PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DEC 2021

RNS Number : 6853G
Impellam Group plc
31 March 2022
 

 

Impellam Group plc

 

(" Impellam ", the " Group " or the " Company ")

 

PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2021 - UNAUDITED
 

Impellam Group plc (AIM: IPEL) announces its unaudited preliminary results for the 52 weeks ended 31 December 2021

A STRONG RETURN TO GROWTH

ADJUSTED RESULTS -

 

FY 2021

FY 2020

Like-for-like(4) Improve / (Decline)

Revenue (£ millions)

 

2,262.4

2,000.9

13.1%

14.7%

 

 

 

 

 

 

Gross profit (£ millions)

 

267.0

228.1

17.1%

19.5%

 

 

 

 

 

 

Operating profit (before amortisation and impairment) (£ millions) (1)

 

29.3

18.2

61.0%

70.5%

 

 

 

 

 

 

Operating profit (before amortisation and impairment) conversion (%) (2)

 

11.0%

8.0%

3.0 ppts

 

 

 

 

 

 

 

Adjusted basic EPS (3) 

 

35.3p

18.2p

94.0%

 

 

Net Debt (£ millions) pre IFRS 16 (5)

 

15.0

4.1

 

 

 

STATUTORY RESULTS -

 

FY 2021

FY 2020

Like-for-like(4) Improve / (Decline)

Revenue (£ millions)

 

2,262.4

2,000.9

13.1%

14.7%

 

 

 

 

 

 

Gross profit (£ millions)

 

267.0

228.1

17.1%

19.5%

 

 

 

 

 

 

Operating profit/(loss) (£ millions)

 

19.5

(15.0)

230.0%

227.2%

 

 

 

 

 

 

Profit before tax

 

15.4

(20.4)

175.5%

 

 

 

 

 

 

 

Basic EPS 

 

18.3p

(46.2)p

139.6%

 

 

Net Debt (£ millions) post IFRS 16

 

31.5

26.3

 

 

 

 

(1) Operating profit before amortisation of acquired intangible assets and impairment (see note 2)

(2) Calculated as operating profit before amortisation of acquired intangible assets and impairment / gross profit

(3) Basic EPS before amortisation of acquired intangible assets and impairment (see note 5)

(4) % change measured at constant exchange rates

(5) Net debt pre IFRS 16 is used as the basis for banking covenant calculations

 

 

 

Key operational highlights

Impellam delivered on its promise for the year with a strong return to growth coupled with conversion improvement and further strategic progress. Group revenue was up 13.1% (14.7%*) on the prior year at £2.3bn (2020: £2.0bn) and 1.8%* up on 2019. Adjusted operating profit1 up 61.0% (70.5%*) to £29.3m (2020: £18.2m).

 

OPERATIONAL

· Our new, regional organisation model, supported by our four key operating segments - STEM, Global Managed Services ('GMS'), Regional Specialist Staffing ('RSS') and Healthcare - enabled us to innovate and respond quickly to rapidly changing customer needs and candidate availability whilst enjoying the economic benefits of increased demand.

· Strong operational gearing in the UK region following strategic delayering initiatives, with conversion of gross profit to adjusted operating profit reaching 14.2% (2019: 10%).

· Year one of our Customer Office exceeded our expectations, delivering 100% account retention and a 21% increase in Life Time Value ('LTV')2.

· Our key strategic investments were in people and technology with both investment cases underpinning our core principle that Virtuosity makes the difference. The core systems road map moved into the delivery phase with on premises servers moved to the cloud and a staged delivery of new systems and upgrades continuing through 2022.

· In North America, following a strategic review of the scale and limited geographic footprint of Corestaff, our light industrial business, and a subsequent expression of interest resulted in its post year-end divestment to swipejobs Inc, a US private digital staffing company, for a cash consideration of approximately £14m ($19m).

 

FINANCIAL

· Gross profit increase of 17.1% (19.5%*), with H2 2021 up 5%* on H2 2019.

· Strong rebound in the UK and NA with gross profit growth on the prior year of 22.6%* and 16.7%* respectively. In APAC, which experienced prolonged lockdowns in 2021, gross profit increased by 4.9%*.

· The GMS and the STEM portfolios, representing over 60% of the Group's gross profit, were up 14.8%* and 29.0%* respectively on 2020 and up 4.8%* and 8.0%* on 2019 gross profit.

· Strong rebound in RSS with gross profit up 26.9%* year on year, though still 12.1%* below 2019 levels.

· Investment in headcount to support growth with 440 net joiners during 2021, although headcount remains 77 below the 2019 year end position. Gross profit per FTE (productivity) was 12.8% above 2019 levels.

· Adjusted operating profit1 growth of 61.0% to £29.3m (2020: £18.2m).

· Net debt1 increased by £5.2m to £31.5m (2020: £26.3m) following £38.9m of deferred UK VAT and US federal taxes repayment, with the final VAT repayment made in Q1 2022. Pre- IFRS 16 net debt1 of £15.0m (2020: £4.1m) with covenant leverage ratio less than 1x throughout 2021.

· Following strong operational cash generation of 167.6%, excluding deferred tax repayments, banking facilities replaced at £182.5m, representing a £57.5m reduction on the previous facility. Net debt before IFRS 161 has reduced by £57.3m since 2019.

 

 

 

 

 

1.  Explanations of Alternative Performance Measures are at the end of the report

2.  Life Time Value (LTV) is defined as average margin per client x average length of contract

 

*Calculated by multiplying the prior year functional currency amount by the current year foreign exchange rate

 

Financial results for the fifty-two weeks to 31 December 2021 - unaudited

The table below sets out the results for the Group by region for 2021.

 

Revenue

Gross profit

Operating profit2

£'million

2021

2020

Like-for-like change1

2021

2020

Like-for-like change1

2021

2020

Like-for-like change1

UK & Europe

1,741.4

1,539.5

13.6

172.5

140.7

22.6

24.5

8.1

223.3

Gross profit %

 

 

 

 

9.9%

9.1%

 

 

 

 

North America

456.3

401.5

20.4

76.5

70.5

16.7

10.1

13.4

(16.4)

Gross profit %

 

 

 

 

16.8%

17.6%

 

 

 

 

Asia Pacific

64.7

59.9

5.9

18.0

16.9

4.9

2.2

1.8

19.9

Gross profit %

 

 

 

 

27.8%

28.2%

 

 

 

 

Total

2,262.4

2,000.9

 

267.0

228.1

 

36.8

23.3

 

Corporate costs

 

 

 

 

 

 

(7.5)

(5.1)

 

Operating profit2

 

 

 

 

29.3

18.2

 

Amortisation of acquired intangible assets

 

 

 

 

(9.8)

(11.0)

 

Impairment

 

 

 

 

-

(22.2)

 

Operating profit / (loss)

 

 

 

 

19.5

(15.0)

 

 

 

 

1.  % change measured at constant exchange rates

2.  Before amortisation of acquired intangibles and impairment

 

 

 

Financial results for the fifty-two weeks to 31 December 2021 - unaudited

The table below sets out the results for the Group by segment for 2021.

 

 

Revenue

Gross profit

£'million

2021

2020

Like-for-like change1

2021

2020

Like-for-like change1

Global Managed Services

838.7

745.8

14.1

79.2

71.4

14.8

Gross profit %

 

 

 

 

9.4%

9.6%

 

STEM

759.6

712.2

8.6

81.8

65.1

29.0

Gross profit %

 

 

 

 

10.8%

9.1%

 

Regional Specialist Staffing

430.7

356.4

22.6

62.3

49.8

26.9

Gross profit %

 

 

 

 

14.5%

14.0%

 

Healthcare

295.3

231.3

27.8

43.7

41.8

4.2

Gross profit %

 

 

 

 

14.8%

18.1%

 

Inter-segment revenues2

(61.9)

(44.8)

 

-

-

 

Total

2,262.4

2,000.9

 

267.0

228.1

 

 

 

1.  % change measured at constant exchange rates

2.  Elimination of inter-segment sales which are all within the UK & Europe region

 

 

 

Chairman's Statement on the Results

 

Despite disruption to our businesses across the world from on-going Covid-19 restrictions, we have delivered an outstanding performance in 2021, with a strong return to growth and robust recovery in our adjusted operating profits1. This is testament to our resilient, collaborative business model and commitment of our Virtuosos.

