IPEL.L Regulatory News (IPEL)

30 March 2023

Impellam Group plc

("Impellam", the "Group" or the "Company")

PRELIMINARY RESULTS FOR THE YEAR ENDED 30 DECEMBER 2022 - UNAUDITED

RECORD RESULTS IN AN EXCEPTIONAL YEAR

(1) Total Group results are presented before the discontinued operations

(2) Operating profit before amortisation of acquired intangible assets and impairment (see note 2)

(3) % change measured at constant exchange rates

(4) Net cash/(debt) pre IFRS 16 is used as the basis for banking covenant calculations

Key operational highlights

Impellam delivered strong financial results in 2022 and our strategic progress has accelerated as a result of the divestment of traditional businesses in our Regional Specialist Staffing and Healthcare portfolios setting Impellam up for sustainable growth.

Full-year performance for the total Group led to record highs in revenue of £2.54bn (2021: £2.26bn) and gross profit of £314.8m (2021: £267.0m). Adjusted operating profit1 was up 41.6% to £41.5m (2021: £29.3m).

Special dividends of £50m were declared in 2022 (110.8 pence per share) with £25m recognised and paid in the year. A further Special dividend of £35m (77.8 pence per share) was declared in March 2023 following the completion of the sale of the Healthcare and Regional Specialist Staffing businesses. Going forward this allows the Group to return to a dividend policy. As previously announced, it is the Company's intention, subject to the Group's trading performance, to re-commence the payment of annual dividends, starting in January 2024 of £25m. This represents a 9% forward yield on closing share price on 28 March 2023.

All onward financial information, unless otherwise stated, is based on the Continuing Operations of the Group.

Group revenue was up 23.9% (21.1%*) on the prior year at £1.96bn (2021: £1.58bn) and gross profit was up 27.3% (19.8%*) to £204.9m (2021: £161.0m). Adjusted operating profit1 was up 38.3% (27.9%*) to £27.8m (2021: £20.1m).

STRATEGIC

· To accelerate progress with our long-term strategy to focus on high-value growth opportunities across our UK & Europe, North America and APAC regions - in January 2023 we entered into an agreement to sell Healthcare (Medacs Global Group in the UK, Ireland and APAC) and Regional Specialist Staffing (Blue Arrow, Chadwick Nott, Career Teachers and Tate in the UK). This transaction completed on 3 March 2023 for cash consideration of £85m on a debt-free, cash, normalised working capital basis. This followed the sale in February 2022 of Corestaff in North America to swipejobs Inc.

· Continuing operations are our digitally-enabled Managed Services (Guidant Global, Comensura and Flexy in the UK & Europe, North America and APAC) and our talent-rich STEM businesses (Lorien, SRG, Carbon60 and Bartech in the UK & Europe and North America).

· We are now a more focused and agile business, well positioned for growth globally across attractive Managed Services and STEM markets.

· Throughout the year, we continued to make key investments in people, technology and customer centricity.

FINANCIAL (CONTINUING OPERATIONS)

· Exceptional performance across the Group delivered 38.3% (27.9%*) increase in adjusted operating profit1.

· Strong revenue and gross profit growth across all regions with APAC delivering a record increase of 31.6% (30.8%*) in gross profit, UK & Europe up 26.2% (25.7%*) and North America up 28.3% (14.6%*).

· Net cash (pre IFRS 16) of £30.2m compared to net debt1 of £(15.0)m in 2021 (includes sale proceeds from Corestaff of £16.3m and final repayments of Covid-19 related support of £9.1m as well as a £25m special dividend paid in December 2022).

1. Explanations of Alternative Performance Measures are at the end of the report

*Calculated by multiplying the prior year functional currency amount by the current year foreign exchange rate

Financial results for the fifty-two weeks to 30 December 2022 - unaudited

The table below sets out the results for the continuing operations of the Group by region for 2022.

1. % change measured at constant exchange rates

2. Before amortisation of acquired intangibles and impairment

Financial results for the fifty-two weeks to 30 December 2022 - unaudited

The table below sets out the results for the continuing operations of the Group by segment for 2022.

1. % change measured at constant exchange rates

2. Elimination of inter-segment sales which are all within the UK & Europe region

Chairman's Statement on the Results

The Group has delivered record results in an exceptional year. Adjusted operating profits1 were up significantly across all segments and in all regions as we responded to talent scarcity and a buoyant labour market. This was achieved against a backdrop of political and economic uncertainty, the war in Ukraine and resulting rising energy costs contributing to a cost-of-living crisis, particularly in the UK. Our agile response to the global skills shortage, the 'great resignation' and post pandemic bounce back in the jobs market resulted in new customer wins and increased levels of customer retention as we collaborated across our brands.

In April 2022, I informed the Board that I wanted to explore opportunities to dispose of my shareholding in the Group and have worked constructively with the Company to ensure the interests of all shareholders were properly considered. The sale of Corestaff in North America in February 2022, followed by the disposal of our Regional Specialist Staffing (RSS) and Healthcare brands in Q1 2023 will enable the Group to focus on the fast-growing Managed Services and Science, Technology and Engineering markets (STEM) where our specialist expertise and track record positions us for high growth in these attractive market sectors. This is a bold step for Impellam, and I know the Executive team have the experience and drive to ensure its success and to use it as a springboard to accelerate the Group's long-term strategy.

