INTERIM RESULTS TO 30 JUNE 2023
21/08/2023 16:31
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230821:nRSU9727Ja&default-theme=true
RNS Number : 9727J Impellam Group plc 21 August 2023
Impellam Group plc
("Impellam", the "Group" or the "Company")
INTERIM RESULTS TO 30 JUNE 2023
Impellam (AIM: IPEL) announces its unaudited interim results for the 26 weeks ended 30 June 2023.
Gross profit growth in a challenging market
H1 2023((1)) H1 2022((1)) Actual Inc/(Dec) Like-for-like((2)) Inc/(Dec)
Revenue (£ millions) £1,028.1 £933.7 10.1% 9.1%
Gross profit (£ millions) £97.6 £95.7 2.0% 0.1%
EBITDA ((3)) £11.0 £11.9 (7.6%) (13.1%)
Operating profit (before amortisation) (£ millions) ((4)) £8.3 £9.3 (10.8%) (17.4%)
Operating profit (before amortisation) conversion (%) ((5)) 8.5% 9.7% (1.2ppts)
Operating profit (£ millions) £4.9 £6.0 (18.3%) (25.3%)
Continuing adjusted basic EPS ((6)) 9.6p 7.6p 26.3%
Continuing basic EPS 4.3p 1.9p 126.3%
£56.1 £18.0
Net cash (£ millions) pre IFRS 16((7))
£47.1 £3.7
Net cash (£ millions) post IFRS 16
(1) The amounts presented in the table above and the text below are for
continuing operations excluding the Healthcare (Medacs Global Group in the UK,
Ireland and APAC) and Regional Specialist Staffing (Blue Arrow, Chadwick Nott,
Career Teachers and Tate in the UK) businesses, being the discontinued
operation. The presentation of discontinued operations is set out in note 7.
2022 financial statements are restated for discontinued operations (see note
7) and revenue adjustment (see note 2)
(2) % change measured at constant exchange rates
(3) EBITDA (Earnings before interest depreciation and amortisation) pre IFRS
16 is used as the basis for banking covenant calculations
(4) Operating profit before amortisation of acquired intangible assets (see
note 2)
(5) Calculated as operating profit before amortisation of acquired intangible
assets / gross profit
(6) Basic EPS before amortisation of acquired intangible assets (see note 5)
(7) Net debt pre IFRS 16 is used as the basis for banking covenant
calculations
Group highlights
§ Group revenue increase of 10.1%, (9.1%((2))), with trading up in the UK
& Europe (10.9%((2))) and Asia PAC (34.7%((2))) with a slight decline in
North America (-1.4%((2))). Global Managed Services has shown stronger
growth of 13.1%((2)) with STEM growth of 5.3%((2)).
§ Group gross profit increase of 2.0%, (0.1%((2))), with temporary and
contingent margin growth of 6.8%((2)) and permanent placement margin
(including Recruitment Process Outsourcing (RPO)) decline of 54.6%((2)),
measured against very strong comparatives in H1 2022 . This decline reflects
the global market uncertainty impacting both client and candidate confidence.
§ EBITDA((3) ) of £11.0m (H1 2022: £11.9m((1))) a 13.1%((2)) decrease due
in part to £0.6m of one-off separation costs in the period associated with
the disposal of the businesses outlined below. Excluding these one-off costs
the decrease would be 8.3%((2)) which is a result of the reduced level of
permanent placements in the STEM portfolio which drove lower conversion of
gross profit to profit in the period. These main factors also lead to a
17.4%((2)) decrease in operating profit((4)) to £8.3m (H1 2022: £9.3m((1))).
§ Cash remains tightly controlled with Pre IFRS 16 net cash of £56.1m, a
£25.8m improvement in the 6 months (December 2022: £30.3m net cash). This is
partly driven by the net proceeds in the period of £72.7m from the disposal
of Healthcare and Regional Staffing businesses offset by £60m of dividend
payments. Net cash after IFRS 16 of £47.1m (December 2022: £20.4m net cash).
§ The sale of the Healthcare (Medacs Global Group in the UK, Ireland and
APAC) and Regional Specialist Staffing (Blue Arrow, Chadwick Nott, Career
Teachers and Tate in the UK) business to Twenty20 Capital completed in March
2023 for cash consideration of £104.3m on a debt-free, cash-free, normalised
working capital basis. The increase from the £85.0m agreed sale price is
due to increases in the disposed working capital and cash. The transaction
has resulted in a loss on disposal of £12.8m after the allocation of £55.7m
of goodwill and intangibles.
§ Separation of the disposed businesses is tracking to plan with completion
expected in Q4 2023. Costs of £0.6m associated with the separation have
been incurred in the period. The Group anticipates cost savings in H2 and
beyond as we align to our new business model.