 

The year 2021 began with a return to lockdown in the UK and our experience in 2020 enabled us to respond quickly, moving to remote working once again. From this challenging start to the year, demand increased rapidly across all our regions as restrictions have eased, customer confidence has returned and candidate shortages have intensified. Revenue is now ahead of 2019 and we are seeing the benefits of the decisive moves we made to reshape our business in 2020 delivering results.

 

We have continued to transform our business, strengthening our key brands, simplifying our organisational structure and investing in our technology and our people to enable them to perform to their upmost potential. Our move to a regional reporting structure is part of this process, underpinned by our four key operating segments aligned to our primary business activities.

 

We have focused on keeping our people safe and supported. Their resilience and tenacity in the face of an uncertain environment has been exemplary and on behalf of the Board I would like to thank them all for their dedication and hard work.

 

Our Board agenda has broadened in response to the growing interest in ESG - we have a well-defined culture encapsulated in our Virtuoso model and strong sense of purpose that we intend to build on as we begin our sustainability journey. Whilst we learn to live with Covid-19, our customers and candidates expect us to help them navigate the new world of work. We will continue to invest in our people and our technology to ensure we can deliver innovative solutions for our customers and attract high-quality candidates in a tightening labour market and whilst facing an uncertain political landscape.

 

 

 

Lord Ashcroft KCMG PC

Chairman

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1.  Explanations of Alternative Performance Measures are at the end of the report

 

 

CEO Review

 

OVERVIEW

We made enormous strides as a Group in 2021.

 

The promise we made to our customers, our people and our investors during the pandemic was that we would accelerate our strategy and emerge as a fighting fit Virtuoso organisation.

 

Our strategic and financial results for 2021 demonstrate that we delivered on that promise. We entered 2021 in our new formation: an agile Virtuoso operating model with fewer layers, enabling us to innovate and respond quickly to rapidly changing customer needs and candidate availability whilst enjoying the economic benefits of a lean cost base.

 

Early in the year we were able to demonstrate our new organisational agility and the Q1 lockdown in the UK gave us the opportunity to put it to the test. We relied on the flexibility and resilience of our people as they juggled competing responsibilities. We collaborated with our customers to help them navigate the issues they faced while we supported our communities by finding them good work, supporting many to transfer their skills to buoyant sectors. When the schools closed in January 2021, we immediately seconded our talented education recruiters to support the national effort in our healthcare and scientific businesses who were busy fulfilling demands for Covid-19 testing and then vaccination programmes. This is one example of our Virtuoso agility which continued through the year as we responded to the higher-than-expected bounce back in demand across all our markets and territories.

 

With the wind in our sails, we focused hard on adapting quickly to a swift and unprecedented change in market dynamics, whilst preserving the efficiency and conversion gains made during our transformation programme in 2020. Whilst the challenges of the pandemic and resultant lockdowns across our major territories continued, we soon saw the upside opportunity from the major pressure on employers globally due to the 'great resignation', high attrition and a booming post-Covid-19 jobs market. In particular, we saw an immediate impact on demand for tech, digital and analytical skills following rapid global digitisation and, of course, for our scientists and healthcare professionals for testing and vaccination work.

 

KEY STRATEGIC MOVES AND DEVELOPING OUR HIGH GROWTH MARKETS

Our key strategic investments in 2021 were in people and technology, with both investment cases underpinning our core principle that Virtuosity is our strategic advantage.

 

OUR PEOPLE MAKE THE DIFFERENCE

We were pleased to welcome 440 (net increase) new purposeful colleagues into our Group during the year who are all now engaged in providing good work for people and people for good work. Our investments in people focused on expanding our teams in our high-growth markets with a 45% headcount increase for STEM businesses in the UK and a 25% increase in North America. Our Global Managed Services ('GMS') portfolio also invested in headcount but this was offset by the efficiencies achieved through the collaboration of our Managed Services brands and the formation of our Centre of Excellence. The structural efficiencies made in 2020 were maintained and improved in our shared services team where headcount remained 16% below 2019 and in our Regional Specialist Staffing ('RSS') portfolio where headcount remained 15% below 2019. Despite the overall increase in our headcount, we increased our productivity by 18.7%.

 

Our focus on our people has never been stronger, starting first and foremost with their health and wellbeing, swiftly followed by a redoubling of our efforts to make sure every single person was engaged with our purpose and able to work effectively in a blended model from home, our offices and our client sites.

 

We ramped up support for our people while planning for a post-pandemic world, continuing recruitment activity and investing in the workforce of the future. During the year, we invested in our talented people services team making significant leadership appointments in the areas of culture, equality, diversity and inclusion ('ED&I'), talent acquisition and development, and reward and recognition whilst further refining our Virtuoso model to make it accessible and meaningful for all 2,900 Impellam people.

 

In recognition of our colleagues' hard work amidst the challenges presented by the pandemic and an unprecedented increase in demand from customers, we gave our people two extra days off to focus on their wellbeing. We were also careful to pause and recognise our successes whilst encouraging collaboration and innovation along the way, with townhalls, awards conferences, socials - both in person when we could and virtual when we could not - which were designed to lift morale and reinvigorate our culture after lengthy lockdowns.

 

We continued to listen closely to the Virtuoso Alliance, our shadow board. The role of the Virtuoso Alliance is to widen and deepen the leadership team's understanding of the changing world of work and the challenges and opportunities faced by our customers and candidates on the front line. They tell it how it is.

 

This year, more than ever, it was critical to understand what colleagues were experiencing day to day and how it impacted them so that we could provide support as and where needed. Across two cohorts, 27 Virtuosos contributed significantly to the development of our people strategy, our approach to blended working, wellbeing and morale, automation, shifting candidate market dynamics and learning and development planning.

 

Our Virtuoso culture encourages our people to bring their authentic selves to work and our goal is to provide them with challenging and fulfilling work, supportive colleagues and a career without limits.

 

TECHNOLOGY FREES UP OUR VIRTUOSOS

Our investments in innovation, digital and core systems have touched most brands, teams and colleagues across the world. We are 100% focused on freeing up our Virtuosos to add value to our customers and candidates, whilst also delivering an enhanced digital experience. We have a strategic target to be 65% digital2 by the end of 2022 and we made solid progress towards this during 2021.

 

As the global pandemic continues to disrupt the world of work, accelerating our investment in technology remains key.

 

The 'Digital Core' is a substantive rolling replacement for all our sales, operational and finance systems. This supports our ambitious growth plans for Impellam North America in addition to supporting organic growth in other geographies. We completed the first phase of this programme during 2021, with initial deployment to business users in Q4, to be followed by a roll-out programme leading to completion by the end of 2022. We also moved many of our existing systems to the cloud and exited a large on-premises data centre, saving property and technology costs.

 

As these new systems come on stream, we plan to add a range of additional modern, plug-in digital components to meet the needs of individual regions, brands, markets, categories and clients.

 

These additional systems will be rapidly deployed, on a cloud subscription basis, and in a combination that adds competitive advantage to the individual business units. Our existing integration platform will give us the flexibility to change, as better and newer plug-in products become available. Examples of investments in plug-in digital components include enhanced candidate attraction and database searching, recruitment task automation and a range of analytics and intelligence tools.

 

Our investment in technology will enable our people to work more efficiently using self-service solutions and data analytics, supported by digital process automation and integration tools.