There have been no changes to the Board during the year, providing a stable foundation to support the Group during this period of transformation and I thank the Board for their contributions through the year.

I am pleased that we announced two special dividends in 2022, which will return £50m to our shareholders. The Group announced a further special dividend of £35m following the disposal of the RSS and Healthcare brands in early 2023. Going forward this allows the Group to return to a dividend policy.

It's been a fast-paced year and our people have risen to the challenges and opportunities, building close working relationships with their colleagues and customers. I would like to thank each and every one of them for their hard work, commitment, and ability to respond positively to a changing environment.

Lord Ashcroft KCMG PC

Chairman

1. Explanations of Alternative Performance Measures are at the end of the report

CEO Review

OVERVIEW

2022 was a defining year for Impellam. Not only did we deliver strong and consistent operational performance and financial growth but we also responded to our majority shareholder's intent to explore options around his shareholding. We entered into negotiations that were substantially concluded in December 2022 and saw the Group complete the disposal of its Regional Specialist Staffing and Healthcare businesses on 3 March 2023. This followed the sale of Corestaff, our North America Specialist Staffing business, to swipejobs Inc in February 2022.

This bold strategic move enhances the investment case for Impellam's connected and collaborative, digitally-enabled businesses. Our continuing operations are now focused on the key growth markets of multidisciplinary workforce solutions in the UK & Europe, North America and Asia Pacific and the specialist talent verticals of Science, Technology and Engineering.

The year began with optimism and confidence delivering gross profit growth across all our regions when compared to 2021. This growth was achieved despite a backdrop of political and economic upheaval caused by the combined factors of the global pandemic, the war in Ukraine, the impact of Brexit and the fast-emerging cost-of-living crisis, particularly in the UK. Despite these headwinds, the labour market remained tight driven by global skills and talent shortages, the 'great resignation', the early retirement of over 50s, high attrition and a booming post Covid-19 job market creating a positive trading environment for all our businesses.

As a result, our continuing operations delivered gross profit of £204.9m and operating profit growth of 53.3% (60.3%*). Including discontinued operations we generated £67.9m of cash and were able to announce dividends of £50m to shareholders.

IMPACT OF INVESTMENT

We capitalised on the increased demand for our services by continuing to invest in people, technology and customer centricity.

We developed our service offerings to respond quickly and decisively to meet our customers' evolving needs, with our key investments in 2022 underpinning our core principle that Virtuosity is our strategic advantage.

PEOPLE AND VIRTUOSITY

Our customers consistently tell us that they love what we do, but even more importantly they love how we do it. That's Virtuosity. Our people are really close to our customers and that means we take the utmost care of them. We hire, develop and nurture our people to become Virtuosos, so that in turn they support our customers to build better businesses.

During 2022 more than 268 colleagues joined our Group as customer demand increased. We expanded our teams in key growth markets with a 20.3% increase in headcount in our UK and North America STEM businesses and an 8.3% increase in our GMS businesses across the world, supporting exciting new customer wins. Alongside this expansion in headcount, we also increased our productivity with gross profit per FTE rising from £100.2k in 2021 to £112.3k in 2022.

We supported our people's performance and wellbeing, enabling them to work flexibly between our offices, their homes and customer sites. We worked hard to get the balance right between providing collaboration technology and ensuring they received maximum benefit from in-person teamwork. Understanding that managers make the difference to engagement, we also focused on reigniting the beautiful basics of thoughtful people management. We made it a priority that all our people enjoyed quality time with their manager to explore how the things that mattered most to them personally aligned to the goals and ambitions of our business.

We have a diverse and talented global workforce who are connected and who collaborate more than ever before to make sure there is never a reason for a customer to leave Impellam. We are keen to make sure that our people enjoy a fulfilling career with us and as we grow, our goal is to create compelling opportunities across our global business. In 2022, more than 50 colleagues embarked on exciting new careers in a different part of the Group.

At Impellam, we listen to our people. Our Virtuoso Alliance continued to influence our strategy. Across two cohorts, 22 Virtuosos made a significant contribution to our performance and development strategy, our refreshed Impellam brand and proposition, our EVP, our blended working strategy and our response to shifting candidate market dynamics.

Similarly, our people shout loudly about the things that matter to them and I am proud of the great strides we took in 2022 in equity, diversity and inclusion (ED&I). We launched our Unity council globally and we had highly active Business Resource Groups helping us understand and celebrate our differences as we came together for particularly memorable events for International Women's Day, Pride, Mental Fitness Month and Disability Awareness.

As we say goodbye to almost 1,300 colleagues leaving the Group for their new home following the divestment of our Regional Specialist Staffing and Healthcare businesses, I would like to thank all Impellam colleagues for the wonderful part they have played in making our Company special and delivering such impressive operational and financial results in 2022.

CUSTOMER CENTRICITY

Our Virtuoso strategy means that our people are close to their customers and their voice is heard directly by the Executive team. We have a non-hierarchical organisation structure with few layers between our customers and me, ensuring that decisions are always made with customers front of mind.

Our customers have trusted us to find their contingent and permanent talent in a candidate short market. Following the combined effect of the profound disruption in our markets across the world outlined in my introduction, there has been a huge increase in demand across all our vertical market specialisms and within our 271 managed service and RPO customers.