§ Special dividends of £60.0m paid in 2023 to date, of which £25.0m was
declared in 2022.
§ The Company continues to work with Lord Ashcroft in relation to his
notification referred to in the 12 April 2022 announcement made by the Company
that he wanted to explore opportunities to sell his shareholding, which
resulted in the commencement of an offer period under the Takeover Code. On
4 July 2023, following media speculation, the directors confirmed that the
Company is in discussions with HeadFirst Global ("HeadFirst") in relation to a
possible offer by HeadFirst for the entire issued and to be issued ordinary
share capital of the Company. Discussions are ongoing and a further update
will be provided in due course.
Regional highlights
§ UK & Europe revenue up 10.9%((2)) to £803.0m and gross profit down
3.1%((2)) to £52.6m. Adjusted operating profit((3)) down 27.5%((2)) to
£6.2m.
o Global Managed Services resilient to the macro-economic conditions with
gross profit growth of 21.6%((2)).
o STEM portfolio impacted by market confidence in the technology sector and
reduced client and candidate confidence levels from the macro-economic
uncertainty, off-set by strong performance in defence and aviation. Temp fees
decreased by 6.6%((2)) whilst permanent recruitment declined by 33.1%((2))
particularly within the financial services RPO accounts.
o Operating profit declined by 27.5%((2)) due to reduced gross profit and
£0.6m of separation costs in relation to the business disposal. Future cost
savings are expected, with efficiencies delivered as we move to our new
operating model.
§ North America revenue down 1.4%((2)) to £197.0m and gross profit up
1.2%((2)) to £39.6m. Adjusted operating profit((3)) down 9.7%((2)) to £2.8m.
o Global Managed Services impacted by the financial liquidity issues within
the financial services sector and a reduction in hiring volumes.
o STEM portfolio affected by reduced permanent hiring in the technology
market, offset by gains in the Engineering and Science businesses with the
portfolio delivering 6.8%((2)) gross profit growth.
§ APAC revenue up 37.4%((2)) to £28.1m and gross profit up 34.0%((2)) to
£5.4m. Adjusted operating profit((3)) up 264.0%((2)) to £1.0m.
o Global Managed Services continues to grow gross profit across both the
traditional and digital platforms and has benefited from significant customer
expansion.
Julia Robertson, Chief Executive Officer, commented:
"Our H1 trading has delivered a robust result against the backdrop of muted
client and candidate confidence which resulted in declines in permanent
placement against strong prior year comparators. These declines however were
more than offset by temporary placement growth.
The disposal of our Healthcare and Regional Specialist Staffing portfolios has
allowed us to return a further £60m to shareholders in H1 whilst improving
our overall cash position. With the disposal complete, we have entered a new
strategic phase as an integrated workforce solutions group focused on Managed
Services and high value, specialist STEM talent. We see great opportunity in
these growth segments. During H1 we have undertaken activity to refine our
market facing strategy whilst completing activity to separate from the
disposed businesses. The separation activities are tracking to plan. Whilst
costs have been incurred to separate the businesses we have seized the
opportunity to bring our group together in a new, streamlined and resilient
customer centric operating model, which will drive future efficiencies in our
delivery.
1,353 colleagues left the Group during H1 as part of the disposal of
Healthcare and Regional Specialist Staffing and our headcount was 1,783 on 30
June 2023
On 4 July 2023, following media speculation, we confirmed that the Company is
in discussions with HeadFirst Global ("HeadFirst") in relation to a possible
offer by HeadFirst for the entire issued and to be issued ordinary share
capital of the Company our discussions are ongoing, and a further update will
be provided in due course."
UK & Europe
The UK & Europe region delivered a resilient result in challenging market
conditions which particularly affected the technology market (Lorien) and
permanent recruitment, leading to an overall gross profit decline of
3.1%((1,2)) to £52.6m (H1 2022: £54.2m((1))). However, Global Managed
Services (Guidant and Comensura) out-performed and delivered an increase in
gross profit of 21.6%((2)). The region saw a £3.6m reduction in permanent
recruitment fees which due to the strong conversion to operating profit led to
the decrease in adjusted operating profit of 27.5%((1,2)) to £6.2m (H 2022:
£7.8m((1))). The separation of the disposed business is tracking to plan
and expected to complete in Q4. Associated costs of the separation amounted
to £0.6m in the period and there is a tightly governed programme which will
deliver savings in H2 and beyond.
North America (NA)
The North America region gross profit increased by 1.2%((2)) to £39.6m,
driven by the engineering and science brands in STEM (Bartech Staffing and
SRG) offsetting challenging market conditions in technology (Lorien) and the
finance sector impacting Global Managed Services. Temporary recruitment fees
increased in STEM by 20.1%((2)), more than offsetting the decline in
permanent recruitment fees. However, the change in business mix drove a
lower conversion and a reduction in adjusted operating profit of 9.7%((2)) to
£2.8m (H1 2022: £3.1m).