 

Collectively, these new system combinations will allow Impellam to operate in the nascent Platform Recruitment Market for high-volume demand and supply matching and will enhance deal volume and profit per colleague.

 

Innovation and entrepreneurship are core behaviours of Virtuosity. Origin, our innovation hub, works closely with the Virtuoso Alliance, IT, the Customer Office and across regions through a virtual innovation community and actively monitors emerging technologies. In 2021, we invested in our ideation tool and DIY guides to crowd-source ideas from across the business. Our Virtuoso model ensures we are close to our customers and innovate continuously. Our clients trust our people to provide access to the latest tools, insights and trends to support fast, effective and informed workforce decision-making. For example, our innovation network helped to create a full end-to-end turnkey solution that included a chatbot and video interviews to speed up an ambitious hiring campaign. As the need for digital solutions grows, our portfolio of proprietary digital solutions and our global network of digital partners provides our customers and candidates with access to a wide array of stand-alone or fully integrated services to support them throughout their journey.

 

Our offering now spans zero touch transactional services through proprietary and hybrid proprietary digital staffing platforms through to payroll solutions as well as standalone, third party solutions. For example, Flexy, acquired in 2019, uses leading technology to streamline the temporary recruitment process for companies looking for flexible labour, and individuals looking for flexible work. Flexy is now embedded with customers in both APAC and the UK & Europe.

 

FACING VOLATILE MARKETS IN PARTNERSHIP WITH OUR CUSTOMERS

In support of our strategic goal that there should never be a reason for a customer to leave Impellam, we continued to optimise our organisation design to make sure that our customers have access to the very best of Impellam's collective expertise.

 

This led to the creation of the Customer Office and the GMS Centre of Excellence. Together, these teams leverage our organisational Virtuosity, customer insight and combined capability to ensure customer delight, growth and retention.

 

Our Customer Office is led by a newly appointed Chief Customer Officer. This strategic function is designed to drive customer engagement with the right experts at the right time, enabling our brands to deliver in the short, medium and long term; deliver advisory, innovative consultancy, best practice and benchmarking and ensure a long-term strategy is in place for each customer. Like all organisations, our customers are embracing change as they adapt to a volatile and extremely challenging talent market. They are turning to trusted partners like Impellam to help drive innovation and offer unique perspectives on how to build better businesses. The Customer Office plays a key role in understanding our customers' needs and tailoring our services for them. In the first year of operation, the Customer Office exceeded expectations, delivering 100% account retention and a 21% increase in Life Time Value ('LTV').

 

Collaboration remained a key theme and, together with the creation of our Customer Office, the introduction of our GMS Centre of Excellence has played a vital role in reducing duplication of effort and ensuring that our customers access the best that Impellam has to offer. This dedicated, expert global function provides services to our Managed Services and STEM customers and expertise to our brands, including access to technology, data management, reporting and implementation expertise, sharing managed services best practice. In short, our Centre of Excellence has enabled us to deliver a higher quality, more consistent service globally whilst improving our operational efficiency.

 

DRIVING SUSTAINABLE GROWTH

Our new organisation design underpinned a strong strategic focus on our key growth markets, geographically and segmentally. We exited 2021 with over 70% of our revenue in our digitally enabled Global Managed Services ('GMS') and STEM segments and are excited by the growth opportunities we have seen and continue to see in these markets in each of our territories. We will continue to make strategic investments to support further growth in these markets.

 

We saw strong performance from our GMS operating segment, with robust growth in both revenue and gross profit reflecting the positive results from increasing collaboration across the portfolio. With 20 new customer wins, a 96% renewal rate and over seven years average tenure, the portfolio made significant progress. In the last 12 months alone, GMS has expanded the scope of services delivered to 20% of our clients.

 

The implementation of our new Customer Office helped us expand our service offering and support Group-fill opportunities, alongside access to our GMS Global Centre of Excellence.

 

Both the life sciences and technology sectors have played pivotal roles amid the Covid-19 pandemic. Digitisation and transformation have taken a significant leap at both an organisation and industry level. To cope with the crisis, companies have had to stand up digital, tech-enabled solutions to meet new demand more quickly than thought possible before the pandemic. With the introduction of this 'new-normal', digitisation is also broadening the horizon of new possibilities in the life sciences sector. Redefined workplace environments; the shift in health care delivery; and innovative collaborations between traditional companies and entrepreneurial start-ups are a few examples that are leading to this unprecedented change supported by technological advancements.

 

As a result of pharmaceutical innovations saving the world and with technology transformation widespread, customer demand increased exponentially through the pandemic. In response, Impellam created a focused STEM portfolio with investments in specialist STEM leadership in both the UK and North America yielding positive results in its first full year of operation. The collaboration across our brands has been critical in winning and fulfilling some of our largest healthcare contracts to date, where we have been proud to play our part in the fight against Covid-19 in the US, UK & Europe. With significant global capability in this high-growth, future-facing market, revenues grew by 6.7% (8.6%*) to £759.6m, and gross profit reached £81.8m, up 25.7% (29.0%*) year on year.

 

Both our RSS and Healthcare businesses bounced back after facing tough market conditions in 2020, with significant increases in Covid-19 related demand and despite ongoing candidate shortages, and challenges created by border closures in our APAC region.

 

We are particularly proud of the increased collaboration between our healthcare businesses and our staffing and managed services businesses which delivered outstanding services and people to hospitals, testing laboratories and vaccination centres across all our territories, playing their part in the fight against Covid-19, whilst also delivering to our customers as demand increased.

FINANCIAL REVIEW

Revenue grew 13.1% (14.7%*) to £2.3bn in 2021 and has now recovered to a pre-pandemic (2019) level. Gross profit grew by 17.1% (19.5%*) over 2020, only 1.8%* behind 2019.

 

With significant increases in customer demand, we made investments in headcount and our People Strategy and continued enhancing our technology through our Digital Core IT Systems Programme whilst delivering a strong adjusted operating profit1 performance of £29.3m, up 61.0% (70.5%*) on 2020 and just 2.0%* behind 2019.

 

Our strong focus on cash ensured we managed our cash and net debt1 position very effectively and reduced Days Sales Outstanding ('DSO') by 1.7 days. Net debt1 increased by £5.2m to £31.5m as we repaid £38.9m of the £48.0m cash support received from both the UK and US governments in 2020 with the remaining balance due to be repaid in 2022. The ongoing strong cash position has allowed us to reduce our revolving credit facility by £57.5m whilst continuing to invest in our key priorities of people and technology.

 

UK & EUROPE (65% OF GROSS PROFIT)

Our businesses in the UK & Europe saw an unexpectedly rapid bounce back from their Covid-19-driven revenue dip in 2020 and our dedicated teams were delighted to have a surplus of roles to offer our talented candidates. As the year progressed it became clear that we needed to become increasingly resourceful to help our customers manage their requirements and engage the right people to meet their growing needs.

 

Talent shortages across most sectors were exacerbated in the UK due to Brexit and Off Payroll Working. Driver availability hit the headlines resulting in fuel shortages at petrol stations and empty supermarket shelves. A scarcity of nurses, residential care workers and IT specialists drove an increase in demand and pay rates for our candidates, and in response we rapidly up-skilled our people to deal with these fast-changing market dynamics.

 

The UK & Europe segment recovered strongly across all our markets with overall gross profit growth of 22.6% (22.6%*) which resulted in an excellent adjusted operating profit1 performance, up 202.5% (223.3%*) on 2020. During Q4 2019, through 2020 and continuing into 2021, we focused on right sizing our cost base and this, together with record-breaking

productivity, led to the region ending the year 45.8%* ahead of 2019 adjusted operating profit1 even though gross profit was 4.1%* lower.

