Final Results

RNS Number : 8275Y

Impellam Group plc

28 February 2013

 



Impellam Group plc

 

REPORT FOR THE 52 WEEKS ENDED 28 DECEMBER 2012

 Preliminary Results - Unaudited

Key Strategic Highlights

Ø Revenue increased by 7.0% to £1,210.8 million (2011: £1,131.4 million)

Ø Gross profit decreased by 4.5% to £174.1 million (2011: £182.3 million)

Ø Permanent placement mix 11.3% (2011: 11.1%)

Ø Adjusted operating profit* decreased by £3.1 million to £33.6 million (2011: £36.7 million)

Ø Earnings before interest and tax of £17.3 million

Ø Conversion of gross margin to adjusted operating profit* 19.3% (2011: 20.1%)

Ø Basic earnings per share 22.2 pence (2011: 54.0 pence)

Ø Adjusted* basic earnings per share 59.0 pence (2011: 58.3 pence)

Ø Net cash of £16.8 million at 28 December 2012 (30 December 2011: £1.8 million)

Ø UK receivable finance agreement with Barclays renewed for three more years and extended to £70 million

Ø Special dividend of 35 pence per share, approximately £15.4 million, payable on 10 April 2013 to all shareholders on the register on 2 April 2013

Ø Final dividend of 5 pence per share proposed to be approved at the AGM to be convened for June and dates to be announced in due course.

               * Adjusted operating profit before non-recurring expense items, goodwill impairment and share based payments

Andrew Wilson, Chairman commented:

"The year's operating performance reflects a tremendous effort by each of our four divisions against a back drop of continuing difficult economic environments and trading conditions in their respective markets.  Whilst revenue increased, margin compression meant that we ended the year with operating profits down against 2011 although adjusted EPS increased to 59.0 pence per share.  However, sensible balance sheet management has meant that the Company has been able to return £5.9 million to shareholders, in the form of a maiden 7 pence per share interim dividend and through a programme of share buy backs in the market, whilst still delivering an improvement in the Group's cash position at the year end.  The Board believes that the restructured operating model provides a degree of resilience to the Group's earnings and a platform for sustainable cash generation.  We have therefore declared a special dividend of 35 pence per share, in total approximately £15.4 million in addition to the proposed final dividend of 5 pence per share."

Business segment results

−      Impellam United Kingdom: Turnover increased 10.6% to £762.2 million whilst gross profit decreased by 4.5% to £102.6 million.  Operating profit decreased marginally by £0.2 million, to £26.5 million.

−      Impellam North America: Turnover increased 5.6%* to £178.0 million and gross profit increased by 2.6%* to £36.0 million.  Operating profit decreased marginally, by £0.1 million to £3.8 million.

−      Medacs Healthcare Group: Turnover increased 0.5% to £187.7 million while gross profit decreased by 6.8% to £26.0 million.  Operating profit decreased to £8.3 million.

−      Carlisle Support Services: Turnover decreased 6.6% to £82.9 million and gross profit decreased 22.8% to £9.5 million.  Operating profit decreased to £0.4 million.

Cash flow, debt and net assets

The Group generated £26.7 million of cash from operating activities in the year (2011: £28.4 million).  Days sales outstanding (DSO) for the Group was 38.4 at 28 December 2012 compared to 35.3 at 30 December 2011.

Net cash increased by £15.0 million to a net cash position of £16.8 million as at 28 December 2012 (30 December 2011: £1.8 million).  In addition, the Group has outstanding letters of credit drawn against its US borrowing facilities amounting to £3.8 million (30 December 2011: £3.6 million).

At 28 December 2012, the Group had net assets of £133.5 million (30 December 2011: £129.3 million).

Financial results for the fifty-two weeks ended 28 December 2012

The table below sets out the financial results for the Group by segment for the fifty-two weeks ended 28 December 2012.