In particular rapid global digitisation led to a buoyant market for those with tech, digital and analytical skills and we also saw increased demand for engineers, scientists and clinicians, as organisations began to invest again, all coming together to create the future through the power of work.

In 2021, we established our Customer Office (CO) with the intention that there should never be a reason for a customer to leave Impellam. The CO celebrated its first anniversary in July 2022 with an impressive 100% account retention and an increase in the lifetime value2 of our CO customers of 5.6%. Our customer focused Centre of Excellence (CoE) brought new capabilities to our clients and important efficiencies to our business. The CoE managed 55 discrete projects to launch, enhance or expand customer relationships. The CoE Analytics team developed new intelligence dashboards for use across the customer portfolio while the Talent Marketing team's highly successful campaigns resulted in up to 2,000 hires per individual customer. Our VMS team collaborated closely with our technology channel partners and was subsequently recognised through our Guidant Global brand as SAP Fieldglass MSP partner of the year. We automated many key business processes, eliminating thousands of hours of manual work annually.

As a Company, we came together in 2022 to secure and share 2,450 new client wins across our regions.

We also expanded our work within existing customers through strong collaboration and service diversification leading to a significant increase in customer spend, alongside deepening those relationships leading to a 9.2% rise in customer retention compared to 2021.

We trained and led our people to price confidently reflecting our premium position in a buoyant market and were delighted that our customers continued to value our people so highly.

We ended the year by launching our refreshed Impellam branding. We are building a consistent and cohesive customer narrative and proposition, confident of our belief in the power of work and our combined and connected ability to deliver market-leading workforce and specialist recruitment solutions in the UK & Europe, APAC and North America.

TECHNOLOGY AND DIGITAL

Our investments in digital technology are focused on our strategic objective to free up our Virtuosos to do their best work whilst enabling collaborative teamwork across our diverse global workforce, wherever they are based. In 2022 we enhanced our overall digital experience, achieving our target to be 65% digital3 by the end of the year.

During the year, we completed the implementation of Bullhorn CRM and RSM in our UK STEM businesses. We now operate on a common platform across the front and back office leading to an enhanced customer and candidate experience, increased collaboration and improved productivity and efficiency. Going forward, we will invest in selected additional digital technology to enhance operational productivity and increase the profit-per-consultant.

In our Managed Services businesses, our investment in digitising service delivery has been a key contributor to increasing our productivity. Our investment in an Integration Platform as a Service (IPaaS) has enabled us to bring together the core functionality and benefits of multiple applications, both proprietary and third party, improving customer and user experience while removing manual data entry and workflows.

In addition, the deployment of Robotic Process Automation (RPA) tools has enabled the automation of a significant number of repetitive tasks allowing our Virtuosos to focus on higher value activities while increasing our access to large volumes of meaningful data. Using sophisticated reporting tools, we can now benchmark our recruiters against market data showing clear evidence that our productivity metrics are ahead of the programmes run by our competitors and in-house teams.

We also made significant investments in technology platforms to drive customer and candidate relationship management and applicant tracking. Our priority is to drive initiatives that free up time for our Virtuosos so they can focus on building trust and delivering on their promises to clients and candidates.

We continued to invest in customer-facing digital solutions and during 2022 we launched our first fully integrated platform solution, leveraging our proprietary technologies EVO and Flexy as well as our newly launched payroll app. We are proud of this solution and intend to introduce it to more of our managed service customers in 2023, and to support new services such as Direct Sourcing.

The divestment of our RSS and Healthcare businesses means that we will now move away from legacy systems and will operate entirely in the Cloud using either software-as-a-service applications, or Microsoft Azure facilities. This transaction removes complexity from the overall Group technology estate by removing multiple overlapping legacy applications; simplifying physical infrastructure and reducing manpower costs to support diverse systems.

OUTLOOK

Our strategic realignment following the disposal of our RSS and Healthcare businesses in March 2023 enables us to focus our investments and the efforts of our Virtuosos on high growth and attractive markets where we have greater visibility of future revenue with improved conversion of gross profit to adjusted operating profit1.

The disposal also enables us to streamline operations whilst increasing collaboration and removes significant complexity from our technology, property estate and our back-office processes.

Trading in 2023 began above our expectations, albeit we have noted some hesitancy during Q1 on permanent hiring, particularly amongst professional and financial services clients. Pipelines remain strong but we will continue to remain vigilant, given the political and economic headwinds of inflationary pressure and interest rate rises, continuing events in Ukraine and ongoing talent shortages across all our regions.

We are confident that the strategic moves we have made will continue to enhance the investment case for Impellam and will return significant value to shareholders.

Julia Robertson

Group Chief Executive Officer

1. Explanations of Alternative Performance Measures are at the end of the report

2. Life Time Value (LTV) is defined as average margin per client x average length of contract.

3. Digital - Data and Digital Technology, supported by monetisable data, automated process, cloud-based systems and flexible, mobile channels.

*Calculated by multiplying the prior year functional currency amount by the current year foreign exchange rate

Group Chief Financial Officer's Review

INTRODUCTION

Revenue from continuing operations for the year was up 23.9% (21.1%*) and gross profit increased by 27.3% (19.8%*), reflecting the buoyant labour market across our regions and high demand for temporary and permanent staff.