 

Our GMS businesses in the UK increased gross profits by 8.7%*, with growth coming mainly from Comensura and support for Covid-19-related work. A number of our Guidant customers, particularly in the manufacturing and aviation sector, experienced reduced demand due to the pandemic, and we expect to see those volumes rise as confidence returns. The new contracts secured in 2020 and 2021 will reap significant financial benefits in 2022.

 

Our STEM portfolio in the UK delivered impressive gross profit growth of 43.4%* spread across all brands and vertical markets, with our life science brand (SRG) also delivering increased gross profit on 2019. The 2021 growth has been achieved through a mixture of improved trading conditions in the UK after the 2020 lockdowns, increased demand for tech, digital and analytical skills at scale, collaboration and cross selling across the portfolio and new contract wins in our STEM brands. In addition, market leader SRG has been very active providing scientists and clinical staff to support Covid-19-related requirements for both government and private companies.

 

The recovery in our RSS brands in the UK was particularly strong as Covid-19 restrictions eased and pent-up demand led to a gross profit increase of 26.3%* compared to 2020. Despite this, the lockdowns in Q1 2021 continued to impact hospitality and catering (Blue Arrow), and also led to school closures, impacting our education business (Career Teachers) where gross profit remained lower than 2019.

 

Across our RSS portfolio, permanent recruitment fees were 90% up on 2020 as market confidence returned, with positive impact in office (Tate) and legal (Chadwick Nott). However, in aggregate, the portfolio still lagged 2019 gross profit by 7.2%*.

 

Our Healthcare business in the UK ('MGG') made good progress in 2021 but with less pronounced growth against 2020 with financial performance continuing to be affected by the pandemic. The virus had a significant impact on availability of front-line staff and resulted in the cancellation of elective surgery and other non-urgent medical procedures. During the year we are proud that MGG was heavily involved in the management of testing and vaccination services as part of the national effort against Covid-19 and, as a consequence, facilitated good work for people in our life sciences (SRG) and general staffing (Blue Arrow) businesses who report gross profit separately. Gross profit in Healthcare UK and Ireland was up 8.0%* on 2020 and 2.7%* up on 2019.

 

NORTH AMERICA (29% OF GROSS PROFIT)

In North America, our investments in STEM and GMS paid dividends with strong momentum building for GMS and new STEM leadership appointed to drive accelerated growth. The region delivered strong gross profit growth of 8.5% (16.7%*) on 2020 and was also 11.6%* higher than 2019.

 

This was driven by strong gross profit growth in GMS of 17.3%* reflecting a good level of new business secured across a broad range of market sectors and positive results from increased collaboration across the portfolio.

 

STEM gross profit was steady at 8.7%*, with a substantial increase of 21.8%* in our IT business, Lorien, offset by declines in life sciences and engineering.

 

Our light industrial business, Corestaff, benefited from fewer restrictions and an increase in demand, and grew gross profit by 34.7%. A particular feature of this growth was the supply of workers into Covid-19-related activities with our managed services customers. Following a strategic review which considered the scale and limited geographic footprint of Corestaff in North America, and a subsequent expression of interest, we decided that our customers and people would benefit from enhanced geographic reach for their light industrial staffing requirements. As a result, in early 2022, Impellam sold the business and assets of Corestaff to swipejobs Inc., a US private digital staffing company, for a cash consideration of approximately £14m ($19m). The proceeds of the sale will pay down net debt1 to fund additional investment to further accelerate the Group's strategy. This transaction will enable the leadership team in North America to focus our STEM and GMS portfolios and accelerate our investments in Virtuosity, technology and digital and innovation.

 

APAC (6% OF GROSS PROFIT)

In Asia Pacific (APAC), border closures and extended lockdowns were more severe in 2021 than in 2020 and continued to frustrate performance in our healthcare business despite some encouraging financial and operational improvements in sequential quarters towards the end of the year. Despite this, overall gross profit was maintained and up 6.5% (4.9%*) in 2021 with more resilient trading in GMS mitigating the decline in Healthcare.

 

Our GMS business achieved gross profit growth of 19.4%* on 2020 and a 7.2%* increase on 2019, whilst the Healthcare business gross profit declined by 9.8%*, due to the cross border lockdowns.

 

We continued to build resilience in our managed services business in APAC when we established our first foothold in the private sector, securing one of our largest global Managed Services Programmes ('MSP') with a global mining organisation. Led by our APAC region this will provide over 1,000 heads globally, across multiple functions from blue

collar skills to mining specialists.

 

In Australia, Global Medics focused on transformation to equip the business with the resources and tools to thrive in the next evolution of the Australian medical recruitment market.

 

In 2020, we launched our digital platform Flexy into the Australian market to support our managed services business. Flexy now has 31 local councils connected directly to good quality candidates in a digital marketplace, supplemented by a digital payroll service that has already been extended into four MSP clients in the region. In its first full year of trading, Flexy delivered £0.4m of gross profit.

 

LOOKING FORWARD

The global pandemic has upended the world of work and created huge societal change. Our vision and mission have never been more important as we continue to focus on Virtuosity as our strategic advantage to further transform our proposition and portfolio. We believe we are well placed for further success in 2022 and beyond, although we are mindful of the potential global economic impact of the current conflict in Ukraine.

 

 

 

Julia Robertson

Group Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1.  Explanations of Alternative Performance Measures are at the end of the report

2.  Digital - Data and Digital Technology, supported by monetisable data, automated process, cloud-based systems and flexible, mobile channels.

*Calculated by multiplying the prior year functional currency amount by the current year foreign exchange rate

 

 

 

Group Chief Financial Officer's Review

 

INTRODUCTION

Revenue for the year was up 13.1% (14.7%*) and gross profit increased by 17.1% (19.5%*), reflecting the improved economic conditions that followed the impact of the Covid-19 pandemic in 2020 and the rising demand for temporary and permanent staff across our regions and segments in 2021. The recovery has been strong and improved throughout 2021, with gross profit in the second half of 2021 2.5%* above the same period in 2019, and the final quarter of 2021 6.5%* above the final quarter of 2019.

 

To support the growth, we invested in customer-facing staff adding 308 to our headcount in the second half of 2021. Despite this, headcount at the end of 2021 remained 77 lower than at the end of 2019. Our staff productivity (gross profit divided by FTE heads) was higher than in previous years and this, together with cost reductions in other areas, including travel, property and facilities, meant that adjusted operating profit1 increased by 61.0% to £29.3m (2020: £18.2m). On a constant exchange rate basis the adjusted operating profit1 was 2.0% below 2019. With no required intangible asset impairment charges this year, the Group recorded an operating profit of £19.5m (2020: loss £15.0m) which also exceeded the £13.9m reported in 2019.

 

The difference between adjusted operating profit1 and operating profit is reconciled in note 2 and relates to the amortisation of acquired intangibles.

 

GOVERNMENT SUPPORT

The Group received £0.4m of rates relief in the final quarter of 2020/21 and continued to administer the Job Retention Scheme ('JRS') for a small number of temporary staff we provide to clients. The net effect of these programmes on our gross profit and cost of sales was not material as these programmes were used to compensate the temporary staff affected. It allowed us to maintain these temporary colleagues on our payroll without charging these to clients and preventing the ending of their contracts.

 

From a cash flow perspective, the Group repaid £33.1m of the VAT payments deferred from 2020, leaving £3.3m to be repaid in the first quarter of 2022. In the US, the first instalment of $8m (£5.8m) of federal tax deferred under the CARES initiative was repaid, with the second instalment due in December 2022.

 

FOREIGN EXCHANGE

Currency movements against Sterling adversely impacted our reported performance, largely due to the strengthening of Sterling against the US Dollar. Over the course of the year to December 2021, the total impact of exchange movements on gross profit and adjusted operating profit1 were £5.0m adverse and £1.3m adverse, respectively. Fluctuations in the rates of the Group's key operating currencies versus Sterling continue to represent a sensitivity for the reported performance of our business. By way of illustration, each 1 cent movement in annual exchange rates of the US Dollar impacts gross profit by £0.6m per annum and adjusted operating profit1 by £0.1m per annum. The rate of exchange between the US Dollar and Sterling over the year ended 31 December 2021 averaged US$1.3757 (2020: US$1.2840) and closed at US$1.3536 (2020: US$ 1.3494). As the Group expands further in overseas territories the impact of changes in exchange rates will be greater.

