Half Yearly Report

RNS Number : 0738L

Impellam Group plc

27 July 2011

 



27 July 2011

Impellam Group plc

REPORT FOR 26 WEEKS ENDED 1 JULY 2011

UNAUDITED INTERIM RESULTS

Highlights

§ Turnover increased 0.9% to £549.4 million (June 2010: £544.4 million)

§ Operating profit increased 29.6% to £16.2 million (June 2010: £12.5 million)

§ Gross profit increased 2.9% to £91.1 million (June 2010: £88.5 million)

§ Conversion of gross profit into operating profit increased to 17.8% (June 2010: 14.1%)

§ Fees from permanent placements increased to £10.4 million (June 2010: £9.0 million) 

§ Earnings per share of 25.4p (June 2010: 17.9p)

Cheryl Jones, Chairman commented:

"I am pleased to announce that Impellam's operating profit of £16.2 million for the first half of the year achieved the Group's plan expectation. The Group's strategy to build competitive market sustainability requires both the re-evaluation of marketing and sales initiatives and improvement in revenue quality, while continuing business re-engineering programmes. These initiatives have been successful to date.

The Group's turnover for the first half of 2011 was affected by shrinkage in specific areas of the Group's client base, exiting of certain contracts across the businesses, and the challenges of difficult market conditions. As a result, the Group increased turnover by just under 1.0% and improved the gross margin percentage by 30 bps.  Overhead investments were made during the period; however, transformation programmes to enhance the efficiency and effectiveness of the businesses enabled overhead costs to remain level, thereby improving overall conversion rates by 370 bps to 17.8%.

Medacs Healthcare Group experienced an anticipated lessened demand in the doctors' staffing business in the UK during the first half of 2011. During the period, orders for doctor assignments declined 18.8%, and average hours for these assignments declined 17.4%. By increasing fill rates, Medacs limited shrinkage in invoiced doctor hours to 9.1% for the period. Medacs continued to increase its sales emphasis in other recruitment sectors as well as the healthcare managed services business. The nursing and social care sectors increased invoiced hours by 5.4% and 5.1%, respectively over the comparative period. In total, Medacs reported £94.6 million in turnover, a 6.9% reduction over the comparative period, and reported £4.3 million in operating profit during the first half of the year. Impellam continues to invest in Medacs' International footprint and to seek acquisitions for this business in keeping with the segment's planned strategy.

Impellam Group's Commercial, Professional and Technical Staffing segments reported combined turnover of £414.3 million for the first half of the year, an increase of 5.6%. Total operating profit for the period was £14.3 million, an increase of 43.0% over the comparative period. Though the targeted growth plans are successfully moving forward, a significant portion of the operating profit improvement has been driven by the efficiency and service reengineering programmes begun in 2009.

The UK Commercial Staffing segment saw turnover of £238.5 million, an increase of 7.9% during the first half of 2011 and operating profit of £8.2 million, an increase of 34.4% over the comparative period. The business has held gains from prior year efficiency programmes while pursuing and converting targeted new business opportunities. This segment of the Group's results includes the Comensura brand and the other UK-based managed services brands. 

The UK Professional & Technical segment reported turnover of £95.3 million, an increase of 13.9% over the comparative period. This result reflects the Group's emphasis on the technology, engineering and sciences sectors, and the current market demand for these specialties. These gains were marginally impacted by lower turnover in the education and finance & accounting sectors during the period. Operating profit reached £4.2 million for the first half of the year.

The US Staffing segment has reported turnover of £80.5 million for the first half of the year and operating profit of £1.9 million for the same period. Overall, the commercial, professional, technical, and managed services brands experienced revenue growth ranging from 4.3% to 15.7% during the first half of 2011 as measured in local currency.  However, these revenue gains were mostly offset by the exit of contracts from prior periods.  This segment of the Group's results includes the Guidant brand.

The Group continues to focus its growth strategies to leverage the strength of its Staffing operations in the UK and the US and will further align objectives where appropriate. The Group recognises that continued rationalisation of its brand portfolio and IT platforms are significant components of completing its planned business transformation programmes for these operations.

Carlisle Support Services made gains in both new business and expanded contracts in the first half of the year. Year-over-year revenue was lower as the timing of new contract start-ups was outpaced by the timing of contracts exited in 2010. This segment reported turnover of £40.5 million in the first half compared to £51.8 million in the comparative period.  However, gross margins in the business improved to 15.1% compared to 11.6% in 2010. This is as a result of the planned approach to growth and revenue quality, and the implementation of processes and technology to support greater efficiencies in the scheduling of employees and contract resources for the Carlisle businesses. The segment reported £1.1 million in operating profit during the period, compared to £0.8 million in the comparative period.  Impellam continues to review acquisition opportunities in specific market sectors to support the planned growth and market position of the business." 

