Interim Results
9 September 2008
INTERIM FINANCIAL INFORMATION (UNAUDITED) FOR THE SIX MONTHS ENDED 30 JUNE 2008
Financial highlights **
• Adjusted earnings per share of 7.4p (June 2007: 7.8p)***
Operational highlights **
• Support services turnover up by 5.5% to £60.4 million (June 2007: £57.2 million). Gross profit increased 12.4% to £13.1 million (June 2007: £11.7 million) with the gross margin percentage increasing to 21.8% (June 2007: 20.4%). Operating profit up by 17.1% to £2.8 million (June 2007: £2.3 million)***
Desmond Doyle, Group Chief Executive, commented:
'The Board is well aware of the adverse economic conditions in the two principal geographies in which the Group operates. Specifically, we are continuing to see weakness in the financial services, logistics and construction market sectors. In addition, we have yet to see the normal seasonal growth in our traditional marketplace and in this respect September will be a key month for the Group. As a consequence, we enter our traditionally stronger second half year for the Group with the performance of our UK and US Commercial staffing sectors remaining under pressure.
However, other parts of the Group continue to perform strongly and the strength and breadth of our brand portfolio reduces exposure to weakness in the more traditional staffing sectors. We are experiencing good growth in our healthcare and education businesses both of which are public sector focused. Our managed services, catering and premium office businesses have also continued to show good growth since the half year. In addition, the longer term nature of contracts within our technical, scientific and support services businesses provide visibility of earnings and have some defensive qualities when compared to the Group's more cyclical staffing businesses.
Overall, the Board believes that trading in the second half will remain mixed and that, on a pro forma basis, earnings for the year will be broadly comparable to those in 2007.'
* as measured in local currency
** on a pro forma basis
*** before exceptional items, share option charges and the amortisation of intangible assets
For further information please contact:
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Impellam Group plc |
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Kevin Mahoney, Chairman |
Tel: 01582 692658 |
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Desmond Doyle, Group Chief Executive |
Tel: 01582 692658 |
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Andrew Burchall, Group Finance Director |
Tel: 01582 692658 |
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Naomi Stuart, Marketing and Communications Manager |
Tel: 01582 692624 |
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Cenkos Securities plc (Nominated Advisor and Broker to Impellam) |
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Nicholas Wells |
Tel: 020 7397 8900 |
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Landsbanki Securities (UK) Limited (Joint Broker to Impellam) |
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James Wellesley Wesley |
Tel: 020 7426 9000 |
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Bell Pottinger Corporate & Financial Nick Lambert / Sarah Williams |
Tel: 020 7861 3232 |
Notes to Editors:
Impellam Group plc, listed on AIM, has operations in the UK and the USA, as well as smaller operations in Australia, Ireland, New Zealand and Switzerland. The Group operates across a broad range of staffing sectors and is complemented by businesses in the outsourced support services sector.
The Group operates through a number of trading brands, each targeted towards specific niche markets. The larger of which include Tate, Medacs, SRG, S.Com, Blue Arrow, Recruit, ABC Contract Services, Carlisle, Hewitson Walker, Chadwick Nott and Comensura in the UK and Corestaff, S.Com Inc and the Guidant Group in the US.
Interim management report
Business overview
Impellam Group plc ('Impellam', 'the Group') was incorporated on 21 February 2008 specifically for the purpose of merging The Corporate Services Group plc ('CSG') and Carlisle Group Limited ('Carlisle'). On 6 May 2008, Impellam merged with Carlisle and the acquisition of CSG was then completed on 7 May 2008.
The new Impellam Group has operations in the UK and the USA, as well as smaller operations in Australia, Ireland, New Zealand and Switzerland. The Group operates across a broad range of staffing sectors and is complemented by businesses in the outsourced support services sector. Each of the trading brands is sector focused with dedicated management teams operating within a framework of control and coordination provided, where appropriate, by central functions.
Pro forma financial information
To enable a meaningful comparison the financial information included in this report incorporates certain pro forma income statement, balance sheet and cash flow information for Impellam as if the merger of Carlisle and CSG had taken place on 1 January 2007 rather than in May 2008.
This pro forma information is provided in order to give shareholders a clearer indication of the underlying trading of the newly formed Group rather than purely statutory information which would have included the results of Impellam from incorporation, Carlisle for only one quarter of the period and CSG from the date of acquisition. Further reference should be made to note 1 'Basis of Preparation'.
It is also the intention of the Board to update shareholders from 2009 on a quarterly basis with respect to the operating performance of the business.
Pro forma financial results for the six months to 30 June
Although operated independently, the staffing brands have been aggregated, for reporting purposes into:
-
Commercial, both UK and US;
-
Healthcare; and
-
Professional & Technical
these reflect common attributes, either in the nature of the candidates and clients, or in the manner in which they conduct business. The table below sets out the pro forma results for the Group by segment for the first half of 2008 with comparisons against the same period in the prior year.
|
Group results |
Revenue |
Gross profit |
Operating profit |
|||||||
|
£'million |
2008 |
2007 |
% change* |
2008 |
2007 |
% change* |
2008 |
2007 |
||
|
UK Commercial staffing |
216.2 |
181.4 |
19.2 |
38.2 |
34.5 |
10.6 |
1.4 |
1.7 |
||
|
Professional & Technical Staffing |
88.7 |
77.7 |
14.1 |
17.5 |
15.4 |
13.7 |
1.8 |
1.2 |
||
|
Healthcare staffing |
64.7 |
51.9 |
24.7 |
10.0 |
9.3 |
7.8 |
2.2 |
1.8 |
||
|
US Commercial staffing |
87.2 |
95.4 |
(8.4) |
17.6 |
18.3 |
(3.9) |
0.8 |
1.8 |
||
|
Support services |
60.4 |
57.2 |
5.5 |
13.1 |
11.7 |
12.4 |
2.8 |
2.3 |
||
|
Intercompany revenue |
(0.3) |
(0.2) |
|
- |
- |
|
- |
- |
||
|
|
516.9 |
463.4 |
11.6% |
96.4 |
89.2 |
8.1% |
9.0 |
8.8 |
||
|
Central costs |
|
|
|
|
|
|
(2.7) |
(2.7) |
||
|
Operating profit before amortisation of intangibles and exceptional items |
|
|
|
|
|
|
6.3 |
6.1 |
||
|
Amortisation of intangibles |
|
|
|
|
|
|
(0.7) |
- |
||
|
Exceptional items |
|
|
|
|
|
|
(4.1) |
0.2 |
||
|
Operating profit |
|
|
|
|
|
|
1.5 |
6.3 |
||
* measured in local currency
Group turnover increased 11.6% to £516.9 million (June 2007: £463.4 million). Overall gross profit increased 8.1% to £96.4 million (June 2007: £89.2 million), with the Group's gross profit margin percentage slightly reduced on last year at 18.7% (June 2007: 19.3%). Permanent placements accounted for 16.5% of the Group's gross profit (June 2007: 17.2%). Administrative expenses, including normal charges for depreciation and amortisation but before amortisation of intangibles arising from the fair values attributed to CSG customer relationships and exceptional items, increased by 8.4% to £90.1 million during the period (June 2007: £83.1 million). This reflects the full period impact of acquisitions made during 2007 together with planned investment in headcount during the second half of 2007 and early 2008 to deliver the growth in gross profit. After deducting these expenses, the resulting operating profit, before amortisation of intangibles and exceptional items, increased to £6.3 million (June 2007: £6.1 million).