Asia Pacific (APAC)
The APAC region has performed strongly in 2023 with gross profit increasing by
34.0%((1,2)) to £5.4m (H1 2022: £4.1m((1))) with strong growth across the
Global Managed Services portfolio (Comensura and Guidant) on both traditional
and digital platforms. As a consequence of gross profit growth, adjusted
operating profit increased by 264.0%((1.2)) to £1.0m (H1 2022: £0.3m((1))).
Cash flow, net debt and net assets
The Group generated £26.0m (H1 2022: £26.2m) of net cash from operations
over the first half of the year. Days Sales Outstanding, being total trade
receivables divided by average daily invoiced sales, remained stable at 34.0
days, down 0.8 days from 34.8 days at the end of FY2022. As a result of these
positive cash inflows and the £72.7m cash received (net of disposal costs)
from the sale of the RSS and Healthcare Business and after the special
dividends of £60.0m were paid, net cash (pre IFRS 16) stood at £56.1m, which
was a £25.8m improvement from the £30.3m net cash reported at 30 December
2022. Net cash after IFRS 16 adjustments stood at £47.1m, a £26.7m
improvement from the net cash of £20.4m at 30 December 2022.
The Group has outstanding letters of credit drawn against its US borrowing
facilities amounting to £2.1m (30 December 2022: £2.7m).
We continue to model scenarios to ensure the Group has sufficient liquidity
over the period ahead. With our current level of net cash (pre IFRS 16) of
£56.1m, our £132.5 million facility and strong relationship with our lenders
we do not envisage the need for any additional financial support within the
scenarios we have modelled.
Share Buyback and Dividend
Approval was gained at the 2022 AGM whereby a maximum of £0.5m of Ordinary
Shares (by market value) can be purchased per calendar month until the 2023
AGM. Under this programme a total of 266,876 shares were purchased at a value
£1.8m, of which £0.4m was purchased during 2022.
At the 2023 AGM approval was given to continue the programme until the 2024
AGM.
On 22 December 2022 the Board announced a second special dividend of 55.4p per
share, amounting to £25m, which was paid on the 27 January 2023.
On 3 March 2023 the Board announced a further special dividend in connection
with the sale of the RSS and Healthcare businesses of 77.8p per share,
amounting to £35m which was paid on the 6 April 2023.
See note 8 Dividend and capital reduction.
Trading outlook
Our newly focused integrated workforce solutions and STEM talent business has
shown resilience in H1 against the backdrop of extremely challenging market
conditions. Given the opportunities that the persisting global talent
shortage present we are well placed for growth when customer and candidate
confidence return. Our optimism is further buoyed by the number of workforce
solutions implementations going live in H2. As we complete our separation
from the disposed business we are identifying opportunities in our new
operating model to deliver better outcomes for our customers and efficiency
savings which will drive further improvements in our underlying performance in
H2 and beyond.
Financial results for the twenty-six weeks to 30 June 2023
The table below sets out the results for the Group by region for the first
half of 2023.
Unaudited Revenue Gross profit Operating profit
£'million H1 H1 Like-for-like change((2)) H1 2023 H1 2022(()(1)) Like-for-like change((2)) H1 2023 H1 2022(()(1)) Like-for-like change((2))
2023 2022(()(1))
UK & Europe((1)) 803.0 722.6 10.9% 52.6 54.2 (3.1%) 6.2 7.8 (27.5%)
Gross profit % 6.6% 7.5%
North America(()(1)) 197.0 190.4 (1.4%) 39.6 37.4 1.2% 2.8 3.1 (9.7%)
Gross profit % 20.1% 19.6%
Asia Pacific((1)) 28.1 20.7 37.4% 5.4 4.1 34.0% 1.0 0.3 264.0%
Gross profit % 19.2% 19.8%
Total 1,028.1 933.7 9.1% 97.6 95.7 0.1% 10.0 11.2 (16.0%)
Corporate costs (1.7) (1.9) (10.5%)
Operating profit((3)) 8.3 9.3 (17.4%)
Amortisation of acquired intangible assets (3.4) (3.3)
Operating profit 4.9 6.0 (25.3%)
1. 2022 financial statements restated for discontinued operations (see
note 7) and revenue adjustment (see note 2)
2. % change measured at constant exchange rates
3. Before amortisation of acquired intangibles
Financial results for the twenty-six weeks to 30 June 2023
The table below sets out the results for the Group by segment for the first
half of 2023.
