Impellam Group plc REPORT FOR THE 52 WEEKS ENDED 30 DECEMBER 2011
Impellam Group plc REPORT FOR THE 52 WEEKS ENDED 30 DECEMBER 2011
Preliminary Results - Unaudited
Key Strategic Highlights
Ø EBITDA increased 13.9% to £47.5 million (2010: £41.7 million)
Ø Operating profit increased 13.4% to £34.8 million (2010: £30.7 million)
Ø Adjusted operating profit increased 16.2% to £38.7 million (2010: £33.3 million)
Ø Conversion of gross margin to operating profit increased to 19.1% (2010: 16.8%)
Ø Basic earnings per share increased 15.6% to 54.0p (2010: 46.7p)
Ø Net cash of £1.8 million at 30 December 2011 (31 December 2010: Net debt of £17.8 million)
* Adjusted operating profit excludes amortisation of client relationships and non-recurring items
Cheryl Jones, Chairman commented:
"I am pleased to announce Impellam Group plc concluded 2011 with a strong set of financial results whilst at the same time completing several important milestones in support of repositioning the Group's businesses. Our strategy is built on the premise of 'Unlocking the Value of the Impellam Group of Companies' for our shareholders, our clients, management teams and employees.
First, the financial structuring of the Group has been critical for the Company in that a highly leveraged historic debt position had to be addressed. Conversion of margin to profit and through to cash flows has been an imperative in this regard and remains so going forward.
In 2011, the Group's operating profit increased by 13.4%, aligned in part to an increase in the conversion ratio of 2.3%, whilst EBITDA improved by 13.9% to £47.5 million on increased revenues of 1.6%. Basic earnings per share improved by 15.6%. At the year-end the Group was in a net cash position.
Execution of the strategy in 2010/2011 has allowed the Group to repay in full and on the due date in 2011 its final obligations under the £20 million guaranteed secured loan notes and both of the Group's UK and US financing facilities were also successfully renewed during the year.
During the year, taking the opportunity of market conditions, Impellam purchased 360,500 of its own shares at a cost of £1.2m. On an annualised basis this provides shareholders with an approximate 1% increase in value, as measured through earnings per share. The Board will continue to look to purchase its own shares going forward, as well as reviewing potential acquisitions where they are accretive and fit with the Group's overall strategy.
Second, the strategy requires the Group to align its brands into focused market-facing businesses. To support this divisional and group strategy, two new holding companies have been established in 2011 to house the realigned Medacs Healthcare and Carlisle Support Services brands.
The UK and US Staffing businesses have begun the realignment of their brands to support accelerated development of evolving client requirements for Managed Service Offerings and Client Innovation moreover, accelerated development of the Science, Engineering and Technology related brand activities is also key. Restructuring of these businesses is underway.
The accomplishments in 2011 were critical to the transformational strategy of the Group. The primary trading markets of the UK and US are anticipated to continue to show tough conditions, but the Group remains focused in delivering the most efficient and innovative service offerings. Establishing consistency of reliability and a sustainable competitive advantage are key elements for our current and prospective clients. The Group will continue to develop in 2012 in all its key businesses and markets.
The Board remains focussed on maximising shareholder value and unlocking the value of the Impellam Group of Companies. This will include the payment of dividends when appropriate.
To this end, Impellam will shortly be seeking shareholder and court approval for a capital reorganisation. Contingent on such approval, the Company will then have sufficient distributable reserves to be in a position to pay a cash dividend starting with the 2012 interims. The capital reorganisation will also provide for other forms of capital transactions capable of delivering value to the shareholders. Further details will be sent to shareholders in due course."
Financial results for the fifty two weeks to 30 December 2011
The table below sets out the results for the Group by segment for the fifty two weeks to 30 December 2011.
UKStaffing - Commercial
UKStaffing - Professional & Technical
Medacs Healthcare Group
Depreciation and amortisation
Operating profit before amortisation of client relationships and non-recurring items (Adjusted operating profit)
Amortisation of client relationships
* % change measured in local currency
Cash Flow, Debt and Net Assets
The Group generated £28.4 million of cash from operating activities in the year (2010: £57.5 million). Days sales outstanding (DSO) for the Group was 35.3 at 30 December 2011 compared to 36.0 at 31 December 2010.