After deducting exceptional items of £4.1 million (June 2007: profit £0.2 million), principally reflecting professional costs in relation to the merger, and amortisation of intangibles relating to CSG's customer relationships of £0.7 million (June 2007: £nil), the profit before interest and taxation was £1.5 million (June 2007: £6.3 million). Once net finance expense of £3.0 million (June 2007: £3.6 million), which includes an exceptional charge of £0.4 million (June 2007: £0.9 million), and taxation of £0.3 million (June 2007: £0.1 million) have been deducted the loss for the period was £1.8 million (June 2007: profit £2.6 million). The adjusted earnings per share was 7.4p (June 2007: 7.8p); the unadjusted loss per share was 4.0p (June 2007: profit 5.8p).
Strategy
Integration
Impellam is one of the largest UK quoted staffing companies as measured by gross profit. The Group has a broad portfolio of brands operating across a number of industry sectors with established operations in the UK and USA as well as smaller businesses in Australia, Ireland, New Zealand and Switzerland.
A key feature and benefit of the merger was that there was very little overlap between the former Carlisle and CSG businesses. Only in our Healthcare and UK Commercial segments were there some competing businesses. In the UK, our healthcare operations have now been combined under common leadership as have our general office and industrial businesses (Blue Arrow and Recruit). In the US, while there is no overlap in operations, the businesses have been consolidated under one CEO. Accordingly, we have been able to very quickly rationalise businesses and secure the synergy benefits with the focus now directed to process efficiency through the merger of the support and back office functions.
Identified cost savings
One of the key strategic focuses of Impellam over the next 12 months is the effective integration of the two former head offices, the consolidation of certain support functions, and the elimination of duplicated roles and responsibilities both in the UK and the USA. To date, annualised cost reductions of £2.9 million have been identified and actioned through rationalisation of central functions and procurement. We expect to see a benefit in the current year of approximately £1.0 million, the majority of which will come in the second half of this year. In time, further synergies will be delivered through the rationalisation of IT applications and processes and we have identified a further £2.0 million of savings that will be actioned in the coming months and which will flow into the results during 2009. An exceptional charge of £0.7 million has been incurred in the period, relating principally to the termination of duplicated roles and there will be a further charge to income in the second half as these and further actions are taken.
Rationalisation
The philosophy of the Group is to run a portfolio of staffing businesses with each component continually assessed as to its suitability for inclusion in the future. As such, no business or brand is considered to be 'core' for an indefinite period. On 28 May 2008, the Group sold its 50% interest in a loss-making manned guarding security joint venture in Ireland, Carlisle Security Plus, for a nominal consideration to its joint venture partner. The loss on disposal amounted to £0.3m, including costs of disposal, and net cash outflow was £0.1million. In conjunction with its advisors, the Board has identified other businesses that, subject to suitable market valuations, it is looking to divest over the next 12 to 18 months. These divestments have progressed to varying levels and we will update shareholders in due course. The Board is confident that by pursuing such a programme it can reduce the Group's indebtedness to no more than two times EBITDA over the medium term.
Portfolio
The Board is acutely aware that staffing is a cyclical business driven by macro economic factors, local employment market characteristics and the demand for, and flow of, talent. Accordingly, despite its objective of reducing indebtedness, Impellam will seek to manage its portfolio of brands to respond to these trends by looking to expand operations geographically through acquisition where it sees opportunities at sensible valuations and also through planned investment in people and brands, particularly in the healthcare and specialist professional & technical markets. Opportunities for 'fill in' businesses in existing geographic markets will be considered as well as those that move the mix of the business towards permanent recruitment and increase our exposure to the faster growing sectors, economies and geographies.
On a pro forma basis, the conversion ratio (defined as the conversion of gross profit into operating profit) was 9.5% in 2007. The conversion ratio in the first six months of 2008 was 6.5%, (2007: 6.9%) reflecting the traditionally lower conversion ratio experienced in the first half of the year. Given the operational and synergy savings identified, our mix of businesses and our strategic intent to target more specialist business, the Board believe that over the medium term there is scope to increase the conversion ratio significantly to approach levels of performance more in line with our peer group. This will be a key objective for Impellam as the newly combined Group looks to the future.
Board changes
On 14 August 2008, Cheryl Jones was appointed to the Board as a Non-executive Director. Cheryl will have specific responsibility in advising the Board on the US market place and strategy.
After ten years with Carlisle, and latterly Impellam, Richard Bradford decided to stand down as Chief Operating Officer and also left the Group at the end of July. In addition, Adrian Carey resigned as a Non-executive Director on 30 July 2008. Adrian was a Non-executive Director of CSG from February 2007, and latterly Impellam. We thank Richard and Adrian for their contributions to the Group.
Operating review
UK Commercial staffing
This segment includes the brands of ABC Contract Services, Austin Benn, Blend, Blue Arrow (Catering, Driving, Managed Services, Office and Industrial), Carlisle Managed Solutions, Recruit and Tate. Turnover in this segment has increased by 19.2% to £216.2 million (June 2007: £181.4 million) mainly on the back of wins in our managed services businesses. This change in business mix, coupled with a reduction in permanent placements, which now account for 19.6% of gross profit (2007: 21.1%) is reflected in the gross profit margin of 17.7% (2007: 19.0%). Gross profit has increased by 10.6% to £38.2 million (June 2007: £34.5million). We have seen good progress in all of the principal brands in this segment in what is becoming an increasingly difficult market place. Whilst the overall rate of growth in the second quarter has slowed, different businesses are experiencing different trading conditions. Whereas our driving and construction businesses experienced more challenging times, our catering, premium office and our on-site managed service businesses continued to experience good growth on 2007, particularly in the supply of temporary workers where they hold market leading positions.
Administrative costs have increased by 12.0% from £32.8 million in the period to 30 June 2007 to £36.8 million reflecting planned investment supporting the development of the businesses based on the growth we saw in the second half of 2007. As market conditions have deteriorated, headcount has been reduced and costs are being actively controlled with a focus on improving conversion. Operating profit for the segment was £1.4 million, a reduction from £1.7 million in the comparable period in 2007 with a conversion ratio of 3.7% (2007: 4.9%).
UK Professional & Technical staffing
Our Professional & Technical staffing segment comprises the brands: Celsian Education (education); Chadwick Nott (legal); Hewitson Walker (accounting); Indigo City (banking); Praxis (executive & interim management); IRC (Ireland); S.Com (technical); and SRG (scientific). Overall turnover in this segment increased by 14.1% to £88.7 million (June 2007: £77.7 million) with gross profit increasing by 13.7% to £17.5 million (June 2007: £15.4 million). Permanent recruitment accounted for 38% of gross profit in the period (2007: 40%).
Whilst 2008 has been a tougher market for our legal, banking and accounting businesses, our education, technical and scientific businesses continue to show underlying growth driven by longer term contracts with organisations operating in less cyclical markets.
Administrative costs have increased by 10.2% to £15.7 million (June 2007: £14.2 million) again reflecting planned investment in additional heads for a number of our permanent brands and also to support the growth we have seen in our technical business on the back of contract wins, particularly in the aviation sector. Accordingly, the segment has seen operating profit increase by 55.7% to £1.8 million (June 2007: £1.2 million). The conversion ratio within this segment has also improved to 10.5% from 7.7%.