	Revenue			Gross profit				Operating profit
£'million	2012	2011	% change	2012	2011	% change	2012		2011
Impellam United Kingdom ^	762.2	689.2	10.6	102.6	107.4	(4.5)	26.5		26.7
Impellam North America *	178.0	166.6	5.6	36.0	34.7	2.6	3.8		3.9
Medacs Healthcare Group	187.7	186.8	0.5	26.0	27.9	(6.8)	8.3		8.8
Carlisle Support Services	82.9	88.8	(6.6)	9.5	12.3	(22.8)	0.4		2.0
	1,210.8	1,131.4	7.0	174.1	182.3	(4.5)	39.0		41.4
Add back: Depreciation and amortisation							5.6		6.1
EBITDA							44.6		47.5
Central costs							(5.4)		(4.7)
Operating profit before non-recurring items							33.6		36.7
Non-recurring items							(5.7)		(1.9)
Goodwill impairment							(9.0)		-
Share based payment							(1.6)		-
Earnings before interest and taxation (EBIT)							17.3		34.8

* Impellam North Americapercentage changes are measured in local currency

^ Two of the segments previously reported have been amalgamated. Prior period comparatives have been restated accordingly

Consolidated income statement		Unaudited	Audited
For the fifty-two weeks ended		28 December	30 December
		2012	2011
	Notes	£ m	£ m
Revenue	2	1,210.8	1,131.4
Cost of sales		(1,036.7)	(949.1)
		_________	_________
Gross profit		174.1	182.3
Administrative expenses		(156.8)	(147.5)
		_________	_________
Operating profit	2	17.3	34.8
Operating profit before non-recurring items		33.6	36.7
Non-recurring items	3	(5.7)	(1.9)
Goodwill impairment	3	(9.0)	-
Share based payment		(1.6)	-
		_________	_________
Operating profit		17.3	34.8
Finance income		-	0.4
Finance expense		(1.5)	(2.3)
		_________	_________
Profit before taxation		15.8	32.9
Taxation	4	(6.0)	(8.6)
		_________	_________
Profit for the period		9.8	24.3
		_________	_________

Profit attributable to:
Owners of the parent Company		9.8	24.2
Non-controlling interests		-	0.1
		_________	_________
		9.8	24.3
		_________	_________

Earnings per share
Attributable to equity holders of the parent Company -   basic -   diluted	5	22.2p 22.1p	54.0p 53.9p

Consolidated statement of comprehensive income		Unaudited	Audited
For the fifty-two weeks ended		28 December	30 December
		2012	2011
		£ m	£ m
Profit for the period		9.8	24.3
Other comprehensive income:
Currency translation differences (net of tax)		0.3	(0.3)
		_________	_________
Total comprehensive income for the period, net of tax		10.1	24.0
		_________	_________

Total comprehensive income attributable to:
Owners of the parent Company		10.1	23.9
Non-controlling interests		-	0.1
		_________	_________
		10.1	24.0
		_________	_________

Consolidated balance sheet		Unaudited	Audited
As at		28 December	30 December
		2012	2011
		£ m	£ m
Non-current assets
Property, plant and equipment		5.2	5.8
Goodwill		51.1	60.1
Other intangible assets		47.7	48.1
Deferred tax assets		3.1	4.2
Financial assets		1.8	2.4
		_________	_________
		108.9	120.6
		_________	_________
Current assets
Trade and other receivables		227.8	194.3
Cash and short term deposits		37.8	22.3
		_________	_________
		265.6	216.6
		_________	_________
Total assets		374.5	337.2
		_________	_________
Current liabilities
Trade and other payables		197.3	161.9
Taxation liabilities		3.3	4.0
Short-term borrowings		21.0	20.5
Provisions		3.8	3.8
		_________	_________
		225.4	190.2
		_________	_________
Net current assets		40.2	26.4
		_________	_________
Non-current liabilities
Other payables		0.1	0.9
Provisions		5.5	5.6
Deferred tax liabilities		10.0	11.2
		_________	_________
		15.6	17.7
		_________	_________
Total liabilities		241.0	207.9
		_________	_________
Net assets		133.5	129.3
		_________	_________

		Unaudited	Audited
		28 December	30 December
		2012	2011
		£ m	£ m
Equity
Issued share capital		0.4	0.4
Share premium account		15.5	15.5
		_________	_________
		15.9	15.9
Other reserves		93.0	92.7
Retained earnings		24.6	20.7
		_________	_________
Total equity attributable to equity holders of the parent Company		133.5	129.3
		_________	_________

