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UK – Impellam full year revenue rises, but profits hit by investments and costs

14 March 2019

UK staffing firm Impellam Group plc (IPEL:LSE) reported revenue for the full year ending 31 December 2018 of £2.27 billion, an increase of 5.7% compared to the previous year, on a like-for-like basis.

Revenue growth was driven by growth in the group’s Managed Services segment. Gross profit was impacted by challenging market conditions in the UK Healthcare, Education and Retail markets. The company also stated that it improved the competitiveness of its international businesses.

Adjusted EBITDA saw a decline of 14.4% in constant currency. The group also reported profit before tax of £16.1 million (2017: £37.9 million).

With regards to the reduction in profit, Impellam cited costs related to investments including IT investments in Ignite, its recruiters’ operating system; and ShiftWise, a technology solutions platform. Furthermore, Impellam also said its profits were hit by the increased cost of doing business compliantly (GDPR, Cyber and increase in employment related on-costs).

In a trading update in September 2018, Impellam had issued a profit warning, citing a subdued trading performance in Healthcare and in the UK Retail sector as well as exchange rate movements.

The group also reported profit before tax of £16.1 million (2017: £37.9 million).

(£ millions) FY 2018 FY 2017 Change Like-for-Like
Revenue 2,276.7 2,171.3 4.9% 5.7%
Gross Profit 282.3 285.5 -1.1% 0.1%
Adjusted EBITDA 50.2 59.5 -15.6% -14.4%
Operating Profit 22.9 44.7 -48.8% N/A
Profit Before Tax 16.1 37.9 -57.5%  

In October 2018, Impellam Group announced the merger of its US and UK talent acquisition and managed solutions businesses — rebranding them as Guidant Global.

Earlier this year, the company also announced that it plans to demerge subsidiary Carlisle Support Services Group Ltd, in order to focus on its managed services and specialist staffing portfolio.

Revenue by Segment

(£ millions) FY 2018 FY 2017 Change
Managed Services - UK, Europe and Australasia 1,154.6 1,019.4 13.3%
Specialist Staffing - UK, Europe and Australasia 800.0 811.9 -1.5%
Managed Services - North America 183.7 187.2 -0.8%
Specialist Staffing - North America 198.3 213.8 -1.8%
Inter-segment revenues -59.9 -61.0 N/A

“In 2018, Impellam Group made good strategic progress amidst the backdrop of challenging conditions in the UK Healthcare, Education and Retail markets,” Impellam Chairman Lord Ashcroft said.

“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,” Ashcroft said.

Julia Robertson, Group Chief Executive Officer, also commented, “Looking forward, we anticipate continued market and technological disruption and downward pricing pressure, as well as ongoing uncertainty from Brexit.”

“Notwithstanding this, we anticipate an increasing return from our strategic investments in 2019, and this, coupled with a rigorous portfolio, operating model and cost base review means that we expect to see a return to higher levels of conversion of gross profit to EBITDA and profit before tax,” Robertson said.

As of last trade Impellam Group traded at £464.60, down heavily by 15.14% on the day and 8.05% above its 52-week low of £430.00, set on 28 June 2018. Based on its current share price the company has a market value of £270.22 million.

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