To support this growth, we invested in customer-facing staff adding 268 to our headcount during the year. Our staff productivity (gross profit divided by FTE heads) was higher than in previous years and this, together with tightly controlled costs meant that adjusted operating profit1 from continuing operations increased by 38.3% to £27.8m (2021: £20.1m). Operating profit after the amortisation of acquired intangibles was £21.0m (2021: £13.7m).

The difference between adjusted operating profit1 and operating profit is reconciled in note 2 and relates to the amortisation of acquired intangibles.

DISCONTINUED OPERATIONS

We completed the sale of Corestaff in the US to swipejobs Inc. in February 2022 and in January 2023 we announced the sale of our UK Regional Specialist Staffing businesses (Blue Arrow, Tate, Chadwick Nott and Career Teachers) and the UK, Ireland and APAC Healthcare business (MGG) to Twenty20 Capital for a cash consideration of £85.0m on a debt-free, cash-free normalised working capital basis. This sale completed on 3 March 2023. All financials, unless otherwise stated, are based on the continuing operations of the Group.

GOVERNMENT SUPPORT

Following support received in 2020 for Covid-19 the Group repaid £3.3m of deferred VAT payments and US$8m (£5.8m) of federal tax deferred under the CARES initiative. There are no further payments due under these schemes.

FOREIGN EXCHANGE

Currency movements against Sterling positively impacted our reported performance, largely due to the strengthening of US Dollar against Sterling. Over the course of the year to December 2022, the total impact of exchange movements on gross profit and adjusted operating profit1 were £8.2m favourable and £1.1m favourable, respectively. Fluctuations in the rates of the Group's key operating currencies versus Sterling continue to represent a sensitivity for the reported performance of our business. By way of illustration, each 1 cent movement in annual exchange rates of the US Dollar impacts gross profit by £0.6m per annum and adjusted operating profit1 by £0.1m per annum. The exchange rate between the US Dollar and Sterling over the year ended 30 December 2022 averaged US$1.2372 (2021: US$1.3757) and closed at US$1.2077 (2021: US$ 1.3536). As the Group expands further in overseas territories the impact of changes in exchange rates will increase.

CAPITAL INVESTMENT

Capital expenditure on tangible and intangible fixed assets in the period was £11.3m (2021: £5.8m), as we continued our investment in our core systems to further digitalise the business with roll outs of new front office systems, new bill and pay systems and new finance systems. The deployment will continue in 2023, though revisions will take into account the disposed businesses and associated separation plans. As well as some general IT equipment refreshes, we also continued investment in our proprietary vendor management systems (VMS) and the development of our digital platform, Flexy. The net repayment of finance leases amounted to £5.5m (2021: £7.2m).

INTEREST AND DEBT

Net cash generated from operations (including discontinued operations) during the period was £67.9m (2021: £10.2m). During the year final deferred tax payments of £9.1m (2021: £38.9m) were made. Excluding the impact of these tax deferrals, cash generated from operations was £77.0m (2021: £49.1m). Excluding deferred taxes, the conversion of adjusted operating profit1 to net cash generated is 244.2% (2021: 167.6%). Cash generation from operations was enhanced by an improvement in Days Sales Outstanding (DSO) which stood at 34.8 days (2021: 35.4 days) at the end of 2022.

In addition to the strong operating cash flows, £16.3m of cash proceeds (net of cash disposed) were received following the disposal of Corestaff in February 2022.

Finance expenses for the Group, including discontinued operations, were higher than the prior year at £5.2m (2021: £4.3m). Lease interest was lower at £0.4m (2021: £0.6m) and interest cost on financing facilities increased to £4.6m (2021: £3.4m) as a result of interest rates rises. At the balance sheet date net cash1, excluding the adjustments for IFRS 16, was £30.2m compared to £(15.0)m net debt in 2021, an increase of £45.2m.

The net cash flow from operations was primarily utilised as follows:

• Special dividend £25m

• Investment in fixed assets and software development: £11.3m

• Net lease repayment: £5.5m

• Share buybacks: £1.2m

• Net interest paid on borrowings and leases: £4.9m.

The Group's operations are financed by retained earnings and bank borrowings. The Group manages working capital requirements through a £182.5m global revolving credit facility (RCF) approved in December 2021. This £182.5m RCF has an accordion element of an additional £40m which is available for three years with options to extend for a further two years. Rates of interest for the RCF are based on SOFRA/SONIA plus a margin calculated on the net debt1 to adjusted EBITDA1 leverage. The RCF also includes a letter of credit facility which amounted to £2.7m (2021: £3.0m) at the end of 2022.

The Group takes advantage of a number of nonrecourse supplier finance arrangements organised by clients of the Group to allow for the acceleration of payment of the Group's receivables. At the end of 2022, we did not utilise these arrangements (2021: £8.2m).

These agreements accrue interest at between 0.65% and 1.75% over SONIA applied to the number of days the drawdown takes place before the due date. During 2022, the Group paid less than £0.1m in other interest (2021: less than £0.1m).

Following the completion of the sale of the RSS and Healthcare businesses in March 2023 the RCF was reduced to £132.5m and the accordion reduced to £30m.

