Annual Report
and Accounts
2020
IMPELLAM GROUP PLC
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Impellam Group plc_annual report and accounts_2020
STRATEGIC REPORT
The Company
Impellam is a leading
Global talent acquisition
and managed Workforce
solutions provider
STRATEGIC REPORT
1_ progress and performance
2_
Impellam at a glance
4_ chairman’s statement
6_ ceo review
14_ our business model
16_ Key performance indicators
18_ performance reviews
26_ cFo review
30_ principal risks
34_ stakeholder engagement
and our s172 statement
37_ responsible business
CORPORATE GOVERNANCE
41_ Governance report
42_ Board of directors
44_ Qca code compliance
46_ corporate governance statement
52_ directors’ report
55_ statement of directors’ responsibilities
FINANCIAL STATEMENTS
Independent auditor’s report
57_
66_ consolidated income statement
67_ consolidated statement of
comprehensive income
68_ consolidated balance sheet
69_ consolidated statement of changes
in equity
70_ Consolidated cash flow statement
71_ Notes to the consolidated financial
statements
113_ company balance sheet
114_ statement of changes in equity
115_ notes to the company balance sheet
120_ alternative performance measures
122_ Glossary
124_ company information
Alternative Performance Measures
Words with the symbol Δ are defined in the Alternative
performance measures section of the annual report on
page 120.
Our Managed Services providers
are supported by talent-focused
Specialist Staffing brands with deep
heritages, vertical sector expertise
and loyal candidate networks. Clients
across the world trust us to deliver
Managed Services and Specialist
Staffing in the UK, North America,
Australasia and Europe. Working with
them are 2,500 Impellam people,
bringing a wealth of expertise
through our 14 market-leading
brands across 76 locations. Every
year, we connect carefully chosen
candidates with good work at all
levels. They include technology and
digital specialists, scientists, clinical
experts, engineers, nurses, doctors,
lawyers, teachers, receptionists,
drivers, chefs, administrators,
warehouse and call centre
operatives.
Underpinning everything we do is
our Virtuoso strategy which
recognises it is our people who make
the difference. Virtuosos make and
deliver on promises and grow with
their customers through sector,
service or international expansion,
which ensures there is never a need
for a customer or candidate to leave
Impellam. Impellam is the seventh1
largest Global Talent Acquisition and
Managed Workforce Solutions
provider in the world.
OUR VISION
To be the world’s most trusted staffing company
– trusted by our people, our customers and our investors
in equal measure.
OUR MISSION
To provide fulfilment and a sense of purpose for
our people and help our customers build better
businesses in a changing world.
For more information visit
www.impellam.com
1 By revenue (2019 published numbers)
Progress and performance
Headlines
A robust performance in the face of substantial global challenges to the
business from the Covid-19 pandemic, with Group revenue down 11.3% at
£2.0bn (2019: £2.3bn) and adjusted operating profitΔ reduced to £18.2m
(2019: £31.1m after including separately disclosed items). Significant progress
against strategy delivered in the period to enable our Virtuosos, transform
our portfolio and improve our resilience, ready for when we emerge from
the pandemic.
OPERATIONAL
1. A swift and decisive response to the global pandemic, keeping our people
safe, moving to home working overnight and ensuring uninterrupted service
for customers and candidates.
2. Accelerating our strategy through Covid-19 and re-organising our business
to ensure we were well placed to adapt with speed and agility to volatile
and uncertain markets.
3. Administered the UK Government’s Job Retention Scheme, supporting the
payment of more than 5,000 furloughed temporary workers to ensure their
continuity of income. In addition, 800 Impellam colleagues were furloughed
during the year to protect jobs for the long term.
FINANCIAL
1. Gross profit decline of 16.8%, primarily in Q2 during extensive global
lockdowns. The UK was hit hardest with gross profit down 21.5% whilst
APAC and North America showed more resilience, falling by 16.9% and 4.5%
respectively (on a constant exchange rate basis).
2. Global Managed Services, representing nearly a third of the Group’s gross
profit, withstood the market challenges better than other segments, with
gross profit declining by 8.6% (on a constant exchange rate basis).
3. Temporary recruitment, which represents 91.4% of gross profit, decreased
by 13.2%. Lockdowns had a significant impact on Permanent recruitment,
which was also slower to recover when restrictions eased, leading to a
decline of 42.4%.
4. A relentless focus on costs included headcount reductions, salary reductions,
furloughing of staff, support from government schemes and the curtailment
of discretionary spend, resulting in total savings of £33.1m in the year.
5. The benefits of Q4 2019 headcount reductions flowed through the year,
with a further 500 headcount reduction across 2020.
6. A solid result despite adverse and challenging conditions globally with
adjusted operating profitΔ of £18.2m (2019: £31.1m).
7. Non-cash impairment charges on acquired goodwill and intangibles of
£22.2m, reflecting the impact of Covid-19, leading to an operating loss
of £15.0m (2019: £13.9m profit).
8. Net debt was reduced by £72.5m to £26.3m (2019: £98.8m). £48.0m of the
reduction comprised of deferred UK VAT payments and US federal tax
payments. Pre-IFRS 16 net debt of £4.1m (2019: £72.3m) brought the
covenant leverage ratio to less than 1x (2019: 1.74x).
GROUP REVENUE_£m
£2,000.9m
2020
2019
2018
2,000.9
2,254.8
2,267.3
GROUP GROSS
PROFIT_£m
£228.1m
2020
2019
2018
228.1
274.1
277.5
GROUP ADJUSTED
OPERATING
PROFITΔ_£m
£18.2m
18.2
2020
2019
2018
31.1
35.7
GROUP OPERATING
PROFIT_£m
£(15.0)m
2020
2019
2018
(15.0)
13.9
22.5
GROUP NET DEBT
(BEFORE IFRS 16)_£m
£(4.1)m
2020
2019
2018
(4.1)
(72.3)
(71.7)
GROUP NET CASH
GENERATED FROM
OPERATIONS_£m
£94.5m
2020
2019
2018
49.5
33.4
94.5
For more information
Glossary: page_122
As a result of the adoption of IFRS 16 in the previous financial year, the Group has adopted adjusted operating profit, in place of adjusted EBITDA, as its Alternative Performance Measure,
to include depreciation and amortisation of assets but excluding amortisation of acquired intangibles.