UK Healthcare staffing
Our Healthcare staffing segment comprises Medacs (doctors, nursing, international recruitment and managed healthcare), Chrysalis Care and Celsian Care (domiciliary care). These operations are under the direction of a single focused management team with cost reductions already actioned and delivered in the form of people and locations. Further rationalisation of the back office and IT applications will be delivered before the year end. Cross selling and the utilisation of combined candidate databases has also started to deliver benefits.
Turnover in the sector has increased by 24.7% to £64.7 million (June 2007: £51.9 million) driven by continued strong demand for healthcare professionals in general. Medacs was successful in retaining its position on the new National Framework for locum doctors which commenced on 1 July 2008. Framework agreements for nursing and allied health professionals are due for retender in the next six months. In the domiciliary care business, the combination of the Celsian business with Chrysalis has created considerable scope for synergy, particularly in the front office applications and candidate databases.
Gross profit has increased by 7.8% to £10.0 million (June 2007: £9.3 million). However, the gross profit margin has declined from 17.9% to 15.5% reflecting not only continued pressure on margins within the framework environments and also increasing pay rates to temporary medical staff, but also the reduction in permanent placements to 6.1% of gross profit (2007: 8.6%). Operating profit was £2.2 million (June 2007: £1.8 million), a 19.4% increase on the same period in 2007. The conversion ratio has increased to 21.7% (2007: 19.6%).
US Commercial staffing
The segment includes the Corestaff (clerical, office and industrial), Guidant (on-site vendor neutral), S.Com (technical), Specialty Services Group (IT) and SRG Woolf (scientific). The management of these operations has been combined under a single country CEO.
Turnover in this segment reduced by 8.4%, as measured in local currency, to £87.2 million (June 2007: £95.4 million) with gross profit reducing 3.9%, as measured in local currency, to £17.6 million (June 2007: £18.3million).
These reductions reflect the impact of weakness in the US economy which has principally impacted the more traditional Corestaff businesses. While we are not seeing contract losses within this business, and we continue to win new business, our existing client base has progressively reduced the volume of its temporary staffing requirements reflecting weakness in their own market places. However, our Guidant business, which principally serves the more resilient utility sector, and our IT and technical niche operations have seen increased gross profits. This change in mix together with an increase in permanent placements which accounted for 7.6% of gross profit (2007: 6.7%) is reflected in our gross profit percentage which improved to 20.1% (June 2007: 19.2%).
Administrative costs increased by only 2.0% despite underlying inflationary pressures. The cost base is under continued review and savings will be delivered through synergies and sharing of services between the businesses. Accordingly, the underlying operating profit of the segment has reduced to £0.8 million (2007: £1.8 million). The conversion ratio was 4.7% (2007: 10.2%).
Support services
The Support services segment comprises the Carlisle (cleaning and security), Comensura (vendor neutral procurement) and Recruit (retail merchandising and events) businesses. On 28 May 2008 the Group sold its 50% interest in a loss making manned guarding security joint venture in Ireland, Carlisle Security Plus, for a nominal consideration to the joint venture partner. The loss on disposal amounted to £0.3 million including costs of disposal and net cash outflow was £0.1m.
Turnover for the segment saw an increase of 5.5% to £60.4 million (June 2007: £57.2 million). Encouragingly, gross profit increased by 12.4% to £13.1 million (June 2007: £11.7 million) with the gross profit margin increasing to 21.8% (June 2007: 20.4%).
There were a number of contract wins in the period. Our cleaning business has been successful in winning new business at a number of UK airports. Comensura has also added a number of new clients during the period as well as successfully renewing a number of other contracts. Finally, our Retail Merchandising business is developing a number of new activities in the face of reduced demand from its traditional retail clients as consumers limit spending.
Administrative costs in this segment increased by 11.3% to £10.3 million (June 2007: £9.4 million). Accordingly, operating profit has increased by 17.1% to £2.8 million (June 2007: £2.3 million). The conversion ratio is 21.0% (2007: 20.2%).
Cash flow and net debt
The Group demonstrated good cash generation of £10.9 million from operations (2007: £1.4 million) in the first six months of the year. Both of the businesses forming Impellam had strong working capital management protocols with consistent levels of debtor days. Since the merger, debtor days have remained well controlled at 37.1 days (June 2007: 38.3 days, December 2007: 40.2 days). During the period, a dividend in specie of £4.0 million was paid along with the costs of the merger. After net interest expense of £2.3 million (June 2007: £2.7 million) and capital expenditure, net debt increased by £1.4 million to £64.7 million as at June 2008 (December 2007: £63.3 million). In addition, the Group has outstanding letters of credit drawn against its US borrowing facilities amounting to £5.7 million (June 2007: £7.2 million, December 2007: £6.2 million). The Group continues to operate within the financial and operational covenants and the headroom provided by its current bank facilities in both the UK and the US.
Principal risks and uncertainties
Each business considers strategic, operational and financial risks and identifies actions to mitigate those risks on a regular basis and these risk profiles are communicated to the Group board at least annually. The principal risks and uncertainties for the remaining six months of the year are discussed below.
General risk environment
Economic environment
The performance of the Group has a very close relationship and dependence on the underlying growth of the economies of the countries in which it operates. Part of our strategy is to grow the size of our business in both financial terms and in geographic coverage, in order to reduce the Group's exposure or dependence on any one specific economy. We are also noticing inflationary pressure to our costs in line with that being seen in the wider economies.
Competitive environment
In the United Kingdom, Europe and the USA the markets for the provision of permanent and temporary recruitment are highly competitive and fragmented. In these more developed markets, competitor risk manifests itself in increased competition for clients and candidates and in pricing pressures. During the year, in both of the principal geographies in which we operate, we have again experienced margin pressure within our temporary business.
Competitors in the staffing markets range from large multi-national organisations to small privately-owned businesses. In all of our markets, we are continually subject to both existing and new competitors. The costs of entry into general recruitment can be relatively low; however, in certain specialist sectors these costs can rise on the back of increased levels of compliance required by local regulators and clients.
Commercial relationships
The Group benefits from close commercial relationships with key clients in both the public and private sectors. Within the private sector, the Group is not dependent on any single key client. The public sector markets that we operate in are directly dependent on funding from local and national government organisations.
Foreign exchange
The Group has significant operations in the USA and as such is exposed to movements in exchange rates. Currently, the Group does not actively manage its exposure to foreign exchange translation risk by the use of financial instruments. The impact of foreign exchange could become more important for the Group when it diversifies itself internationally. We will continue to monitor our policies in this area.
Technology systems
The Group is reliant on a number of technology systems in providing its services to clients. These systems are housed both in-house and in various data centres. The business continues to review and enhance its ability to cope with the loss of a technology system as a result of a significant event.
Regulatory environment
The staffing industry is governed by an increasing level of compliance which varies from country to country and market to market. Additionally our clients require more complex levels of compliance in their contractual arrangements. The Group takes its responsibilities seriously, is committed to meeting all of its regulatory responsibilities, and continues to strengthen its internal controls and processes with respect to legal and contractual obligations.