Unaudited Revenue Gross profit
£'million H1 H1 Like-for-like change((2)) H1 H1 Like-for-like change((2))
2023 2022(()(1)) 2023 2022(()(1))
Global Managed Services 526.9 462.6 13.1% 48.2 42.7 10.4%
Gross profit % 9.1% 9.1%
STEM 514.8 482.8 5.3% 49.4 53.0 (8.5%)
Gross profit % 9.6% 11.0%
Inter-segment revenues((3)) (13.6) (11.7) 16.2% - - -
Total 1,028.1 933.7 9.1% 97.6 95.7 0.1%
1. 2022 financial statements restated for discontinued operations (see
note 7) and revenue adjustment (see note 2)
2. % change measured at constant exchange rates
3. Elimination of inter-segment sales which are all within the UK
& Europe region
Consolidated income statement
For the twenty-six weeks ended 30 June 2023
26 weeks Restated
30 June 26 weeks
2023 1 July
2022
Notes £m £m
Unaudited Unaudited
Revenue 2 1,028.1 933.7
Cost of sales (930.5) (838.0)
Gross profit 2 97.6 95.7
Administrative expenses (92.7) (89.7)
Operating profit 2 4.9 6.0
Operating profit before amortisation 8.3 9.3
Amortisation of acquired intangible assets (3.4) (3.3)
Operating profit 4.9 6.0
Finance income 0.6 -
Finance expense 3 (2.8) (2.3)
Profit before taxation 2.7 3.7
Taxation 4 (0.8) (2.9)
Profit from continuing operations 1.9 0.8
Profit on discontinued operations, net of tax 7 (10.4) 9.3
(Loss)/profit for the period (8.5) 10.1
(Loss)/profit for the period attributable to: (8.4) 10.1
Equity holders of the Parent Company
Non-controlling interests (0.1) -
(8.5) 10.1
Earnings per share for equity holders of the parent Company
Basic & diluted - continuing 5 4.3p 1.9p
Basic & diluted - discontinued 5 5.5p 20.6p
Basic & diluted - total 5 9.8p 22.5p
Consolidated statement of comprehensive income
For the twenty-six weeks ended 30 June 2023
26 weeks Restated
30 June 26 weeks
2023 1 July
2022
£m £m
Unaudited Unaudited
(Loss)/profit for the period (8.5) 10.1
Other comprehensive income:
Foreign currency translation differences - foreign operations (4.3) 11.5
Total comprehensive income for the period, net of tax, attributable to owners (12.8) 21.6
of the parent Company
Consolidated balance sheet
As at 30 June 2023 30 June 2023 30 December 2022
£m £m
Notes Unaudited Audited
Non-current assets
Property, plant and equipment 2.7 3.4
Right-of-use assets 7.8 9.1
Goodwill 105.5 109.5
Other intangible assets 43.7 49.8
Financial assets 0.9 1.0
Deferred tax assets 2.7 3.2
Trade and other receivables 1.6 0.7
164.9 176.7
Current assets
Trade and other receivables 645.7 636.8
Tax receivable 2.5 4.0
Asset held for sale - 171.2
Cash and cash equivalents 6 106.2 112.4
754.4 924.4
Total assets 919.3 1,101.1
Current liabilities
Lease liabilities 6 2.7 3.0
Trade and other payables 689.3 677.7
Tax payable 0.3 0.4
Liabilities held for sale - 87.1
Provisions 1.9 2.0
694.2 770.2
Net current assets 60.2 154.2
Non-current liabilities
Long-term borrowings 6 50.1 77.8
Lease liabilities 6 7.4 6.9
Provisions 1.5 1.7
Deferred tax liabilities 5.1 7.7
64.1 94.1
Total liabilities 758.3 864.3
Net assets 161.0 236.8
Equity
Issued share capital 0.4 0.5
Share premium account 30.1 30.1
30.5 30.6
Other reserves 125.1 130.9
Retained earnings 5.2 75.0
Total equity attributable to owners of the parent Company 160.8 236.5
Non-controlling interest 0.2 0.3
Total equity 161.0 236.8
Consolidated statement of changes in equity
For the twenty-six weeks ended 30 June 2023
Total share capital and share premium Other reserves Retained earnings Total equity attributable to equity owners of the parent Non-controlling interest Total equity
Unaudited £ m £ m £ m £ m £ m £ m
31 December 2022 30.6 130.9 75.0 236.5 0.3 236.8
Loss for the period - - (8.4) (8.4) (0.1) (8.5)
Transfer to discontinued operations - (1.6) - (1.6) - (1.6)
Other comprehensive income from foreign currency translation - (4.3) - (4.3) - (4.3)
Total comprehensive income in the period - (5.9) (8.4) (14.3) (0.1) (14.4)
Transactions with owners, recorded directly in equity
Dividends paid - - (60.0) (60.0) - (60.0)
Purchase and cancellation of own shares (0.1) 0.1 (1.4) (1.4) - (1.4)
30 June 2023 30.5 125.1 5.2 160.8 0.2 161.0
Consolidated cash flow statement
For the twenty-six weeks ended 30 June 2023
26 weeks Restated
30 June 26 weeks
2023 1 July
2022
£m £m
Unaudited Unaudited
Cash flows from operating activities
Profit before taxation - continuing operations 2.7 3.7
