		458.5
Group Supply 2- North America		56.6		62.7
Managed Services - UK 3		1,036.0		658.2	57.4%		67.1		49.4		35.8%	23.1	16.0
Gross Profit %							6.5%		7.5%
Specialist Staffing - UK		609.2		544.0	12.0%		127.6		108.6		17.5%	28.6	24.0
Gross Profit %							20.9%		20.0%
Managed  Services - North America		101.3		95.3	(1.4)%		19.9		16.2		14.3%	3.1	0.6
Gross Profit %							19.6%		17.0%
Specialist Staffing - North America		101.2		91.4	2.6%		19.1		19.7		(10.2)%	1.0	2.8
Gross Profit %							18.9%		21.6%
Inter-segment revenues		(70.4)		(65.5)			-		-			-	-
Total staffing services		1,777.3		1,323.4	34.3%		233.7		193.9		20.5%	55.8	43.4
Shared costs5												-	(1.8)
Total		1,777.3		1,323.4			233.7		193.9			55.8	41.6
Corporate costs												(2.9)	(3.6)
Amortisation of customer relationships												(2.3)	(1.3)
Operating profit before separately disclosed items												50.6	36.7
Add back: depreciation and amortisation6												7.1	5.8
EBITDA												57.7	42.5
Separately disclosed items												(5.7)	(2.7)
Share based payment												(0.4)	-
Operating profit												44.5	34.0

1 Spend Under Management is the total value of client funds managed including where we operate as an agent.

2 Group supply is the value of the Spend Under Management supplied by other areas of the Group

3 2014 restated to reflect incorporating Carlisle Support Services into UK Managed Services

4 % change measured at constant currency rates (2014 results restated at 2015 rates)

5 2014 restated to show amortisation of customer relationships separately.  The remainder represents unallocated depreciation.

6 Excludes £0.2m (2014: £0.2m) depreciation relating to the Managed Services business charged above the line in cost of sales which is not added back in arriving at EBITDA

Chairman's Comments on the Results

It has been another year of significant growth for Impellam and I am pleased with the performance of the Group, given that there have been challenging external factors. Our markets - in particular healthcare and blue collar - have seen disruption around caps on rates for doctors and nurses and the continuing impact of the minimum and living wage. Despite this, our robust portfolio of Managed Services and Specialist Staffing businesses has ensured we have delivered a good set of results.

We have traded in line with expectations and have progressed well in delivering our strategic objectives, set out by our CEO, Julia Robertson last year. We completed two acquisitions in 2015, Global Group and Bartech Holdings, and both are integrating well into the Impellam family. Cultural transformation has also been high on the priority list and we are already seeing tangible results across the business.

Subject to shareholder approval, the Board is proposing a final dividend in respect of 2015 of 10p per share, amounting to £5.0m, to be paid on 28 July 2016, following the Annual General Meeting on Wednesday 29 June 2016 at 9.00am. Other than the appointment of our Group Finance Director, Darren Mee, in February 2015 I can report that there were no changes to the Board of Directors since my report on last year's results.   

Finally, I would like to thank all of our employees for their contribution in 2015, and my fellow Board members for their support, as the Group progresses on its journey to become 'the world's most trusted staffing company'.

Lord Ashcroft KCMG PC

Chairman

Chief Executive's Comments on the Results

We can look back on 2015 with a good deal of pride.

It was a year when we made significant progress in delivering our strategy. Not only did we achieve our financial commitments, but successfully integrated two acquisitions from 2014 - Lorien and Career Teachers - to the point where they performed ahead of expectations.

This augurs well for two further acquisitions, Global Group and Bartech, which we completed in 2015. We're excited about the extra dimensions that both will bring to Impellam in terms of expanding our geographic, sector and service coverage.

Perhaps most notable are the clear signs that our cultural transformation is yielding tangible results. The business has recorded a measureable improvement in high-retention behaviour and activity. We're attracting high-calibre people to work with us; significant customers to partner with; and great businesses to welcome into the Impellam family. In turn, this is giving us increasing momentum and strength.

During the year there have been several external factors influencing our key markets. Despite this, our robust and diversified portfolio - in particular, our mix between Managed Services and Specialist Staffing - has ensured that we have delivered a strong set of results.

In two of our largest markets, healthcare and blue collar, we have worked with our clients to address particular challenges. 

The UK healthcare market has faced significant disruption since caps on doctors' and nurses' rates were introduced in November 2015. Despite this, our market-leading Managed Services offering has optimised supply and demand for our customers, while ensuring that our healthcare staff work where they want, when they want.

In Blue Arrow, the impact of the minimum wage and living wage, together with the imminent removal of travel and subsistence allowances, has given us some challenges. However, it has enabled us to reinforce the economic benefit of our high-retention strategy.

We work collaboratively with our customers to ensure that our motivated, flexible employees drive productivity gains that more than compensate for increased hourly costs. In fact, our approach has won us many new customers who recognise the value of a genuinely engaged workforce.

Operating and financial summary

During the year we have enjoyed many successes in both Managed Services and Specialist Staffing.

Both culturally and operationally, the two offerings are designed to complement each other, ensuring that Group performance is optimal and predictable.

Our portfolio of Managed Service customers has grown following an excellent year for new business. Key wins include Airbus, Morrisons, Arqiva, the New South Wales Health Authority and City of Moreland Council (AU), the Royal Marsden NHS Trust and the University Hospitals Bristol NHS Trust.

As importantly, we have renewed and expanded 21 of our programmes, notably with British Airways, Interserve, Pitney Bowes, Hilton Hotels, City of London and Lancashire Teaching Hospitals.

We were delighted that Guidant, our multi-disciplinary Managed Service business with operations in the UK and US, was recognised with prestigious industry awards. They won the coveted APSCo RPO/MSP of the Year in 2015, and secured second in the HRO Baker's Dozen Customer Satisfaction Award.

These accolades reflect a proven ability to deliver substantial savings to our customers. For example, through the delivery of Managed Services and securing placements, Medacs Healthcare has delivered estimated annual savings of over £23m for the NHS in 2015.

Overall, our Managed Service spend (SUM) increased from £1,581.3m to £2,318.0m; our gross profit grew from £65.6m to £87.0m; and our operating profit increased from £16.6m to £26.2m. Our conversion of gross profit to operating profit improved from 25.3% to 30.1%.

