27 Sep 2018 07:00
The information contained within this announcement is deemed by the Company to constitute inside information under the Market Abuse Regulation (EU) No. 596/2014.
27 September 2018
Impellam Group plc
("Impellam" or the "Company" or the "Group")
Trading Update
Impellam continues to make good strategic progress. Our Managed Services businesses in the UK and Australia are growing ahead of expectations as is the entire US business, on a like for like currency basis.
Our Managed Services businesses now account for 60% of the Company's total EBITDA and are driving continued top line revenue growth with a year on year increase of 5% as at 31 August 2018. We have a strong Managed Services sales pipeline across all geographies and continue to win new business with a further 6 wins confirmed since our interim results were announced on the 29th June 2018 giving us 21 confirmed Managed Services wins so far in 2019. In addition, we continue to see year on year growth in Group Supply, up 1.4% year on year to the end of August 2018, as collaboration across the Group bears fruit.
In line with our strategy, we are further strengthening our position in the growing £117bn SUM managed services market. Accordingly, our talent acquisition & managed solutions businesses in the UK and US are being merged and rebranded as Guidant Global from 1st October 2018, which will enable us to meet the needs of a broader range of international clients, delivering opportunities for greater market share and creating better workplaces world-wide.
Our strategic IT investments in Ignite and ShiftWise technology continue to yield results. The roll out of Ignite in Blue Arrow has increased efficiency and driven an improvement in the conversion of margin to EBITDA by 3% year-on-year to the end of August 2018. Our ShiftWise technology is helping our Healthcare business deliver a differentiated solution to the NHS in support of their stated goal of shifting spend to internal staff banks. We continue to invest in developing our virtuoso culture and all investments are now managed in a consistent, flexible innovation practice with our virtuoso managers leading key growth initiatives to hasten the delivery of our strategy.
The UK NHS market remains challenging due to the continued reduction in agency spend by the NHS and the impact of IR35 which has significantly contracted the size of this market. In recent weeks the NHS has reinforced its intention to reduce agency spend by 17% in 2018/19 and this has meant that the usual seasonal uplift in demand in September has not yet materialised.
In addition, in the last few weeks we have seen reduced volumes in certain of our UK Specialist Staffing brands which have exposure to the UK retail sector. The seasonal uplift that we would expect to see in the retail market after the end of the summer period has not yet happened, as many of our retail customers continue to experience difficult trading conditions. We also continue to be affected more generally by the uncertainty around Brexit negotiations.
The Group has also been negatively impacted by movements in foreign exchange rates which is impacting the level of profit reported in sterling from our overseas business. Our non-UK businesses represent 50% of our total EBITDA.
As a result of the subdued trading performance in Healthcare and in our UK Retail sector as well as exchange rate movements, we expect EBITDA for the 2018 financial year to be lower than in 2017. We continue to have a strong cash position, and expect net debt at the end of 2018 to be lower than at the end of 2017.
Despite these short term pressures on profitability we are confident that our strategy is working. We are improving our resilience by developing and investing in our Managed Services proposition which is increasing our market share and we are growing internationally, thus reducing our reliance on the UK. Our focus on virtuosity and the way we are managing our portfolio gives us a disciplined approach to strategic investment and delivery and we are continually looking for opportunities to reduce waste and re-work whilst ensuring we deliver on our promises to our customers and our people. I am therefore confident of our ability to continue to make long term sustainable strategic and financial progress.
Enquiries:
Impellam Group plc
Julia Robertson, Chief Executive Officer 01582 692658
Alison Wilford, Chief Financial Officer
Cenkos Securities plc (Nomad and Corporate broker)
Nicholas Wells / Mark Connelly 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 18 market-leading brands across 168 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 (2016 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.