Profit before taxation - discontinued operations (9.7) 6.9
Adjustments for:
Depreciation and amortisation 8.0 11.3
Loss on disposal of discontinued operations 12.8 -
Net interest charge 2.2 2.4
16.0 24.3
Increase in trade and other receivables (19.7) (91.7)
Increase in trade and other payables 31.7 98.4
Decrease in provisions (0.2) (0.6)
Cash generated by operations 27.8 30.4
Taxation paid (1.8) (4.2)
Net cash generated by operating activities 26.0 26.2
Cash flows from investing activities
Cash flow from discontinued operations - net of cash 72.7 13.3
Purchase of property, plant and equipment (0.3) (2.0)
Purchase of intangible assets (1.7) (4.3)
Increase in other financial assets 0.6 0.7
Net cash utilised on investing activities 71.3 7.7
Cash flows from financing activities
Drawdown of short-term borrowings 200.0 98.7
Repayment of short-term borrowings (227.7) (96.8)
(Decrease)/increase in overdraft (4.3) 1.0
Dividends paid (60.0) -
Purchase and cancellation of own shares (1.4) (0.8)
Finance expense paid (2.8) (2.2)
Repayment of lease liabilities (1.9) (2.9)
Net cash (outflow) from financing activities (98.1) (3.0)
Net increase / (decrease) in cash and equivalents (0.8) 30.9
Opening cash and cash equivalents 112.4 90.9
Foreign exchange gain / (loss) on cash and cash equivalents (5.4) 4.9
Closing cash and cash equivalents 106.2 126.7
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 the IFRS Interpretations Committee (IFRIC) interpretations that are
expected to be applicable to the consolidated financial statements for the
period ending 5 January 2024. 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 for the 26 weeks to 30 June 2023 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 period
ended 30 December 2022 were reported on by the auditors without qualification.
The published annual report and accounts did not contain any statement under
section 498 of the Companies Act 2006 and have been delivered to the Registrar
of Companies.
The interim financial statements have been prepared on a going concern basis.
In coming to their conclusion the Directors have considered the Group's profit
and cash flow plans for the coming period, together with outline projections
for 2024 and 2025. The Group had a net cash position of £56.1m (excluding
IFRS 16 lease liabilities) and has a further £82.4m available to drawdown on
the Group's revolving credit facility. The amount of borrowing required to
fund the Group's activities is determined based on these projections, together
with expected returns to shareholders and planned capital expenditure. Also
considered is the projection of compliance with the financial covenants
implied by these plans. In addition, these figures are tested for sensitivity
to possible changes to the economic environments in which the Group operates.
The Group has no operations in Ukraine or surrounding regions and therefore
there is no direct impact on the Group's trading, however, any indirect impact
such as a worsening in economic conditions, would represent such a
sensitivity. The Directors continue to monitor the economic conditions for any
signs of a possible downturn that may adversely impact trading. From the
recent experience gained from managing adverse trading conditions, the
Directors are confident that if there were an economic downturn the Company
would be able to take appropriate mitigating actions to continue to trade for
the foreseeable future. The impact on Group liquidity and covenants of each of
these sensitivities is then considered together with the likelihood of each of
these occurring either individually or in combination. Given this analysis,
the Directors have determined that there are no likely downside scenarios
which would cause the Group a concern.
III. Accounting policies
The accounting policies used in this report are with those applied at 30
December 2022.
No other new and/or revised IFRS and IFRIC publications that come into force
in the period have any material impact on the accounting policies, financial
position or performance of the Group.
2 Segmental information
In line with internal reporting the primary segment is presented by region. In
addition, as a secondary segment we presented our business segments of Global
Managed Services, STEM, Regional Specialist Services and Healthcare within
this report.