Our Specialist Staffing brands provided bespoke services to over 9,000 organisations in 2015, and a key focus during the year was gross profit margin improvement as our customers recognised the value of the talented staff we place with them.

During 2015 our gross profit margin across our UK Specialist Staffing brands improved to 20.9% from 20.0% last year.  We expect over the next 12 months to see increasing numbers of customers doing business with more than one of our specialist brands. "Working across Boundaries" (WAB) was a key initiative to facilitate cross selling between our businesses. In the months since it launched, we generated over £350k of forward fees, which means we are on track to hit our £1m gross profit target this year. The WAB initiative will continue to be implemented across the Group in 2016.

To support our initiative to drive Group-fill rates within our Managed Service accounts, many of our Specialist Staffing brands have dedicated teams tasked with this goal. As a result, Group-fill increased from 33.0% to 43.1% year-on-year.

A key part of our strategy is the consistent application of our high-retention cycle and our specialist brands embrace this fully. Indeed, five of our UK brands have achieved 2 and 3-star accreditations from Best Companies, with three being ranked in the Sunday Times Top 100 Companies to Work For. In addition, both Tate and Blue Arrow won Investor in People Gold Awards.

At the heart of our offering are brands with proud histories and valuable customer loyalty. During 2015, Tate celebrated its 30-year anniversary and both SRG and Medacs celebrated 25 years apiece. We honour the heritage and individual personalities of our specialist brands and we now have 21 in the portfolio that each have a history stretching back 20 years or more.

Among other things, this heritage creates a virtuous circle: it enables us to attract and retain great people to work in our business, which in turn cements the loyalty and longevity of our customer relationships. We encourage our specialist brands to market themselves in an individual way, as befits their particular sector.

Among many initiatives in 2015, Blue Arrow delivered its third "Chef of the Year" competition. One of the judges was Michelin-starred chef and restaurateur Mark Sargeant, catapulting our new offering "Chefs by Blue Arrow" into the limelight. Tate continued to develop its PA network and the ever-popular 'Tate Guides', which provide advice on every stage of a career. Chadwick Nott was also awarded the Best Specialist Recruitment Business at the Global Recruitment Industry Awards 2015.

Within our Medacs Global Group business, we have seen particular growth in the mental health area. We were proud to develop the industry's first revalidation service for agency nurses in the UK, which includes a three-year Royal College of Nursing partnership.

Overall, our revenues from Specialist Staffing increased from £635.4m to £710.4m; our gross profit from £128.3m to £146.7m; and our operating profit from £26.8m to £29.6m. Our conversion of gross profit to operating profit decreased slightly from 20.9% to 20.2% due to issues in our North American business.

Across the portfolio, we measure customer retention as a key indicator of the strength of our High Retention strategy. I am therefore delighted to report that only one of our Top 50 customers was lost in 2015, and even this was due to our customer being acquired. Naturally, we have our sights set on getting them back!

Collectively, the focused delivery of our strategy, and the hard work of all our people, has enabled us to deliver revenue growth of 34.3% gross profit growth of 20.5% and EBITDA growth of 35.8%.

Our differentiated strategy

Our strategy remains unchanged, continuing to gain momentum and drive performance as our cultural transformation progresses.

Our vision is to become 'the world's most trusted staffing company'; trusted by our people, our customers, our candidates and our investors in equal measure. This vision drives every part of our strategy and gives clear guidance on the behaviours and actions we expect from all our people across the Group.

Our strategic objective is to grow ahead of the market and improve our margins. We are doing this by enhancing our customers' businesses through more productive and engaged people, while improving our conversion of gross profit to operating profit by being consistently reliable and delivering our promises.

Structurally, our business model underpins our strategy. Our portfolio is designed and led, culturally and operationally, to be robust through all stages of the economic cycle. With one clear vision, both our Managed Service and Specialist Staffing businesses put our customers, candidates, colleagues and investor stakeholders at the centre of their everyday actions, knowing that, over time, we have to deliver for all four.

So while other major staffing businesses may cannibalise, our businesses collaborate. We fill a high percentage of our Managed Service business from Specialist brands within the Group. This ensures choice for our candidates, the best person for the job for our customers, success for our people and higher margins for our investors. It also means that when the job market contracts, we are able to "feed family first", protecting all our stakeholders through every stage of the cycle.

However, our business model has another clear dimension. We aim to be a high-retention organisation that operates in a high-retention ecosystem. We choose to work with like-minded organisations since they recognise that people are assets who should be treated well. We seek to work with customers that are ambitious, growing and admired, offering both our business and our people an opportunity to make a difference. High retention organisations are also easier to recruit for, and people stay with them longer, so it is more efficient and profitable for us to engage with them.

Our approach is to recruit the right people, select and train them intensively, and give them the tools to do their job. We treat our people well and give them the space to develop and perform. We reward them properly with the result they stay with us for longer and are more productive. In turn, this makes our customers happier and more loyal, and they spend more of their time and money with us. We measure the success of this business model through staff, customer and candidate satisfaction and retention, and this gives us a forward indicator of financial performance.

Progress against our 2015 priorities

We have made considerable progress against each of our 2015 key priorities:

Developing our leaders and our culture to achieve our vision across the Group

Our cultural transformation has underpinned our operational and financial performance. To a large extent, this has been possible due to the work we have undertaken with our leaders across the Group.

Our Top 50 leaders have been introduced to the skills of entrepreneurial, commitment-based leadership and have been trained in everyday promise management.

They have all been encouraged to think deeply about their purpose as a leader and this authenticity and transparency has meant we can embed our promise-based culture in all our businesses and supporting functions. As a consequence, we have instilled a new aspiration, greater unity and a common language.

Refining our portfolio through highly targeted M&A

Building on the successful 2014 acquisitions of Lorien and Career Teachers, we completed two further important and strategic acquisitions in 2015. 

The Global Group acquisition, with operations in Australia, New Zealand, the Republic of Ireland and UK was completed in July. It extends the geographic footprint of our healthcare business more widely outside the UK, and it is in the process of being integrated with Medacs to form the Medacs Global Group.

The Bartech acquisition in December 2015 gives us increased scale in North America and we believe will drive growth in the continued operations and an improvement in conversions. The business will also accelerate achieving our strategy in the US, with its blend of Managed Services and Specialist Staffing, its opportunity for cross selling and Group-fill, and its strong cultural and operational match to our vision.