 

CAPITAL INVESTMENT

Capital expenditure on tangible and intangible fixed assets in the period was £5.8m (2020: £3.5m), as we recommenced investment in our core systems to further digitalise the business, following a freeze on non- essential capital expenditure in 2020. In 2021 our core systems project involved moving away from on-premises servers to the cloud, which also allowed us to exit an on-premises back up site. In addition, we began our digital programmes to deliver new front office, bill and pay systems, as well as global finance and HR systems, scheduled for full implementation in 2022. We also continued investment in our proprietary vendor management systems ('VMS') and the development of our digital platform, Flexy, which was deployed in Australia. The net repayment of finance leases amounted to £7.2m (2020: £8.3m).

 

INTEREST AND DEBT

Net cash generated from operations during the period was £10.2m (2020: £94.5m). In 2020, cash generated from operations benefited from £48.0m of deferred tax payments and £38.9m of these were repaid in 2021. Excluding the impact of these tax deferrals, cash generated from operations was £49.1m (2020: £46.5m). Excluding deferred taxes, the conversion of adjusted operating profit1 to net cash generated is 167.6% (2020: 256%). Cash generation from operations was further supported by an improvement in Days Sales Outstanding ('DSO') which stood at 35.4 days (2020: 37.1 days) at the end of 2021.

 

Finance expenses were lower than the prior year at £4.3m (2020: £5.7m). Lease interest was lower at £0.6m (2020: £0.8m) and interest cost on financing facilities fell to £3.5m (2020: £4.6m) as a result of reduced borrowings through the year. At the balance sheet date net debt1, excluding the adjustments for IFRS 16, was £15.0m compared to £4.1m in 2020, an increase of £10.9m. From the end of 2019, net debt1 has reduced by £57.3m (a £49.7m reduction when excluding the remaining deferred tax repayments). Including IFRS 16 adjustments net debt1 was £31.5m (2020: £26.3m). In addition to the positive operating cash generation reducing the underlying net debt1, we have continued to actively manage our property portfolio with a net reduction in our lease liability of £7.2m from 2020. The net cash flow from operations was primarily utilised as follows:

 

• Investment in fixed assets and software development: £5.8m

• Net lease repayment: £7.2m

• Share buybacks: £1.9m

• Net interest paid on borrowings and leases: £3.9m.

 

The Group's operations are financed by retained earnings and bank borrowings. With the benefits of the strong operational cash flow the Group replaced the existing £240m global revolving credit facility ('RCF') with a new facility agreement in December 2021. This £182.5m RCF has an accordion element of an additional £40m which is available for three years with options to extend for a further two years. The new facility also includes the appropriate replacements required following the end of LIBOR. This provides the Group with the flexibility to fund its working capital as well as future potential acquisitions. Rates of interest for the RCF are based on SOFRA/SONIA plus a margin calculated on the net debt1 to adjusted EBITDA1 leverage. The RCF also includes a letter of credit facility which amounted to £3.0m (2020: £3.2m) at the end of 2021.

 

The Group takes advantage of a number of nonrecourse supplier finance arrangements organised by clients of the Group to allow for the acceleration of payment of the Group's receivables. At the end of 2021, these amounted to £8.2m received for invoices not yet due for payment (2020: £6.3m).

 

These agreements accrue interest at between 0.65% and 1.75% over SONIA applied to the number of days the drawdown takes place before the due date. During 2021, the Group paid less than £0.1m in interest (2020: less than £0.1m).

 

A significant priority for the Group remains the focus on the conversion of operating profit into sustained positive cash flow by controlling working capital. The Group measures three covenants as required by the facility - interest cover, adjusted leverage ratio (defined as net debt1 less loan notes and restricted cash to adjusted EBITDA1) and debtor cover. All covenants were met during the year. Borrowing levels are controlled by the Group Finance department, which manages treasury risk in accordance with policies set by the Board.

 

The Group's financial liabilities are denominated primarily in Sterling. Exposure to currency risk at a transactional level is generally minimal, with most transactions being carried out in local currency.

 

TAXATION

The tax charge in the period of £7.1m (2020: £1.0m) represents an effective tax rate of 46.1% (2020: -4.9%) and arises on the Group's activities in the UK and overseas. The higher effective tax rate is driven by non-deductible expenses and remeasuring and recognising deferred tax in the UK at 25%. Finance Act 2021 increases the UK corporation tax rate

from 19% to 25% effective 1 April 2023 for companies with profits in excess of £0.25m. Under IAS 12, deferred tax assets and liabilities should be measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled.

 

The Group's contribution to the UK Treasury in the period amounted to £331.9m (2020: £212.3m) and consisted of VAT, income tax, national insurance and corporation tax. Of this amount, employer's national insurance, apprenticeship levy, irrecoverable VAT and corporation tax totalling £37.7m (2020: £24.5m) was a cost to the business.

 

EARNINGS PER SHARE

Continuing basic earnings per share increased to 18.3p (2020: Loss (46.2)p) as underlying profit after tax from continuing operations increased by £29.7m.

 

The weighted average number of shares in 2021 was 45.5m, 0.7m lower than 2020 due to the ongoing share buyback programme. Continuing adjusted earnings per share increased to 35.3p (2020: 18.2p) and reflects the underlying performance of the business, excluding impairment and amortisation of acquired intangibles and their respective taxation impact.

 

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 monitored, and the approval of extended payment terms requires senior finance involvement. In some 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. The amount of borrowing required to fund the Group's activities is determined based on these projections, together with expected returns to shareholders and planned capital expenditure. This is then compared to the bank lending facilities currently committed and expected to be available to the Group.

 

Also considered is the projection of compliance with the financial covenants implied by these plans. In addition, these figures are tested for sensitivity to possible changes to the economic environments in which the Group operates. The Group has no operations in Ukraine or surrounding regions and therefore there is no direct impact on the Group's trading. However, any indirect impact, such as a worsening in economic conditions, would represent such a sensitivity.

 

 The impact on Group liquidity and covenants of each of these sensitivities is then evaluated together with the likelihood of each of these occurring either individually or in combination. On a regular basis, and at least quarterly, the Board reviews 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.

 

DIVIDENDS AND SHARE BUYBACK

In January 2021, the Board announced a reduced share buyback programme, to purchase Ordinary Shares in the Company up to an aggregate market value of £0.5m per calendar month until the next AGM which was held in June 2021. Under this programme, 466,753 shares were purchased at a total value of £1.3m.

 

An updated programme was approved at the AGM authorising the Board to purchase up to a maximum of 4,560,363 shares, representing 10% of the issued Ordinary share capital of the Company (as at 17 May 2021) until the earliest of the 2022 AGM or 30 June 2022. Under this programme, 148,492 shares were purchased during this period at a total value of £0.6m.  No dividend has been paid or is proposed for the year (2020: £nil).

 

INSURANCE

The Group maintains a comprehensive insurance programme with several 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.

 

OUTLOOK

2021 has seen a significant recovery in trading in our regions and segments from the sharp declines experienced in 2020. We maintained our focus on cost management whilst making investments in revenue-generating headcount to drive further growth in 2022. Operational cash flow was strong with further improvements in DSO which enabled an underlying reduction in borrowings and facility levels. This provides a strong liquidity position for 2022. The strategic disposal of Corestaff in February 2022 and the cash received will further bolster this position. Trading as we exited 2021 was above pre-pandemic levels and this has continued in the first few months of 2022. Investments in our core systems and the subsequent deployment will also enable our teams to deliver further productivity gains.