Disclaimer on forward looking statements
Certain statements in this interim report are forward-looking. Although the Group believes that the expectations reflected in these forward-looking statements are reasonable, it gives no assurance that these expectations will prove to have been correct. Because these statements involve risks and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements.
The Group undertakes no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.
Current Group trading and outlook
The Board is well aware of the adverse economic conditions in the two principal geographies in which the Group operates. Specifically, we are continuing to see weakness in the financial services, logistics and construction market sectors. In addition, we have yet to see the normal seasonal growth in our traditional marketplace and in this respect September will be a key month for the Group. As a consequence, we enter our traditionally stronger second half year for the Group with the performance of our UK and US Commercial staffing sectors remaining under pressure.
However, other parts of the Group continue to perform strongly and the strength and breadth of our brand portfolio reduces exposure to weakness in the more traditional staffing sectors. We are experiencing good growth in our healthcare and education businesses both of which are public sector focused. Our managed services, catering and premium office businesses have also continued to show good growth since the half year. In addition, the longer term nature of contracts within our technical, scientific and support services businesses provide visibility of earnings and have some defensive qualities when compared to the Group's more cyclical staffing businesses.
Overall, the Board believes that trading in the second half will remain mixed and that, on a pro forma basis, earnings for the year will be broadly comparable to those in 2007.
Statement of Directors' responsibilities
The Directors' confirm that this condensed consolidated interim financial information has been prepared in accordance with IFRS's as adopted by the European Union with the exception of the matters noted in the basis of preparation (note 1); however they have not been prepared in accordance with IAS 34. They also confirm that the interim management report contained herein includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:
-
An indication of important events that have occurred during the first six months and the impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year, and;
-
Material related party transactions in the first six months and any material changes in the related party transactions described in the last annual report.
The Directors of Impellam Group plc are as listed in the admission document in connection with the Group's admission to trading on the Alternative Investment Market of the London Stock Exchange, with the exception of the resignations of Richard Bradford and Adrian Carey on 31 July 2008 and the appointment of Cheryl Jones on 14 August 2008. A list of current directors is maintained on the Impellam Group plc website: www.impellam.com.
By order of the Board,
Desmond Doyle
Group Chief Executive
Andrew Burchall
Group Finance Director
Independent review report to Impellam Group plc
Introduction
We have been engaged by the Company to review the condensed pro forma financial statements in the interim financial report for the six months ended 30 June 2008, which comprise the pro forma consolidated income statement, consolidated condensed balance sheet, consolidated statement of changes in equity, pro forma consolidated cash flow statement and the related notes. We have read the other information contained in the interim financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.
Directors' responsibilities
The interim financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim financial report in accordance with the AIM Rules for Companies which require that the financial information must be presented and prepared in a form consistent with that which will be adopted in the Company's annual financial statements.
The interim financial report has been prepared in accordance with the basis set out in note 1.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the interim financial report based on our review. This report, including the conclusion, has been prepared for and only for the Company for the purpose of the AIM Rules for Companies and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed pro forma financial statements in the interim financial report for the six months ended 30 June 2008 are not prepared, in all material respects, in accordance with the basis set out in note 1 and the AIM Rules for Companies.
Emphasis of matter - basis of preparation adopted for pro forma financial information
In forming our review conclusion, which is not qualified, we have considered whether the disclosures made in the basis of preparation note within the interim financial report are adequate. The Company has presented only pro forma results and cash flows for the enlarged Group assuming, for the purposes of the income and cash flow statements only, that the accounting period commenced on 1 January 2008 and that the combination of Impellam Group plc, Carlisle Group plc and The Corporate Services Group plc was accounted for using merger accounting as at 1 January 2007. This represents a departure from the requirements of IAS 1, Presentation of Financial Statements, IAS 27, Consolidated and Separate Financial Statements and IFRS 3, Business Combination which would require presentation of the results of Impellam Group plc from the date of its incorporation, Carlisle Group plc from 1 April 2008 and The Corporate Services Group plc from the date of acquisition by Impellam Group plc (7 May 2008) to 30 June 2008. The directors have disclosed the reasons for this departure from the requirements of IFRS in the basis of preparation within in note 1.
PricewaterhouseCoopers LLP
Chartered Accountants
9 September 2008
St Albans
Notes:
-
The maintenance and integrity of the Impellam Group plc website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.
-
Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Consolidated income statement
For the six months ended 30 June 2008
|
|
|
Pro forma basis |
||||
|
|
|
Before exceptional items |
Exceptional items |
Six |
Six 30 June 2007 |
Twelve months to 31 December 2007 |
|
|
|
|
|
|
|
|
|
|
Notes |
£m |
£m |
£m |
£m |
£m |
|
Continuing operations |
|
|
|
|
|
|
|
Revenue |
2 |
516.9 |
- |
516.9 |
463.4 |
977.7 |
|
Cost of sales |
|
(420.5) |
- |
(420.5) |
(374.2) |
(789.0) |
|
|
|
__________ |
__________ |
__________ |
__________ |
__________ |
|
Gross profit |
|
96.4 |
- |
96.4 |
89.2 |
188.7 |
|
Administrative expenses |
|
(90.8) |
(4.1) |
(94.9) |
(82.9) |
(189.7) |
|
|
|
__________ |
__________ |
__________ |
__________ |
__________ |
|
Operating profit |
2 |
5.6 |
(4.1) |
1.5 |
6.3 |
(1.0) |
|
Finance income |
|
0.3 |
- |
0.3 |
0.2 |
0.5 |
|
Finance expense |
|
(2.9) |
- |
(2.9) |
(2.9) |
(6.2) |
|
Exceptional finance expense |
|
- |
(0.4) |
(0.4) |