We will assess M&A targets on their ability to propel us towards achieving our ambitious plan. Above all, our due diligence will be relentlessly focused around people and culture - the key determinants of success in a service organisation such as Impellam.

Selective organic investment in key markets

During 2015, 272 people joined the Group, excluding those coming to us through acquisitions. A total of 78 joined to support new and expanded Managed Service programmes and 129 joined our Specialist Staffing businesses, with notable investments being made in Medacs, Blue Arrow and Tate. We also invested in our property portfolio during the year, upgrading and refurbishing 22 of our offices and replacing 19.

In 2015, Comensura invested in three strategic areas:

·      investment in key growth markets in both the UK private sector and the Australian public sector, with a 28% increase in productive heads;

·      development of our proprietary c.net technology, sharpening our intelligence on the changing needs of organisations, their hiring managers and recruitment suppliers. This investment is designed to future-proof Comensura's ability to manage a complex range of temporary, interim and contractor labour suppliers on behalf of customers; and

·      new product development in adult social care. The solution, which will be launched in April 2016, aims to help local authorities meet demand and budgetary pressures, while also promoting better outcomes for members of the public, the public sector and the providers of care and support.

Investing in our technology platforms; in particular, our digital reach

Our business needs to deliver an outstanding digital experience in order to continue to compete effectively and efficiently. We have therefore committed to replace all our brand websites during 2015 and 2016.  Although they share a common platform, they are individually designed to support our multi-brand specialist strategy. They are fully accessible by every type of device and are integrated into our proprietary CRM system to create a seamless candidate and customer journey.

With an anticipated longevity of 5-7 years, we expect this significant investment to reduce our cost per hire, optimise our client services and increase the effectiveness of our fee earners, all of which will translate to better conversion of gross profit to operating profit.  The first of these new websites went live in Q4 2015, and the remainder will follow over the course of 2016.

During the year we made tactical investments in CRM with new front office systems for two of our specialist brands, SRG and Hewitson Walker. These investments are expected to increase productivity, improve compliance and deliver better-engaged candidates.

We also launched our strategic programme of CRM development, Ignite; it is powered by salesforce.com and will be rapidly deployed during 2016.

The focus here is to increase candidate retention, reduce administration, improve productivity and automate time sheeting and billing, all of which will have a positive impact on financial performance.

Enhancing the performance in our North American, Asia Pacific and other non-UK geographies to support our customers' growth plans

During 2015, we re-aligned our North American business with the Group strategy and structure of Managed Services and Specialist Staffing. This enabled us to remove $4m in redundant costs that, together with growth in our Managed Services business, substantially compensated for reduced spend from a few key Specialist Staffing customers.

Our operational management was highly resilient and focused, with H2 performance showing a significant improvement on H1.

Having taken this action, we made the strategic acquisition of Bartech. This business has a strong cultural fit to the Group, brings talented leadership to the enlarged business and will provide both revenue and synergy benefits in 2016. Conversion of gross profit to operating profit for this part of the Group will therefore improve significantly.

As well as our activities in North America, the acquisition of the Global Group significantly increased our non-UK healthcare revenues and further widened the candidate base.

Through Global Medics Ireland, the leading supplier of locum doctors in The Republic of Ireland, the Group secured access to an important new market and candidate pool. In addition, combining the Group's operations in Australasia has improved both the supply of doctors and broadened the Managed Service customer base. Medacs Global Group expects to achieve further synergy benefits by sharing knowledge and technology, and by broadening its global candidate proposition.

Comensura in Australia enjoyed a positive year. Our investment in productive new heads and effective marketing has resulted in raising awareness in the government sector of our neutral vendor Managed Service. The year saw significant wins including the City of Moreland and New South Wales Health.

Our strategy to secure places on statewide procurement frameworks has also seen positive results in new customer wins and a broadened access to the government sector. Our ambition for the future is to retain existing customers and continue to build our in-country infrastructure as we grow market share sustainably across the Victoria, South Australia and New South Wales regions.

Refining further our operational structure and cost base, supporting Managed Services and Specialist Staffing

As we reported earlier, we now have a robust and diversified portfolio with a market-leading position in UK Managed Services (as measured by spend under management), customer satisfaction and a portfolio of many flagship brands in Specialist Staffing.

Our Managed Service brands provide us with resilient earnings, with better forward visibility and high conversions of gross profit to operating profit. Our Specialist Staffing businesses operate at higher margins; this boosts our conversions when the economic cycle is strong and candidates are in short supply.

By rigorously focusing the businesses on each segment, we have continued to question and drive out redundant cost, and we see further opportunity for this in the future.

Our 2016 priorities

1.   Achieve an increasingly consistent application of our high-retention cycle, to embed a culture in which our people can thrive and flourish:

·      attract and select the right people

·      develop, reward and keep our people - from apprentices to CEOs

·      craft career paths and continue to deliver leadership development and promise management training

·      invest in websites, digital and IT infrastructure

2.   Retain agility by growing organically ahead of the market and through carefully selected acquisitions, all the time maintaining sensible debt leverage

·      develop a sales prowess that matches our service prowess

·      target geographic- and sector-based growth, and service diversification

·      focus on getting things right first time, reducing waste and re-work

·      drive cross-business sales opportunities to win and retain more high-retention customers

·      increase our share of clients' gross spend on Managed Services (targeting 20% of the untapped element)

·      support entrepreneurship by celebrating and backing new ideas

·      drive synergy savings in North America following the integration of Bartech

·      collect our cash quickly and reduce our debt

Outlook

Having successfully passed through the establishing and reinforcing stages of our strategic plan and journey, we are now able to move at pace to the next stage of our transformation.

We will not let up on being operationally reliable and delivering our promises, and nor will we change direction. I am proud of the way that all Impellam people have pulled together to transform the business, while delivering on our financial commitments, and this will not change.

Although we anticipate continued turbulent conditions in the UK healthcare market in the short-term, we are confident that our strategy will give us the opportunity in the medium- to-long term to increase market share. This confidence is born out of the manner in which our talented teams in the Medacs Global Group have adapted to market conditions in the last quarter of 2015 and the feedback we are receiving from our customers.

