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UK – Impellam Group reports growth and acquisition ambitions

30 July 2014

UK recruitment firm Impellam Group (IPEL: LSE) reported revenue for the 26 weeks ending 27 June 2014 of £612.3 million, an increase of +3.5% compared with £591.7 million last year. The company achieved gross profit of £91 million, an increase of +8.6% from £83.8 million last year.

Impellam Group achieved operating profit of £14.8 million for the period, a year-on-year increase of +25.4% from £11.8 million a year ago.

Julia Robertson, Chief Executive Officer of Impellam Group, commented: “During the period, I am pleased to report that significant steps have been taken against the Group’s strategic objectives… thus for the first time, we are also reporting financial performance in our core staffing businesses [broken down into our] Specialist Staffing and Managed Services [divisions].”

“I am also happy to report that we have completed the rebranding of our UK Managed Services business, formerly Carlisle Managed Solutions, as Guidant Group. The Group now has a truly global Managed Services operation across the United Kingdom, North America, and Australia and is able to extend services across multiple geographies. The acquisition of Career Teachers in March 2014 was the first step in strengthening and refining our portfolio of Specialist Staffing businesses into market leading positions and I am pleased to report that the business is delivering in line with the Board’s expectations,” she added.

The company’s Managed Services business reported revenue growth of +11.4% to £309.1 million, up from £277.4 million a year ago. Operating profit for the period increased by +16.9% to £15.2 million, compared with £13 million last year. During the period, Impellam rebranded their core UK operations as Guidant Group and brought their UK and US operations under common management.

Medacs Healthcare Group, the company’s temporary and permanent healthcare staffing division, reported a fall in revenue of -2.5% to £85.5 million, down from £87.7 million last year. Operating profit for the division increased by +57.1% to £3.3 million, up from £2.1 million a year ago. The business is experiencing improving market conditions with increasing volumes, although demand in specific clinical areas continues to be challenging. 

Revenue from the company’s Specialist Staffing segment increased by +0.8% to £298.1 million, compared with £295.6 million in 2013. Operating profit for the period was £18.6 million, a year-on-year increase of +2.8% from £18.1 million last year.

Following the acquisition of Career Teachers in March, Impellam’s Specialist Staffing segment announced that it will continue to look for further acquisitions.

Revenue from Impellam United Kingdom increased by +10.5% organically to £411 million during the period, up from £372.1 million last year. Operating profit for the region was £14.2 million, equating to year-on-year growth of +15.4% from £12.3 million last year.

Revenue from Impellam North America fell by -9.7% organically (-2.3% in constant currency)  to £86 million, down from £95.2 million a year ago. Operating profit for the period also reported a decline, falling by -55% to £900,000 from £2 million last year. According to Impellam, the adverse weather conditions in North America at the start of the year negatively impacted the business. 

The company announced in a trading update in February 2014 that it expects to lose up to £9.8 million over the next four years stemming from the company’s non-core business, Carlisle Support Services.

In December 2013, the company reported that Carlisle had two long-term contracts, which had proven to be operationally complex, badly priced, and financially onerous. According to the company’s financial statement Impellam have: “Negotiated the exit of [one] the onerous contract[s]. An orderly handover of the services is on-going with an agreed termination date at the end of September this year. As a consequence, the expected future losses have been reduced, which has allowed £1.3 million of excess provision to be released to the income statement.”      

Impellam operates primarily in the UK and the USA, with smaller operations in Australia, Ireland, New Zealand, and mainland Europe. According to research from Staffing Industry Analysts, the firm is ranked among the 20 largest staffing companies in the world.

In trading today, the company’s share price remained unchanged at £4.68, an increase of +31.9% compared with a year ago. Based on its current share price, the company has a market value of £205.3 million.