IPEL.L Regulatory News (IPEL)

20 February 2019

Impellam Group plc

("Impellam" or the "Company")

Demerger of Carlisle Support Services Group Limited

The Company announces a de-merger of its wholly owned subsidiary, Carlisle Support Services Group Limited ("Carlisle") from the Impellam group (the "Demerger" or "Transaction") as the next step in driving margin and EBITDA growth by focusing on its collaborative Managed Services and Specialist Staffing portfolio. The Demerger will result in qualifying shareholders being issued with an equivalent number of ordinary shares in Carlisle.

The board of the Company (the "Board") has determined that qualifying shareholders are those shareholders on the Company's register of members at 5.00 p.m. on Friday 1st March 2019 (London time) ("Record Date") and to whom the distribution or communicating details of the Share Dividend (as defined below) (including onward distribution to beneficial owners (if any)) would not be in breach of law or regulation (or otherwise not practicable for the directors of the Company to so conclude, also by reference to known beneficial owners) ("Eligible Shareholders").

The Transaction is to be effected through a dividend in specie by the Company in accordance with its Articles of Association to Eligible Shareholders (the "Share Dividend") by the issue of new ordinary shares of £0.034 pence each (to 3 decimal places3) in the share capital of Carlisle (each, a "Carlisle Share") on the basis of one new Carlisle Share for each Impellam Share owned by an Eligible Shareholder on the Record Date.

Information on Carlisle

Overview

Carlisle focuses on the provision of cleaning, security, events, retail facilities and support services across the UK employing over 3,000 people. Carlisle's vision is to be the preferred expert and the most trusted provider of people services for the customers it serves by delivering innovative, tailored solutions 24 hours a day, 7 days a week. For more information visit www.carlislesupportservices.com.

Financial information

For Impellam's financial year ended 29 December 2017, Carlisle generated revenues of £44.8 million and profit before tax of £0.3 million5. As at 29 June 2018, Carlisle had gross assets of £16.9 million.

Reasons for the Demerger / Strategic rationale

The Board believes that the Carlisle business is a non-core division of the Impellam group representing less than 3 per cent. of the group's revenue for the financial year ended 29 December 2017. The Board believes that the Demerger will enable Carlisle to better focus on its growth strategy as an independent entity, which seeks to increase shareholder value.

As an independent business, it is expected that Carlisle will have more flexibility to pursue activities intended to build scale and take market share, which may include the acquisition of similar complementary businesses. The business will also benefit from a dedicated Board and anticipated operational efficiencies.

The Board believes that Impellam will benefit from being more focused on its core proposition of offering trusted high value managed services and specialist staffing where collaboration is key to driving Group Supply4 and cross selling. This, in turn, will reduce selling, recruitment and operational costs and improve conversions of gross margin to EBITDA.

The Board is actively considering other opportunities in support of its intention to accelerate the delivery of its vision and strategy and to enhance shareholder value.

Board of Directors

The board of directors of Carlisle will be as follows:

Peter Gaze - Non-Executive Chairman

Peter Gaze is a Fellow of the Institute of Chartered Accountants in England and Wales having trained with PricewaterhouseCoopers in London.

During its expansion in the UK and US, Mr. Gaze was a senior financial executive at ADT Group Limited until 1997 at which time it was acquired by Tyco International.

Angela Entwistle - Non-Executive Director

Angela Entwistle is a Corporate Communications Specialist working with companies in the private sector including Deacon Street Partners Limited and Conservative Home Limited. She was appointed a Non-Executive Director of Impellam in September 2012, and is also a Non-Executive Director of Dods Group, a leading business intelligence, data, events, media and training company.

Philip Osborne - Non-Executive Director

Philip Osborne is a solicitor and a member of the Law Society of England and Wales.

Mr. Osborne previously worked as a legal adviser to the London Stock Exchange and The Securities Association in the United Kingdom and for Clifford Chance and S. J. Berwin & Co.

Paul Evans - Chief Executive Officer

Paul Evans has an extensive background over more than 18 years in the facilities and outsourcing sectors, having worked in various senior roles for some of the largest facilities management companies in the UK. Prior to taking up his current role with Carlisle in 2015, he worked within the Impellam Group as Commercial Director for their Blue Arrow recruitment brand for three years.

Over the last three years he has overseen a successful turnaround of the Carlisle business, which has not only seen significant increases in revenues and EBITDA but also ensured the business has firm and stable footings to allow for sustainable and continued growth over the coming years, both organically and potentially through acquisition.

Michael Shirt - Finance Director

Michael Shirt was appointed as Finance Director of Carlisle in 2015 and has overseen the Finance, HR and support functions of the business during a period of rapid organic growth.

He has over 25 years' experience as an accountant prior to joining Carlisle and started his career in private practice before progressing to roles with ACI Worldwide (banking software) and GE's Healthcare division.

Additional information on Carlisle

Carlisle is a private company limited by share capital incorporated in England and Wales and domiciled and tax resident in the United Kingdom. The Company was incorporated on 13 December 2011 and its company number is 07880629. Its registered address is 800 The Boulevard, Capability Green, Luton, Bedfordshire LU1 3BA. The directors of Carlisle are Julia Robertson and Rebecca Watson, Portfolio CEO, General Counsel and Company Secretary of Impellam.