(0.9) |
(0.9) |
|
|
|
__________ |
__________ |
__________ |
__________ |
__________ |
|
Profit/(loss) before taxation |
|
3.0 |
(4.5) |
(1.5) |
2.7 |
(7.6) |
|
Taxation |
5 |
(0.5) |
0.2 |
(0.3) |
(0.1) |
0.6 |
|
|
|
__________ |
__________ |
__________ |
__________ |
__________ |
|
Profit/(loss) for the period (attributable to equity shareholders) |
2.5 |
(4.3) |
(1.8) |
2.6 |
(7.0) |
|
|
|
|
__________ |
__________ |
__________ |
__________ |
__________ |
|
Earnings per share (basic and diluted) |
6 |
Pence |
Pence |
Pence |
Pence |
Pence |
|
Unadjusted |
|
5.6 |
(9.6) |
(4.0) |
5.8 |
(15.6) |
|
|
|
__________ |
__________ |
__________ |
__________ |
__________ |
|
Adjusted |
|
|
|
7.4 |
7.8 |
29.5 |
|
|
|
|
|
__________ |
__________ |
__________ |
Consolidated condensed balance sheet
At 30 June 2008
|
|
|
Statutory |
Pro forma basis |
|
|
|
|
30 June 2008 |
30 June 2007 |
31 December 2007 |
|
|
|
|
|
|
|
|
|
£m |
£m |
£m |
|
Non-current assets |
|
|
|
|
|
Property, plant and equipment |
|
10.4 |
9.9 |
10.0 |
|
Goodwill |
|
60.6 |
102.0 |
83.7 |
|
Other intangible assets |
|
50.1 |
3.0 |
3.0 |
|
Deferred tax asset |
|
0.8 |
0.3 |
1.3 |
|
Financial assets |
|
4.8 |
4.4 |
4.8 |
|
|
|
_________ |
_________ |
_________ |
|
|
|
126.7 |
119.6 |
102.8 |
|
|
|
_________ |
_________ |
_________ |
|
Current assets |
|
|
|
|
|
Trade and other receivables |
|
177.0 |
172.0 |
192.1 |
|
Deferred tax asset |
|
0.8 |
0.2 |
0.2 |
|
Cash and short-term deposits |
|
7.4 |
4.9 |
8.3 |
|
|
|
_________ |
_________ |
_________ |
|
|
|
185.2 |
177.1 |
200.6 |
|
|
|
_________ |
_________ |
_________ |
|
Assets held for sale |
|
4.7 |
- |
- |
|
|
|
_________ |
_________ |
_________ |
|
Total assets |
|
316.6 |
296.7 |
303.4 |
|
|
|
_________ |
_________ |
_________ |
|
Current liabilities |
|
|
|
|
|
Trade and other payables |
|
134.4 |
122.9 |
141.4 |
|
Taxation liabilities |
0.8 |
1.0 |
1.0 |
|
|
Bank overdrafts and other short-term borrowings |
50.0 |
37.7 |
39.6 |
|
|
Derivative financial instruments |
|
- |
- |
0.1 |
|
Provisions |
|
5.4 |
2.0 |
2.0 |
|
|
|
_________ |
_________ |
_________ |
|
|
|
190.6 |
163.6 |
184.1 |
|
|
|
_________ |
_________ |
_________ |
|
Liabilities associated with assets held for sale |
1.4 |
- |
- |
|
|
|
|
_________ |
_________ |
_________ |
|
Net current (liabilities)/assets |
|
(2.1) |
13.5 |
16.5 |
|
|
|
_________ |
_________ |
_________ |
|
Non-current liabilities |
|
|
|
|
|
Long-term borrowings |
|
22.1 |
33.0 |
32.0 |
|
Other payables due in greater than 1 year |
|
1.3 |
1.3 |
1.3 |
|
Provisions |
|
6.5 |
2.0 |
1.2 |
|
Deferred taxation liability |
|
10.5 |
- |
- |
|
|
|
_________ |
_________ |
_________ |
|
|
|
40.4 |
36.3 |
34.5 |
|
|
|
_________ |
_________ |
_________ |
|
Total liabilities |
|
232.4 |
199.9 |
218.6 |
|
|
|
_________ |
_________ |
_________ |
|
Net assets |
|
84.2 |
96.8 |
84.8 |
|
|
|
_________ |
_________ |
_________ |
|
Total share capital and reserves |
|
84.2 |
96.8 |
84.8 |
|
|
|
_________ |
_________ |
_________ |
Consolidated cash flow statement
For the six months ended 30 June 2008
|
|
|
Pro forma basis |
||
|
|
|
Six months ended 30 June 2008 |
Six months ended 30 June 2007 |
Twelve months ended 31 December 2007 |
|
|
|
|
|
|
|
|
Notes |
£m |
£m |
£m |
|
Cash flows from operating activities |
|
|
|
|
|
Cash generated by operations |
9 |
10.9 |
1.4 |
14.3 |
|
Taxation paid |
|
(0.3) |
(0.1) |
(0.6) |
|
|
|
________ |
________ |
________ |
|
Net cash generated by operating activities |
10.6 |
1.3 |
13.7 |
|
|
|
|
________ |
________ |
________ |
|
Cash flows from investing activities |
|
|
|
|
|
Costs associated with acquisition of CSG |
(2.0) |
- |
- |
|
|
Acquisition of subsidiaries (net of cash acquired) |
- |
(1.6) |
(3.1) |
|
|
Purchase of property, plant and equipment (PPE) |
(2.6) |
(1.9) |
(3.6) |
|
|
Purchase of intangible assets |
|
(0.8) |
(0.8) |
(1.6) |
|
Purchase of investments |
|
- |
- |
(0.5) |
|
Proceeds from sale of PPE |
|
- |
0.1 |
0.1 |
|
Proceeds from sale of subsidiary (net of cash disposed) |
(0.1) |
0.4 |
0.4 |
|
|
Proceeds from sale of investments |
|
0.1 |
- |
0.2 |
|
Net movement in other financial assets |
|
- |
0.4 |
0.5 |
|
Finance income received |
|
0.4 |
0.1 |
0.3 |
|
|
|
________ |
________ |
________ |
|
Net cash utilised on investing activities |
(5.0) |
(3.3) |
(7.3) |
|
|
|
|
________ |
________ |
________ |
|
Cash flows from financing activities |
|
|
|
|
|
Purchase of own shares |
|
- |
(0.3) |
(0.3) |
|
Net movement in other long-term borrowings |
|
(10.0) |
(1.3) |
(2.4) |
|
Net movement in short-term borrowings |
|
10.6 |
6.7 |
6.4 |
|
Capital element of finance lease payments |
|
(0.2) |
(0.2) |
(0.3) |
|
Finance expense paid |
|
(2.7) |
(2.7) |
(5.6) |
|
Finance expense on early redemption of loan notes |
|
- |
(0.8) |
(0.8) |
|
Dividends paid |
|
(4.0) |
- |
(3.0) |
|
|
|
________ |
________ |
________ |
|
Net cash (outflow) / inflow from financing activities |
|
(6.3) |
1.4 |
(6.0) |
|
|
|
________ |
________ |
________ |
|
Net (decrease) / increase in cash and equivalents |
|
(0.7) |
(0.6) |
0.4 |
|
Opening cash and cash equivalents |
|
5.9 |
5.5 |
5.5 |
|
Foreign exchange loss on cash and cash equivalents |
0.1 |
- |
- |
|
|
|
|
________ |
________ |
________ |
|
Closing cash and cash equivalents |
|
5.3 |
4.9 |
5.9 |
|
|
|
________ |
________ |
________ |
|
|
|
30 June 2008 |
30 June 2007 |
31 December 2007 |
|
Cash and short term deposits |
|
7.4 |
4.9 |
8.3 |
|
Bank overdrafts |
(2.1) |
- |
(2.4) |
|
|
|
|
________ |
________ |
________ |
|
Cash and cash equivalents |
|
5.3 |
4.9 |
5.9 |
|
|
|
________ |
________ |
________ |
Consolidated statement of changes in equity
For the period ended 30 June 2008
|
|
|
Statutory basis |
||||
|
|
Share capital |
Share premium |
Other reserves |
Retained deficit |
Total equity |
|
|
|
Notes |
£m |
£m |
£m |
£m |
£m |
|
1 April 2008 |
|
2.4 |
- |
90.8 |
(19.3) |
73.9 |
|
|
|
______ |
______ |
______ |
______ |
______ |
|
Currency translation differences |
|
- |
- |
(0.1) |
- |
(0.1) |
|
|
|
______ |
______ |
______ |
______ |
______ |
|
Total income and expense recognised in equity to June 2008 |
|
- |
- |
(0.1) |
- |
(0.1) |
|
Loss for the period |
|
- |
- |
- |
(1.3) |
(1.3) |
|
|
|
______ |
______ |
______ |
______ |
______ |
|
Total recognised income and expense to June 2008 |
|
- |
- |
(0.1) |
(1.3) |
(1.4) |
|
Reduction of share capital as part of scheme of arrangement and merger |
|
(2.2) |
- |
2.2 |
- |
- |
|
Shares issued on acquisition of CSG |
|
0.2 |
15.5 |
- |
- |
15.7 |
|
Dividend paid |
7 |
- |
- |
- |
(4.0) |
(4.0) |
|
|
|
______ |
______ |
______ |
______ |
______ |
|
|
|
(2.0) |
15.5 |
2.1 |
(5.3) |
10.3 |
|
|
|
______ |
______ |
______ |
______ |
______ |
|
30 June 2008 |
|
0.4 |
15.5 |
92.9 |
(24.6) |
84.2 |
|
|
|
______ |
______ |
______ |
______ |
______ |
Notes to the interim financial statements
1 Basis of preparation
The accounting policies used in this report are consistent with those applied at March 2008; no new and or revised IFRS and IFRIC publications that are applicable to the Group are required to be accounted for by the Group in the period to 31 December 2008.