 

We started 2022 positively, whilst being mindful of possible economic headwinds, government fiscal easing, tax increases, inflationary pressure, potential interest rises, as well as acute talent shortages, these have now been overshadowed by the events in Ukraine and the resulting political and economic instability. Though we do not trade within the affected region, the global economic impacts and knock-on effect to our markets at this time is uncertain.

 

 

Tim Briant

Group Chief Financial Officer

 

 

 

 

 

 

 

 

 

 

 

1.  Explanations of Alternative Performance Measures are at the end of the report

 

*Calculated by multiplying the prior year functional currency amount by the current year foreign exchange rate

 

 

Consolidated income statement

For the fifty-two weeks to 31 December 2021

 

 

Unaudited  52 weeks

31 December

2021

Audited  52 weeks

1 January

2021

 

Notes

£m

£m

 

 

 

 

Revenue

2

2,262.4

2,000.9

Cost of sales

 

(1,995.4)

(1,772.8)

Gross profit

2

267.0

228.1

Administrative expenses

 

(244.2)

(239.5)

Impairment losses from receivables

 

(3.3)

(3.6)

Operating profit/(loss)

2

19.5

(15.0)

Operating profit before impairments, amortisation of brand value and customer relationships

 

29.3

18.2

Amortisation of brand value and customer relationships

 

(9.8)

(11.0)

Impairment of goodwill

 

-

-16.6

Impairment of other intangible items

 

-

(5.6)

Operating profit/(loss)

 

19.5

(15.0)

Finance income

 

0.2

0.3

Finance expense

3

(4.3)

(5.7)

Profit/(loss) before taxation

 

15.4

(20.4)

Taxation

4

(7.1)

(1.0)

Profit/(loss) for the period attributable to owners of the parent Company

8.3

(21.4)

 

 

 

 

 

 

Earnings per share for equity holders of the parent Company

 

 

 

Basic & diluted

5

18.3p

(46.2)p

 

 

 

 

 

Consolidated statement of comprehensive income

For the fifty-two weeks to 31 December 2021

 

Unaudited  52 weeks

31 December

2021

Audited  52 weeks

1 January

2020

 

  £m

  £m

 

 

 

 

 

 

Profit/(loss) for the period

8.3

(21.4)

Other comprehensive income:

 

 

Foreign currency translation differences - foreign operations

(1.4)

(2.0)

Reduction in non-controlling interests

(0.3)

-

Total comprehensive income/(loss) for the period, net of tax, attributable to owners of the parent Company

6.6

(23.4)

 

 

 

 

 

Consolidated balance sheet

As at 31 December 2021

 

 

Unaudited  31 December 2021

Audited  1 January 2021

 

 

Notes

£m

£m

 

Non-current assets

 

 

 

 

Property, plant and equipment

 

4.2

5.1

 

Right-of-use assets

 

15.9

21.3

 

Goodwill

 

128.9

129.1

 

Other intangible assets

 

85.3

96.2

 

Financial assets

 

1.7

1.6

 

Deferred tax assets

 

8.3

10.3

 

Trade and other receivables

 

0.9

3.3

 

 

 

245.2

266.9

 

Current assets

 

 

 

 

Trade and other receivables

 

605.5

563.9

 

Tax receivable

 

0.9

2.8

 

Cash and cash equivalents

6

90.9

117.9

 

 

 

697.3

684.6

 

Total assets

 

942.5

951.5

 

Current liabilities

 

 

 

 

Short-term borrowings

 

0.1

0.1

 

Lease liabilities

6

5.1

9.2

 

Trade and other payables

 

568.7

558.0

 

Tax payable

 

0.7

0.5

 

Provisions

 

8.3

7.2

 

 

 

582.9

575.0

 

Net current assets

 

114.4

109.6

 

Non-current liabilities

 

 

 

 

Long-term borrowings

6

101.9

119.0

 

Lease liabilities

6

11.4

17.3

 

Provisions

 

3.8

3.3

 

Deferred tax liabilities

 

18.7

18.1

 

 

 

135.8

157.7

 

Total liabilities

 

718.7

732.7

 

Net assets

 

223.8

218.8

 

Equity

 

 

 

Issued share capital

 

0.5

0.5

Share premium account

 

30.1

30.1

 

 

30.6

30.6

Other reserves

 

116.9

118.3

Retained earnings

 

76.2

70.2

Total equity attributable to owners of the parent Company

223.7

219.1

Non-controlling interest

 

0.1

(0.3)

Total equity

 

223.8

218.8

 

 

 

Consolidated statement of changes in equity

For the fifty-two weeks to 31 December 2021

 

Total share capital and share premium

Other reserves

Retained earnings

Total equity attributable to equity owners of the parent

Non-controlling interest

Total equity

 

£ m

£ m

£ m

£ m

£ m

£ m

Audited 1 January 2021

30.6

118.3

70.2

219.1

(0.3)

218.8

Profit for the period

-

-

8.2

8.2

0.1

8.3

Other comprehensive income from reducing the NCI component

-

-

(0.3)

(0.3)

0.3

-

Other comprehensive income

-

(1.4)

-

(1.4)

-

(1.4)

Total comprehensive (loss)/income in the period

-

(1.4)

7.9

6.5

0.4

6.9

Transactions with owners, recorded directly in equity

 

 

 

 

 

 

Purchase and cancellation of own shares

-

-

(1.9)

(1.9)

-

(1.9)

Unaudited 31 December 2021

30.6

116.9

76.2

223.7

0.1

223.8

 

 

 

 

 

 

 

 

 

 

 

Consolidated cash flow statement

For the fifty-two weeks to 31 December 2021

 

Unaudited  52 weeks

31 December

2021

Audited  52 weeks

1 January

2021

 

  £m

  £m

 

 

 

Cash flows from operating activities

 

 

Profit before taxation

15.4

(20.4)

Adjustments for:

 

 

  Depreciation and amortisation

2.4

2.8

  Amortisation of right-of-use assets

7.0

9.5

  Amortisation of other intangible assets

15.1

17.6

  Impairment of goodwill

-

16.6

  Impairment of other intangible assets

-

5.6

  Profit on disposal of property, plant and equipment

(0.2)

(0.2)

  Finance income

(0.2)

(0.3)

   Finance expense

4.3

5.7

 

43.8

36.9

(Increase) / Decrease in trade and other receivables

(46.0)

8.1

Increase in trade and other payables

12.1

50.8

Increase in provisions

2.0

1.4

Cash generated by operations

11.9

97.2

Taxation paid

(1.7)

(2.7)

Net cash generated by operating activities

10.2

94.5

Cash flows from investing activities

 

 

Purchase of property, plant and equipment

(1.5)

(1.2)

Purchase of intangible assets

(4.3)

(2.3)

Receipt from lease debtors

1.7

3.2

Increase in other financial assets

-

(0.1)

Finance interest received

0.2

0.3

Net cash utilised on investing activities

(3.9)

(0.1)

Cash flows from financing activities

 

 

Drawdown of short-term borrowings

292.0

167.1

Repayment of short-term borrowings

(309.0)

(213.4)

Increase / (Decrease) in overdraft

1.0

(36.1)

Purchase and cancellation of own shares

(1.9)

(4.3)

Interest paid on lease liabilities

(0.6)

(0.8)

Interest paid on borrowings

(3.5)

(4.6)

Repayment of lease liabilities

(8.9)

(11.5)

Net cash (outflow) from financing activities

(30.9)

(103.6)

Net (decrease) in cash and equivalents

(24.6)

(9.2)

Opening cash and cash equivalents

117.9

132.3

Foreign exchange (loss) / gain on cash and cash equivalents

(2.4)

(5.2)

Closing cash and cash equivalents

90.9

117.9

 

Notes to the interim financial statements

1  Basis of preparation

I.  Non-statutory information

The financial information for the 52 weeks to 31 December 2021 does not constitute the statutory accounts of the Group for the relevant period within the meaning of section 435 of the Companies Act 2006.