Twenty-six weeks ended 30 June 2023 - unaudited
Revenue Gross profit Adjusted operating profit
£ m £ m £ m
UK & Europe 803.0 52.6 6.2
North America 197.0 39.6 2.8
Asia Pacific 28.1 5.4 1.0
Operating regions 1,028.1 97.6 10.0
Twenty-six weeks ended 1 July 2022 - unaudited
Restated Revenue Gross profit Adjusted operating profit
£ m £ m £ m
UK & Europe 722.6 54.2 7.8
North America 190.4 37.4 3.1
Asia Pacific 20.7 4.1 0.3
Operating segments 933.7 95.7 11.2
Unaudited 26 weeks Restated
30 June
2023 26 weeks
1 July
£ m
2022
£ m
Segment adjusted operating profit 10.0 11.2
Corporate costs (1.7) (1.9)
Operating profit before amortisation 8.3 9.3
Amortisation of acquired intangibles (3.4) (3.3)
Operating profit 4.9 6.0
Finance income 0.6 -
Finance expense (2.8) (2.3)
Taxation charge (0.8) (2.9)
Profit for the period from continuing activities 1.9 0.8
Twenty-six weeks ended 30 June 2023 - unaudited
Revenue Gross profit
£ m £ m
Global Managed Services 526.9 48.2
STEM 514.8 49.4
Inter-segment revenues (13.6) -
Operating segments 1,028.1 97.6
Twenty-six weeks ended 1 July 2022 - unaudited
Restated Revenue Gross profit
£ m £ m
Global Managed Services 462.6 42.7
STEM 482.8 53.0
Inter-segment revenues (11.7) -
Operating segments 933.7 95.7
The prior period results have been restated to remove the trade from
discontinued operations (see note 7) and a £5.1m reduction in revenue for
fees which need to be accounted for against revenue under the agency basis of
revenue recognition.
The above table reconciles the adjusted operating profit to the standard
profit measure under International Financial Reporting Standards (Operating
Profit). This is the Alternative Profit Measure used when discussing the
performance of the Group. The Directors believe that adjusted operating profit
is the most appropriate approach for ascertaining the underlying trading
performance and trends as it reflects the measures used internally by senior
management for all discussions of performance, including Directors'
remuneration. All discussions within the Group on segmental and individual
brand performance refer to adjusted operating profit. Corporate costs
represent costs associated with being a listed company with a wide portfolio
of brands and therefore are not allocated to the segments.
Adjusted operating profit is not defined by IFRS and therefore may not be
directly comparable with other companies' alternative profit measures. It is
not intended to be a substitute, or superior to, IFRS measurements of profit.
3 Finance expense - unaudited
Finance expense 26 weeks 26 weeks
30 June
2023 1 July
£m 2022
£m
Revolving credit facilities 2.6 2.0
Interest on lease liabilities 0.2 0.1
Other interest expense - 0.2
Income statement 2.8 2.3
4 Taxation - unaudited
Income tax expense is recognised based on management's best estimate of the
effective annual income tax rate expected for the full financial year which
has been estimated as 25.0% (2022: 34.4%) on a continuing basis. The 2022
full year Effective Tax Rate ("ETR"), excluding prior year adjustments, was
23.8% (14.5% including prior year adjustments). An increase in the full year
2023 ETR is expected given the main rate of corporation tax in the UK
increased to 25% from 1 April 2023. The UK ETR on continuing operations for
the current period is 26.1% driven by non-deductible expenses, largely
estimated legal and professional fees in line with previous years.
The prior year adjustments in 2022 largely related to one-off amendments to
either current tax (change in tax treatment of bad debt provisions) and
deferred tax (ensuring the correct deferred tax rate was applied to each
jurisdiction), and therefore when making a sensible year on year comparison of
the ETR one would exclude these.
5 Earnings per share - unaudited
Basic earnings per share amounts are calculated by dividing the profit or loss
for the period attributable to the owners of the Company by the weighted
average number of Ordinary shares outstanding during the period.
Diluted earnings per share amounts are calculated on the same basis but after
adjusting the denominator for the effects of dilutive options. The only
potentially dilutive shares arise from the share options issued by the Group
under its share-based compensation plans. There were no options outstanding at
either 30 June 2023 or 1 July 2022. The weighted average number of shares in
2023 is 44,966,787 (2022: 45,195,505).
26 weeks Restated
30 June
2023 26 weeks
1 July
2022
£m £m
Continuing profit for the period 1.9 0.8
Discontinued profit for the period 2.4 9.3
Total profit for the period 4.3 10.1
Acquired intangibles amortisation (net of tax) - continuing 2.4 2.6
Acquired intangibles amortisation (net of tax) - discontinued - 1.1
Total adjusted profit 6.7 13.8
Continuing adjusted profit 4.3 3.4
Discontinued adjusted profit 2.4 10.4
Weighted average number of shares 44,966,787 45,195,505
26 weeks Restated
30 June
2023 26 weeks
1 July
2022
Basic and diluted EPS Pence Pence
Continuing earnings per share 4.3 1.9
Discontinued earnings per share 5.5 20.6
Total earnings per share 9.8 22.5
Acquired intangibles amortisation (net of tax) - continuing 5.3 5.7
Acquired intangibles amortisation (net of tax) - discontinued - 2.6
Total adjusted earnings per share 15.1 30.8
Continuing adjusted earnings per share 9.6 7.6
Discontinued adjusted earnings per share 5.5 23.2
6 Additional cash flow information - unaudited
Unaudited 30 December 2022 Cash flow Interest charged Interest paid Drawdown Foreign exchange 30 June 2023
£ m £ m £ m £ m £ m £ m £ m
Cash and cash equivalents 112.4 (0.8) 0.6 (0.6) - (5.4) 106.2
Bank overdraft (4.3) 4.3 - - - - -
Revolving credit (77.8) 27.7 (2.6) 2.6 - - (50.1)
Lease debtors - - - - 1.1 - 1.1
Lease liabilities (9.9) 1.7 (0.2) 0.2 (2.0) 0.1 (10.1)
Net cash 20.4 32.9 (2.2) 2.2 (0.9) (5.3) 47.1
The bank overdraft is included in trade and other payables on the balance
sheet.