|
International Accounting Standards (IAS / IFRS) |
Effective date |
|
IFRS 8 - Operating segments |
1 January 2009 |
|
IFRIC 13 - Customer loyalty programmes |
1 July 2008 |
|
IFRIC 15 - Agreements for the construction of real estate |
1 January 2009 |
|
IFRIC 16 - Hedges of a net investment in a foreign operation |
1 January 2009 |
The Directors do not anticipate that the adoption of these standards and interpretations will have a material impact on the Group's financial statements in the period of application.
Upon adoption of IFRS 8, the Group will be required to disclose financial and descriptive information about its reportable segments. Whilst the criteria used to identify the reportable segments differs from that currently applied in accordance with IAS 14, there will be no effect on reported income or net assets.
The Group's primary reporting format is geographical and its secondary format is by business type. The economic climates of these two geographies exist independently and are subject to different legal and fiscal rules.
Although the Group does have operations in Australia and New Zealand the results are included under UK and Europe in the geographical analysis as they are not of a material size.
The geographical segments are based upon the location of the business units which is also the location of its customers. In the UK and Europe we identify four business segments, they are managed independently with different economic characteristics and social challenges impacting their results; the principal services provided under these segments are discussed in the Interim management report above.
Revenue disclosed in the income statement relates solely to the rendering of services. Inter-group sales have been eliminated; there are no significant inter-segment sales.
Unallocated costs are all incurred in the UK and represent the costs associated with being a publicly listed company, including the costs of the directors of Impellam Group plc, and certain functions managed centrally for the Group as a whole.
Geographic and business segments
Pro forma basis
Six months ended 30 June 2008
|
Continuing operations |
Commercial staffing |
Professional & technical staffing |
Healthcare staffing |
Support services |
Group total |
|
|
£m |
£m |
£m |
£m |
£m |
|
Segment revenue |
|
|
|
|
|
|
United Kingdom & Europe |
216.2 |
88.7 |
64.7 |
60.4 |
430.0 |
|
United States |
87.2 |
- |
- |
- |
87.2 |
|
Inter-group revenue - UK |
(0.3) |
- |
- |
- |
(0.3) |
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
303.1 |
88.7 |
64.7 |
60.4 |
516.9 |
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
|
Segment result |
|
|
|
|
|
|
United Kingdom & Europe |
1.3 |
1.8 |
2.1 |
2.7 |
7.9 |
|
United States |
0.4 |
- |
- |
- |
0.4 |
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
1.7 |
1.8 |
2.1 |
2.7 |
8.3 |
|
|
_______ |
_______ |
_______ |
_______ |
|
|
Unallocated - Corporate cost |
|
|
|
|
(2.7) |
|
|
|
|
|
|
_______ |
|
Operating profit before exceptional items, finance costs and taxation |
|
|
|
|
5.6 |
|
Exceptional items |
|
|
|
|
(4.1) |
|
|
|
|
|
|
_______ |
|
Operating profit before finance costs and taxation |
|
|
|
|
1.5 |
|
Finance costs - net |
|
|
|
|
(2.6) |
|
Exceptional finance costs |
|
|
|
|
(0.4) |
|
|
|
|
|
|
_______ |
|
Loss before taxation |
|
|
|
|
(1.5) |
|
Taxation |
|
|
|
|
(0.3) |
|
|
|
|
|
|
_______ |
|
Loss for the period |
|
|
|
|
(1.8) |
|
|
|
|
|
|
_______ |
Pro forma basis
Six months ended 30 June 2007
|
Continuing operations |
Commercial staffing |
Professional & technical staffing |
Healthcare staffing |
Support services |
Group total |
|
|
£m |
£m |
£m |
£m |
£m |
|
Segment revenue |
|
|
|
|
|
|
United Kingdom & Europe |
181.4 |
77.7 |
51.9 |
57.2 |
368.2 |
|
United States |
95.4 |
- |
- |
- |
95.4 |
|
Inter-group revenue - UK |
(0.2) |
- |
- |
- |
(0.2) |
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
276.6 |
77.7 |
51.9 |
57.2 |
463.4 |
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
|
Segment result |
|
|
|
|
|
|
United Kingdom & Europe |
1.7 |
1.2 |
1.8 |
2.3 |
7.0 |
|
United States |
1.8 |
- |
- |
- |
1.8 |
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
3.5 |
1.2 |
1.8 |
2.3 |
8.8 |
|
|
_______ |
_______ |
_______ |
_______ |
|
|
Unallocated - Corporate cost |
|
|
|
|
(2.7) |
|
|
|
|
|
|
_______ |
|
Operating profit before exceptional items, finance costs and taxation |
|
|
|
|
6.1 |
|
Exceptional items |
|
|
|
|
0.2 |
|
|
|
|
|
|
_______ |
|
Operating profit before finance costs and taxation |
|
|
|
|
6.3 |
|
Finance costs - net |
|
|
|
|
(2.7) |
|
Exceptional finance costs |
|
|
|
|
(0.9) |
|
|
|
|
|
|
_______ |
|
Profit before taxation |
|
|
|
|
2.7 |
|
Taxation |
|
|
|
|
(0.1) |
|
|
|
|
|
|
_______ |
|
Profit for the period |
|
|
|
|
2.6 |
|
|
|
|
|
|
_______ |
Pro forma basis
Year ending 31 December 2007
|
Continuing operations |
Commercial staffing |
Professional & technical staffing |
Healthcare staffing |
Support services |
Group total |
|
|
£m |
£m |
£m |
£m |
£m |
|
Segment revenue |
|
|
|
|
|
|
United Kingdom & Europe |
407.4 |
151.4 |
110.1 |
121.7 |
790.6 |
|
United States |
187.8 |
- |
- |
- |
187.8 |
|
Inter-group revenue - UK |
(0.7) |
- |
- |
- |
(0.7) |
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
594.5 |
151.4 |
110.1 |
121.7 |
977.7 |
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
|
Segment result |
|
|
|
|
|
|
United Kingdom & Europe |
6.3 |
3.0 |
3.8 |
5.9 |
19.0 |
|
United States |
4.7 |
- |
- |
- |
4.7 |
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
11.0 |
3.0 |
3.8 |
5.9 |
23.7 |
|
|
_______ |
_______ |
_______ |
_______ |
|
|
Unallocated - Corporate cost |
|
|
|
|
(5.8) |
|
|
|
|
|
|
_______ |
|
Operating profit before exceptional items, finance costs and taxation |
|
|
|
|
17.9 |
|
Exceptional items |
|
|
|
|
(18.9) |
|
|
|
|
|
|
_______ |
|
Operating loss before finance costs and taxation |
|
|
|
|
(1.0) |
|
Finance costs - net |
|
|
|
|
(5.7) |
|
Exceptional finance costs |
|
|
|
|
(0.9) |
|
|
|
|
|
|
_______ |
|
Loss before taxation |
|
|
|
|
(7.6) |
|
Taxation |
|
|
|
|
0.6 |
|
|
|
|
|
|
_______ |
|
Loss for the period |
|
|
|
|
(7.0) |
|
|
|
|
|
|
_______ |
Carlisle Group Limited
On 6 May 2008, Impellam combined with Carlisle through a statutory merger under Belize law, in accordance with Part VII of the IBCA. Impellam is the surviving company resulting from the merger (Carlisle ceased to exist) and all rights, assets, properties, obligations and liabilities of Carlisle vested in Impellam.