A significant priority for the Group remains the focus on the conversion of operating profit into sustained positive cash flow by controlling working capital. The Group measures three covenants as required by the facility - interest cover, adjusted leverage ratio (defined as net debt1 less loan notes and restricted cash to adjusted EBITDA1) and debtor cover. All covenants were met during the year. Borrowing levels are controlled by the Group Finance department, which manages treasury risk in accordance with policies set by the Board.

The Group's financial liabilities are denominated primarily in Sterling. Exposure to currency risk at a transactional level is generally minimal, with most transactions being carried out in local currency.

TAXATION

The tax charge (including discontinued operations) in the period of £12.5m (2021: £7.1m) represents an effective tax rate of 44.8% (2021: 45.8%) and arises on the Group's activities in the UK and overseas. The higher effective tax rate is driven by adjustments in respect of previous periods, primarily arising from transfer pricing adjustments and a legacy US deferred tax disclosure position. Excluding adjustments in respect of previous periods, the effective tax rate is 23.8%.

The Group's contribution to the UK Treasury in the period amounted to £347.4m (2021: £331.9m) and consisted of VAT, income tax, national insurance and corporation tax. Of this amount, employer's national insurance, apprenticeship levy, irrecoverable VAT and corporation tax totalling £46.9m (2021: £37.7m) was a cost to the business.

EARNINGS PER SHARE

Continuing basic earnings per share increased to 18.6p (2021: 7.3p) as underlying profit after tax from continuing operations increased by £5.1m. Total group (including discontinued operations) basic earnings per share increased to 37.2p (2021: 18.3p) with underlying profit after tax increasing by £8.5m.

The weighted average number of shares in 2022 was 45.1m, 0.4m lower than 2021 due to the ongoing share buyback programme. Continuing adjusted earnings per share increased to 30.3p (2021: 18.2p) and reflects the underlying performance of the business, excluding impairment and amortisation of acquired intangibles and their respective taxation impact.

CAPITAL MANAGEMENT

The Group's capital base is primarily used to finance its working capital requirement, the key component of which is trade receivables. Trade receivables in the staffing and support services sectors are managed according to a range of DSO targets. Terms of trade are monitored, and the extended payment terms require senior finance approval. In some of the Group's Managed Services businesses, the amounts payable to third party suppliers are not due until shortly after the receipt of the client receivable. As noted above, the Group has committed facilities that ensure there is sufficient liquidity to meet ongoing business requirements. The primary objectives of the Group's capital management are to ensure that it maintains a good credit rating in order to support its business, maximise shareholder value and to safeguard the Group's ability to continue as a going concern.

GOING CONCERN

After making appropriate enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. In coming to their conclusion, the Directors have considered the Group's profit and cash flow plans for the coming period. The amount of borrowing required to fund the Group's activities is determined based on these projections, together with expected returns to shareholders and planned capital expenditure. This is then compared to the bank lending facilities currently committed and expected to be available to the Group.

Following the sale of the RSS and Healthcare business in 2023 the continuing requirements of the Group has been assessed in line with revised profit and cash flow plans and bank lending facilities.

Also considered is the projection of compliance with the financial covenants implied by these plans. In addition, these figures are tested for sensitivity to possible changes to the economic environments in which the Group operates. The Group has no operations in Ukraine or surrounding regions and therefore there is no direct impact on the Group's trading. However, any indirect impact, such as a worsening in economic conditions, would represent such a sensitivity.

The impact on Group liquidity and covenants of each of these sensitivities is then evaluated together with the likelihood of each of these occurring either individually or in combination.

On a regular basis, and at least quarterly, the Board reviews updated projections of future borrowing requirements, facility usage and resulting headroom, together with projected covenant compliance; these are based upon the latest actual results and borrowing position supplemented by regularly updated profit forecasts. Based on the above, the Directors consider it appropriate to continue to adopt the going concern basis in preparing the financial statements.

DIVIDENDS AND SHARE BUYBACK

Approval was gained at the 2021 AGM to commence an updated programme authorising the Board to purchase up to a maximum of 4,560,363 shares, representing 10% of the issued Ordinary Share capital of the company (as at 17 May 2021) until the earliest of the 2022 AGM or 30 June 2022. Under this programme a total of 188,255 shares were purchased at a value £0.8m in 2022.

An updated programme was approved at the 2022 AGM authorising the purchase of a maximum of £0.5m of Ordinary Shares (by market value) per calendar month until the 2023 AGM. Under this programme a total of 65,360 shares were purchased at a value £0.4m in 2022. A further 92,270 shares have been purchased in 2023 at a value of £0.6m.

On the 8 November 2022 the Board announced a special dividend of 55.4p per share, amounting to £25m, which was paid on 9 December 2022. On 22 December 2022 the Board announced a second special dividend of 55.4p per share, amounting to £25m, which was paid on the 27 January 2023.

On 3 March 2023 the Board announced a further special dividend in connection with the sale of the RSS and Healthcare businesses of 77.8p per share, amounting to £35m to be paid on the 6 April 2023.

See note 11 Post Balance Sheet Events - Important Information.

INSURANCE

The Group maintains a comprehensive insurance programme with several reputable third-party underwriters. Insurance is brokered at a Group level. The Group's insurance policies are reviewed and updated annually to ensure that there is adequate cover for insurable risks and that the terms of those policies are optimised.