Business Segment Results:

−    Medacs Healthcare Group: Turnover decreased 6.9% to £94.6 million and gross profit decreased by 8.8% to £14.5 million.  Operating profit decreased to £4.3 million.

−    UK Staffing - Commercial: Turnover increased 7.9% to £238.5 million and gross profit increased by 7.2% to £37.2 million.  Operating profit increased to £8.2 million.

−    UK Staffing - Professional & Technical: Turnover increased 13.9% to £95.3 million and gross profit increased 14.0% to £16.3 million.  Operating profit increased to £4.2 million.

−    US Staffing: Turnover decreased 0.9%* to £80.5 million, gross profit increased by 2.5%* to £17.0 million.  Operating profit increased to £1.9 million.

−    Carlisle Support Services: Turnover decreased 21.8% to £40.5 million and gross profit increased 1.7% to £6.1 million.  Operating profit increased to £1.1 million.

The Group generated £7.7 million of cash from operations in the first twenty-six weeks of the year (June 2010: £34.6 million). Days sales outstanding (DSO) for the Group was 35.6 at 1 July 2011 compared to 36.0 at 31 December 2010.

During the first half of 2011, the Group utilised £0.2 million to acquire the non controlling interests in our Australian subsidiary and all group companies are now wholly owned.  Capital expenditure was £2.0 million.  The reduction in debt and the repayment of the remaining 10% loan notes resulted in a reduction in interest paid to £1.3 million (June 2010: £1.8 million). As a result of the improving profitability and the utilisation of tax losses, the Group paid £2.4 million in Corporation tax in the period, a £2.0 million increase on 2010.

Rigorous focus on the Group's cash and debt position in both 2009 and 2010 resulted in substantive changes in operational processes and significant improvements in cash management and DSO across the business segments. Though these initiatives are imbedded across the businesses in 2011, elements of the results of these prior period initiatives will not be replicated in 2011. Cash management continues to be an ongoing focus within the Group businesses.

Net debt decreased by £1.7 million to £16.1 million as at 1 July 2011 (31 December 2010: £17.8 million).  In addition, the Group has outstanding letters of credit drawn against its US borrowing facilities amounting to £3.4 million (31 December 2010: £3.4 million).

 

Interim Management Report

Financial results for the twenty-six weeks to 1 July 2011

The table below sets out the results for the Group by segment for the first half of 2011.

Group results (unaudited)	Revenue			Gross profit			Operating profit
£'million	2011	2010	% change	2011	2010	% change	2011	2010
Medacs Healthcare Group	94.6	101.6	(6.9)	14.5	15.9	(8.8)	4.3	5.6
UK Staffing - Commercial	238.5	221.0	7.9	37.2	34.7	7.2	8.2	6.1
UK Staffing - Professional & Technical	95.3	83.7	13.9	16.3	14.3	14.0	4.2	2.1
US Staffing	80.5	86.3	(0.9)*	17.0	17.6	2.5*	1.9	1.8
Carlisle Support Services	40.5	51.8	(21.8)	6.1	6.0	1.7	1.1	0.8
	549.4	544.4	0.9	91.1	88.5	2.9	19.7	16.4
Central costs							(2.5)	(2.2)
Operating profit before amortisation of client relationships							17.2	14.2
Amortisation of client relationships							(1.0)	(1.7)
Operating profit							16.2	12.5

* % change measured in local currency 

Consolidated income statement

For the twenty-six weeks ended 1 July 2011

		2011	2010
	Notes	£m	£m
Continuing operations
Revenue	2	549.4	544.4
Cost of sales		(458.3)	(455.9)
		__________	__________
Gross profit		91.1	88.5
Administrative expenses		(74.9)	(76.0)
		__________	__________
Operating profit	2	16.2	12.5
Finance expense		(1.1)	(2.0)
		__________	__________
Profit before taxation		15.1	10.5
Taxation	3	(3.5)	(2.4)
		__________	__________
Profit for the period		11.6	8.1
		__________	__________
Attributable to:
Owners of the parent Company		11.5	8.1
Non-controlling interest		0.1	-
		__________	__________
		11.6	8.1
		__________	__________

Earnings per share for equity holders of the parent Company
Basic and diluted	4	25.4p	17.9p
		__________	__________