Consolidated cash flow statement		Unaudited	Audited
For the fifty-two weeks ended		28 December	30 December
		2012	2011
	Notes	£ m	£ m
Cash flows from operating activities
Cash generated by operations	6	32.9	34.9
Taxation paid		(6.2)	(6.5)
		_________	_________
Net cash generated by operating activities		26.7	28.4
		_________	_________
Cash flows from investing activities
Non-controlling interest acquired		-	(0.3)
Purchase of property, plant and equipment		(2.0)	(2.7)
Purchase of intangible assets		(3.2)	(2.5)
Proceeds of disposal of property, plant and equipment		0.3	0.2
Net movement in other financial assets		0.5	-
Finance income received		-	0.4
		_________	_________
Net cash utilised by investing activities		(4.4)	(4.9)
		_________	_________
Cash flows from financing activities
Net movement in short-term borrowings		0.5	8.9
Repayment of guaranteed secured loan notes		-	(20.0)
Purchase and cancellation of own shares		(2.8)	(1.2)
Capital element of finance lease payments		-	(0.1)
Dividend paid		(3.1)	-
Finance expense paid		(1.2)	(2.3)
		_________	_________
Net cash outflow from financing activities		(6.6)	(14.7)
		_________	_________
Net increase in cash and cash equivalents		15.7	8.8
Opening cash and cash equivalents		22.3	13.9
Foreign exchange losses on cash and cash equivalents		(0.2)	(0.4)
		_________	_________
Closing cash and cash equivalents		37.8	22.3
		_________	_________

Consolidated statement of changes in equity		Unaudited
For the fifty-two weeks ended 28 December 2012	Total share capital and share premium	Other reserves	Retained earnings	Total equity
	£ m	£ m	£ m	£ m
31 December 2011	15.9	92.7	20.7	129.3
	______	______	______	______
Other comprehensive income	-	0.3	-	0.3
Profit for the period	-	-	9.8	9.8
Purchase of treasury shares	-	-	(2.8)	(2.8)
Dividends paid	-	-	(3.1)	(3.1)
	______	______	______	______
28 December 2012	15.9	93.0	24.6	133.5
	______	______	______	______

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 28 December 2012.

·      Financial information

The financial information, which is unaudited, for the fifty two weeks to 28 December 2012 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 December 2011. 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 28 December 2012 - Unaudited

	Impellam United Kingdom^	Impellam North America	Medacs Healthcare Group	Carlisle Support Services	Group total
	£m	£m	£m	£m	£m
Revenue	762.2	178.0	187.7	82.9	1,210.8
	_______	_______	_______	_______	_______
Segment EBIT before non-recurring items	26.5	3.8	8.3	0.4	39.0
	_______	_______	_______	_______
Corporate costs					(5.4)
					_______
Operating profit before non-recurring items					33.6
Non-recurring items# (note 3)					(5.7)
Goodwill impairment* (note 3)					(9.0)
Share based payment					(1.6)
					_______
Operating profit					17.3
Net finance expense					(1.5)
Taxation charge					(6.0)
					_______
Profit for the period					9.8
					_______

^#Non-recurring items comprise restructuring costs in all business segments and certain legal costs relating to capital restructuring and reorganisation attributed to corporate costs. 

*Goodwill impairment relates to a write down in the carrying value of the Carlisle Support Services business

^ Two of the segments previously reported have been amalgamated. Prior period comparatives have been restated accordingly

Fifty-two weeks ended 30 December 2011- Audited

	Impellam United Kingdom^	Impellam North America	Medacs Healthcare Group	Carlisle Support Services	Group Total
	£m	£m	£m	£m	£m
Revenue	689.2	166.6	186.8	88.8	1,131.4
	_______	_______	_______	_______	_______
Segment EBIT before non-recurring items	26.7	3.9	8.8	2.0	41.4
	_______	_______	_______	_______
Corporate costs					(4.7)
					_______
Operating profit before non-recurring items					36.7
Non-recurring items# (note 3)					(1.9)
					_______
Operating profit					34.8
Finance expense					(1.9)
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. 