7 Discontinued operations
On 30 January 2023 the Group announced the sale of the business and assets of
its Regional Specialist Staffing businesses in the UK (Tate, Blue Arrow Group,
Chadwick Nott, Career Teachers) and its Healthcare Staffing business in the
UK, Ireland and APAC (Medacs Global Group) to Twenty20 Capital for cash
consideration of £85m on a debt-free, cash-free, normalised working capital
basis (the "Disposal"). This consideration was based on an agreed nil cash
position and target net working capital of £30.8 million on the date of
disposal with a £ for £ adjustment to consideration if the final positions
were above or below this amount. The transaction was completed on 3 March
2023.
On 24 January 2022 the Group announced the sale of the business and assets of
Corestaff, the US-based Light Industrial brand, to swipejobs Inc., a US
private digital staffing company and recognised a gain on disposal of £3.2m
(see 2022 financial statements for more information).
Profit from the Disposal
£m
Cash consideration received 104.3
Cash disposed of (29.2)
Expenses relating to disposal (2.4)
Net cash inflow on disposal of discontinued operation 72.7
Deferred consideration due 6.6
Total consideration 79.3
Net assets disposed (other than cash):
Tangible fixed assets (2.8)
Right of use asset (3.3)
Goodwill (25.2)
Other intangible assets (30.5)
Deferred tax assets (1.7)
Financial assets (0.1)
Trade and other receivables (105.6)
Lease receivables (1.1)
Trade and other payables 60.0
Lease liabilities 4.3
Deferred tax liabilities 6.8
Provisions 5.5
(93.7)
Pre-tax loss on disposal of discontinued operation (14.4)
Transfer from foreign exchange reserve 1.6
Loss on disposal of discontinued operation (12.8)
Profit and loss relating to discontinued operations
26 weeks 26 weeks
30 June 1 July
2023 2022
£m £m
Turnover 104.2 293.5
Cost of Sale (84.6) (239.9)
Gross Profit 19.6 53.6
Admin expenses (16.5) (46.6)
Operating profit 3.1 7.0
Interest - (0.1)
Profit before tax 3.1 6.9
Taxation (0.7) (0.8)
Profit from discontinued operations 2.4 6.1
Post tax loss on Disposal (12.8) -
Total (loss)/profit from the Disposal (10.4) 6.1
Gain from disposal of Corestaff - 3.2
Total (loss)/profit from discontinued operations (10.4) 9.3
Cash flows relating to discontinued operations
26 weeks 26 weeks
30 June 1 July
2023 2022
£m £m
Unaudited Unaudited
Net cash generated by operating activities 5.1 4.2
Net cash generated on investing activities (0.3) (0.8)
Net cash outflow from financing activities - (0.2)
Net cash flows for discontinued operations 4.8 3.2
Effect of the Disposal on the financial position of the Group
At disposal
£m
Tangible fixed assets 2.8
Right of use asset 3.3
Goodwill 25.2
Other intangible assets 30.5
Deferred tax assets 1.7
Financial assets 0.1
Trade and other receivables 105.6
Lease receivables 1.1
Trade and other payables (60.0)
Lease liabilities (4.3)
Deferred tax liabilities (6.8)
Provisions (5.5)
Net assets and liabilities (93.7)
8 Dividend and capital reduction
26 weeks 26 weeks
30 June 1 July
2023 2022
£m £m
Unaudited Unaudited
Special dividend paid 27 January 2023 at 55.4p per share 25.0 -
Special dividend paid 6 April 2023 at 77.8p per share 35.0 -
Paid in period 60.0 -
As reported in the annual report the Board became aware of an administrative
oversight concerning technical compliance with the Companies Act 2006 ("CA
2006") in respect of the special dividend paid on 27 January 2023 (the
"Dividend") and share buybacks effected by the company following this date
(the "Post January 2023 Share buybacks"). The amount of the Dividend was £25m
and the total amount of the Post January 2023 Share buybacks was approximately
£0.6m representing 94,822 shares. At the Annual General Meeting held on the
27 June 2023 all resolutions were passed to rectify the oversight and to put
affected parties in the position they were intended to be in. Following the
passing of these resolutions the Dividend was rectified. On the 18 July 2023
the High Court of Justice in England and Wales made an order confirming the
Capital Reduction (the "Court Order") and as such the Post January 2023 Share
buybacks was rectified. In addition, the Court Order ordered the
cancellation of GBP 30,121,328 of the share premium account of the Company and
accordingly, this capital reduction has now become effective in accordance
with the terms of the Court Order.