The Corporate Services Group plc
On 7 May 2008 Impellam Group plc acquired 100% of the share capital of The Corporate Services Group plc, a public company listed on the London Stock Exchange. The acquisition of CSG was completed by means of a scheme of arrangement under section 425 of the Companies Act 1985 and Part 26 of the Companies Act 2006.
The provisional fair values of the identifiable assets and liabilities of this business at the date of acquisition and the corresponding carrying amounts immediately prior to the acquisition were:
|
|
Provisional fair value recognised on acquisition |
Book value |
|
|
£m |
£m |
|
Property plant and equipment |
5.8 |
5.8 |
|
Goodwill |
- |
26.2 |
|
Intangible assets - brand values |
31.1 |
- |
|
Intangible assets - customer relationships |
16.1 |
- |
|
Intangible assets - other |
2.0 |
1.8 |
|
Investments |
2.2 |
2.2 |
|
Other non-current assets |
3.8 |
3.8 |
|
Cash and cash equivalents |
- |
- |
|
Trade and other receivables |
112.0 |
112.4 |
|
Trade and other payables |
(90.0) |
(89.0) |
|
Short term borrowings |
(15.3) |
(15.3) |
|
Corporation taxes |
(0.1) |
(0.1) |
|
Long-term borrowings |
(32.9) |
(32.9) |
|
Provisions |
(9.4) |
(3.0) |
|
Deferred tax liability |
(10.5) |
- |
|
|
_________ |
_________ |
|
Net assets |
14.8 |
11.9 |
|
|
|
_________ |
|
Provisional goodwill arising on acquisition |
2.9 |
|
|
|
_________ |
|
|
Total consideration |
17.7 |
|
|
|
_________ |
|
The total costs associated with the business combination were £2.0 million and comprised costs directly attributable to the combination:
|
|
|
£m |
|
Shares issued |
|
15.7 |
|
Costs associated with the acquisition |
|
2.0 |
|
|
|
_________ |
|
|
|
17.7 |
|
|
|
_________ |
From the date of acquisition The Corporate Services Group plc has contributed £1.6 million loss to the loss after tax of the Group. If the combination had taken place at the beginning of the year, the loss after tax of the Group would have been £1.5 million and revenue from continuing operations would have been £516.9 million.
The goodwill of £2.9 million comprises the fair value of expected synergies which are not separately recognised.
|
|
Pro forma basis |
||
|
|
Six months ended 30 June 2008 |
Six months ended 30 June 2007 |
Twelve months ended 31 December 2007 |
|
|
£m |
£m |
£m |
|
Impairment of goodwill |
- |
- |
19.1 |
|
Cost associated with the merger |
3.0 |
- |
- |
|
Loss/(profit) on disposal of subsidiary |
0.3 |
(0.2) |
(0.2) |
|
Restructuring and other costs |
0.7 |
- |
- |
|
Impairment of investments |
0.1 |
- |
- |
|
|
____ |
____ |
____ |
|
Total exceptional items included in operating profit |
4.1 |
(0.2) |
18.9 |
|
Financing expenses written off on merger |
0.4 |
- |
- |
|
Financing expense on early redemption of loan notes |
- |
0.9 |
0.9 |
|
|
____ |
____ |
____ |
|
Total exceptional items |
4.5 |
0.7 |
19.8 |
|
Taxation |
(0.2) |
- |
- |
|
|
____ |
____ |
____ |
|
Total exceptional items |
4.3 |
0.7 |
19.8 |
|
|
____ |
____ |
____ |
An impairment charge of £19.1 million was recognised in December 2007's income statement following a review of The Corporate Services Group plc's US business, its medium-term economic outlook and increases in the cost of capital.
Costs associated with the merger relate to the various legal and professional costs incurred by both Carlisle Group Limited and The Corporate Services Group plc to effect the merger of the two businesses under the name of Impellam Group plc.
On 28 May 2008 the Group sold its 50% interest in a loss making manned guarding security joint venture in Ireland, Carlisle Security Plus, for a nominal consideration to the joint venture partner. The loss on disposal amounted to £0.3 million including costs of disposal and net cash outflow was £0.1million.
In 2007 this relates to the disposal of Euromedica, a pharmaceutical search business.
Restructure costs relate to reorganisation and redundancy costs following the combination of the two businesses to form the Impellam Group plc.
The impairment of investment relates to the write down of the carrying value of the Group's investment in Clear Technology Inc, an unlisted US software development company.
Finance expenses written off relate to the costs associated with The Corporate Services Group plc's restructure of debt in 2007 which were being amortised over the period of the loans and which on replacement by the new arrangements for Impellam Group plc have been accelerated and written off in full.
On 30 May 2007 The Corporate Services Group plc redeemed £15.0 million of its outstanding £35.0 million 10% Guaranteed Loan Notes due 2011. This redemption was funded by three-year bank term loans and increased borrowings from the Group's existing senior lenders. The one-off cost attributable to this early redemption of £0.9 million has been shown on a separate line of the consolidated income statement.
Income tax expense is recognised based on management's best estimate of the effective annual income tax rate expected for the full financial year.
Basic profit/loss per share amounts are calculated by dividing the profit for the year attributable to the equity holders of the Company by the weighted average number of ordinary shares outstanding during the period.
Diluted profit/loss 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. This fully diluted number of shares leads to no effective change to the earnings per share figures in any of the periods.
The weighted average number of shares has been calculated for the period between 7 May 2008 (date of merger between Impellam Group plc and Carlisle Group Limited) and 30 June 2008. The number of shares so calculated is 44,803,602, excluding the shares owned by The Corporate Services Group Employee Share Trust.