Page_1
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Impellam at a glance
our operating
segments
GLOBAL TALENT ACQUISITION AND
MANAGED WORKFORCE SOLUTIONS
our Global Talent Acquisition and Managed Workforce
Solutions (Global Managed Services (‘GMS’)) businesses
design, implement, coordinate and report on the
whole staffing process through the provision of
multi-disciplinary services. This includes all forms of
partial and complete outsourcing, allowing our
customers to focus on building better businesses.
Long-term contracts with public, private and not-for-
profit high road customers provide high visibility of
future earnings.
There are two brands within this portfolio: Comensura
and Guidant Global, engaged in providing full-scale,
multi-disciplinary Managed Services around the world.
GLOBAL SPECIALIST STAFFING
REGIONAL SPECIALIST STAFFING
HEALTHCARE
our Global Specialist Staffing (‘GSS’) businesses
operate across the UK, US and Europe and partner with
international customers through the provision of
specialist workers for permanent, temporary contract,
fixed-price work and statement of work directly, or in
collaboration with one of our Managed Services
businesses in the portfolio. Dedicated teams provide
scientific, clinical, technology, telecommunications and
digital specialists. our integrated model and
collaborative culture allow these teams to employ an
agile, flexible approach. They deliver market-leading
sector expertise that builds better businesses and
supports our customers’ needs on a global scale.
our Global Specialist Staffing brands include the
technology and telecommunications brand Lorien, and
our life sciences brand, SRG. S.com and onezeero were
rebranded to Lorien in 2020 to form a global business.
our Regional Specialist Staffing (‘RSS’) businesses in
Medacs Global Group (‘MGG’) is a leading international
the UK and US leverage our deep heritage, sector
expertise and extensive network of specialist
healthcare workforce solutions provider operating
under a variety of brands including Medacs Healthcare,
candidates to provide expert recruitment services and
Global Medics, Doctors on Call, Fast Response
fulfilled, engaged workers for our customers. our
Healthcare and Litmus Workforce Solutions. MGG
dedicated teams build better businesses by providing
provides healthcare staffing, managed services, staff
centre operatives, mechanical and product engineers,
Within its healthcare brands, MGG delivers locum,
people for permanent, temporary contract and
fixed-price work; from the supply of warehouse
workers to production technicians, secretaries, call
IT specialists, lawyers, drivers, teachers and chefs.
Tate, Carbon60, Celsian, Career Teachers, Flexy and
Chadwick Nott in the UK, and Bartech Staffing and
Corestaff in the US.
bank, occupational health, social care, home care
services and eHealth solutions.
temporary and permanent doctors, nurses and allied
health professionals. It is the largest provider of locum
of specialist healthcare managed services outside of
the US. With operations across the UK, Ireland, the
Middle East, India, Australia and New Zealand, MGG
enables customers to deliver outstanding care globally.
our Regional Specialist Staffing brands are Blue Arrow,
doctors to the NHS in the UK and is the largest supplier
OPERATING PERFORMANCE
REVENUE_£m
2020
709.7
OPERATING PERFORMANCE
REVENUE_£m
2020
523.2
2019
2018
757.1
715.8
£709.7m
2019
2018
649.1
682.2 £523.2m
GROSS PROFIT_£m
2020
70.9
GROSS PROFIT_£m
45.8
2020
2019
2018
78.0
75.5
£70.9m
2019
2018
55.5
54.9 £45.8m
For more information
page_18
For more information
page_20
Page_2
OPERATING PERFORMANCE
OPERATING PERFORMANCE
REVENUE_£m
REVENUE_£m
2020
2019
2018
2020
2019
2018
GROSS PROFIT_£m
69.6
581.5
650.3
682.2
£581.5m
94.0
97.8
£69.6m
2020
2019
2018
2020
2019
2018
GROSS PROFIT_£m
231.3
245.8
247.0
41.8
46.6
49.3
£231.3m
£41.8m
STRATEGIC REPORT
GROSS PROFIT BY SEGMENT_£m
£228.1m
Global Managed Services
Global Specialist Staffing
Regional Specialist Staffing
Healthcare
GLOBAL SPECIALIST STAFFING
REGIONAL SPECIALIST STAFFING
HEALTHCARE
our Regional Specialist Staffing (‘RSS’) businesses in
the UK and US leverage our deep heritage, sector
expertise and extensive network of specialist
candidates to provide expert recruitment services and
fulfilled, engaged workers for our customers. our
dedicated teams build better businesses by providing
people for permanent, temporary contract and
fixed-price work; from the supply of warehouse
workers to production technicians, secretaries, call
centre operatives, mechanical and product engineers,
IT specialists, lawyers, drivers, teachers and chefs.
our Regional Specialist Staffing brands are Blue Arrow,
Tate, Carbon60, Celsian, Career Teachers, Flexy and
Chadwick Nott in the UK, and Bartech Staffing and
Corestaff in the US.
Medacs Global Group (‘MGG’) is a leading international
healthcare workforce solutions provider operating
under a variety of brands including Medacs Healthcare,
Global Medics, Doctors on Call, Fast Response
Healthcare and Litmus Workforce Solutions. MGG
provides healthcare staffing, managed services, staff
bank, occupational health, social care, home care
services and eHealth solutions.
Within its healthcare brands, MGG delivers locum,
temporary and permanent doctors, nurses and allied
health professionals. It is the largest provider of locum
doctors to the NHS in the UK and is the largest supplier
of specialist healthcare managed services outside of
the US. With operations across the UK, Ireland, the
Middle East, India, Australia and New Zealand, MGG
enables customers to deliver outstanding care globally.