Similarly, we anticipate that the ongoing impact of the Minimum/Living wage issue, the removal of travel and subsistence benefits and the introduction of the Apprenticeship Levy will all continue to require mindset changes in our UK blue-collar market in the short- to medium-term.

However, we are confident that our high-retention strategy, already embedded in the business, will become even more current and meaningful to our customers and will create market share gains.

In conclusion, I would like to thank all Impellam employees, candidates, customers and investors for their support in 2015. In 2016, you can expect more of the same: a company delivering on its promises and earning the trust of all its stakeholders.

Julia Robertson

Group Chief Executive Officer

Group Finance Director's Report

I am pleased to present the finance report on the results of the Group for the 52 weeks ended 1 January 2016, focussing on cashflow, funding, debt and tax.

The net cash generated from operations during the period was £20.7m (2014: £30.9 million). The cash conversion in 2014 of 78% of normalised EBITDA was positively impacted by a significant VAT deferral which unwound in 2015. The earlier year end date in 2015 also adversely impacted on customer receipts in the US from one of our biggest MSP customers. The like for like cash conversion in 2015 would have been 89% excluding these impacts. The second half of the year saw a much improved cash conversion of 119% of normalised EBITDA.

At the end of 2015, DSO stood at 33.5 days, 7.3 days better than the prior period (2014: 40.8 days), reflecting the increasing importance of our managed services business where DSOs are generally more favourable and our focus on cash collection. Day to day control of cash and tight control of working capital continues to be a priority for the Group.

Capital expenditure in the period was £109.9m (2014: £56.2m), including £101.9m on acquisitions (2014: £50.9m), including debt acquired.

The net finance expense of £4.6m (2014: £2.1m) reflects a higher level of borrowings, due to the acquisitions made in the period, albeit with continuing low borrowing costs in the UK and US linked to base rates.

In November 2015 the Group replaced its receivables financing agreements and term loans in the UK and US with a new 4 year £250m global Revolving Credit Facility (RCF). The facility is provided by a syndicate of six banks led by Barclays, with an option to extend to November 2020 and with an accordion element of an additional £50m.The new RCF provides the Group with the flexibility to fund its working capital as well as the M&A pipeline and significantly reduces the operational complexity associated with the invoice discounting facility that it replaced.

Rates of interest for the RCF are based on LIBOR plus a margin based on the net debt to adjusted EBITDA leverage. The margin ranges from 1.45% to 2.4% depending on the leverage, which is tested quarterly.

Incorporated into the RCF is a letters of credit facility which at 1 January 2016 amounted to £4.5m (2 January 2015: £5.2m).

The Group does take advantage of a number of non-recourse factoring agreements in order to accelerate payment of certain receivables. At 1 January 2016 these amounted to £14.7million.  These agreements accrue interest at between 0.75% and 1.85% over LIBOR.

A significant priority for the Group continues to be to focus on the conversion of EBITDA into sustained positive cash flow by controlling its working capital in order to enable it to reduce its borrowings and to continue to invest in high returning projects.

Borrowing levels are controlled by the Group finance department which manages treasury risk in accordance with policies set by the Board. This department does not engage in speculative transactions nor does it operate as a profit centre. Short term debt and cash are maintained at floating rates.

The Group's financial liabilities are denominated primarily in sterling, although post year end a portion of the RCF has been drawn in US$ to provide a hedge against the US operations' profit streams and net assets which, when reported at a Group level, are affected by movements in exchange rates.   Exposure to currency risk at a transactional level is generally minimal, with most transactions being carried out in local currency.

Movement in net debt	Unaudited 52 weeks  ended   1 January	Audited 53 weeks  ended 2 January
	2016	2015
	£ m	£ m
Profit before taxation	39.4	31.6
Add back non-cash items:
Net finance expense	4.6	2.1
Depreciation, amortisation and impairment	7.3	6.0
Other non-cash items	0.1	-
Cash from operations before working capital changes	51.4	39.7
Movements in working capital	(30.7)	(8.8)
Cash generated by operations	20.7	30.9
Taxation paid	(4.8)	(4.7)
Finance expense paid	(3.7)	(1.4)
Investing activities (including debt acquired)	(109.9)	(56.2)
Free cash flow	(97.7)	(31.4)
Foreign exchange	1.6	(0.2)
Issue of shares	-	14.6
Dividends	(7.3)	(5.8)
Movement in net debt	(103.4)	(22.8)

Net debt

	Audited 2 January 2015	Cash flow	Foreign exchange	Unaudited 1 January 2016
	£ m	£ m	£ m	£ m
Cash and short-term deposits	53.4	11.0	1.6	66.0
Revolving credit	(54.0)	(129.7)	-	(183.7)
Hire purchase	-	(0.5)	-	(0.5)
Term loan	(14.2)	14.2	-	-
	______	_____	_____	______
Net debt	(14.8)	(105.0)	1.6	(118.2)
	_______	_____	_____	______

Taxation

A tax charge of £3.9m (2014: £5.0m) was recorded in the period. The Group has access to substantial tax losses in the US.  The US group is expected to be profitable going forward and is not expected to pay any material amounts of corporate income tax in the foreseeable future.   Within the UK, the Group is a major contributor to the UK Treasury. During the period, the UK businesses collected and remitted payments to the UK Treasury amounting to £289.1m (2014: £275.1m) in the form of VAT, income tax, national insurance, stamp duty as well as corporation tax. Of this amount, employer's national insurance, stamp duty and corporation tax of £59.6m (2014: £55.4m) was a cost taken by the business.

Capital management

The Group's capital base is primarily used to finance its working capital requirement; the key component of which is trade receivables. Trade receivables in the staffing and support services sectors are managed according to a range of DSO targets. Terms of trade are strictly adhered to and monitored, with the approval of extended payment terms requiring senior finance involvement in accordance with delegated authority policies. In certain of the Group's Managed Services businesses, the amounts payable to third party suppliers are not due until shortly after the receipt of the client receivable.

As noted above the Group has committed facilities that ensure there is sufficient liquidity to meet ongoing business requirements. The primary objectives of the Group's capital management are to ensure that it maintains a good credit rating in order to support its business, maximise shareholder value and to safeguard the Group's ability to continue as a going concern.