The pro forma calculations of (loss)/earnings per share are based upon the following pro forma consolidated income statement data:
|
|
Pro forma basis |
|||||
|
|
Profit/(loss) for the |
Earnings/(loss) per share |
||||
|
|
Six months |
Six months to 30 June 2007 |
Twelve months to 31 December 2007 |
Six months |
Six months to 30 June 2007 |
Twelve months to 31 December 2007 |
|
|
£m |
£m |
£m |
Pence |
Pence |
Pence |
|
Basic and diluted |
|
|
|
|
|
|
|
(Loss)/profit for the year |
(1.8) |
2.6 |
(7.0) |
(4.0) |
5.8 |
(15.6) |
|
Exceptional items |
4.3 |
0.7 |
19.8 |
9.6 |
1.6 |
44.2 |
|
Amortisation of intangible customer relationships |
0.7 |
- |
- |
1.6 |
- |
- |
|
Share option charges |
0.1 |
0.2 |
0.4 |
0.2 |
0.4 |
0.9 |
|
|
_________ |
_________ |
________ |
_________ |
_________ |
_________ |
|
Adjusted profit for the year |
3.3 |
3.5 |
13.2 |
7.4 |
7.8 |
29.5 |
|
|
_________ |
_________ |
________ |
_________ |
_________ |
_________ |
In September 2007 and March 2008 Carlisle Group Ltd declared dividends-in-specie relating to the financial years to March 2007 and March 2008. This comprised shares in its wholly owned subsidiaries Shellshock Limited and Shellproof Limited, which were capitalised at £3.0 million and £4.0 million respectively. These were paid on 4 October 2007 and 4 April 2008.
8 Issued share capital
Statutory basis
|
Number of issued shares |
Issued share capital |
Share premium account |
Total share capital |
|
|
|
Millions |
£m |
£m |
£m |
|
1 April 2008 |
24.1 |
2.4 |
- |
2.4 |
|
Exercise of options |
0.1 |
- |
- |
- |
|
|
______ |
______ |
______ |
______ |
|
|
24.2 |
2.4 |
- |
2.4 |
|
Cancellation of 'own shares' |
(1.1) |
(0.1) |
- |
(0.1) |
|
|
______ |
______ |
______ |
______ |
|
Shares subject to terms of the merger |
23.1 |
2.3 |
- |
2.3 |
|
|
______ |
______ |
______ |
______ |
|
New shares issued on merger |
23.1 |
0.2 |
- |
0.2 |
|
Issued pursuant to acquisition |
21.4 |
0.2 |
15.5 |
15.7 |
|
Exercise of options |
0.4 |
- |
- |
- |
|
|
______ |
______ |
______ |
______ |
|
30 June 2008 |
44.9 |
0.4 |
15.5 |
15.9 |
|
|
______ |
______ |
______ |
______ |
Impellam Group plc
The Company 'Impellam Group plc' was incorporated on 21 February 2008 with an authorised share capital of £30,049,999 represented by 3,000,000,000 ordinary shares of one penny each and 49,999 redeemable preference shares of £1 each. On 3 March 2008 100 ordinary shares of 1 penny were allotted and on 4 March 2008 and 49,999 preference shares of £1 were allotted.
Both the ordinary and the preference shares were held in 'trust' for the principal shareholder of Carlisle Group Limited until the date of the merger described below. Immediately following the completion of the merger, on 6 May 2008, the preference shares were redeemed by the Company.
The 100 ordinary shares held in trust were deducted from the number of shares allotted to the principal shareholder as part of the merger arrangements and transferred to the beneficial ownership of that shareholder.
Carlisle Group Limited
Carlisle Group Limited had an authorised share capital of £5,000,000 consisting of 50,000,000 ordinary shares of 10 pence. Its issued share capital was £2,406,666 consisting of 24,066,660 ordinary shares of which 1,056,260 were held in 'Treasury'.
During April 2008 a further 137,200 ordinary share were issued by Carlisle upon the exercise of share options by employees of the company for a total consideration of £5.
On 6 May 2008 the Company merged with Carlisle Group Limited under Belizean law on terms of one Impellam share for each Carlisle share. As part of this transaction the shares held in 'Treasury' were cancelled. The equity value of the difference between the 10p shares in Carlisle and the 1 penny shares of the Company has been transferred to a separate non-distributable reserve.
The Corporate Services Group plc
On 7 May 2008 the Company acquired the entire share capital of The Corporate Services Group plc ('CSG') and under the terms of the acquisition agreement the Company issued 50.4 shares in the Company for each share in CSG. As a result of this transaction an additional 21,373,330 shares were issued; at the date of acquisition these shares had a fair value of £15,727,351.
Share options
Subsequent to the merger and acquisition movements detailed above a further 363,940 ordinary shares were issued by the Company upon the exercise of share options by employees of the Group for a total consideration of £6.
9 Reconciliation of profit/(loss) before tax to cash generated by operations
|
|
Pro forma basis |
||
|
|
Period ended 30 June 2008 |
Six months ended 30 June 2007 |
Twelve months ended 31 December 2007 |
|
|
|
|
|
|
|
£m |
£m |
£m |
|
(Loss)/profit before taxation |
(1.5) |
2.7 |
(7.6) |
|
Adjustments for: |
|
|
|
|
Net interest charge |
2.6 |
2.7 |
5.7 |
|
Exceptional finance expenses |
0.4 |
0.9 |
0.9 |
|
Depreciation and amortisation |
3.1 |
2.4 |
4.7 |
|
Impairment of investments / goodwill |
0.1 |
- |
19.1 |
|
Loss/(profit) on disposal of subsidiary |
0.3 |
(0.2) |
(0.2) |
|
Share based payments charge |
0.1 |
0.2 |
0.4 |
|
Gain on disposal of investments |
- |
- |
(0.1) |
|
|
__________ |
__________ |
__________ |
|
|
5.1 |
8.7 |
22.9 |
|
Increase in trade and other receivables |
9.6 |
(17.3) |
(35.0) |
|
Increase in trade and other payables |
(3.3) |
10.3 |
27.5 |
|
Decrease in provisions for liabilities and charges |
(0.5) |
(0.3) |
(1.1) |
|
|
__________ |
__________ |
__________ |
|
Cash generated by operations |
10.9 |
1.4 |
14.3 |
|
|
__________ |
__________ |
__________ |
10 Additional cash flow information
|
|
Pro forma basis |
||||
|
|
1 January 2008 |
Cash flow |
Foreign exchange |
Other changes |
30 June 2008 |
|
|
£m |
£m |
£m |
£m |
£m |
|
Cash at bank and in hand |
8.3 |
(1.0) |
0.1 |
- |
7.4 |
|
Overdrafts |
(2.4) |
0.3 |
- |
- |
(2.1) |
|
|
__________ |
__________ |
_________ |
__________ |
__________ |
|
|
5.9 |
(0.7) |
0.1 |
- |
5.3 |
|
|
__________ |
__________ |
_________ |
__________ |
__________ |
|
Guaranteed secured loan note |
(19.8) |
- |
- |
(0.1) |
(19.9) |
|
Bank loans |
(12.8) |
10.0 |
- |
- |
(2.8) |
|
Finance leases |
(0.4) |
0.2 |
- |
(0.3) |
(0.5) |
|
Revolving credit |
(36.2) |
(10.6) |
- |
- |
(46.8) |
|
|
__________ |
__________ |
_________ |
__________ |
__________ |
|
|
(69.2) |
(0.4) |
- |
(0.4) |
(70.0) |
|
|
__________ |
__________ |
_________ |
__________ |
__________ |
|
|
(63.3) |
(1.1) |
0.1 |
(0.4) |
(64.7) |
|
|
__________ |
__________ |
_________ |
__________ |
__________ |
This information is provided by RNS
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