OPERATING PERFORMANCE
REVENUE_£m
2020
581.5
2019
2018
650.3
682.2
£581.5m
GROSS PROFIT_£m
2020
69.6
2019
2018
For more information
page_22
94.0
97.8
£69.6m
OPERATING PERFORMANCE
REVENUE_£m
2020
2019
2018
231.3
245.8
247.0
GROSS PROFIT_£m
2020
2019
2018
41.8
46.6
49.3
For more information
page_24
£231.3m
£41.8m
Page_3
our Global Talent Acquisition and Managed Workforce
our Global Specialist Staffing (‘GSS’) businesses
Solutions (Global Managed Services (‘GMS’)) businesses
operate across the UK, US and Europe and partner with
GLOBAL TALENT ACQUISITION AND
MANAGED WORKFORCE SOLUTIONS
design, implement, coordinate and report on the
whole staffing process through the provision of
multi-disciplinary services. This includes all forms of
partial and complete outsourcing, allowing our
customers to focus on building better businesses.
Long-term contracts with public, private and not-for-
profit high road customers provide high visibility of
future earnings.
and Guidant Global, engaged in providing full-scale,
multi-disciplinary Managed Services around the world.
international customers through the provision of
specialist workers for permanent, temporary contract,
fixed-price work and statement of work directly, or in
collaboration with one of our Managed Services
businesses in the portfolio. Dedicated teams provide
scientific, clinical, technology, telecommunications and
digital specialists. our integrated model and
collaborative culture allow these teams to employ an
agile, flexible approach. They deliver market-leading
supports our customers’ needs on a global scale.
our Global Specialist Staffing brands include the
technology and telecommunications brand Lorien, and
our life sciences brand, SRG. S.com and onezeero were
rebranded to Lorien in 2020 to form a global business.
There are two brands within this portfolio: Comensura
sector expertise that builds better businesses and
OPERATING PERFORMANCE
OPERATING PERFORMANCE
REVENUE_£m
GROSS PROFIT_£m
2020
2019
2018
2020
2019
2018
709.7
757.1
715.8
70.9
78.0
75.5
£709.7m
£70.9m
REVENUE_£m
523.2
GROSS PROFIT_£m
45.8
2020
2019
2018
2020
2019
2018
649.1
682.2 £523.2m
55.5
54.9 £45.8m
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS
IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Chairman’s statement
A year of
transformation
Lord Ashcroft KCMG PC
Chairman
“ THE RESPONSE
OF OUR PEOPLE
WAS EXEMPLARY,
ADAPTING TO
WORK FROM
HOME ALMOST
OVERNIGHT.”
We saw one change to the Impellam Board in 2020. Tim Briant
joined the Group on 1 october 2019 and was appointed to the
Board on 3 February 2020 as Group Chief Financial officer.
our investment in people and technology proved an essential
element in our response to new ways of working and
collaborating during the pandemic and we will continue to
enhance our IT infrastructure, systems and digital capabilities
to ensure we are well prepared for the opportunities the year
ahead will bring.
We entered 2020 in a strong position following the moves we
made in 2019; however, the world changed very quickly during
the first quarter. The pandemic created uncertain market
conditions, restrictions on our lives and corporate activities,
and caused illness and bereavement amongst our customers,
candidates and colleagues. The response of our people was
exemplary, adapting to work from home almost overnight
to deliver an uninterrupted service to our customers
and candidates.
on behalf of the Board, I would like to thank our shareholders
for their continued support and our people for their hard work
and contribution during this challenging time. Julia and her
team reacted decisively to secure the business, control costs
and manage cash and, at the same time, continued to focus on
our transformation to a streamlined, integrated business to
ensure we emerge from the pandemic a stronger, leaner and
more resilient organisation.
Page_4
STRATEGIC REPORT Virtuosity in action
2020 WAS THE YEAR VIRTUOSITY
CAME INTO ITS OWN.
Virtuosity is a mindset that sees opportunities where others
do not. Virtuosos look ahead to see how customers’ and
candidates’ needs are changing and are always ready to
adapt and innovate. Covid-19 presented the perfect,
challenging environment to test our Virtuoso philosophy
and our people. I am incredibly proud of how they have
responded with resilience, perseverance and open-
mindedness to extreme change both at work and at home.
We adapted to working at home overnight, we continued to
place large volumes of people into new and fulfilling work
and we enjoyed a successful sales year, winning and
implementing new managed services accounts remotely
whilst supporting each other and our communities.
our Virtuosos have demonstrated the power of our
collective knowledge, mindset and experience as we
stepped up to supply huge numbers of key workers and
differentiated technology solutions in our response to
the national Covid demands, collaborating across Impellam
to deliver the right service to our customers. This included
supporting Ambulance Services and the Nightingale
Hospitals, vaccination programmes and helping our
customers pivot their production lines to make PPE.
It has been a year of Virtuosity in action.
Impellam’s
digital society
AS SOON AS LOCKDOWNS WERE ANNOUNCED
BY REGIONAL GOVERNMENTS, OUR IT TEAMS
TOOK SWIFT ACTION TO ENSURE OUR GLOBAL
WORKFORCE WAS ABLE TO WORK EFFECTIVELY
FROM HOME.
Almost overnight, our people adapted to a new virtual
world, where recruitment and on-boarding all took place
online, and our internal collaboration platform, Workplace,
came into its own to support communications between
teams and colleagues.
As part of our strategy to improve resilience, a significant
investment in our core systems and digital technology is
planned over the coming year, moving systems to the
cloud and further digitalising the way we work using AI,
automation and mobile solutions to support fast-changing
ways of working for both customers and candidates.
