GP down over 1% at year-end 2018 for Impellam
Impellam has released its unaudited final results for the 53-week period ended 4th January 2019.
Revenue for the 53-week period ended 4th January 2019 grew by 4.9% to £2,276.7m (5.7% at constant exchange rates). Gross profit decreased by 1.1% to £282.3m (0.1% increase at constant exchange rates). Gross profit declined in its specialist staffing business and was further impacted by the increased mix of its managed services business revenues.
Adjusted EBITDA was 15.6% lower year-on-year at £50.2m (14.4% at constant exchange rates). This was the combination of lower gross profit and an increase in operating costs, particularly IT investment. Operating profit was 48.8% lower year-on-year, down at £22.9m. The difference between these measures is principally due to a goodwill impairment charge of £8.6m in respect of the education business and £5.7m of separately disclosed items primarily in respect of legal provisions and restructure and integration costs.
Despite significant challenges in the UK healthcare, education and retail markets and the impact of 2017 customer losses in the US, overall group gross profit was flat at constant exchange rates (1.1% decrease at actual exchange rates), with gross profit growth recorded in UK managed services, technology, office, engineering, legal and blue collar markets, in US technology and engineering markets and Australia managed services, healthcare and engineering markets.
A new portfolio structure has been implemented to drive managed services and international growth further to deliver premium (+ 10% per annum) returns. Regional businesses have distinct leadership and are focused on investing to stay relevant, productive and efficient so that they perform ahead of their market peer group.
A key strategic move in 2018 was the merger of its two talent acquisition and managed solutions businesses in the UK and US to form Guidant Global. This move means that Impellam has strengthened its position in the growing £117bn spend under management (SUM) managed services market and enabled it to meet the needs of a broader range of international clients, securing increased market share and creating better workplaces across the world.
In February 2019, the Group announced the de-merger of Carlisle Support Services Group. The Group believes that the Carlisle business is a non-core division and the de-merger will allow Impellam to focus on its portfolio of Specialist Staffing and Managed Services businesses.
Collectively, its managed services businesses (Guidant Global, Comensura, Medacs Global Group (MGG) and Lorien) recorded 57 new wins in 2018 and have a strong sales pipeline across all geographies.
Impellam has continued to invest in international expansion and it has seen particularly strong growth in Australia (Comensura and MGG). It has strengthened its position in Ireland (MGG, Guidant Global and SRG) and invested in the organic start-up of a technology business in Germany (Lorien).
Finally, during 2018 Impellam launched Origin, its innovation hub, to partner with, acquire and invest in staffing start-ups to drive both sustaining and disruptive innovation across the portfolio. In addition, Origin encourages entrepreneurship in its Virtuosos to support them to find new ways to operate and attract, retain and delight its customers and candidates.
Impellam’s combined managed services operation with its long-term customer base and high level of recurring revenues now accounts for 59% of its revenue, 41% of its gross profit and 57% of its segment adjusted EBITDA. Impellam’s non-UK businesses now represent 51% of its total adjusted EBITDA.
Impellam achieved a 1.8pps increase in group fill to 27% (2017: 25.2%), which created £9.2m of additional gross profit in 2018. In addition, its focus on collaboration between brands has continued to deliver results with an additional £2.5m gross profit reported in the UK.
Managed services gross profit at £115.3m was 2.8% up on prior year with growth across the UK brands. Segment adjusted EBITDA from managed services is £30.8m (2017: £32.7m). There was growth in the UK (Lorien), Australia (Comensura) and healthcare (Australia) while US managed services (Bartech, rebranded to Guidant Global) was down due to the timing of wins and losses.
Specialist staffing gross profit at £167.0m was 3.6% down on the prior year, impacted by challenges in the UK retail market, the NHS and UK education sector. However, there were good performances from technology in the UK and US (Lorien and s.com), engineering in the UK (Carbon60), legal in the UK (Chadwick Nott), office and blue collar in the UK (Blue Arrow and Tate).
Lord Ashcroft KCMG PC, chairman, commented, “In 2018, Impellam Group made good strategic progress amidst the backdrop of challenging conditions in the UK healthcare, education and retail markets.
“We have continued to invest selectively in line with our strategy, whilst maintaining control on costs and cash. Our focus on international expansion to reduce reliance on the UK and to increase scale continues, whilst we continue to strengthen our managed services proposition globally.
“Our managed services businesses delivered strong growth, particularly in Australia. The merger of our UK and US managed services businesses has further broadened our capabilities and service offering. We have also seen expansion of our specialist staffing businesses in Europe, with new locations opened in Germany and Switzerland.
“We have also continued to invest in our people and technology to ensure that Impellam Group is equipped to adapt to the changing world of work.
“During 2018, there were some changes to the Impellam Board. Derek O'Neill, Non-executive Director, stepped down from the board in May to pursue other opportunities and Alison Wilford, Group CFO, stepped down in October. Brian Porritt was appointed as Interim Group CFO, a non-board role, until a permanent replacement is recruited. The Board wishes to thank Alison and Derek for their contribution to the company.
“Finally, I would like to thank our shareholders for their continued support and our people for their hard work and contribution throughout the year. We enter 2019 with a clear plan and look forward to reporting our progress in the coming year.”
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