The annual report and accounts for the 52 week period ended 1 January 2021 has been audited and delivered to the Registrar of Companies.  The audit report was unqualified and did not contain any statement under section 498 of the Companies Act 2006. The annual report and accounts for the 52 week period ended 31 December 2021 has not been audited.

 

The Directors consider the Group to be a going concern.  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 2023 and 2024. The Group had a net debt position of £15.0m (excluding IFRS 16 lease liabilities) and has a further £182.5m available to drawdown on the Group's revolving credit facility. The amount of borrowing required to fund the Group's activities is determined based on these projections, together with expected returns to shareholders and planned capital expenditure. Also considered is the projection of compliance with the financial covenants implied by these plans. In addition, these figures are tested for sensitivity to possible changes to the economic environments in which the Group operates. The Group has no operations in Ukraine or surrounding regions and therefore there is no direct impact on the Group's trading, however, any indirect impact such as a worsening in economic conditions, would represent such a sensitivity. The impact on Group liquidity and covenants of each of these sensitivities is then considered together with the likelihood of each of these occurring either individually or in combination. Given this analysis, the Directors have determined that there are no likely downside scenarios which would cause the Group a concern.

II.  Accounting policies

The accounting policies used in this report are with those applied at 31 December 2021.

No new and/or revised IFRS and IFRIC publications that come into force in the period have any material impact on the accounting policies, financial position or performance of the Group.

Segmental information

In line with internal reporting the primary segment is presented by region, this represents a change from previously reported primary business segments of Global Managed Services, Global Specialist Staffing, Regional Specialist Staffing and Healthcare.  In addition, as a secondary segment we presented our revised business segments of Global Managed Services, STEM, Regional Specialist Services and Healthcare within this report.

 

 

 

 

 

Fifty-two weeks to 31 December 2021 - unaudited

 

 

 

Revenue

Gross profit

Adjusted operating profit

 

 

 

£ m

£ m

£ m

 

UK & Europe

 

1,741.4

172.5

24.5

 

North America

 

456.3

76.5

10.1

 

Asia Pacific

 

64.7

18.0

2.2

 

Operating regions

 

2,262.4

267.0

36.8

 

Fifty-two weeks to 1 January 2021 - audited

 

 

 

Revenue

Gross profit

Adjusted operating profit

 

 

 

£ m

£ m

£ m

 

UK & Europe

 

1,539.5

140.7

8.1

 

North America

 

401.5

70.5

13.4

 

Asia Pacific

 

59.9

16.9

1.8

 

Operating segments

 

2,000.9

228.1

23.3

 

 

 

 

Unaudited

52 weeks
31 December 2021

  m

 

Audited

52 weeks
1 January
2021

  m

 

Segment adjusted operating profit

36.8

23.3

 

Corporate costs

(7.5)

(5.1)

 

Operating profit before amortisation and impairment

 

29.3

18.2

 

Amortisation of acquired intangibles

(9.8)

(11.0)

 

Impairment

-

(22.2)

 

Operating profit/(loss)

19.5

(15.0)

 

Finance income

0.2

0.3

 

Finance expense

(4.3)

(5.7)

 

Taxation charge

(7.1)

(1.0)

 

Profit/(loss) for the period

8.3

(21.4)

 

 

 

 

 

 

Where the Group places workers between operational segments, the relevant segments each record the gross revenue for placing the worker on an arm's-length basis. An adjustment has been made to remove the impact of inter-segment revenues from the Group results.

The Group has adopted adjusted operating profit as its Alternative Performance Measure, to include depreciation and amortisation of assets but excluding amortisation of acquired intangibles.

Adjusted operating profit is not defined by IFRS and therefore may not be directly comparable with other companies' alternative profit measures. It is not intended to be a substitute, or superior to, IFRS measurements of profit.

Finance expense

 

Finance expense

 

Unaudited

52 weeks
31 December
2021
£m

 

Audited

52 weeks

1 January

2021

£m

 

 

Revolving credit facilities

 

3.4

4.4

 

Interest on lease liabilities

 

0.6

0.8

 

Unwind discount on provisions

 

0.2

0.3

 

Other interest expense

 

0.1

0.2

 

Total finance expense

 

4.3

5.7

 

 

 

 

 

Taxation

Tax charge in the income statement

 

 

 

Unaudited

52 weeks

31 December 2021

Audited

52 weeks

1 January 2021

 

£m

£m

Current income tax

 

 

  UK corporation tax on results for the period

2.8

0.8

  Adjustments in respect of previous periods

(0.5)

(0.9)

 

2.3

(0.1)

  Foreign tax in the period

1.6

2.1

  Adjustments in respect of previous periods

-

(0.8)

Total current income tax

3.9

1.2

Deferred tax (credit)/debit

3.2

(0.2)

Total taxation charge in the income statement

7.1

1.0

Income tax expense is recognised based on management's best estimate of the effective annual income tax rate expected for the full financial year. 

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 dilutive effect relates to 19,841 shares owned by The Corporate Services Group Ltd Employee Share Trust which hold the shares remaining after various historic option plans lapsed. Excluding these shares, the weighted average number of shares in 2021 is 45,538,963 (2020: 46,208,380) and the fully diluted average number of shares is 45,558,804 (2020: 46,228,221). The calculations of both basic and diluted earnings per share ('EPS') are based upon the following consolidated income statement data:

 

Unaudited

52 weeks
31 December 2021

Audited

52 weeks
1 January 2021

 

£m

£m

Total profit/(loss) for the period

8.3

(21.4)

Impairment of goodwill

-

16.6

Impairment of other intangible assets (net of tax)

-

4.5

Customer relationship and brand amortisation (net of tax)

7.7

8.6

Total adjusted profit

16.0

8.3

 

 

 

Weighted average number of shares

45,538,963

46,208,380

 

 

Unaudited

52 weeks
31 December 2021

Audited

52 weeks
1 January 2021

Basic EPS

Pence

Pence

Total unadjusted basic earnings per share

18.3

(46.2)

Impairment of goodwill

-

36.0

Impairment of other intangible assets (net of tax)

-

9.8

Acquired intangible asset amortisation (net of tax)

17.0

18.6

Total adjusted basic earnings per share

35.3

18.2

 

Additional cash flow information

Unaudited

Audited

2 January 2021

Cash flow

Interest charged

Interest paid

Drawdown

Foreign exchange

Unaudited

31 December 2021

 

£ m

£ m

£ m

£ m

£ m

£ m

£ m

Cash and short-term deposits

117.9

(24.6)

(0.2)

0.2

-

(2.4)

90.9

Bank overdraft

(2.9)

(1.0)

-

-

-

-

(3.9)

Revolving credit

(118.9)

17.0

(3.4)

3.4

-

-

(101.9)

Hire purchase

(0.2)

0.1

-

-

-

-

(0.1)

Lease liabilities

(26.5)

8.8

(0.6)

0.4

1.0

0.4

(16.5)

Lease debtor

4.3

(1.7)

0.1

(0.1)

(2.4)

(0.2)

-

Net debt

(26.3)

(1.4)

(4.1)

3.9

(1.4)

(2.2)

(31.5)

 

 

 

 

 

 

 

 

The overdraft is included in trade and other payables on the balance sheet, and the lease debtor is included in trade and other receivables.

 

POST BALANCE SHEET EVENTS - SHARE PURCHASE AND CANCELLATION

Between the end of the year and 22 March 2022, a further 75,830 Ordinary shares of 1p each have been repurchased in the market for total consideration of £0.4m and have been cancelled.