Page_5
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
CEO review
2020 was a year
like no other
Julia Robertson
Group Chief Executive Officer
“ WE DELIVERED
ROBUST FINANCIAL
RESULTS,
RESTRUCTURED
OUR BUSINESS IN
LINE WITH OUR
STRATEGY AND
STREAMLINED OUR
ORGANISATION.”
OPERATING REVIEW
The impact of the Covid-19 pandemic on our business was
dramatic. It impacted demand for our services – both positively
and negatively – changed the way we communicated with
clients, candidates and colleagues, and challenged our thinking
and the way we operate. Against this backdrop, we delivered
robust financial results, restructured our business in line with
our strategy and streamlined our organisation. I am immensely
proud of what we have achieved and the resilience,
perseverance, creativity and commitment of all the Impellam
people who made it happen.
The health and wellbeing of our colleagues and the talented
people we find work for across the world has been front of
mind throughout the year. Sadly, eight of our clinicians lost
their lives to Covid-19 during 2020. A stark reminder of the
importance of the work we do supporting the national efforts
of the communities we serve across the world.
The impact of Covid-19 was felt across all our regions and
markets but particularly in the UK, our largest region by
revenue and gross margin, where catering, hospitality,
education and aviation markets were all hard hit. our healthcare
businesses in the UK, Republic of Ireland and Australia were
incredibly busy but suffered from the cancellation of elective
surgery in all regions and the shortages of doctors and nurses.
Many succumbed to the virus or had to self-isolate and PPE
was in short supply. In Australia, these conditions were
exacerbated by border closures, meaning that our doctors
were not able to travel to undertake the work needed. our
North American businesses showed more resilience as they
were not materially exposed to the most affected end markets.
Conversely, the pandemic created work for many of our
people across the world. Along with our healthcare
professionals who were, and still are, at the epicentre of the
crisis, Impellam people have been engaged in the national
efforts in all three of our main regions. In the UK, this work has
Page_6
STRATEGIC REPORT included the construction of the Nightingale Hospitals,
supporting the Ambulance Services, and providing clinical
and non-clinical staff for testing and vaccination programmes.
Throughout the year our life sciences business, SRG, has been
centre stage working closely with its pharmaceutical clients
and with the development of mobile testing centres. In North
America, Corestaff provided the call centre operatives needed
to mobilise a crisis management hotline and Bartech played a
key role in enabling clients to produce masks and to deliver
mass temperature checking programmes.
As we accelerated our transformation into a closely integrated
business we benefitted from the collaborative culture we have
nurtured and were able to redeploy colleagues and temporary
workers from hard-hit sectors such as education, catering and
hospitality into growth markets including life sciences and
healthcare. our Global Managed Services businesses worked
closely with our Specialist Staffing brands to ensure that
Impellam candidates fulfilled our customers’ needs and this
contributed £12.6m of Group Fill gross profit (2019: £12.6m).
We also formed cross-Group sales and delivery collaborations,
winning 11 new managed service programmes and delivering
outstanding results for customers. This was the key to
maintaining 98% of our top 50 customers. 2020 was certainly a
year where everything that is wonderful about the Impellam
culture came together to deliver the exceptional service that
our customers and candidates expect.
We moved to a remote working model in the third week of
March 2020 and, like most organisations, we remained in that
formation for most of the year. I remain thankful and amazed
in equal measure that the transition was so smooth and our
investment in IT came into its own. In Q4 2019 we began a
headcount and general cost reduction programme and took
the decision in Q1 2020 to hold headcount flat, even before
the Covid storm clouds gathered. That decision served us well
and protected our performance in Q1 2020, giving us a good
runway into further cost base management in Q2 and beyond.
We made many difficult decisions during the year which meant
that 800 colleagues were on full or part furlough at some
point during the year, a large number, including the Board and
the senior leadership teams, took pay reductions, others
agreed to short time working arrangements but sadly we said
goodbye to 500 colleagues. Everyone played their part in
doing what they could to mitigate the decline in gross profit
in Q2 and Q3 2020 and I am very grateful to them for
their good humour and commitment to Impellam.
FINANCIAL PERFORMANCE
I am extremely proud of our financial results in this
extraordinary year.
From a significant decline in sales during Q2, revenue
recovered throughout the rest of the year to £2.0bn, ending
11.3% down on 2019 with gross profit at £228.1m, down by
16.7%, each on a constant exchange rate basis.
Despite cost mitigation of some £33.1m, adjusted operating
profitΔ at £18.2m fell 40.3% (on a constant exchange rate
basis) compared to 2019, an improvement from H1 2020
which showed a decline of 54.1%. There were no separately
disclosed items in 2020 and the 2019 items of £4.9m have
been included within the 2019 adjusted operating profitΔ.
our closing headcount on 31 December was 2,491, 16.8%
lower than the previous year. During Q2 2020, the Board and
senior leaders across the Group took a 20% pay reduction and
many colleagues reduced their working hours. In addition, 800
colleagues were furloughed for varying periods of time
according to market dynamics. The combination of all these
management actions led to a year-on-year reduction of salary
and related costs of £21.9m.
other areas of discretionary spend reduced significantly.
These included travel, entertainment, accommodation and
candidate attraction. We do not anticipate these returning to
pre-Covid levels as virtual working becomes part of our new
better way of being.
our cash and net debt performance were outstanding and my
heartfelt thanks must go to our tireless finance community,
credit controllers and sales ledger staff across all our
operations for the phenomenal job they did to make sure
we collected our cash when all around were attempting to
preserve it. We are also grateful for the support received from
governments across our regions, which included the Job
Retention Scheme, rates relief, retail grants and tax credits
that benefitted adjusted operating profitΔ by £7.4m and a cash
benefit of £48.0m.
Page_7
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
CEO review continued
Strategic
priorities
1. Enabling our Virtuosos
our Virtuosos do what they do best enabled by reliable
technology. We’ll get out of their way and make sure
they are leading more of the Group, future-proofing
the portfolio and delivering new, incremental
revenue streams.
