IPEL.L Regulatory News (IPEL)

4 November 2014

Impellam Group plc

Acquisition of Lorien Limited

Impellam Group plc ("Impellam" or "the Company") is pleased to announce the acquisition of Lorien Limited ("Lorien"), a UK market leader in technology staffing, for an initial consideration of £22.3m in cash ("Cash Consideration") and £7.5m in new ordinary shares in the Company (the "Consideration Shares") at a price of 460p. Impellam will assume Lorien's net debt of £14m and pay an additional deferred consideration of up to £6m in January 2015 and up to £13.9m in January 2016, dependent on the EBITDA performance of Lorien during these two earn-out periods. The Consideration Shares are subject to a 12-month lock-in restriction.

Lorien was founded in 1977 and is the largest independent specialist IT recruitment business in the UK, with offices in London, Leeds, Manchester and Edinburgh. It operates under the Lorien Resourcing and Vertical IT brands, through which it provides outsourced recruitment services (or "managed services") and specialist staffing expertise to more than 400 customers, including some of the UK's largest blue chip financial, technology and pharmaceutical companies. Lorien benefits from a broad base of long-standing customer relationships, with five of its largest customers having been customers for more than 10 years.

The acquisition of Lorien:

· is consistent with Impellam's strategy of expanding its managed services revenues and adding new disciplines in specialist staffing;

· provides access to the attractive growth dynamics of the IT staffing market;

· enables Impellam to service the IT staffing spend it manages on behalf of clients, but which it currently outsources to competitors;

· materially increases the scale of Impellam, providing an enlarged customer base that offers additional cross-selling opportunities and making Impellam the 2nd largest staffing company in the UK by turnover;

· is expected to be earnings enhancing in its first full year of ownership.

For the 12 months to 31 January 2015, Lorien is expected to achieve an adjusted EBITDA of £8.7m (2014 audited, adjusted: £6.4m) on net fee income of £24m (2014 audited: £20m) and turnover of £330m (2014 audited: £295m). As of 30 September 2014, Lorien had net assets of £6.7m.

The Cash Consideration is to be satisfied by the Company's existing cash resources, and an equity placing with new and existing shareholders. In addition, the acquisition will be financed by a new five-year loan of £15m with Barclays Bank plc. The Company has also extended its current invoice discounting facility with Barclays from £80m to £120m.

An application has been made for the 1,630,426 Consideration Shares to be admitted to trading on AIM ("Admission") and it is expected that trading in the Consideration Shares will commence at 8.00 a.m. on 10 November 2014.

The deferred consideration payments are structured to deliver a maximum payment of £6m in January 2015 for an EBITDA of at least £9.75m and a maximum payment of £13.9m in January 2016 for an EBITDA of at least £12.8m. The payments are to be satisfied through a mixture of cash and shares, with up to 50% payable in Impellam shares at the option of the Company.

The Company also announces that Derek O'Neill, a major shareholder and director of Lorien, has been appointed to the Impellam Board as a Non-Executive Director, with effect from 10 November 2014. Derek, 51, has been a director of Lorien since 2007, having held previous positions as Finance Director of Business Direct plc and Deltron Electronics plc.

The Company reports that trading since the announcement of Half Year results on 30 July 2014 has been in line with expectations. As usual, the Company will provide an update on second half trading prior to the conclusion of its financial year.

Julia Robertson, Chief Executive Officer of Impellam Group plc, commented:

"The acquisition of Lorien is a significant step for Impellam and makes us the second largest staffing company in the UK. It has long been our ambition to develop a substantial presence in IT staffing and I am delighted that Lorien, as a market leader in UK technology staffing, is now part of the Group. There are strong synergies between our businesses and an excellent cultural fit. Following our acquisition of Career Teachers in March, the addition of Lorien further broadens the scale and scope of the Group's activities, increases our base of recurring revenues in an attractive high growth market and balances our portfolio. I am pleased to welcome Derek O'Neill to the Impellam Board and I look forward to working with James Kelly, Lorien's Chief Executive, and all his management team to take the business to its next stage of growth and development."

For further information please contact:

Further information on Derek O'Neill:

Derek O'Neill, 51, is currently or has previously been a director of the following companies or partnerships in the last 5 years:

Lorien Limited

Lorien Engineering Limited*

Lorien Consulting Limited

Signature Quality Refurbished Homes

*indicates no longer a director

Mr. O'Neill was a Director of New World Payphones Limited when it was placed into Administration in 2002.

Mr. O'Neill currently owns 5,764 ordinary shares in the Company. On Admission, Mr O'Neill and his wife will receive an aggregate of 591,357 Consideration Shares and Mr. O'Neill's resultant beneficial interest, including his wife's interest, will therefore be 597,121 ordinary shares of 1p each in the Company.

Derek O'Neill will enter into a letter of appointment with Impellam and will be paid an annual fee of £50,000 with a 1 month notice period.

Note to Editors:

Impellam Group plc, traded on the AIM, (Symbol: IPEL) is a leading provider of managed services and specialist staffing expertise and is primarily based in the UK and North America, with smaller operations in Australasia, Ireland and mainland Europe. Impellam Group plc provides fulfilling jobs at all levels, including doctors, lawyers, accountants, nurses, teachers, scientists, receptionists, drivers, chefs, administrators, engineers, cleaners, security guards, and manufacturing and warehouse operatives. Impellam Group plc has 15 market leading brands and employs around 6,000 staff, including approximately 2,600 managers and consultants across 230 offices.