Interim Results

RNS Number : 5654Q

Impellam Group plc

06 August 2010

 



    

REPORT FOR 26 WEEKS ENDED 2 JULY 2010

INTERIM RESULTS (UNAUDITED)

                                             

Highlights

§ Turnover increased 8.7% to £544.4 million (June 2009: £500.9 million)

§ Gross profit increased 7.7% to £88.5 million (June 2009: £82.1 million)

§ Fees from permanent placements increased 14.3% to £9.0 million (June 2009: £7.9 million) 

§ Permanent fees represented 10.2% of gross profit (June 2009: 9.6%)

§ Operating costs reduced 6.9% to £76.0 million (June 2009: £81.6 million)

§ Operating profit £12.5 million (June 2009: £0.5 million)

§ Conversion of gross profit into operating profit improved to 14.1% (June 2009: 0.6%)

§ Earnings per share of 17.9p (June 2009: loss 3.2p)

§ Debtor days improved to 35.4 days (December 2009: 39.2 days)

§ Cash generation from operations increased to £34.6million (June 2009: £9.5 million)

§ Net debt decreased by £30.4 million to £39.2 million as at 2 July 2010

Before amortisation of intangible assets and exceptional items

§ Operating costs reduced by 1.7% to £74.3 million (June 2009: £75.6 million)

§ Conversion of gross profit into operating profit improved to 16.0% (June 2009: 8.0%)

§ Operating profit £14.2 million (June 2009: £6.5 million)

§ Earnings per share of 21.8p (June 2009: 10.3p)

Cheryl Jones, Chairman, commented:

"I am pleased to announce that Impellam Group plc ("Impellam" or "the Group") concluded its half year results in line with expectations. 

The Group has maintained priority on key drivers of our plan which include leveraging our brands, further improving our process and technology environments, investing in service innovation and refining our growth strategy. 

Continued focus on these priorities will allow the Group's brands to continue to reposition themselves within their respective competitive markets for the remainder of the year."

Business Segment Results:

−    Healthcare Staffing: Turnover increased 25.7% to £101.6 million and gross profit increased by 22.3% to £15.9 million.  Operating profit increased to £5.6 million.

−    UK Staffing - Commercial: Turnover increased 10.5% to £221.0 million and gross profit increased by 8.1% to £34.7 million.  Operating profit of the segment increased to £6.1 million.

−    UK Staffing - Professional & Technical: Turnover declined 3.6% to £83.7 million and gross profit was broadly flat at £14.3 million.  Operating profit increased to £2.1 million.

−    US Staffing: Turnover increased 3.7%* to £86.3 million and gross profit increased by 1.9%* to £17.6 million.  Operating profit of the segment was £1.8 million compared to breakeven in 2009.

−    Support Services: Turnover increased 7.7% to £51.8 million and gross profit increased 20.0% to £6.0 million.  Operating profit £0.8 million compared to a loss in 2010.

The Group generated £34.6 million of cash from operations in the first twenty-six weeks of the year (June 2009: £9.5 million).

Net debt reduced by £30.4 million to £39.2 million as at 2 July 2010 (31 December 2009: £69.6 million).  In addition, the Group has outstanding letters of credit drawn against its US borrowing facilities amounting to £5.0 million (31 December 2009: £4.9 million or £5.2 million in constant currency).

 

Interim Management Report

Financial results for the twenty-six weeks to 2 July 2010

The table below sets out the results for the Group by segment for the first half of 2010.

Group results	Revenue						Gross profit			Operating profit
	Unaudited		Unaudited				Unaudited	Unaudited		Unaudited	Unaudited
£'million		2010		2009		% change*	2010	2009	% change*	2010	2009
UK staffing - Healthcare		101.6		80.8		25.7	15.9	13.0	22.3	5.6	4.5
UK staffing - Commercial ^		221.0		200.0		10.5	34.7	32.1	8.1	6.1	2.2
UK staffing - Professional & Technical		83.7		86.8		(3.6)	14.3	14.3	-	2.1	1.2
US staffing *		86.3		85.2		3.7	17.6	17.7	1.9	1.8	-
UK support services ^		51.8		48.1		7.7	6.0	5.0	20.0	0.8	(0.2)
		544.4		500.9		8.7	88.5	82.1	7.8	16.4	7.7
Central costs										(2.2)	(1.2)
Operating profit before amortisation of client relationships and exceptional items										14.2	6.5
Amortisation of client relationships										(1.7)	(1.7)
Exceptional items										-	(4.3)
Operating profit										12.5	0.5

* measured in local currency

^ Certain prior period costs have been reclassified to conform to the current period presentation with no net impact on operating profit.  As part of the on-going review and rationalisation of the Group, certain business activities have been reclassified within the reporting segments.  Prior period comparatives have been restated accordingly.