POST BALANCE SHEET EVENTS - DISPOSAL OF CORESTAFF

On 24 January 2022 the Group announced that it has entered into an agreement to sell the business and assets of Corestaff, its US-based Light Industrial brand, to swipejobs Inc., a US private digital staffing company, for cash consideration of approximately £14 million ($19 million).

In the year ended 31 December 2021, Corestaff, reported in the Group's Regional Specialist Staffing portfolio, generated revenue of £98 million and gross profit of £12.8 million and had an operating profit of £1.2m. Net assets at 31 December 2021 were approximately £6.9 million.

The details of the sale were completed and agreed after the year end and the transaction was completed on 7 February 2022. Following completion of the Disposal, the Group used the proceeds of sale to pay down net debt to fund additional investment to further accelerate the Group's strategy.

Alternative Performance Measures

Certain discussions and analyses set out in this Preliminary Announcement include measures which are not defined by generally accepted accounting principles such as IFRS. We believe this information, along with comparable IFRS measurements, is useful to investors because it provides a basis for measuring our operating performance on a comparable basis. Our management uses these financial measures, along with the most directly comparable IFRS financial measures, in evaluating our operating performance and value creation. Non-IFRS financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with IFRS. Non-IFRS financial measures as reported by us may not be comparable with similarly titled amounts reported by other companies.

Adjusted operating profit

Definition: The Group calculates adjusted operating profit as operating profit before amortisation of acquired intangibles and impairment.

Closest equivalent IFRS measure: Operating profit.

Rationale for adjustment: The Directors believe that adjusted operating profit is the most appropriate approach for ascertaining the underlying trading performance and trends as it reflects the measures used internally by senior management for all discussions of performance, including Directors' remuneration, and also reflects the starting profit measure used when calculating the Group's banking covenants. All discussions within the Group on segmental and individual brand performance refer to adjusted operating profit.

Following the adoption of IFRS 16 in 2019 the Group has moved from adjusted EBITDA to adjusted operating profit as its Alternative Profit Measure in 2020, to include depreciation and amortisation of assets but excluding amortisation of acquired intangibles, and this is included in the table below.

Reconciliation of adjusted operating profit to operating profit / (loss):

 

Unaudited

2021

Audited

2020

 

£m

£m

Segment adjusted operating profit

36.8

23.3

Corporate Costs

(7.5)

(5.1)

Adjusted operating profit

29.3

18.2

Amortisation of brand value and customer relationships

(9.8)

(11.0)

Impairment of intangible assets

-

(22.2)

Operating profit/(loss)

19.5

(15.0)

 

The amortisation of acquired intangibles (brand value and customer relationships) charge due to its size and nature is disclosed separately to give a comparable view of the year-on-year trading financial performance.

The impairment charge due to its size is disclosed separately to give a more comparable view of the year-on-year underlying financial performance.

Adjusted EBITDA

Definition: The Group calculates adjusted EBITDA as operating profit before interest, tax, depreciation and amortisation.

Closest equivalent IFRS measure: Operating profit.

Rationale for adjustment: The Group continues to measure EBITDA which is used for banking covenants and internal performance measures. It is also used externally for valuation purposes.

Reconciliation of adjusted EBITDA to operating profit / (loss):

 

Unaudited

2021

Audited

2020

 

£m

£m

Adjusted EBITDA

37.0

27.6

Amortisation of software

(5.3)

(6.6)

Depreciation

(2.4)

(2.8)

Adjusted operating profit

29.3

18.2

Amortisation of brand value and customer relationships

(9.8)

(11.0)

Impairment of intangible assets

-

(22.2)

Operating profit/(loss)

19.5

(15.0)

 

Spend Under Management (SUM)

Definition: Total amount of client expenditure which our Managed Service brands managed on behalf of their clients. This equates to revenue earned where Impellam acts as principal plus gross billings to customers where Impellam acts as agent.

Closest equivalent IFRS measure: Group Revenue.

Rationale for adjustment: The Group uses this measure as it reflects the total value of the client spend to the Group, not just the revenue generated.

Continuing adjusted earnings per share (EPS)

Definition: Continuing adjusted profit divided by the weighted average number of Ordinary shares outstanding during

Closest equivalent IFRS measure: Continuing basic earnings per share.

Rationale for adjustment: The Group uses this measure alongside the basic EPS calculation as it reflects the underlying trading performance of the business

Reconciliation of Adjusted EPS to Basic EPS:

 

Unaudited

52 weeks

31 December 2021

Audited

52 weeks

1 January 2021

 

£m

£m

Continuing profit / (loss) for the period

8.3

(21.4)

Impairment of goodwill

-

16.6

Impairment of other intangible assets (net of tax)

-

4.5

Acquired intangibles amortisation (net of tax)

7.7

8.6

Continuing adjusted profit

16.0

8.3

 

 

 

Weighted average number of shares

45,538,963

46,208,380

 

 

 

Continuing basic earnings per share

18.3

(46.2)

Continuing adjusted earnings per share

35.3

18.2

 

 

Net debt excluding IFRS 16 'leases'

Definition: The Group calculates net debt as the total of cash and short-term deposits, revolving credit and hire purchase.  Following the adoption of IFRS 16 the calculation includes lease liabilities and debtors.

Rationale for adjustment: The Group has used this measure to maintain alignment to the covenant reporting during 2020.

Reconciliation of net debt excluding IFRS 16 to net debt:

 

Unaudited

2021

Audited

2020

 

£m

£m

Cash and short-term deposits

90.9

117.9

Bank overdraft

(3.9)

(2.9)

Revolving credit

(101.9)

(118.9)

Hire purchase

(0.1)

(0.2)

Net debt excluding IFRS 16

(15.0)

(4.1)

Lease liabilities

(16.5)

(26.5)

Lease debtors

-

4.3

Net debt

(31.5)

(26.3)

 

Enquiries:  For further information please contact:

Impellam Group plc

 

Julia Robertson, Group Chief Executive

Tim Briant, Group Chief Financial Officer

Tel: 01582 692658

 

Canaccord Genuity Ltd (NOMAD and Corporate Broker to Impellam)

Andrew Potts

Bobbie Hilliam

Georgina McCooke

Tel: 020 7523 8150

 

Prior to publication the information communicated in this announcement was deemed by the Company to constitute inside information for the purposes of article 7 of the Market Abuse Regulations (EU) No 596/2014 as amended by regulation 11 of the Market Abuse (Amendment) (EU Exit) Regulations No 2019/310 ('MAR'). With the publication of this announcement, this information is now considered to be in the public domain.

Note to Editors:

Our Managed Services businesses are enabled by talent-focused Specialist Staffing brands with deep heritages, vertical sector expertise and loyal candidate networks. Clients across the world trust us to deliver Managed Services and Specialist Staffing in the UK, North America, Asia Pacific and Europe.

 

Working with them are 2,900 Impellam people, bringing a wealth of expertise through our 13 market-leading brands across 70 locations. Every year, we connect carefully chosen candidates with good work at all levels. They include technology and digital specialists, scientists, clinical experts, engineers, nurses, doctors, lawyers, teachers, receptionists, drivers, chefs, administrators, warehouse and call centre operatives.

 

Underpinning everything we do is our Virtuoso strategy which recognises it is our people who make the difference. Virtuosos make and deliver on promises, and grow with their customers through sector, service or international expansion which ensures there is never a need for a customer or candidate to leave Impellam. Impellam is the largest Global Talent Acquisition and Managed Workforce Solutions provider in the UK, and 7th1 in the world.

 

For more information about Impellam Group please visit: www.impellam.com

 

By SUM (confirmed by Staffing Industry Analysts).  Spend Under Management (SUM) is the total amount of client expenditure which our Managed Services brands manage on behalf of their clients. This equates to revenue earned where Impellam acts as principal plus gross billings to customers where Impellam acts as agent (2019 published numbers). Management use this measure as it reflects the total value of the client spend to the Group and not just the revenue generated

 

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