2. Transforming our portfolio
We’ll accelerate our Managed Services growth by
selectively integrating our Managed Services brands
across our major geographies. This will make it easier
for our high road customers to access our talented and
engaged people. We’ll refine our Specialist Staffing
portfolio and will build scale in growing global verticals.
At the same time, we’ll respond to macro trends and
develop new business lines in new verticals opened by
the gig economy.
3. Improving resilience
We’ll improve our resilience by investing in technology
to drive efficiencies and productivity. We’ll enter new
growth markets and economies organically to defend
our key high road client relationships.
STRATEGIC REVIEW
our strategic focus since 2018 has been the creation of a
collaborative, high value, integrated business, where global
managed services work in synchrony with our key talent
verticals to create the future of good work.
The global pandemic shone a clear light on where we need to
focus so we took the bold decision in April 2020 to accelerate
the delivery of our strategy.
We simplified our business structure, reduced our management
layers, and gave our Virtuosos a louder voice and greater span
of control, all with the single purpose of creating a fighting fit
Impellam ready for when we emerge from this crisis.
During 2020, we integrated our Managed Services businesses
under single leadership whilst retaining our brand specialisms,
Guidant Global and Comensura. This integration has delivered
increased collaboration in the development of new services,
technology, marketing, people services and best practice. In
2021 we will launch our newly formed Customer office to
formalise the coordination of key strategic accounts to
encourage innovation, expand our service offering and
drive Group Fill, ensuring our customers never have
a reason to leave Impellam.
We also created a regional focus and appointed CEos in our
major territories (UK, North America and Asia Pacific) to bring
us closer to our customers by reducing management
hierarchies, speeding up decision-making and encouraging
regional innovation. our regional CEos have specific
responsibility for optimising and growing our specialist
staffing businesses, working closely with Global Managed
Services to increase Group Fill and developing regional shared
services functions to create efficient and effective back office
services, freeing up our Virtuosos to spend more time with
customers and candidates.
Page_8
STRATEGIC REPORT 1. ENABLING OUR VIRTUOSOS
2020 was an extraordinary year and the year when our Virtuoso
strategy came into its own. Quite simply, we could not have
achieved what we achieved without the Virtuoso behaviours of
Impellam colleagues who not only delivered ‘business as usual’ from
their homes, but also created innovative solutions for our customers
and candidates and worked tirelessly on the transformation of
our business.
The scale of the challenge and the diversity of the staff required a
truly innovative solution, with scientific and associated roles. The
unique combination of MGG’s healthcare experience, SRG’s
scientific footprint and Blue Arrow’s surge recruitment capability
ably supported by Guidant Global’s MSP expertise resulted in a
successful award to MGG. Quite simply, this collaboration would
not have happened if MGG had not been integrated with the rest
of Impellam.
In the spirit of giving our Virtuosos a louder voice, rather than
hear from me, I have chosen to use their words to update on this
strategic priority. In a series of interviews, I asked members of the
Virtuoso Alliance (our shadow board) and other Virtuosos, how they
thought we had done:
Q
WHAT HAS CHANGED AT IMPELLAM AS A DIRECT
CONSEQUENCE OF THE VIRTUOSO ALLIANCE?
A
Having a forum to speak directly to the Group CEo, being encouraged
to share thoughts and ideas and give direct and honest feedback is
massively important especially when you see your ideas come to life
and shape strategy. one example of this was encouraging Julia to
give updates to the whole company by video rather than in writing,
especially during lockdown. It was great to see the feedback as a
result of this move. More strategically, the Virtuoso Alliance is
passionate about diversity and inclusion and it has been brilliant to
be involved at the heart of this initiative. So many organisations pay
lip service to this and I couldn’t authentically stand for that.
Rachel Myers, Digital Project Manager
Q
HOW DID WE GET THE WHOLE BUSINESS
WORKING FROM HOME, VIRTUALLY OVERNIGHT?
A
Quite simply, everyone in IT was involved and pulled together
with a shared goal to get it done. We had to challenge our normal
way of doing things and focus on the fact that we only had days,
if not hours, to achieve our goal and make sure our service to
customers and candidates was not impacted. Nothing was out
of bounds and we collected in laptops from everywhere and
encouraged people to take desktops home. Whatever it took,
we did it. It was really different from anything we had done
before – we knew that the company was depending on us
and we powered through any obstacles.
Rachel Tonks, IT Director
Q
TELL ME ABOUT THE VIRTUOSO COLLABORATION
THAT LED TO THE TEST AND TRACE LAB STAFF
PROGRAMME. WHICH BRANDS WERE INVOLVED
AND HOW DID WE BRING IT TOGETHER?
A
In September we saw collaboration across the Group at its absolute
best. MGG, the market leader in NHS Managed Services, won a
multi-disciplinary Managed Services Programme to support the
UK Government’s response to Covid-19.
Mick Whitley, Commercial Director, MGG
Q
HOW DID YOUR VIRTUOSO ‘WAY OF BEING’
ENABLE YOU TO DRIVE EXCEPTIONAL
PERFORMANCE AND SERVICE EXCELLENCE
DURING THE PANDEMIC?
A
As soon as Covid-19 struck, we knew we had to increase our focus
on the beautiful basics, homing in on sparking joy and picking up the
pace of change. our promise meetings moved from weekly to daily
and it really brought us together as a team. The global pandemic
helped us see the art of the possible and our people stepped out of
their silos in the service of our customers. As a result, Comensura
had its best year ever.
Hoa Ngo, Managing Director, Comensura
Q
HOW HAS THE MOVE TO A REGIONAL
STRUCTURE IMPACTED YOU IN ASIA PACIFIC?
A
The biggest difference is in the speed of decision-making. A good
example of this is getting approval to hire. In the past we have
missed out on hiring top talent but that’s changed now. Four
months ago, I identified a terrific person to join us and the hire was
approved in 15 minutes. She is now our third highest fee earner.
our connections to the Group have been enhanced and investment
in our region has been noticeable. our people can see the positive
results of this, for example our IT infrastructure and websites are
now more robust, freeing up our teams to spend more time adding
value to our customers and candidates.
