Impellam Group plc
Impellam Group plc
REPORT FOR 26 WEEKS ENDED 1 JULY 2011
UNAUDITED INTERIM RESULTS
§ Turnover increased 0.9% to £549.4 million (June 2010: £544.4 million)
§ Operating profit increased 29.6% to £16.2 million (June 2010: £12.5 million)
§ Gross profit increased 2.9% to £91.1 million (June 2010: £88.5 million)
§ Conversion of gross profit into operating profit increased to 17.8% (June 2010: 14.1%)
§ Fees from permanent placements increased to £10.4 million (June 2010: £9.0 million)
§ Earnings per share of 25.4p (June 2010: 17.9p)
Cheryl Jones, Chairman commented:
"I am pleased to announce that Impellam's operating profit of £16.2 million for the first half of the year achieved the Group's plan expectation. The Group's strategy to build competitive market sustainability requires both the re-evaluation of marketing and sales initiatives and improvement in revenue quality, while continuing business re-engineering programmes. These initiatives have been successful to date.
The Group's turnover for the first half of 2011 was affected by shrinkage in specific areas of the Group's client base, exiting of certain contracts across the businesses, and the challenges of difficult market conditions. As a result, the Group increased turnover by just under 1.0% and improved the gross margin percentage by 30 bps. Overhead investments were made during the period however, transformation programmes to enhance the efficiency and effectiveness of the businesses enabled overhead costs to remain level, thereby improving overall conversion rates by 370 bps to 17.8%.
Medacs Healthcare Group experienced an anticipated lessened demand in the doctors' staffing business in the UK during the first half of 2011. During the period, orders for doctor assignments declined 18.8%, and average hours for these assignments declined 17.4%. By increasing fill rates, Medacs limited shrinkage in invoiced doctor hours to 9.1% for the period. Medacs continued to increase its sales emphasis in other recruitment sectors as well as the healthcare managed services business. The nursing and social care sectors increased invoiced hours by 5.4% and 5.1%, respectively over the comparative period. In total, Medacs reported £94.6 million in turnover, a 6.9% reduction over the comparative period, and reported £4.3 million in operating profit during the first half of the year. Impellam continues to invest in Medacs' International footprint and to seek acquisitions for this business in keeping with the segment's planned strategy.
Impellam Group's Commercial, Professional and Technical Staffing segments reported combined turnover of £414.3 million for the first half of the year, an increase of 5.6%. Total operating profit for the period was £14.3 million, an increase of 43.0% over the comparative period. Though the targeted growth plans are successfully moving forward, a significant portion of the operating profit improvement has been driven by the efficiency and service reengineering programmes begun in 2009.
The UK Commercial Staffing segment saw turnover of £238.5 million, an increase of 7.9% during the first half of 2011 and operating profit of £8.2 million, an increase of 34.4% over the comparative period. The business has held gains from prior year efficiency programmes while pursuing and converting targeted new business opportunities. This segment of the Group's results includes the Comensura brand and the other UK-based managed services brands.
The UK Professional & Technical segment reported turnover of £95.3 million, an increase of 13.9% over the comparative period. This result reflects the Group's emphasis on the technology, engineering and sciences sectors, and the current market demand for these specialties. These gains were marginally impacted by lower turnover in the education and finance & accounting sectors during the period. Operating profit reached £4.2 million for the first half of the year.
The US Staffing segment has reported turnover of £80.5 million for the first half of the year and operating profit of £1.9 million for the same period. Overall, the commercial, professional, technical, and managed services brands experienced revenue growth ranging from 4.3% to 15.7% during the first half of 2011 as measured in local currency. However, these revenue gains were mostly offset by the exit of contracts from prior periods. This segment of the Group's results includes the Guidant brand.
The Group continues to focus its growth strategies to leverage the strength of its Staffing operations in the UK and the US and will further align objectives where appropriate. The Group recognises that continued rationalisation of its brand portfolio and IT platforms are significant components of completing its planned business transformation programmes for these operations.
Carlisle Support Services made gains in both new business and expanded contracts in the first half of the year. Year-over-year revenue was lower as the timing of new contract start-ups was outpaced by the timing of contracts exited in 2010. This segment reported turnover of £40.5 million in the first half compared to £51.8 million in the comparative period. However, gross margins in the business improved to 15.1% compared to 11.6% in 2010. This is as a result of the planned approach to growth and revenue quality, and the implementation of processes and technology to support greater efficiencies in the scheduling of employees and contract resources for the Carlisle businesses. The segment reported £1.1 million in operating profit during the period, compared to £0.8 million in the comparative period. Impellam continues to review acquisition opportunities in specific market sectors to support the planned growth and market position of the business."
Business Segment Results:
&minus Medacs Healthcare Group: Turnover decreased 6.9% to £94.6 million and gross profit decreased by 8.8% to £14.5 million. Operating profit decreased to £4.3 million.
&minus UK Staffing - Commercial: Turnover increased 7.9% to £238.5 million and gross profit increased by 7.2% to £37.2 million. Operating profit increased to £8.2 million.
&minus UK Staffing - Professional & Technical: Turnover increased 13.9% to £95.3 million and gross profit increased 14.0% to £16.3 million. Operating profit increased to £4.2 million.
&minus US Staffing: Turnover decreased 0.9%* to £80.5 million, gross profit increased by 2.5%* to £17.0 million. Operating profit increased to £1.9 million.
&minus Carlisle Support Services: Turnover decreased 21.8% to £40.5 million and gross profit increased 1.7% to £6.1 million. Operating profit increased to £1.1 million.
The Group generated £7.7 million of cash from operations in the first twenty-six weeks of the year (June 2010: £34.6 million). Days sales outstanding (DSO) for the Group was 35.6 at 1 July 2011 compared to 36.0 at 31 December 2010.
During the first half of 2011, the Group utilised £0.2 million to acquire the non controlling interests in our Australian subsidiary and all group companies are now wholly owned. Capital expenditure was £2.0 million. The reduction in debt and the repayment of the remaining 10% loan notes resulted in a reduction in interest paid to £1.3 million (June 2010: £1.8 million). As a result of the improving profitability and the utilisation of tax losses, the Group paid £2.4 million in Corporation tax in the period, a £2.0 million increase on 2010.
Rigorous focus on the Group's cash and debt position in both 2009 and 2010 resulted in substantive changes in operational processes and significant improvements in cash management and DSO across the business segments. Though these initiatives are imbedded across the businesses in 2011, elements of the results of these prior period initiatives will not be replicated in 2011. Cash management continues to be an ongoing focus within the Group businesses.
Net debt decreased by £1.7 million to £16.1 million as at 1 July 2011 (31 December 2010: £17.8 million). In addition, the Group has outstanding letters of credit drawn against its US borrowing facilities amounting to £3.4 million (31 December 2010: £3.4 million).