Going concern

After making appropriate enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. In coming to their conclusion the Directors have considered the Group's profit and cash flow plans for the coming period together with outline projections for 2017 and 2018. Using this planned level of profit expected, returns to shareholders and planned capital expenditure, the amount of borrowing required to fund the Group's activities is determined. This is then compared to the bank lending facilities currently committed and expected to be available to the Group. The excess of facilities over and above the funding requirement is known as "headroom".

Also considered is the projection of compliance with the financial covenants implied by these plans. In addition, these figures are overlaid by various sensitivities to take account of possible changes to the economic environments in which the Group operates.

The impact on Group headroom and covenant of each of these sensitivities is then considered together with the likelihood of each of these occurring either singly or in combination.

On a regular basis, and at least quarterly, the Board review updated projections of future borrowing requirements, facility usage and resulting headroom, together with projected covenant compliance; these are based upon the latest actual results and borrowing position supplemented by regularly updated profit forecasts. Based on the above, the Directors consider it appropriate to continue to adopt the going concern basis in preparing the financial statements.

Insurance

The Group maintains a comprehensive insurance programme with a number of reputable third party underwriters. Insurance is brokered at a Group level. The Group's insurance policies are reviewed and updated annually to ensure that there is adequate cover for insurable risks and that the terms of those policies are optimised.

Principal risks facing the business

The Group has a number of key risks which could have a material impact on long-term performance. Each business segment considers strategic, operational and financial risks and identifies actions to mitigate those risks on a regular basis. We recognise that effective risk management is fundamental in helping the Group to deliver its strategy.

Darren Mee

Group Finance Director

Consolidated income statement
		Unaudited 52 weeks	Audited 53 weeks
For the fifty-two weeks ended 1 January 2016		1 January	2 January
		2016	2015
	Notes	£ m	£ m
Revenue	2	1,777.3	1,323.4
Cost of sales		(1,543.6)	(1,129.5)
		_________	_________
Gross profit		233.7	193.9
Administrative expenses		(189.2)	(159.9)
		_________	_________
Operating profit	2	44.5	34.0
Operating profit before separately disclosed items		50.6	36.7
Separately disclosed  items	3	(5.7)	(2.7)
Share based payment		(0.4)	-
		_________	_________
Operating profit		44.5	34.0
Finance expense		(4.6)	(2.1)
Finance expense - separately disclosed items	3	(0.5)	(0.3)
		_________	_________
Profit before taxation		39.4	31.6
Taxation charge	4	(3.9)	(5.0)
		_________	_________
Profit for the period attributable to owners of the parent Company		35.5	26.6
		_________	_________

Earnings per share	5
Attributable to equity holders of the parent Company -       basic		72.2p	59.6p
-       diluted		72.1p	59.6p
Consolidated statement of comprehensive income
For the fifty-two weeks ended 1 January 2016		Unaudited 52 weeks 1 January 2016	Audited 53 weeks 2 January 2015
		£ m	£ m
Profit for the period		35.5	26.6
Other comprehensive income:
Items that may be subsequently reclassified into income:
Currency translation differences (net of tax)		2.4	0.8
		_________	_________
Total comprehensive income for the period, net of tax attributable to owners of the parent Company		37.9	27.4
		_________	_________

Consolidated balance sheet
As at 1 January 2016		Unaudited 1 January	Audited     2 January
		2016	2015
		£ m	£ m
Non-current assets
Property, plant and equipment		7.3	5.7
Goodwill		160.0	80.8
Other intangible assets		129.6	85.7
Deferred tax assets		7.1	4.1
Financial assets		1.7	1.8
		_________	_________
		305.7	178.1
		_________	_________
Current assets
Trade and other receivables		553.3	286.3
Cash and short-term deposits		66.0	53.4
		_________	_________
		619.3	339.7
		_________	_________
Total assets		925.0	517.8
		_________	_________
Current liabilities
Trade and other payables		498.6	260.6
Taxation liabilities		6.5	2.9
Short-term borrowings		40.7	57.0
Provisions		1.4	1.4
		_________	_________
		547.2	321.9
		_________	_________
Net current assets		72.1	17.8
		_________	_________
Non-current liabilities
Other payables		11.9	8.0
Long-term borrowings		143.5	11.2
Provisions		2.0	4.5
Deferred tax liabilities		28.1	16.4
		_________	_________
		185.5	40.1
		_________	_________
Total liabilities		732.7	362.0
		_________	_________
Net assets		192.3	155.8
		_________	_________

		Unaudited 1 January	Audited    2 January
		2016	2015
		£ m	£ m
Equity
Issued share capital		0.5	0.5
Share premium account		30.1	30.1
		_________	_________
		30.6	30.6
Other reserves		108.9	100.6
Retained earnings		52.8	24.6
		_________	_________
Total equity attributable to equity holders of the parent Company		192.3	155.8
		_________	_________

Consolidated cash flow statement
For the fifty-two weeks ended 1 January 2016		Unaudited 52 weeks 1 January	Audited 53 weeks 2 January
		2016 £ m	2015 £ m
Cash flows from operating activities
Profit before taxation		39.4	31.6
Adjustments for:
Net finance expense		4.6	2.1
Depreciation and impairment of property, plant and equipment**		2.5	2.0
Amortisation of software and client relationships		4.8	4.0
Loss on disposal of property, plant and equipment		0.1	-
		_________	_________
		51.4	39.7
Increase in trade and other receivables		(31.2)	(2.0)
Increase in trade and other payables		3.3	10.5
Decrease in provisions		(2.8)	(17.3)
		_________	_________
Cash generated by operations		20.7	30.9
Taxation paid		(4.8)	(4.7)
		_________	_________
Net cash generated by operating activities		15.9	26.2
		_________	_________
Cash flows from investing activities
Acquisition of subsidiary (net of cash and debt acquired)		(101.9)	(50.9)
Purchase of property, plant and equipment		(3.5)	(3.2)
Purchase of intangible assets		(4.6)	(2.1)
Net movement in other financial assets		0.1	-
		_________	_________
Net cash utilised by investing activities		(109.9)	(56.2)
		_________	_________
Cash flows from financing activities
Shares issued (net of transaction costs)		-	14.6
New long-term loans		25.0	15.0
Repayment of long-term loans		(39.2)	(0.8)
New revolving credit facility		183.7	-
Net movement in short-term borrowings		(54.0)	26.9
Capital element of finance lease payments		0.5	-
Dividends paid		(7.3)	(5.8)
Finance expense paid		(3.7)	(1.4)
		_________	_________
Net cash inflow from financing activities		105.0	48.5
		_________	_________
Net increase in cash and cash equivalents		11.0	18.5
Opening cash and cash equivalents		53.4	35.1
Foreign exchange gains / (losses) on cash and cash equivalents		1.6	(0.2)
		_________	_________
Closing cash and cash equivalents*		66.0	53.4
		_________	_________