Consolidated statement of comprehensive income

For the twenty-six weeks ended 1 July 2011

			2011		2010
			£m		£m
Profit for the period			11.6		8.1
Other comprehensive income:
Losses recognised directly in equity
Currency translation differences (net of tax)			(0.2)		(1.0)
			__________		__________
Total comprehensive income for the period			11.4		7.1
			__________		__________
Attributable to:
Owners of the parent Company				11.5	7.1
Non-controlling interest				(0.1)	-
				__________	__________
				11.4	7.1
				__________	__________

Consolidated balance sheet

		1 July 2011	31 December 2010
		£m	£m
Non-current assets
Property, plant and equipment		6.2	5.9
Goodwill		60.1	60.1
Other intangible assets		47.8	49.4
Deferred tax assets		5.8	6.1
Financial assets		2.3	2.5
		_________	_________
		122.2	124.0
		_________	_________
Current assets
Trade and other receivables		203.0	191.9
Cash and short-term deposits		13.6	13.9
		_________	_________
		216.6	205.8
		_________	_________
Total assets		338.8	329.8
		_________	_________
Current liabilities
Trade and other payables		164.4	163.6
Taxation liabilities		3.5	2.7
Bank overdrafts and other borrowings		29.7	11.7
Short-term borrowings		-	20.0
Provisions		3.7	3.7
		_________	_________
		201.3	201.7
		_________	_________
Net current liabilities		15.3	4.1
		_________	_________
Non-current liabilities
Other payables due in greater than 1 year		1.0	1.1
Provisions		6.1	7.8
Deferred taxation liability		12.3	12.4
		_________	_________
		19.4	21.3
		_________	_________
Total liabilities		220.7	223.0
		_________	_________
Net assets		118.1	106.8
		_________	_________

Consolidated balance sheet

		1 July 2011	31 December 2010
		£m	£m
Equity
Issued share capital		0.4	0.4
Share premium		15.5	15.5
		_________	_________
		15.9	15.9
Other reserves		93.1	93.0
Retained profit/(deficit)		9.1	(2.3)
		_________	_________
Total equity attributable to equity holders of the parent Company		118.1	106.6
Non-controlling interest		-	0.2
		_________	_________
Total equity		118.1	106.8
		_________	_________

Consolidated cash flow statement

For the twenty-six weeks ended 1 July 2011

		2011	2010
	Notes	£m	£m
Cash flows from operating activities
Cash generated by operations	5	7.7	34.6
Taxation paid		(2.4)	(0.4)
		________	________
Net cash generated by operating activities		5.3	34.2
		________	________
Cash flows from investing activities
Cost of acquisition (net of cash acquired)		-	(0.6)
Non-controlling interest acquired		(0.2)	-
Purchase of property, plant and equipment (PPE)		(1.3)	(1.2)
Purchase of intangible assets		(0.7)	(0.5)
Net movement in other financial assets		0.1	0.1
		________	________
Net cash utilised on investing activities		(2.1)	(2.2)
		________	________
Cash flows from financing activities
Movement in short-term borrowings		(2.0)	(25.3)
Capital element of finance lease payments		-	(0.1)
Finance expense paid		(1.3)	(1.8)
		________	________
Net cash outflow from financing activities		(3.3)	(27.2)
		________	________
Net (decrease)/increase in cash and equivalents		(0.1)	4.8
Opening cash and cash equivalents		13.9	6.5
Foreign exchange (loss)/gain on cash and cash equivalents		(0.2)	0.7
		________	________
Closing cash and cash equivalents		13.6	12.0
		________	________

Notes to the interim financial statements

1          Basis of preparation

I.            Statement of Compliance

The unaudited interim financial statements presented in this financial report have been prepared in accordance with International Financial Reporting Standards (IFRS) and the IFRS Interpretations Committee (IFRIC) interpretations as endorsed by the European Union that are expected to be applicable to the consolidated financial statements for the 52 weeks ending 30 December 2011. As permitted, this interim report has been prepared in accordance with the AIM Rules for Companies and does not seek to comply with IAS 34 "Interim Financial Reporting".

II.           Statutory information

The financial information, which is unaudited, for the twenty-six weeks to 1 July 2011 does not constitute the statutory accounts of the Group for the relevant period within the meaning of section 434 of the Companies Act 2006.

The published annual report and accounts of Impellam Group plc for the 52 weeks ended 31 December 2010 were reported on by the auditors without qualification, did not contain an emphasis of matter paragraph, did not contain any statement under section 498 of the Companies Act 2006, and have been delivered to the Registrar of Companies.

III.          Accounting policies, new IFRS and interpretations

The accounting policies used in this report are consistent with those applied at 31 December 2010.