Jayson Eichstad, Director, MGG Sydney
Q
WHAT CHANGED FOR YOU THIS YEAR AND
HOW DID THAT DRIVE GROWTH, EVEN IN A
COVID YEAR?
A
A number of things changed and, in particular, the move to a
regional structure definitely led to bigger, better decisions more
quickly and made collaboration so much easier. The re-brand to
Lorien also paved the way for more growth in 2020/21 and gave us
access to a whole new world of digital marketing capability. And
finally, our Virtuosos really shone in a difficult market. We’ve been
investing in them for three years or more and this year they each
took care of a different part of the delivery of our strategy which
meant that yet again we delivered on our promises.
Ryan McMahon, President, Lorien North America
Page_9
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
CEO review continued
2. TRANSFORMING OUR PORTFOLIO
2020 was a year of transformation. By early April, we had
settled into the new rhythm of working from home with new
meeting and communication cadences and ways of working.
We had early sight of the impact of the pandemic on our
customers and, where this caused reductions in work, we
assessed the support available to our Impellam colleagues
and our temporary workers and put it in place. In addition,
we administered and supported 5,000 temporary workers
with the Job Retention Scheme made available by the UK
Government and absorbed the costs and administrative
burden, taking the view it was the right thing to do.
We then had a critical decision to make. Should we focus our
efforts on riding out the storm, or should we push on with our
transformation and accelerate the delivery of our strategy?
We chose to look forward and with a clear goal of
transforming to a fighting fit virtuoso organisation, we set
about re-organising our business into a regional structure
where decisions are made quickly and closer to the customer.
In addition, we integrated our Global Managed Services
businesses under single leadership. With this new structure,
investment decisions were clearer and more transparent.
We continued to carefully invest in our high growth regions
– North America and Asia Pacific – and in our chosen markets
– global managed services and high value talent verticals.
Specifically, we shone a light onto our STEM businesses,
investing in UK leadership to create a compelling STEM
offering, enabling cross-sell and collaboration and sharing best
practice. We brought our portfolio of technology businesses
together under a single brand, Lorien, both to give our
customers access to scalable technology solutions and to
provide more opportunity to colleagues and candidates.
We strengthened our capability in North America, Asia Pacific
and the Republic of Ireland by investing in talented regional
leadership teams and scalable regional shared services. one
early outcome of this regional investment and flattening of
structures is that we launched Flexy in Australia. Flexy is our
digital employment platform which provides just-in-time
staffing solutions to our customers, transforming candidate
experience in the temporary staffing market.
To enhance our Managed Services offering we created a
Managed Services Centre of Excellence to deliver best-in-class
Managed Services Programme (‘MSP’) capabilities including
technology to both specialist and full MSP customers. This is a
dedicated function operating as an extension to our brands to
reduce duplication, drive efficiency and increase service and
innovation to customers.
Page_10
This Centre of Excellence supported the rapid start-up and
roll-out of a nationwide managed service to support the
Department of Health’s testing and vaccination programme
and would not have been possible without our business
transformation.
Finally, and at the core of our strategy, we launched our
Customer office. The Customer office is a C-suite strategic
function and will lead the enhancement and innovation of our
customer experiences in collaboration with our brands. It will
drive customer-led decisions and will support our Virtuosos
with a best practice toolkit to enhance customer delight and
retention and make sure that there is never a reason for a
customer to leave Impellam.
3. IMPROVING RESILIENCE
Whilst our transformation programme was strategically focused
on deliberate moves to build a fighting fit Impellam in the
Virtuoso operating model, robust management of our property
portfolio was equally important to improve our resilience.
With an overnight shift to virtual working in March, we realised
a significant reduction in our property footprint in anticipation
that these more flexible working arrangements would
continue in the future, albeit in a hybrid way. We completed
39 property exits out of a total property portfolio of 177,
delivering annualised savings of £1.92m, 14% of our total
property costs. We have a three-year programme of property
rationalisation driven by our integrated business model and in
anticipation of a long-term shift to virtual and hub working.
We continued to invest in technology to increase efficiency
and productivity and to drive collaboration and
communication. our earlier investment in Workplace by
Facebook really paid back as it became our key internal
communication and engagement platform. We became super
users of Teams, Skype, Zoom and Google and encouraged our
people to keep their cameras on and smile at each other all
year long! We also invested in Condeco, an office management
platform to manage office capacity and the health and safety
of our colleagues. When we return to our offices once again,
we will do so with a system which will simultaneously optimise
our property usage and collaboration and give us the comfort
of automated track and trace capability to mitigate against the
spread of Covid-19.
At the end of 2020 we committed to investment in our core
technology systems. This investment will centre on moving our
systems to the cloud and will further digitise the way we work
using AI, automation and mobile solutions. The focus will be
the development of a ‘digital core’, improving integrity and
integration between our transactions with customers and
candidates. There will be a common global financial system to
support our work in back office transformation, regional
middle office bill and pay replacements and upgrades to help
us digitise and automate our regional operations. Finally, new,
digital front office systems will enable our people to deliver an
enhanced experience for customers and candidates and will
increase collaboration across the Group.
STRATEGIC REPORT SEGMENTS
Global Talent Acquisition and Managed Services
Workforce Solutions
our Global Talent Acquisition and Managed Services
Workforce Solutions (Global Managed Services) businesses
were amongst the most resilient in the Group, notwithstanding
the impact of Covid-19 on several of our core markets,
including aviation and aerospace, travel, hospitality, oil & gas
and manufacturing. Against this backdrop, and supported by
positive hiring trends in healthcare, government, life sciences
and online retail, revenue was down by just 6.2%, whilst gross
profit declined by 8.6%, both on a constant exchange
rate basis.