OUTLOOK

We experienced positive trading conditions in 2022 supported by the investments made in revenue generating headcount in 2021 and through 2022 whilst maintaining our focus on cost management. Operational cash flow was strong with further improvements in DSO which enabled an underlying reduction in borrowings and facility levels. This positive cash flow also facilitated returns to shareholders with special dividends totalling £50m paid or proposed during the year. The strategic disposal of the RSS and Healthcare businesses in March 2022 and the cash received, net of a further distribution of shareholders of £35m, will further bolster this position.

Tim Briant

Group Chief Financial Officer

1. Explanations of Alternative Performance Measures are at the end of the report

*Calculated by multiplying the prior year functional currency amount by the current year foreign exchange rate

2.

Consolidated income statement

For the fifty-two weeks to 30 December 2022

Consolidated statement of comprehensive income

For the fifty-two weeks to 30 December 2022

Consolidated balance sheet

As at 30 December 2022

Consolidated statement of changes in equity

For the fifty-two weeks to 30 December 2022

Consolidated cash flow statement

For the fifty-two weeks to 30 December 2022

Notes to the interim financial statements

1 Basis of preparation

I. Non-statutory information

The financial information for the 52 weeks to 30 December 2022 does not constitute the statutory accounts of the Group for the relevant period within the meaning of section 435 of the Companies Act 2006.

The annual report and accounts for the 52 week period ended 31 December 2021 has been audited and delivered to the Registrar of Companies. The audit report was unqualified and did not contain any statement under section 498 of the Companies Act 2006. The annual report and accounts for the 52 week period ended 30 December 2022 has not been audited.

The consolidated financial statements have been prepared on a going concern basis in accordance with UK adopted international accounting standards. In coming to their conclusion the Directors have considered the Group's profit and cash flow plans for the coming period, together with outline projections for 2024 and 2025. At the end of the year the Group had a net cash position of £31.0m (excluding IFRS 16 lease liabilities) and has a further £105.0m available to drawdown on the Group's revolving credit facility. Following the sale of the Regional Specialist Staffing and Healthcare businesses in March 2023 the Group's revolving credit facility was reduced by £50m to £132.5m in line with the revised projections of the Group's activities. The amount of borrowing required to fund the Group's activities is determined based on these projections, together with expected returns to shareholders and planned capital expenditure. Also considered is the projection of compliance with the financial covenants implied by these plans. In addition, these figures are tested for sensitivity to possible changes to the economic environments in which the Group operates. The Group has no operations in Ukraine or surrounding regions and therefore there is no direct impact on the Group's trading, however, any indirect impact such as a worsening in economic conditions, would represent such a sensitivity. The impact on Group liquidity and covenants of each of these sensitivities is then considered together with the likelihood of each of these occurring either individually or in combination. Given this analysis, the Directors have determined that there are no likely downside scenarios which would cause the Group a concern.

II. Accounting policies

The accounting policies used in this report are those which applied at 30 December 2022.

No new and/or revised IFRS and IFRIC publications that come into force in the period have any material impact on the accounting policies, financial position or performance of the Group.

2 Segmental information

In line with internal reporting the primary segment is presented by region. In addition, as a secondary segment we presented our revised business segments of Global Managed Services, STEM, Regional Specialist Services and Healthcare within this report. The disposals during the year and after the year-end comprised the entirety of the Regional Specialist Staffing and Healthcare segments but these have been retained in this note to reflect what was reviewed by the CODM throughout the period.

Fifty-two weeks to 30 December 2022 - unaudited

Fifty-two weeks to 31 December 2021 - restated

Where the Group places workers between operational segments, the relevant segments each record the gross revenue for placing the worker on an arm's-length basis. An adjustment has been made to remove the impact of inter-segment revenues from the Group results.

The Group has adopted adjusted operating profit as its Alternative Performance Measure, to include depreciation and amortisation of assets but excluding amortisation of acquired intangibles.

Adjusted operating profit is not defined by IFRS and therefore may not be directly comparable with other companies' alternative profit measures. It is not intended to be a substitute, or superior to, IFRS measurements of profit.

3 Finance expense

4 Taxation

5 Earnings per share

Basic earnings per share amounts are calculated by dividing the profit for the period attributable to the owners of the Company by the weighted average number of Ordinary shares outstanding during the period.

There was no dilutive effect in 2022. For 2021 there were 19,841 shares owned by The Corporate Services Group Ltd Employee Share Trust which hold the shares remaining after various historic option plans lapsed. Excluding these shares, the weighted average number of shares in 2022 is 45,147,337 (2021: 45,538,963) and the fully diluted average number of shares is 45,152,679 (2021: 45,558,804). The calculations of both basic and diluted earnings per share ('EPS') are based upon the following consolidated income statement data:

6 Discontinued operations

Profit and loss relating to discontinued operations

Cash flows relating to discontinued operations

Disposal of Corestaff

On 24 January 2022 the Group announced the sale of the business and assets of Corestaff, the US-based Light Industrial brand, to swipejobs Inc., a US private digital staffing company, for cash consideration of approximately $19 million (£14.1 million) (the "Disposal"). This consideration was based on an agreed net working capital of $10 million on the date of disposal with a $ for $ adjustment to consideration if the net working capital was above or below this amount. The final working capital position was to be determined between 90 and 120 days post completion date and, on 29 June 2022, a final position of $12.9 million was agreed. As a result, an additional $2.9 million (£2.2 million) of consideration was received in July 2022 giving a total of $21.9 million (£16.3 million).