Net debt reduced by £19.6 million to a net cash position of £1.8 million as at 30 December 2011 (31 December 2010: £17.8 million net debt). In addition, the Group has outstanding letters of credit drawn against its US borrowing facilities amounting to £3.6 million (31 December 2010: £3.4 million).
At 30 December 2011, the Group had net assets of £129.3 million (31 December 2010: £106.8 million).
Business Segment Review
UKStaffing - Commercial:
In 2011, the Commercial Staffing segment included the key brands of Blue Arrow Catering, Blue Arrow Staffing Solutions, Blue Arrow Managed Services, ABC, Tate, Comensura and CMS. Many of the traditional markets for these brands were under significant economic pressure as demand for their traditional services declined or remained depressed.
The overall strategy of the Group is to realign the brands to the ever-changing market requirements. Technology programmes to support AWR, Agency Workers Regulations, has also been implemented, to provide efficiencies going forward whilst adhering to tight compliance standards.
Focus on the evolving managed services market has supported much of the revenue growth in these businesses. Both Tate and Blue Arrow Catering had reduced revenues year-on-year, resulting from the market-related conditions. The repositioning of these brands is ongoing.
Overall, turnover increased a creditable 4.9% to £496.1 million for the year. EBITDA showed a reported 25% increase in 2011 to £22.5 million. Reported operating profit was £19.8 million in 2011 compared to £14.9 million in 2010.
UKStaffing - Professional & Technical:
In 2011, the Professional and Technical Staffing segment comprised the Science and Technology and Professional parts of the business. As part of the overall strategy, during the year initiatives were put in place to disaggregate the businesses and re-evaluate the changing market requirements, so as to implement service delivery efficiencies and drive strategic sales processes.
Science and Technology sectors, through the SRG and Scom brands, had a 16.3% increase in revenues reflecting the focus to this sector and the higher demand for services. The Professional brands achieved an 8.8% improvement in revenues as the client service offering was expanded to support managed service requirements in the market.
Overall this group of brands achieved an aggregate 14.9% increase in turnover to £193.1 million. EBITDA increased by £3.5 million in 2011 to £8.0 million whilst operating profit was £7.8 million in 2011 compared to £4.3 million in the prior year.
The US Staffing segment continued to expand its current client base and to emphasise its managed service offerings to clients so as to meet the evolving demand for strategic solutions in the marketplace. During the year, Guidant Group was relocated to an expanded headquarters and operational environment, allowing increased scalable expertise in the managed services segment, including expanded payroll service programmes to its client base.
The US operations faced tough economic challenges, whilst completing efficiency programmes planned for the end of the year so as to continue to lower their cost of service delivery.
Turnover for the segment increased 5.0%* in the year to £166.6 million. EBITDA increased by £0.6 million to £5.1 million in 2011 and operating profit was £4.7 million compared to £4.0 million in 2010.
Medacs Healthcare Group:
Medacs Healthcare Group experienced an anticipated reduction in demand in the doctors' staffing business in the UK during 2011. During the year, orders for doctor assignments declined 14.5% and average hours for these assignments declined 17.6%. By increasing client density and fill rates, Medacs limited overall shrinkage in invoiced doctor hours to 8.8%. The nursing and social care sectors increased invoiced hours by 6.6% and 7.0% respectively.
In 2011, some £1.3 million was invested in the development of an expanded contact centre designed to allow efficient consolidation and increased specialisation in recruitment and client service activities.
Medacs reported turnover of £186.8 million in 2011, a 7.7% decline over the prior year. EBITDA and operating profit was £9.6 million and £9.1 million, respectively, compared to £12.0 million and £11.6 million, respectively, in the prior year.
Carlisle Support Services' full year performance is a result of the emphasis to deleverage the historic dependence on the retail sector, initiatives to improve labour management and the timing of a change in emphasis in the service portfolio to increasingly complex client environments. Whilst certain key client relationships were added in the year, the full impact of these will not be seen until 2012.
During 2011, Carlisle relocated its corporate offices to further consolidate its distribution network to five locations going to four in 2012. New scheduling and payroll systems were installed in the business for the 3,500 employee base. These technology changes, combined with office consolidation, allow for further efficiencies through scalability and specialisation of back-office and operational support services, as well as allowing consolidation of sales and account management staff into a more effective environment.
Carlislereported turnover of £88.8 million in 2011 compared to £105.3 in the prior year. EBITDA declined by £0.4 million to £2.3 million in 2011, whilst operating profit was £2.0 million compared to £2.4 million in 2010.