* Unrestricted cash, available to the Group

** Includes £0.2m (January 2015: £0.2) depreciation relating to the Managed Services business charged above the line in cost of sales which is not added back in arriving at EBITDA

Consolidated statement of changes in equity
For the fifty-two weeks ended 1 January 2016	Total share capital and share premium	Other reserves	Retained earnings	Total equity
Audited	£ m	£ m	£ m	£ m
28 December 2013	16.0	92.3	3.8	112.1
	______	______	______	______
Currency translation differences (net of tax)	-	0.8	-	0.8
	______	______	______	______
Total other comprehensive income	-	0.8	-	0.8
Profit for the period	-	-	26.6	26.6
	______	______	______	______
Total comprehensive income in period	-	0.8	26.6	27.4
Shares issued in placing	15.0	-	-	15.0
Merger reserve created on acquisition	-	7.5	-	7.5
Transaction costs relating to share placing	(0.4)	-	-	(0.4)
Dividends paid	-	-	(5.8)	(5.8)
	______	______	______	______
2 January 2015	30.6	100.6	24.6	155.8
	______	______	______	______
Unaudited
3 January 2015	30.6	100.6	24.6	155.8
	______	______	______	______
Currency translation differences (net of tax)	-	2.4	-	2.4
	______	______	______	______
Total other comprehensive income	-	2.4	-	2.4
Profit for the period	-	-	35.5	35.5
	______	______	______	______
Total comprehensive income in period	-	2.4	35.5	37.9
Merger reserve created	-	5.5	-	5.5
Share based payment charge	-	0.4	-	0.4
Dividends paid	-	-	(7.3)	(7.3)
	______	______	______	______
1 January 2016	30.6	108.9	52.8	192.3
	______	______	______	______

1.   Basis of preparation

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 1 January 2016.

Financial information

The financial information, which is unaudited, for the fifty two weeks to 1 January 2016 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.

Accounting policies, new IFRS and interpretations

The accounting policies used in this report are consistent with those applied at 2 January 2015. No other new and/or revised IFRS and IFRIC publications that come into force in the period and were adopted have had any impact on the accounting policies, financial position or performance of the Group.

2.   Segment information - unaudited

Fifty-two weeks ended 1 January 2016

	Revenue	EBITDA before separately disclosed  items and corporate costs	Depreciation and amortisation*	Segment Operating profit/(loss) before separately disclosed  items	DSO Days
	£ m	£ m	£ m	£ m
Managed Services - United Kingdom	1,036.0	24.2	(1.1)	23.1	30.3
Specialist Staffing - United Kingdom	609.2	31.0	(2.4)	28.6	41.0
Managed Services - North America	101.3	4.0	(0.9)	3.1	29.1
Specialist Staffing - North America	101.2	1.4	(0.4)	1.0	44.5
Inter-segment revenues	(70.4)	-	-	-	-
Shared costs	-	-			-
	_______	_______	_______	_______	______
Operating segments	1,777.3	60.6	(4.8)	55.8	33.5
	_______	_______	_______	_______	______

^* A further £0.2m (January 2015: £0.2m) of depreciation relating to the Managed Services - United Kingdom businesses is charged above the line in cost of sales.

Fifty-three weeks ended 2 January 2015 - audited

	Revenue	EBITDA before separately disclosed  items and corporate costs	Depreciation and amortisation	Segment Operating profit/(loss) before separately disclosed  items	DSO Days
	£ m	£ m	£ m	£ m
Managed Services** - United Kingdom	658.2	16.5	(0.5)	16.0	27.5
Specialist Staffing - United Kingdom	544.0	25.0	(1.0)	24.0	39.4
Managed Services - North America	95.3	1.7	(1.1)	0.6	20.2
Specialist Staffing - North America	91.4	3.0	(0.2)	2.8	41.6
Inter-segment revenues	(65.5)	-	-	-	-
Shared costs***	-	(0.1)	(1.7)	(1.8)	-
	_______	_______	_______	_______	_______
Operating segments	1,323.4	46.1	(4.5)	41.6	40.8
	_______	_______	_______	_______	_______

^** 2014 restated to reflect incorporating Carlisle Support Services into UK managed segment

^*** 2014 restated to show amortisation of customer relationships outside of the operating segments

Reconciliation of segment operating profit to profit after tax is as follows:

	Unaudited 52 weeks 1 January 2016 £ m	Audited 53 weeks 2 January  2015 £ m
Segment operating profit before separately disclosed items	55.8	41.6
Corporate costs	(2.9)	(3.6)
Amortisation of customer relationships	(2.3)	(1.3)
	_______	_______
Operating profit before separately disclosed  items	50.6	36.7
Separately disclosed  items#	(5.7)	(2.7)
Share based payments	(0.4)	-
	_______	_______
Operating profit	44.5	34.0
Finance expense	(4.6)	(2.1)
Finance expense - separately disclosed	(0.5)	(0.3)
Taxation charge	(3.9)	(5.0)
	_______	_______
Profit for the period from continuing operations	35.5	26.6
	_______	_______

^# Separately disclosed items acquisition costs, abortive transaction costs and senior management restructuring, net of a credit from onerous contract provisions.