Consolidated income statement

For the twenty-six weeks ended 2 July 2010

		2010	2009
	Notes	£m	£m
Continuing operations
Revenue	2	544.4	500.9
Cost of sales		(455.9)	(418.8)
		__________	__________
Gross profit		88.5	82.1
Administrative expenses		(76.0)	(81.6)
		__________	__________
Operating profit	2	12.5	0.5
Operating profit before amortisation and exceptional items		14.2	6.5
Amortisation of client relationships		(1.7)	(1.7)
Exceptional items		-	(4.3)
		__________	__________
Operating profit		12.5	0.5
Finance income		-	0.5
Finance expense		(2.0)	(2.4)
		__________	__________
Profit/(loss) before taxation		10.5	(1.4)
Taxation	3	(2.4)	-
		__________	__________
Profit/(loss) for the period (attributable to equity shareholders)		8.1	(1.4)
		__________	__________

Earnings/(loss) per share	4	Pence	Pence
Basic		17.9p	(3.2)p
		__________	__________
Diluted *		17.9p	(3.2)p
		__________	__________

* The Group was loss-making for the period ended June 2009 and accordingly, share options in issue were considered to be "anti-dilutive", as such the calculation is the same for both basic and diluted earnings per share.

Consolidated statement of comprehensive income

For the twenty-six weeks ended 2 July 2010

		2010	2009
		£m	£m
Profit/(loss) for the period		8.1	(1.4)
Other comprehensive income:
Gains/(losses) recognised directly in equity
Currency translation differences		0.2	(1.7)
Income tax related to currency translation differences		(1.2)	1.2
		__________	__________
Other comprehensive losses for the period, net of tax		(1.0)	(0.5)
		__________	__________
Total comprehensive income/(loss) for the period		7.1	(1.9)
		__________	__________

Consolidated balance sheet

		2 July 2010	31 December 2009
		£m	£m
Non-current assets
Property, plant and equipment		8.5	8.5
Goodwill		60.1	59.9
Other intangible assets		49.7	51.3
Deferred tax assets		6.4	7.5
Financial assets		3.5	3.5
		_________	_________
		128.2	130.7
		_________	_________
Current assets
Trade and other receivables		205.9	189.7
Cash and short-term deposits		12.0	9.2
		_________	_________
		217.9	198.9
		_________	_________
Total assets		346.1	329.6
		_________	_________
Current liabilities
Trade and other payables		173.0	136.8
Taxation liabilities		3.5	1.2
Bank overdrafts and other short-term borrowings		51.0	58.8
Other financial liabilities		-	0.2
Provisions		2.3	4.6
		_________	_________
		229.8	201.6
		_________	_________
Net current liabilities		11.9	2.7
		_________	_________
Non-current liabilities
Long-term borrowings		0.2	20.0
Other payables due in greater than 1 year		1.2	0.9
Provisions		9.3	8.4
Deferred taxation liability		13.1	13.3
		_________	_________
		23.8	42.6
		_________	_________
Total liabilities		253.6	244.2
		_________	_________
Net assets		92.5	85.4
		_________	_________

Consolidated balance sheet (continued)

		2 July 2010	31 December 2009
		£m	£m
Equity
Issued share capital		0.4	0.4
Share premium		15.5	15.5
		_________	_________
		15.9	15.9
Other reserves		91.7	92.7
Retained deficit		(15.3)	(23.4)
		_________	_________
Total equity attributable to equity holders of the parent company		92.3	85.2
Minority interest		0.2	0.2
		_________	_________
Total equity		92.5	85.4
		_________	_________

Consolidated cash flow statement

For the twenty-six weeks ended 2 July 2010

		2010	2009
	Notes	£m	£m
Cash flows from operating activities
Cash generated by operations	5	34.6	9.5
Taxation (paid)/refunded		(0.4)	0.1
		________	________
Net cash generated by operating activities		34.2	9.6
		________	________
Cash flows from investing activities
Cost of acquisition (net of cash acquired)		(0.6)	-
Purchase of property, plant and equipment (PPE)		(1.2)	(1.3)
Purchase of intangible assets		(0.5)	(0.5)
Net movement in other financial assets		0.1	(0.1)
Finance income received		-	0.5
		________	________
Net cash utilised on investing activities		(2.2)	(1.4)
		________	________
Cash flows from financing activities
Movement in other long-term borrowings		-	(0.6)
Movement in short-term borrowings		(25.3)	(9.4)
Capital element of finance lease payments		(0.1)	(0.2)
Finance expense paid		(1.8)	(2.3)
		________	________
Net cash outflow from financing activities		(27.2)	(12.5)
		________	________
Net increase/(decrease) in cash and equivalents		4.8	(4.3)
Opening cash and cash equivalents		6.5	8.6
Foreign exchange on cash and cash equivalents		0.7	(1.5)
		________	________
Closing cash and cash equivalents		12.0	2.8
		________	________
		2 July 2010		30 June 2009
Cash and short term deposits		12.0		8.9
Bank overdrafts		-		(6.1)
		________		________
Cash and cash equivalents		12.0		2.8
		________		________