Following the Demerger, Carlisle will have an issued share capital of £1,671,000 sub-divided into 49,400,015 ordinary shares of £0.034 each (rounded to three decimal places3).

Ongoing communication with shareholders in Carlisle

The board of Carlisle will provide twice yearly updates to its shareholders and these will be made available to view on its website (www.carlislesupportservices.com)

Expected timetable of principal events

Tax

The following comments are based on current United Kingdom tax law and published HMRC practice, both of which are subject to change, possibly with retrospective effect. They are intended as a general and non-exhaustive guide to the tax treatment of the Demerger, and apply only to certain categories of Eligible Shareholder (in particular to those who are resident - and in the case of individuals domiciled - in the United Kingdom, and who hold their shares beneficially as investments), and may not apply to other categories of Eligible Shareholder (such as those to whom "split year" treatment applies, or those who have acquired their Eligible Shares by reason of their employment or as part of a trade). The comments set out below do not constitute legal or tax advice. Eligible Shareholders who are in any doubt as to their tax position, or who are resident or otherwise subject to taxation in a jurisdiction outside the United Kingdom, should consult their own professional advisers.

Impellam has received HMRC clearance under section 1091 of the Corporation Tax Act 2010 confirming that the distribution effecting the Demerger is an exempt distribution for UK tax purposes.

Accordingly Eligible Shareholders who are tax resident in the United Kingdom should not incur any liability to tax on income, neither should they be treated as making a disposal or part disposal of their Impellam Shares for the purposes of taxation of chargeable gains, by virtue of their receipt of Carlisle Shares. For the purposes of taxation of chargeable gains, the Carlisle Shares should be treated as the same asset as the Impellam Shares already held by Eligible Shareholders and as having been acquired at the same time as those Impellam Shares were acquired. The aggregate base cost of an Eligible Shareholder's Impellam Shares prior to the Demerger should be apportioned between their Impellam shares and their Carlisle Shares by reference to their market values immediately following the Demerger. As the Carlisle Shares will not be listed, Eligible Shareholders who need to apportion their base cost as a result of a future disposal of their Impellam or Carlisle Shares may need to seek professional advice as to valuation and agree this apportionment with HMRC.

Impellam will not be required to withhold or deduct amounts for or on account of United Kingdom income tax from the distribution of the Carlisle Shares to Eligible Shareholders (wherever resident).

No United Kingdom stamp duty or stamp duty reserve tax should be payable by Eligible Shareholders (wherever resident) in respect of the distribution to them of the Carlisle Shares pursuant to the Demerger.

Other information

Shareholders should note that the Transaction is not conditional on the approval of Impellam Shareholders.

J P Jenkins, a trading division of Peterhouse Corporate Finance Limited, provides companies which are unlisted and unquoted with a facility enabling existing and prospective shareholders to deal in their shares. The Company has been informed that the Carlisle Directors intend, following Completion of the Share Dividend, to make arrangements with J P Jenkins for Carlisle Shares to be eligible to trade via the J P Jenkins share matching facility for companies. This facility provides a cost effective mechanism to buy or sell shares.

Eligible Shareholders should be aware that liquidity of Carlisle Shares trading via J P Jenkins is likely to be less than if such shares were listed on a trading platform and, as such, it might take a considerably longer time for proposed share transactions to be executed Carlisle Shares will be eligible for settlement in CREST. Carlisle's ISIN is GB00BJK9WS17 and its LEI (Legal Entity Identifier) is 213800DMLPTRSMW91272.

Enquiries:

Impellam Group plc

Julia Robertson, Chief Executive Officer 01582 692658

Cenkos Securities plc (Nominated adviser and broker)

Nicholas Wells / Mark Connelly / Callum Davidson 020 7397 8900

Note to Editors:

Impellam is the second largest1 staffing business in the UK and sixth largest2 Managed Services provider worldwide. Our vision is to be the world's most trusted staffing company - trusted by our people, our customers and our investors in equal measure.

We provide Managed Services and Specialist Staffing solutions across the UK, Europe, US, the Middle East and Australasia. We have over 3,200 Impellam people throughout our network of 17 market-leading brands across 167 worldwide locations.

Ultimately, Impellam Group's mission is to provide fulfilment and a sense of purpose to our people and to help customers build better businesses in a changing world.

For more information about Impellam Group please visit: www.impellam.com 

1 By revenue (2017 published numbers)

2 By SUM (confirmed by Staffing Industry Analysts). Spend Under Management (SUM) is the total amount of client expenditure which our Managed Service brands manage on behalf of their clients whether acting as a principal or agent. Management use this measure as it reflects the total value of the client spend to the Group and not just the revenue generated.

3 The nominal value of each share in Carlisle is £0.0338259006601516

4 Group Supply is the value of the Spend Under Management supplied by other areas of the Group. Spend Under Management (SUM) is the total amount of client expenditure, excluding VAT, which our managed services brands (across all geographies) have been able to fill whether acting as a principal or an agent. This is calculated either through the total amount invoiced to the client excluding VAT or, where we operate a direct engagement model, the value of the salaries and related costs of temporary staff we introduce to and administer for the client, plus our fee for this service.

 5 The profit before tax in relation to Carlisle that was consolidated into the Impellam Annual Report for year ended 29 December 2017 was £0.1m. An adjustment was made post the approval of the Annual Report such that the profit before tax in the Carlisle statutory accounts was £0.3m.