^ Two of the segments previously reported have been amalgamated. Prior period comparatives have been restated accordingly

Non-recurring items and goodwill impairment

	2012	2011
	£ m	£ m
Legal costs associated with capital reorganisation and group restructuring	1.5	-
Restructuring and relocation - Impellam United Kingdom	1.7	-
Restructuring and relocation - Impellam North America	0.9	-
Restructuring and relocation - Medacs Healthcare Group	0.3	1.3
Restructuring and relocation - Carlisle Support Services	1.3	-
Legal costs related to the enforcement of employee covenants	-	0.6
	______	______
Non-recurring items	5.7	1.9
Goodwill impairment - Carlisle Support Services	9.0	-
	______	______
	14.7	1.9
	______	______

The restructuring of the Group has resulted in personnel redundancies, the closure of certain properties and the write-off of certain associated fixed assets. There have also been costs associated with the Capital restructuring of the Impellam Group plc share capital and in reorganisation of the group structure as an integral part of the alignment of the group. These costs are not considered to be part of the normal course of business and are of sufficient size to be identified separately on the face of the income statement as non-recurring items.

The goodwill impairment relates to a reduction in the carrying value of the Carlisle Support Services business.  The profitability of this business segment has been adversely impacted in recent years by reductions in demand from the retail sector in particular.  The majority of the restructuring costs in this segment during the year relate to the rationalisation of the cost base for this particular activity.  With the structural changes taking place in the wider retail sector within the UK demand is not expected to recover to levels seen historically.  As a consequence, impairment to the carrying value of the segment goodwill is required.

Taxation

	2012	2011
	£ m	£ m
Current income tax
UK Corporation tax on results for the period	5.9	7.2
Adjustments in respect of previous periods	-	(0.1)
	______	______
	5.9	7.1
Foreign tax in the period	0.3	0.6
	______	______
Total current income tax	6.2	7.7
Deferred tax (credit) / charge	(0.2)	0.9
	______	______
Total tax charge in the income statement	6.0	8.6
	______	______

3          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 and those associated with the former Chairman. There are 83,165 options outstanding as at the balance sheet date under the former arrangement and 250,000 under the latter (2011: 83,165).

Excluding the 19,841 shares owned by The Corporate Services Group Ltd Employee Share Trust, the weighted average number of shares in 2012 is 44,204,842 (2011: 44,949,595) and the fully diluted average number of shares is 44,360,810 (2011: 45,032,760).

The average weighted number of shares calculated above has been so calculated by treating the shares repurchased in the market for cancellation as part of the Group "Treasury Management Program" as having been cancelled on date of purchase. During the period, the Directors became aware that certain administrative errors in respect to filings with the Registrar of Companies had taken place and that, as a consequence certain, of the buy-backs were not in compliance with the Companies Act 2006, and hence were void. Remedial action was approved at a General meeting held on 22 November 2012 and ratified by the High Court of Justice in England and Wales on 12 December 2012. The affected shares were not available for trade on the market, were not eligible for dividend distributions, and not capable of being voted. Hence the Directors' believe that these shares should be excluded from the calculation of average number of shares from the date of repurchase.

4          Reconciliation of profit before tax to cash generated by operations

		2012	2011
		£ m	£ m
Profit before taxation		15.8	32.9
Adjustments for:
Net finance expense		1.5	1.9
Goodwill impairment		9.0	-
Depreciation and impairment of property, plant and equipment		2.5	2.5
Amortisation of software and client relationships		3.6	3.8
(Profit)/loss on disposal of property, plant and equipment		(0.2)	0.1
		_________	_________
		32.2	41.2
Increase in trade and other receivables		(35.2)	(2.0)
Increase / (decrease) in trade and other payables		36.3	(2.0)
Decrease in provisions		(0.4)	(2.3)
		_________	_________
Cash generated by operations		32.9	34.9
		_________	_________

5          Additional cash flow information

	31 December 2011	Cash flow	Foreign exchange	28 December 2012
	£ m	£ m	£ m	£ m
Cash and short-term deposits	22.3	15.7	(0.2)	37.8
Revolving credit	(20.5)	(0.5)	-	(21.0)
	______	_____	_____	______
Net cash	1.8	15.2	(0.2)	16.8
	______	_____	_____	______

 

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

Impellam Group plc
Andrew Wilson, 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 Eliabeth Bowman/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.  Impellam Group plc conducts business primarily in the UK and North America, 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 19th on the Staffing Industry Analysts' 2012 Top Global Staffing Companies List.

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