Notes to the interim financial statements

1          Basis of preparation

I.            Statement of Compliance

The interim financial statements presented in this financial report have been prepared in accordance with International Financial Reporting Standards (IFRS) and International Financial Reporting Interpretations Committee (IFRIC) interpretations as endorsed by the European Union that are expected to be applicable to the consolidated financial statements for the year ending 31 December 2010. 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 statutory financial information, which is unaudited, for the twenty-six weeks to 2 July 2010 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 year ended 31 December 2009 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 December 2009 with the exception of the following new or revised IFRS publications that have been adopted in the period:

International Accounting Standards (IAS / IFRS)	Effective date
IFRS 3 - Business combinations	1 July 2009

No other new and/or revised IFRS and IFRIC publications that came into force in the period have any impact on the Group.

2          Segmental information

As part of the on-going review and rationalisation of the Group, certain business activities have been reclassified within the reporting segments.  Prior period comparatives have been restated accordingly.

Twenty-six weeks ended 2 July 2010

Continuing operations	Healthcare staffing	UK staffing - Commercial	UK staffing -Professional & Technical	US staffing	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 and exceptional items						14.2
Amortisation of client relationships						(1.7)
Exceptional items						-
						_______
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
						_______

Six months ended 30 June 2009

Continuing operations	Healthcare staffing	UK staffing - Commercial	UK staffing -Professional & Technical	US staffing	Support services	Group total
	£m	£m	£m	£m	£m	£m
Segment revenue	80.8	200.0	86.8	85.2	48.1	500.9
	_______	_______	_______	_______	_______	_______
Segment EBIT	4.5	2.2	1.2	-	(0.2)	7.7
	_______	_______	_______	_______	_______
Unallocated - Corporate cost						(1.2)
						_______
Operating profit before amortisation of client relationships and exceptional items						6.5
Amortisation of client relationships						(1.7)
Exceptional items						(4.3)
						_______
Operating profit before finance costs and taxation						0.5
Finance costs - net						(1.9)
						_______
Loss before taxation						(1.4)
Taxation						-
						_______
Loss for the period						(1.4)
						_______

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/(loss) per share

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

Diluted 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. There are no outstanding options as at 2 July 2010.  At 30 June 2009, the Group was loss-making, so any share options in issue were considered to be "anti-dilutive".  There is, therefore, no effective change to the earnings per share figures in either period.

The weighted average number of shares has been calculated for the period from 1 January 2010 to 2 July 2010. The number of shares so calculated is 45,018,931 (June 2009: 44,979,041) excluding the shares owned by The Corporate Services Group Employee Share Trust.

The calculations of earnings/(loss) per share are based upon the following consolidated income statement data:

	Profit/(loss) for the period		Earnings/(loss) per share
	2010	2009	2010	2009
	£m	£m	Pence	Pence
Basic and diluted
Profit/(loss) for the period	8.1	(1.4)	17.9	(3.2)
Exceptional items (net of tax)	-	4.3	-	9.6
Amortisation of client relationships	1.7	1.7	3.9	3.9
	_________	_________	_________	_________
Adjusted profit for the period	9.8	4.6	21.8	10.3
	_________	_________	_________	_________

5        Reconciliation of profit/(loss) before tax to cash generated by operations

	2010	2009
	£m	£m
Profit/(loss) before taxation	10.5	(1.4)
Adjustments for:
Net interest charge	2.0	1.9
Depreciation and amortisation	4.2	4.0
	__________	__________
	16.7	4.5
(Increase)/decrease in trade and other receivables	(14.1)	8.3
Increase/(decrease) in trade and other payables	33.7	(3.1)
Decrease in provisions for liabilities and charges	(1.7)	(0.2)
	__________	__________
Cash generated by operations	34.6	9.5
	__________	__________