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

2          Segmental information

Twenty-six weeks ended 1 July 2011

Continuing operations	Medacs Healthcare Group	UK Staffing - Commercial	UK Staffing -Professional & Technical	US Staffing	Carlisle Support Services	Group total
	£m	£m	£m	£m	£m	£m
Segment revenue	94.6	238.5	95.3	80.5	40.5	549.4
	_______	_______	_______	_______	_______	_______
Segment EBIT	4.3	8.2	4.2	1.9	1.1	19.7
	_______	_______	_______	_______	_______
Unallocated - Corporate cost						(2.5)
						_______
Operating profit before amortisation of client relationships						17.2
Amortisation of client relationships						(1.0)
						_______
Operating profit before finance costs and taxation						16.2
Finance costs - net						(1.1)
						_______
Profit before taxation						15.1
Taxation						(3.5)
						_______
Profit for the period						11.6
						_______

Twenty-six weeks ended 2 July 2010

Continuing operations	Medacs Healthcare Group	UK Staffing - Commercial	UK Staffing -Professional & Technical	US Staffing	Carlisle Support Services	Group total
	£m	£m	£m	£m	£m	£m
Segment revenue	101.6	221.0	83.7	86.3	51.8	544.4
	_______	_______	_______	_______	_______	_______
Segment EBIT	5.6	6.1	2.1	1.8	0.8	16.4
	_______	_______	_______	_______	_______
Unallocated - Corporate cost						(2.2)
						_______
Operating profit before amortisation of client relationships						14.2
Amortisation of client relationships						(1.7)
						_______
Operating profit before finance costs and taxation						12.5
Finance costs - net						(2.0)
						_______
Profit before taxation						10.5
Taxation						(2.4)
						_______
Profit for the period						8.1
						_______

3        Taxation

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

4        Earnings per share

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

Diluted earnings per share amounts are calculated on the same basis, but after adjusting the denominator for the effects of dilutive options. The only potentially dilutive shares arise from the share options issued by the Group under its share-based compensation plans. There are 83,165 outstanding options as at 1 July 2011 (2010: 83,165).  This number has no effective impact on the earnings per share figures in either period; hence the diluted and basic figures are the same.

The weighted average number of shares has been calculated for the period from 1 January 2011 to 1 July 2011 for the basic calculation is 45,039,041 (2 July 2010: 45,018,931) excluding the shares owned by The Corporate Services Group Employee Share Trust.    

The profit for the period used in the calculations of both basic and diluted earnings per share is £11.5 million (2010: £8.1 million).

5        Reconciliation of profit before tax to cash generated by operations

	2011	2010
	£m	£m
Profit before taxation	15.1	10.5
Adjustments for:
Net interest charge	1.1	2.0
Depreciation and amortisation	3.3	4.2
	__________	__________
	19.5	16.7
Increase in trade and other receivables	(11.9)	(14.1)
Increase in trade and other payables	1.8	33.7
Decrease in provisions for liabilities and charges	(1.7)	(1.7)
	__________	__________
Cash generated by operations	7.7	34.6
	__________	__________

6.         Additional cash flow information

	1 January 2011	Cash flow	Foreign exchange	1 July 2011
	£m	£m	£m	£m
Cash at bank and in hand	13.9	(0.1)	(0.2)	13.6
	__________	__________	_________	__________
Guaranteed secured loan notes	(20.0)	20.0	-	-
Finance leases	(0.1)	-	-	(0.1)
Revolving credit	(11.6)	(18.0)	-	(29.6)
	__________	__________	_________	__________
	(31.7)	2.0	-	(29.7)
	__________	__________	_________	__________
	(17.8)	1.9	(0.2)	(16.1)
	__________	__________	_________	__________

 

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

Impellam Group plc
Cheryl Jones, Chairman  Andrew Burchall, Group Finance Director	Tel: [phone] Tel: [phone]
Threadneedle Communications
John Coles	Tel: [phone]
Cenkos Securities plc (Nominated Advisor and Broker to Impellam)
Nicholas Wells Liz Bowman	Tel: [phone] Tel: [phone]

Note to Editors:

Impellam Group plc, traded on AIM (Symbol: IPEL), is a leading provider of human capital services including innovative solutions for the workforce, business process outsourcing (BPO), expertise in technical, professional and medical talent, flexible workforce consulting, staffing and recruitment.  The Group conducts business primarily in the UK and the US, with smaller operations in Australia, Ireland, New Zealand and mainland Europe. The Group employs nearly 6,000 people, including 2,200 managers and consultants and more than 3,800 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 plc was formed in May 2008 through the merger of The Corporate Services Group plc and Carlisle Group Limited and is ranked 15th on the Staffing Industry Analysts' 2010 Top Global Staffing Companies List.

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

-ENDS-

 

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