3.     Separately disclosed  items

	Unaudited 52 weeks ended 1 January 2016 £ m	Audited 53 weeks ended 2 January 2015 £ m
Acquisition costs (a)	1.4	3.0
Abortive transaction costs (b)	-	0.5
Senior management restructuring (c)	0.8	0.5
Contract exit costs, onerous contract provision and associated impairment of assets - Carlisle (d)	-	(1.3)
US businesses restructuring (e)	2.3	-
Disposal of Interiors business (f)	1.2	-
	______	______
Total included in Operating profit	5.7	2.7
	______	______
Finance expense - separately disclosed (g)	0.5	0.3
	______	______

a)    The costs associated with the acquisition of Bartech Group Inc and Global Group (UK) Limited (January 2015: Career Teachers Limited and Lorien Limited) have been expensed to the income statement as a separately disclosed  item due to the size of expense and as the costs are not incurred in the normal course of trading. These costs include bonuses arising from the achievement of successful acquisitions in the year.

b)    Certain third party deal costs were incurred during the period in connection with a potential acquisition including associated fund raising costs. The costs have been taken to the income statement as separately disclosed items due to their size and as they were not incurred in the normal course of trading.

c)     Senior management structure changes during the course of the current and prior year resulted in termination payments being made. These have been shown as highlighted due to being outside of normal activities and due to their significance.

d)    During the previous period the Group has successfully negotiated the exit of one of the onerous contracts, the expected losses of which it had previously provided for in full to the end of the contract term.  As a consequence, the expected future losses have been reduced which has allowed £nil (January 2015: £1.3 million) of excess provision to be released to the income statement.

e)    During 2015 the US business, was restructured which resulted in redundancy costs and certain property exit, or partial exit, costs. In addition a number of balance sheet items were identified as non-recoverable and have been written off

f)      The Carlisle Interiors business was sold on 29 January 2016. The business was non-core to the Group and loss making. The losses and costs of disposal for the period 3 January 2015 to 1 January 2016 are shown as separately disclosed.

g)    Finance costs previously capitalised have been written off due to the negotiation of a new Receivable Financing agreement pursuant to various acquisitions.

4.   Taxation

Taxation charge in the income statement
	Unaudited 52 weeks ended 1 January 2016	Audited 53 weeks ended 2 January 2015
	£ m	£ m
Current income tax
UK Corporation tax on results for the period	7.2	6.2
Adjustments in respect of previous periods	-	0.3
	______	______
	7.2	6.5
Foreign tax in the period	1.0	0.1
	______	______
Total current income tax	8.2	6.6
Deferred tax credit	(4.3)	(1.6)
	______	______
Total taxation (credit) / charge in the income statement	3.9	5.0
	______	______

5.   Earnings per share

Basic earnings per share amounts are calculated by dividing the profit for the period attributable to the owners 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 were 1,300,000 options outstanding at 1 January 2016.

Excluding the 19,841 shares owned by The Corporate Services Group Ltd Employee Share Trust, the weighted average number of shares in 2016 is 49,155,937 (January 2015: 44,625,529) and the fully diluted average number of shares is 49,208,447 (January 2015: 44,625,529).

The calculations of both basic and diluted earnings per share ("EPS") are based upon the following consolidated income statement data:

	Unaudited 52 weeks ended 1 January 2016	Audited 53 weeks ended 2 January 2015
	£ m	£ m
Profit for the period	35.5	26.6
Separately disclosed  items (net of tax)	6.3	2.8
Customer relationship amortisation (net of tax)	1.7	1.0
	_________	_________
Adjusted profit for the period	43.5	30.4
	_________	_________

EPS - Basic calculation	Unaudited 52 weeks ended 1 January 2016	Audited 53 weeks ended 2 January 2015
	Pence	Pence
Unadjusted earnings per share	72.2	59.6
Separately disclosed  items (net of tax)	12.9	6.3
Customer relationship amortisation (net of tax)	3.5	2.2
	_________	_________
Adjusted earnings per share *	88.6	68.1
	_________	_________
EPS - Diluted calculation	Unaudited 52 weeks ended 1 January 2016	Audited 53 weeks ended 2 January 2015
	Pence	Pence
Unadjusted earnings per share	72.1	59.6
Separately disclosed  items (net of tax)	12.8	6.3
Customer relationship amortisation (net of tax)	3.5	2.2
	_________	_________
Adjusted earnings per share *	88.4	68.1
	_________	_________

* Additional earnings per share calculations have been presented in order to provide information on the underlying performance of the Group before separately disclosed expenditure.

6.     Business combinations

a) Acquisition of Global Group (UK) Limited - unaudited

On 30 July 2015 the Group acquired 100% of the shares of Global Group (UK) Limited (''Global Group''), an unlisted company incorporated in the United Kingdom in exchange for cash. Global Group is a specialist doctors locum recruitment business operating in Ireland, Australasia and the UK, which is complimentary to the Medacs business and propels the healthcare business forward significantly outside the UK.

Assets acquired and liabilities assumed

The fair values of identifiable assets and liabilities of Global Group as at the date of acquisition were:

		Acquired book value £ m	Fair value recognised on acquisition £ m
Property, plant and equipment		0.3	0.3
Software		0.2	0.2
Brand value		-	7.9
Customer relationships		-	8.6
Trade and other receivables		16.9	16.9
		17.4	33.9
Overdrafts and short-term deposits		(7.6)	(7.6)
Trade and other payables		(5.9)	(5.9)
Taxation liabilities		(1.1)	(1.1)
Deferred tax liabilities		-	(2.7)
		(14.6)	(17.3)
Total identifiable net assets at fair value		2.8	16.6
Goodwill arising on acquisition			11.5
Purchase consideration			28.1

The goodwill of £11.5 million comprises the value of its employees and their close understanding of their client requirements which are of great importance in the recruitment business and expected synergies arising from the acquisition with Global Group (UK) Limited providing candidates for fellow Group companies. Goodwill is allocated wholly to the Specialist services segment and included in the Global Medics cash generating unit for impairment testing.

The deferred tax liability arises from the tax effect of temporary timing differences relating to brand values and customer relationships.

Purchase consideration			£ m
Cash consideration			18.1
Contingent consideration liability			10.0
Total consideration			28.1

Other cash flows on acquisition				£ m
Transaction costs of the acquisition (included in cash flows from operating activities)				0.6
Net cash and short term borrowings acquired with the subsidiary (included in cash flows from financing activities)				7.6
Net other cash out flow on acquisition				8.2

Contingent consideration

As part of the purchase agreement with the previous owners of Global Group, a contingent consideration has been agreed.  There will be additional payments due, in cash, to the previous owners of Global Group between July 2016 and March 2019.

As at the acquisition date, the fair value of the contingent consideration was estimated to be £10.0 million representing the present value of the full potential consideration as the directors are expecting the full contingent consideration will be paid.

Significant unobservable valuation inputs are provided below:

At 1 January 2016 the performance indicators have not changed significantly from those used at the date of acquisition.

