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UK – New acquisitions drive strong growth at Impellam

30 July 2015

UK recruitment firm Impellam Group (IPEL: LSE) reported revenue for the 26 weeks ending 3 July 2015 of £831.6 million, an increase of 35.8% on a constant currency basis compared with £612.3 million during the first half of 2014. The results were boosted by the acquisitions of Career Teachers and Lorien during 2014 but the company did not provide an insight into organic revenue growth.

Impellam also announced the acquisition of Global Group, a global healthcare business specialising in locum doctors with operations in Ireland, Australia, New Zealand, Canada and UK which is expected to be earnings enhancing in its first full year of ownership. 

  H1 2015 H1 2014 Change (CC)
Revenue € 831.6 million €612.3 million +35.8%
Gross Profit € 108.8million €91.0 million +14.7%
EBITA €24.5 million €17.4 million +40.8%

Julia Robertson, Chief Executive Officer, commented: "I am pleased to report that we continue to make good progress against the 2015 strategic priorities outlined in our 2014 Annual Report. Our focus on Managed Services and Specialist Staffing as two distinct segments is reaping rewards, enabling us to increase both market share and quality of earnings by focusing on "fulfilling flexibility" whilst improving efficiency in both operations.”

Revenue in the UK Managed Services segment increased by 84.6% to £461.7 million or 7.5% on a like-for-like basis, excluding the impact of acquisitions in 2014. Lorien, since its acquisition in 2014, has grown its Managed Service revenue by 17.2% and EBITDA by 14.3% on a standalone like-for-like basis and helped to increase the group supply of spend under management from 31% to 42%, demonstrating its strategic fit within the Impellam Group.

Revenue in the UK Specialist Staffing segment increased by 8.5% to £283.3m with margins improving to 21.2% from 19.5%.  Operating profit was £12.6 million (2014: £9.8 million) with an improved conversion rate of 21%, up from 19% in FY14.  The UK Specialist Staffing business was complemented by the acquisition of Career Teachers in March last year. Career Teachers grew its standalone revenue by 17.2% and EBITDA by 24.3% on a like-for-like basis. 

Revenue in the US Managed Services segment increased by £3.8m to £44.8 million, although after adjusting for currency movements was broadly flat year on year (reduction of 0.4%).  Gross profit increased by £1.0 million to £8.3 million (2014: £7.3 million) an increase of 13.7% (3.8% after adjusting for currency movements).

US Specialist Staffing revenue decreased by £0.2m to £44.8 million, broadly flat although after adjusting for currency movements this was a decline of 8.9%.  Gross profit decreased by £1.0 million to £8.6 million (2014: £9.6 million), a decrease of 10.4% and 18.1% after adjusting for currency movements. With new leadership in the business since Q4 2014, Impellam are now seeing positive trends in the Specialist Staffing businesses and are confident that, coupled with US restructuring,  will see a significant improvement in results in the second half of 2015.

As expected, revenue from Carlisle Support Services business decreased 44.6% to £17.9 million and gross profit decreased by 36.7% to £1.9 million (2014: £3.0 million). The business reported an operating loss of £0.9 million in the first half (2014: £0.9 million). Impellam are confident that the business will continue to improve although expect that progress made with existing contracts and the conversion of contract wins into profitable long term income streams will take time to achieve.

  H1 2015 H2 2014 Change (CC)
Managed Services - UK €461.7 million €250.1 million +84.6%
Specialist Staffing - UK €283.3 million €261.2 million +8.5%
Managed Services - NA €44.8 million €41.0 million -0.4%
Specialist Staffing - NA €44.8 million €45.0 million -8.9%
Total Staffing Services €813.7 million €580.0 million +40.3%
Carlisle Support services €17.9 million €32.3 million -44.6
Total Revenue €831.6.3 million €612.3 million +35.8%

Impellam Group expect the businesses to continue to perform well in key markets and are confident that a differentiated strategy, with a portfolio of market focused specialist staffing businesses complemented by the high performing managed services businesses, will drive shareholder value through more resilient earnings.

In trading today, the company’s share price rose by 8.3% to £7.90, an increase of 68.2% compared with a year ago. Based on its current share price, the company has a market value of £359.3 million.