Corestaff is not a separate legal entity but is included within the trade of two US registered legal entities (Corporate Employment Resources Inc and Corestaff Support Services Inc). Assets, liabilities and trade relating to Corestaff are identified by way of specific cost centre combinations that are identified as relating to Corestaff.

Profit from disposal of Corestaff:

Profit and loss relating to discontinued operations

Cash flows relating to discontinued operations

Effect of disposal on the financial position of the Group

Disposal of Regional Specialist Staffing and Healthcare Staffing divisions

On 30 January 2023 the Group announced the sale of the business and assets of its Regional Specialist Staffing businesses in the UK (Tate, Blue Arrow Group, Chadwick Nott, Career Teachers) and its Healthcare Staffing business in the UK, Ireland and APAC (Medacs Global Group) to Twenty20 Capital, for cash consideration of £85m on a debt-free, cash-free, normalised working capital basis (the "Transaction"). This consideration was based on an agreed nil cash position and net working capital of £46.3 million on the date of disposal with a £ for £ adjustment to consideration if the final positions were above or below this amount. The final working capital position is to be determined 60 days post completion date. The deal had been deemed to be highly probable on 30 December 2022 and at that time was treated as a discontinued operation and as an asset and liability held for sale. The transaction was completed on 3 March 2023.

Profit and loss relating to discontinued operations

Cash flows relating to discontinued operations

Effect of disposal on the financial position of the Group

7 Additional cash flow information

The overdraft is included in trade and other payables on the balance sheet, and the lease debtor is included in trade and other receivables.

8 Dividends

On 22 December 2022 the company announced a further special dividend of 55.4p per share totalling £25.0m to be paid on 27 January 2023 which has not been recognised in these accounts.

On 6 March 2023 the company announced a further special dividend of 77.8p per share totalling £35.0m to be paid on 6 April 2023 which has not been recognised in these accounts.

9 POST BALANCE SHEET EVENTS - SHARE PURCHASE AND CANCELLATION

Between the end of the year and 22 March 2023, a further 92,270 Ordinary shares of 1p each have been repurchased in the market for total consideration of £0.6m and have been cancelled.

10 POST BALANCE SHEET EVENTS - DISPOSAL OF SUBSIDIARIES

On 30 January 2023 the Group announced the sale of the business and assets of its Regional Specialist Staffing businesses in the UK (Tate, Blue Arrow Group, Chadwick Nott, Career Teachers) and its Healthcare Staffing business in the UK, Ireland and APAC (Medacs Global Group) to Twenty20 Capital, for cash consideration of £85m on a debt-free, cash-free, normalised working capital basis. This consideration was based on an agreed nil cash position and net working capital of £46.3 million on the date of disposal with a £ for £ adjustment to consideration if the final positions were above or below this amount. The final working capital position is to be determined 60 days post completion date. The deal had been deemed to be highly probable on 16 December 2022 and at that time was treated as a discontinued operation and as an asset and liability held for sale. The transaction was completed on 3 March 2023.

11 POST BALANCE SHEET EVENTS - IMPORTANT INFORMATION

The Board has become aware of an administrative oversight concerning technical compliance with the Companies Act 2006 ("CA 2006") in respect of the special dividend paid on 27 January 2023 (the "Dividend") and share buybacks effected by the company following this date (the "Post January 2023 Share buybacks"). The amount of the Dividend was £25m and the total amount of the Post January 2023 Share buybacks was approximately £0.6m. The Group's historic reported trading results and financial condition, and ability to pay future dividends are entirely unaffected by this matter. The CA 2006 requires the amount of any dividend distribution and share repurchases to be justified by reference to relevant accounts which show the requisite level of distributable reserves. If a company's last annual accounts do not show the necessary reserves, then the company must prepare interim accounts and, in the case of a public company, file those interim accounts with the Registrar of Companies prior to the payment of the relevant dividend or share repurchase. The Company's last annual accounts did not show the necessary reserves, interim accounts should have been prepared and filed with the Registrar of Companies prior to the payment of the Dividend and the Post January 2023 Share buybacks, but were not. This therefore has the consequent effect on the Dividend and the Post January 2023 Share buybacks.

Due to this administrative oversight the Company has been advised that, as a consequence of the Dividend having been paid otherwise than in accordance with the 2006 Act, the Dividend is technically unlawful and that the Company may have claims against past and present shareholders who were recipients of the Dividend and against persons who were directors of the Company at the time of the payment of the Dividend. In addition, the Company has been advised that the purported purchase and cancellation of the Post January 2023 Share buybacks is void. The ordinary shares of the Company purportedly subject to the Post January 2023 Share buybacks remain technically in issue but the voting rights which attach to them are not capable of being exercised by any person. The Company intends to take action to resolve this matter as soon as practicable.

The Board notes, however, that the Company has no intention of bringing any such claims or to seek the return of funds and that the Group's historic reported trading results and financial condition and ability to pay future dividends and continue its previously announced buyback programme are entirely unaffected by this matter.