During 2020, Impellam unified its Managed Services brands
under single leadership whilst retaining the distinct brand
personalities and value propositions of Guidant Global and
Comensura. This strategic move maximises collaboration,
reduces duplication and contributed to the 10.6% reduction
in administration expenses compared to 2019.
Continued investment in and adoption of technology together
with a Virtuoso approach to business transformation and
agility meant that several new business wins were secured
whilst existing relationships were renewed at a record level.
Following particularly strong performances from Comensura
in the UK and Guidant Global in the US, our Managed Services
businesses are very well placed for a strong recovery in 2021.
Global Specialist Staffing
our Global Specialist Staffing brands in the UK and US faced
two major challenges in 2020, Covid-19 and IR35, and
consequently, revenue decreased by 19.4% and gross profit
by 17.6% on a constant exchange rate basis.
The UK Government’s decision to pause IR35 came too late to
reverse the policies that many of our enterprise customers had
made, leading to a significant reduction in the UK of the use of
IT contractors during H1 2020. This coincided with the start of
the pandemic, which had an immediate impact on permanent
hiring in both the UK and US. The hiring of IT contractors
returned quickly following the end of the initial lockdown
phases in both territories and by Q4, business volumes were
starting to recover towards pre-pandemic levels.
In Q4, recognising the vital role our technology and life
sciences businesses play in the future world of work, brought
into sharp focus by the impact of the pandemic, we re-
organised our STEM business in the UK into one portfolio
to ensure continued focus and investment.
In addition, during 2020 we consolidated our technology
staffing businesses across the world and rebranded as Lorien.
The move to a single global business enables us to provide our
customers with the scale, agility and expertise to meet all their
technology and telecoms needs anywhere in the world.
our STEM businesses are well positioned for future growth as
we see a consistent increase in demand for developers and
software engineers as businesses accelerate their digital
transformation programmes coupled with an unprecedented
recognition and demand for the work of our scientists.
Regional Specialist Staffing
our Regional Specialist Staffing brands in the UK and US were
amongst those hit hardest by Covid-19 in 2020. Whilst across
the globe our white-collar workforces pivoted to working
remotely, our light industrial and manufacturing workers were
unable to do so and the well-documented decline of the travel,
catering and hospitality sectors added to the challenge. This
had a significant impact on gross profit, which declined by
25.8% compared with 2019, whereas the business mix and
recovery throughout the year meant revenue ended the year
only 11.0% down on last year (all on a constant exchange
rate basis).
In response to these changing market conditions, as well as
providing thousands of people to support vital Covid-19 work,
decisive action was taken to reduce the cost base, cutting
administration costs by 20.4%. This was achieved through
thoughtful strategic management actions to share resources,
reduce duplication and increase collaboration as well as
headcount reduction and use of the UK Government’s Job
Retention Scheme. The focus on reducing our working capital
and overdue debts also improved our cash flow.
In the UK, the uncertainties caused by the pandemic,
combined with the potential impact of Brexit, meant that our
customers approached future hiring plans with some caution.
The UK life sciences business, SRG, was undoubtedly one of
the most Covid-19 resilient parts of the Impellam portfolio.
SRG delivered growth year-on-year due to the increased
demand in Covid-19 related projects, with over 50% of
scientific placements made in H2 2020 linked to pandemic-
related projects, from R&D through to Covid testing projects
across both the private and public sector.
We continued to selectively invest in our Global Specialist
Staffing businesses during 2020 whilst keeping tight control
of discretionary spend, reducing administration expenses by
14.1% compared to 2019.
In the US, restrictions were lifted more quickly, and businesses
reopened and adapted to the new pandemic landscape by
mid-year, meaning that our brands returned to pre-pandemic
worker numbers by Q4.
During 2020 our Regional Specialist Staffing businesses
continued to transform, embracing more flexible ways of
working. our teams became accustomed to working virtually
and across geographic boundaries, enabled by the investment
made in technology between 2017 and 2019. This gave us the
confidence and operating model to make substantial inroads
into reducing our property estate for this portfolio.
Page_11
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
CEO review continued
Healthcare
The impact of the Covid-19 pandemic was felt most
profoundly by our Healthcare business, MGG.
Not only were our colleagues and healthcare professionals
caught up in the very epicentre of the battle, but we also had
to deal with the significant impact on the financial
performance of the business as waves of the virus drove up
mortality rates and regional healthcare authorities took action
to conserve and preserve mission critical resource. This
resulted in the cancellation of elective surgery and non-urgent
clinical activity, the closure of international and domestic
borders and gave rise to resource planning challenges as our
health professionals succumbed to the virus or were forced
to isolate. Within a turbulent overall healthcare market, our
nursing business saw unprecedented demand and was able
to respond heroically, achieving 25% growth over 2019.
Against this backdrop, MGG revenue fell by 5.8% on a constant
exchange rate basis and gross profit fell by 9.6%. Much of the
decline reflected the closure of borders and the impact on
international migration of healthcare professionals whilst the
UK business had a strong year.
During 2020, MGG became an integral part of Impellam’s
integrated business model and from this strategic move came
collaboration at its best. The sharing of sales pipelines and
collaborative bids has resulted in new wins for multiple brands
including MGG. Additionally, recruiters from areas of the
business hard hit by the pandemic were transferred to MGG
to support the NHS in managing the impact of Covid-19.
OUTLOOK
Whilst the global fight against the Covid-19 pandemic is still
underway across our major regions, causing restricted visibility,
we are cautiously optimistic about a reasonable recovery
in 2021.
Whilst we do not anticipate a return to 2019 performance
levels on a full-year basis, we are seeing the benefit of the
assertive cost management and strategic transformation
actions we took in 2020 in our Q1 results to date. We are
making selective investments in headcount in our attractive
growing markets, particularly STEM and Managed Services,
and we are also investing in a Customer office and a digital
core systems upgrade. Costs continue to be well managed
and temp gross profits are recovering.