Alternative Performance Measures
Certain discussions and analyses set out in this Preliminary Announcement
include measures which are not defined by generally accepted accounting
principles such as IFRS. We believe this information, along with comparable
IFRS measurements, is useful to investors because it provides a basis for
measuring our operating performance on a comparable basis. Our management uses
these financial measures, along with the most directly comparable IFRS
financial measures, in evaluating our operating performance and value
creation. Non-IFRS financial measures should not be considered in isolation
from, or as a substitute for, financial information presented in compliance
with IFRS. Non-IFRS financial measures as reported by us may not be comparable
with similarly titled amounts reported by other companies.
Adjusted EBITDA
Definition: The Group calculates adjusted EBITDA as operating profit before
interest, tax, depreciation and amortisation and excludes IFRS 16 adjustments.
Closest equivalent IFRS measure: Operating profit.
Rationale for adjustment: The Group continues to measure EBITDA which is used
for banking covenants and internal performance measures. It is also used
externally for valuation purposes.
Reconciliation of adjusted EBITDA to operating profit:
26 weeks Restated
30 June 26 weeks
2023 1 July
2022
£m £m
Adjusted EBITDA 11.0 11.9
Add back rent 1.7 2.2
EBITDA excl IFRS 16 12.7 14.1
IFRS 16 depreciation (1.4) (1.7)
Depreciation and amortisation of software (3.0) (3.1)
Adjusted operating profit 8.3 9.3
Amortisation of brand value and customer relationships (3.4) (3.3)
Operating profit 4.9 6.0
Enquiries: For further information please contact:
Impellam Group plc
Julia Robertson, Group Chief Executive Tel: 01582 692658
Tim Briant, Group Chief Financial Officer
Canaccord Genuity Limited (NOMAD and Corporate Broker to Impellam)
Emma Gabriel Tel: 020 7523 8150
Bobbie Hilliam
Prior to publication the information communicated in this announcement was
deemed by the Company to constitute inside information for the purposes of
article 7 of the Market Abuse Regulations (EU) No 596/2014 as amended by
regulation 11 of the Market Abuse (Amendment) (EU Exit) Regulations No
2019/310 ('MAR'). With the publication of this announcement, this information
is now considered to be in the public domain.
In accordance with Rule 26.1 of the Takeover Code, a copy of this announcement
will be available, subject to certain restrictions relating to persons
resident in restricted jurisdictions, on Impellam's website at
https://investors.impellam.com/ (https://investors.impellam.com/) by no later
than 12 noon (London time) on the business day following the date of this
announcement. The content of the website referred to in this announcement is
not incorporated into and does not form part of this announcement.
Note to Editors:
Impellam is a connected group providing global workforce and specialist
recruitment solutions. Our 2000 people and market leading brands work across a
broad spectrum of industries and job categories throughout North America, the
UK and Europe and Asia Pac.
Our award-winning Global Managed Services provide a diverse range of digitally
enabled, multi-disciplinary workforce solutions to organisations around the
world. We are upper quadrant industry leaders in Managed Service Provision and
Services Procurement, and the seventh largest Managed Service Provider in the
world with over £4bn SUM(1) (Spend under Management).
Our STEM businesses are specialists in recruiting and engaging talent in the
key growth markets of technology, digital, data analytics, science, clinical
and engineering and work with clients across all sectors and sizes delivering
services that span Managed Services (MSP) Recruitment Process Outsourcing
(RPO), Statement of Work (SOW) and specialist recruitment.
Led by our Virtuosos, our capabilities are underpinned by proprietary digital
technology and unique partnerships with market-leading software providers,
enabling us to transform and future-proof our services.
We believe in the power of work. Through the power of work, we build better
businesses and help people lead more fulfilling lives.
For more information about Impellam Group please visit: www.impellam.com
(http://www.impellam.com)
1 By SUM (confirmed by Staffing Industry Analysts). Spend Under Management
(SUM) is the total amount of client expenditure which our Managed Services
brands manage on behalf of their clients. This equates to revenue earned where
Impellam acts as principal plus gross billings to customers where Impellam
acts as agent (2021 published numbers). Management use this measure as it
reflects the total value of the client spend to the Group and not just the
revenue generated
-END-
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR EASPFAEPDEFA