From the date of acquisition, Global Group has contributed £42.6 million of revenue and £1.9 million to profit before tax from continuing operations of the Group. If the combination had taken place at the beginning of the year, Group revenue from continuing operations would have been £1,828.1 million and the profit before tax from continuing operations would have been £42.0 million.

b) Acquisition of Bartech Holding Corporation - unaudited

On 8 December 2015 the Group acquired 100% of the shares of Bartech Holding Corporation ("Bartech"), an unlisted company incorporated in the United States and specialising in recruitment, in exchange for cash and shares in the Group. The Group acquired Bartech in order to provide increased scale and cross selling opportunities in the managed services and specialist staffing capability in the US and Europe.

Assets acquired and liabilities assumed

The fair values of identifiable assets and liabilities of Bartech as at the date of acquisition were:

		Acquired book value £ m	Fair value recognised on acquisition £ m
Property, plant and equipment		0.6	0.6
Brand value		-	13.6
Customer relationships		-	13.8
Trade and other receivables		217.1	217.1
Cash and short-term deposits		15.7	15.7
		233.4	260.8
Trade and other payables		(219.6)	(219.6)
Taxation liabilities		(1.8)	(1.8)
Short-term borrowings		(10.4)	(10.4)
Deferred tax liabilities		-	(10.4)
		(231.8)	(242.2)
Total identifiable net assets at fair value		1.6	18.6
Goodwill arising on acquisition			65.8
Purchase consideration			84.4

The goodwill of £65.8 million comprises the value of its employees and their close understanding of their client requirements which are of great importance in the recruitment business and expected synergies arising from the acquisition with Bartech providing candidates for fellow Group companies. Goodwill is allocated between the Specialist services and Managed services segments based upon the relative sizes of the offerings acquired and included in the Total US cash generating unit for impairment testing.

The deferred tax liability arises from the tax effect of temporary timing differences relating to brand values and customer relationships.

Purchase consideration			£ m
Shares issued, at fair value			3.0
Cash consideration			77.9
Contingent consideration liability			3.5
Total consideration			84.4

Other cash flows on acquisition			£ m
Transaction costs of the acquisition (included in cash flows from operating activities)			0.6
Net cash and short term borrowings acquired with the subsidiary (included in cash flows from financing activities)			(5.3)
Net other cash inflow on acquisition			(4.7)

The Group issued 401,866 shares as part consideration for the 100% interest in Bartech. The fair value of the shares is calculated with reference to the quoted price of the shares of the Company at the date of acquisition which was £7.675. The fair value of the consideration given is therefore £3.0 million. The excess of fair value over nominal value is transferred to a merger reserve in accordance with s612 of the Companies Act 2006.

Contingent consideration

As part of the purchase agreement with the previous owners of Bartech, a contingent consideration has been agreed. There will be additional payments due, in cash, to the previous owners of Bartech between March 2016 and March 2018 dependant on trading performance.

As at the acquisition date, the fair value of the contingent consideration was estimated to be £3.5 million which represents the present value of the full potential consideration as the directors are expecting the full contingent consideration will be paid.

Significant unobservable valuation inputs are provided below:

At 1 January 2016 the performance indicators have not changed significantly from those used at the date of acquisition.

From the date of acquisition, Bartech has contributed £17.6 million of revenue and £0.5 million to profit before tax from continuing operations of the Group. If the combination had taken place at the beginning of the year, Group revenue from continuing operations would have been £1,954.7 million and the profit before tax from continuing operations would have been £47.1 million.

c)    Acquisition of Lorien Limited - audited

On 3 November 2014 the Group acquired 100% of the shares of Lorien Limited, an unlisted company incorporated in the United Kingdom and specialising in recruitment, in exchange for cash of £22.3m, contingent consideration of £9.9m and shares in the Group valued at £7.5m.  The fair value of the recognised net assets on acquisition was originally £15.9m leading to a goodwill of £23.8m.  Following a review of the business a further £1.9m of liabilities has been discovered which relate to pre-acquisition events.  This has reduced the acquired net assets to £14.0m. 

d)    Acquisition of Career Teachers Limited - audited

On 6 March 2014 the Group acquired 100% of the shares of Career Teachers Limited, an unlisted company incorporated in the United Kingdom and specialising in recruitment, in exchange for £19.2m cash, £1.5m deferred consideration and £1.1m loan notes in the Group.  The fair value of the recognised net assets on acquisition was £11.8m leading to a goodwill of £10.2m.  Nothing has come to light since the 2 January 2014 to cause a change in either the net assets or fair value of deferred consideration.

7.     Net debt

	Audited 2 January 2015	Cash flow	Foreign exchange	Unaudited 1 January 2016
	£ m	£ m	£ m	£ m
Cash and short-term deposits	53.4	11.0	1.6	66.0
Revolving credit	(54.0)	(129.7)	-	(183.7)
Hire purchase	-	(0.5)	-	(0.5)
Term loan	(14.2)	14.2	-	-
	______	_____	_____	______
Net debt	(14.8)	(105.0)	1.6	(118.2)
	______	_____	_____	______

[END]

For further information please contact:

Impellam Group plc

Julia Robertson, Group Chief Executive  Tel: + 44 (0)1582 692658

Darren Mee, Group Finance Director      

Cenkos Securities plc (NOMAD and Joint Corporate Broker to Impellam)

Nicholas Wells                                         Tel: [phone]

Mark Connelly                                         

Investec Bank plc (Joint Corporate Broker to Impellam)

Chris Treneman                                       Tel: [phone]

James Rudd                                              

Josh Levy                                                

Note to Editors:

Impellam Group plc, traded on AIM (Symbol: IPEL) is a leading provider of managed services and specialist staffing expertise and is primarily based in the UK and North America, with smaller operations in Asia Pacific, Ireland and mainland Europe. Impellam Group plc provides fulfilling jobs at all levels, including doctors, lawyers, accountants, nurses, teachers, scientists, receptionists, drivers, chefs, administrators, engineers, technology specialists, cleaners, security guards, and manufacturing and warehouse operatives. Impellam Group plc is the 2nd largest staffing business in the UK and the 6^th largest (as measured by spend under management) MSP provider worldwide, employing over 3,100 people across 220 worldwide locations.

 

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