6        Additional cash flow information

	1 January 2010	Cash flow	Foreign exchange	Other non-cash changes	2 July 2010
	£m	£m	£m	£m	£m
Cash at bank and in hand	9.2	2.1	0.7	-	12.0
Overdrafts	(2.7)	2.7	-	-	-
	__________	__________	_________	__________	__________
	6.5	4.8	0.7	-	12.0
	__________	__________	_________	__________	__________
Guaranteed secured loan note	(19.9)	-	-	(0.1)	(20.0)
Finance leases	(0.3)	0.1	-	-	(0.2)
Revolving credit	(55.9)	25.3	(0.4)	-	(31.0)
	__________	__________	_________	__________	__________
	(76.1)	25.4	(0.4)	(0.1)	(51.2)
	__________	__________	_________	__________	__________
	(69.6)	30.2	0.3	(0.1)	(39.2)
	__________	__________	_________	__________	__________

Responsibility statement

The Directors of Impellam Group plc confirm that these condensed interim financial statements have been prepared in accordance with the AIM Rules for Companies and IFRS's as adopted by the European Union, however, they have not been prepared in accordance with IAS 34.

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.

By order of the Board,

Cheryl Jones                                                                 Andrew Burchall

Chairman                                                                      Group Finance Director

Independent review report to Impellam Group plc

Introduction

We have been engaged by the Company to review the interim financial information in the interim financial report for the twenty-six weeks ended 2 July 2010, which comprise the consolidated income statement, consolidated statement of comprehensive income, consolidated balance sheet, 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 information.

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.  

As disclosed in note 1, the annual financial statements are prepared in accordance with IFRSs as adopted by the European Union.  This condensed set of financial statements included in this interim financial report have been prepared in accordance with the basis of preparation set out in note 1.

Our responsibility

Our responsibility is to express to the Company a conclusion on the interim financial information 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 interim financial information in the interim financial report for the twenty-six weeks ended 2 July 2010 is not prepared, in all material respects, in accordance with the basis of preparation set out in note 1 and the AIM Rules for Companies.

PricewaterhouseCoopers LLP

Chartered Accountants

6 August 2010

St Albans

Note:  Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

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

Impellam Group plc
Cheryl Jones, Chairman	Tel: [phone]
Andrew Burchall, Group Finance Director	Tel: [phone]
Naomi Stuart, Marketing and Communications Manager	Tel: [phone]
Cenkos Securities plc (Nominated Advisor and Broker to Impellam)
Nicholas Wells Beth McKiernan	Tel: [phone] Tel: [phone]
Threadneedle Communications
John Coles	Tel: [phone]

Note to Editors:

Impellam Group plc, traded on AIM (Symbol: IPEL), conducts business primarily in the United Kingdom and the United States, with smaller operations in Australia, Ireland, New Zealand and Continental Europe.  The Group employs more than 8,000 people, including 2,400 managers and consultants and more than 5,600 support services workers, across a network of 240 branch and regional offices. The Group operates more than 20 specialty brands across a broad range of staffing sectors which are complemented by businesses in the outsourced support services sector.  Impellam Group was formed in May 2008 through the merger of The Corporate Services Group plc and Carlisle Group Limited and is ranked 18^th on Staffing Industry Analysts' 2009 Top Global Staffing Companies List.

Business Segment	Staffing Sectors/Brands
Healthcare Staffing	The Group's Healthcare staffing segment comprises Medacs Healthcare (locum doctors, nursing, international recruitment and managed healthcare services) and Chrysalis Homecare (domiciliary care).
UK Staffing - Commercial	The Group's UK Commercial staffing segment primarily includes those brands that operate in the traditional clerical, administrative, industrial/trades and hospitality staffing markets. These principal brands include ABC Contract Services (construction and telecoms), Blue Arrow (catering, managed services, office and industrial), Carlisle Managed Solutions (managed services), Comensura (vendor neutral staffing & recruitment procurement),and Tate (office).
UK Staffing - Professional & Technical	The Group's UK Professional & Technical staffing segment comprises the following principal brands: Austin Benn (sales and marketing), Celsian Education (teachers and school support staff), Chadwick Nott (legal), Hewitson Walker (accounting), IRC (multi-sector staffing in Ireland), S∙COM (technical) and SRG (scientific).
US Staffing	The Group's US staffing segment operates across a wide spectrum of staffing sectors.   The principal brands and their specialties include CORESTAFF Services and Leafstone (Call centre/customer care, engineering, IT, light industrial, office/clerical, professional, skilled trade and technical), Guidant Group (managed services), InfoCurrent (information/records management and library services), S∙COM (technical and telecom) and SRG Woolf (clinical research).
Support Services	The Group's Support services segment consists of several brands providing a wide range of outsourced services to clients throughout the UK.  These brands include Carlisle Cleaning & Support Services (contract cleaning and facility support services), Carlisle Security (security guarding and CCTV public space surveillance), and the Recruit (retail merchandising and events).

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