The Company will shortly post to shareholders an explanatory circular (the "Circular") in due course and convene a general meeting, at which resolutions authorising various rectifying actions will be proposed which will, if passed and once such actions are completed, put all potentially affected parties, so far as possible, in the position in which they were always intended to be.

Alternative Performance Measures

Certain discussions and analyses set out in this Preliminary Announcement include measures which are not defined by generally accepted accounting principles such as IFRS. We believe this information, along with comparable IFRS measurements, is useful to investors because it provides a basis for measuring our operating performance on a comparable basis. Our management uses these financial measures, along with the most directly comparable IFRS financial measures, in evaluating our operating performance and value creation. Non-IFRS financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with IFRS. Non-IFRS financial measures as reported by us may not be comparable with similarly titled amounts reported by other companies.

Adjusted operating profit

Definition: The Group calculates adjusted operating profit as operating profit before amortisation of acquired intangibles and impairment.

Closest equivalent IFRS measure: Operating profit.

Rationale for adjustment: The Directors believe that adjusted operating profit is the most appropriate approach for ascertaining the underlying trading performance and trends as it reflects the measures used internally by senior management for all discussions of performance, including Directors' remuneration, and also reflects the starting profit measure used when calculating the Group's banking covenants. All discussions within the Group on segmental and individual brand performance refer to adjusted operating profit.

Following the adoption of IFRS 16 in 2019 the Group has moved from adjusted EBITDA to adjusted operating profit as its Alternative Profit Measure in 2020, to include depreciation and amortisation of assets but excluding amortisation of acquired intangibles, and this is included in the table below.

Reconciliation of adjusted operating profit to operating profit:

The amortisation of acquired intangibles (brand value and customer relationships) charge due to its size and nature is disclosed separately to give a comparable view of the year-on-year trading financial performance.

The impairment charge due to its size is disclosed separately to give a more comparable view of the year-on-year underlying financial performance.

Adjusted EBITDA

Definition: The Group calculates adjusted EBITDA as operating profit before interest, tax, depreciation and amortisation and excludes IFRS 16 adjustments.

Closest equivalent IFRS measure: Operating profit.

Rationale for adjustment: The Group continues to measure EBITDA which is used for banking covenants and internal performance measures. It is also used externally for valuation purposes.

Reconciliation of adjusted EBITDA to operating profit:

Spend Under Management (SUM)

Definition: Total amount of client expenditure which our Managed Service brands managed on behalf of their clients. This equates to revenue earned where Impellam acts as principal plus gross billings to customers where Impellam acts as agent.

Closest equivalent IFRS measure: Group Revenue.

Rationale for adjustment: The Group uses this measure as it reflects the total value of the client spend to the Group, not just the revenue generated.

Continuing adjusted earnings per share (EPS)

Definition: Continuing adjusted profit divided by the weighted average number of Ordinary shares outstanding during

Closest equivalent IFRS measure: Continuing basic earnings per share.

Rationale for adjustment: The Group uses this measure alongside the basic EPS calculation as it reflects the underlying trading performance of the business

Reconciliation of Adjusted EPS to Basic EPS:

Net debt excluding IFRS 16 'leases'

Definition: The Group calculates net debt as the total of cash and short-term deposits, revolving credit and hire purchase. Following the adoption of IFRS 16 the calculation includes lease liabilities and debtors.

Rationale for adjustment: The Group has used this measure to maintain alignment to the covenant reporting during 2020.

Reconciliation of net debt excluding IFRS 16 to net debt:

Enquiries:  For further information please contact:

Prior to publication the information communicated in this announcement was deemed by the Company to constitute inside information for the purposes of article 7 of the Market Abuse Regulations (EU) No 596/2014 as amended by regulation 11 of the Market Abuse (Amendment) (EU Exit) Regulations No 2019/310 ('MAR'). With the publication of this announcement, this information is now considered to be in the public domain.

Note to Editors:

Impellam is a connected group providing global workforce and specialist recruitment solutions. Our 2000 people and market leading brands work across a broad spectrum of industries and job categories throughout North America, the UK and Europe and Asia Pac.

Our award-winning Global Managed Services provide a diverse range of digitally enabled, multi-disciplinary workforce solutions to organisations around the world. We are upper quadrant industry leaders in Managed Service Provision and Services Procurement, and the seventh largest Managed Service Provider in the world with over £4bn SUM1 (Spend under Management).

Our STEM businesses are specialists in recruiting and engaging talent in the key growth markets of technology, digital, data analytics, science, clinical and engineering and work with clients across all sectors and sizes delivering services that span Managed Services (MSP) Recruitment Process Outsourcing (RPO), Statement of Work (SOW) and specialist recruitment.

Led by our Virtuosos, our capabilities are underpinned by proprietary digital technology and unique partnerships with market-leading software providers, enabling us to transform and future-proof our services.

We believe in the power of work. Through the power of work, we build better businesses and help people lead more fulfilling lives.

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

1 By SUM (confirmed by Staffing Industry Analysts). Spend Under Management (SUM) is the total amount of client expenditure which our Managed Services brands manage on behalf of their clients. This equates to revenue earned where Impellam acts as principal plus gross billings to customers where Impellam acts as agent (2021 published numbers). Management use this measure as it reflects the total value of the client spend to the Group and not just the revenue generated

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