We anticipate further recovery when key markets such
as hospitality, catering and aviation reopen at the end
of lockdowns, but this will be offset to some degree by
reducing levels of Covid-related revenue.
Page_12
STRATEGIC REPORT A bold promise
Geography We offer multiple brands and services across
North America, the UK and Europe and Australasia. To
further support our mission, and to find exciting
opportunities for our people, we also invest in, and operate
with, specific clients in other regions.
Integration We have a unique, differentiated and
collaborative model. This integrates Managed Services
and Specialist Staffing into a full workforce solutions
management platform for our customers’ permanent,
contingent and Statement of Work (‘SoW’) spend. our
work is important, and we get it done.
OUR STRATEGIC OBJECTIVE
Virtuosity makes the difference and will drive market-
beating value creation.
OUR STRATEGIC ADVANTAGE
We believe we retain customers, people and investors for
longer than our competitors because we’re trusted to do
what we say we are going to do. We work collaboratively
across our diverse portfolio with a shared vision, mission,
style and language we call ‘The Virtuoso Way’. This enables
us to deliver differentiated, integrated solutions and services
to our customers, and to find good work for our people.
OUR STRATEGIC SCOPE
Customers We work with customers who value engaged,
fulfilled and purposeful people, and who allow us to take
our share of the economic value we create as we help them
build a better business.
Offering We are a leading Global Talent Acquisition and
Managed Workforce Solutions provider enabled by talent-
focused Specialist Staffing brands with deep heritages,
vertical sector expertise and loyal candidate networks.
For more information
Business model: page_14
Page_13
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Our business model
At the heart of our business
model is a virtuous circle
OUR INTEGRATED, COLLABORATIVE BUSINESS MODEL
our Virtuoso culture is our key differentiator enabling
us to see possibilities and collaborate to leverage Group
Fill and cross-sell opportunities to improve the quality
of our earnings. We constantly innovate to deliver the
right service at the right time and at the right price to
the customers we choose to work with, and by working
together, our businesses share thinking, resources and
execution which reduces duplication, re-work and waste.
our Global Talent Acquisition and Managed Workforce
Solutions businesses, Regional Specialist Staffing,
Global Specialist Staffing and Healthcare businesses
provide market-leading services to high road customers
across our core markets and we rigorously manage the
portfolio and invest according to market potential.
S
M
R
O
F
T
A
L
P
L
A
T
I
G
I
D
D
A
HIG H R O
T
R
U
S
T
GLOBAL
MANAGED
SERVICES
Manage high volumes through
an end-to-end staffing process
for a wide range of customers
on a global scale
Long-term contracts
and high visibility
of future earnings
HEALTHCARE
Specialist recruiters provide
locum, temporary and
permanent doctors,
nurses and allied health
professionals globally
Higher % margins,
shift work driving
volume transactions
INCREASED
MARGIN,
REDUCED COST
AND
DUPLICATION
C
O
L
L
A
B
O
R
A
T
I
O
N
D
I
G
I
T
A
L
P
L
A
T
F
O
R
M
S
REGIONAL
SPECIALIST
STAFFING
Local market, specialist recruiters
Higher % margins,
shorter assignments
GLOBAL
SPECIALIST
STAFFING
Partners with customers
on a global scale to deliver
sought-after people with
specialist skills
Higher pay rates,
lower % margins and
longer assignments
N
H R E TE NTIO
H I G
ENHANCED VALUE MODEL
Page_14
STRATEGIC REPORT
HOW WE DO IT
OUR CULTURE OF VIRTUOSITY
At the heart of our integrated, collaborative
business model is a virtuous circle of making and
keeping promises, engendering trust and loyalty.
By keeping our promises, we retain clients,
candidates, colleagues and investors for longer,
and reap the benefits of that longevity.
We make sure that
‘the beautiful basics’
as a Virtuoso way of working are in place and
deeply embedded in all of our businesses, all of the
time and we make investment promises to sustain,
enhance and innovate our combined portfolio.
We focus on partnering with organisations that
value engaged, fulfilled people and we call this the
‘high road’
which serves to drive clear market segmentation
and a compelling price point.
All our businesses work in
‘The Virtuoso Way’
which embeds a consistent, collaborative
Group-wide culture, based on trusted behaviours,
delivered by entrepreneurial Virtuoso leaders
who can drive our competitive advantage and
deliver on our promises to all our stakeholders.
For more information visit
www.impellam.com
OUR VALUE CREATION
CLIENTS
We tune in to our customers and work closely with
them to find people for good work to help them
build better businesses. We retain them, continuing
to listen and partner with them to extend the scope
and tenure of our services, and in doing so, open up
more opportunities for organic growth.
CANDIDATES
From the outset, we listen to our candidates and
find them good work that fulfils them and matches
their aptitudes, skills and aspirations. We reward
our candidates fairly, retain them by treating them
well, and by finding them work that interests and
develops them. In turn, this encourages them to
refer more people and good work to us.
COLLEAGUES
We employ people who care about our mission and
our craft and we develop them, so they have the
right skills and experience to do their job by being
Virtuosos in their field. We free up our Virtuosos
and give them more influence so they in turn
develop a culture of Virtuosity across the Company.
Ultimately, we trust them to make the right
decisions, collaborate and deliver on their promises.
INVESTORS
We take care to create relationships with investors
and we build on the trust we create by delivering
sustainable earnings.
SUPPLIERS
We build strong partnerships of mutual trust with
our suppliers, many of whom are also our clients.
our long-term relationships with our suppliers
enable us to fill more jobs for our clients and by
building an engaged recruitment supply chain
which is passionate about finding the right
candidates with the right skills, we can reduce
the cost of recruitment; reduce the time to hire;
provide timely market insight; and drive innovation.
Page_15
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Key performance indicators
We monitor our performance against our strategic
priorities by using key performance indicators (‘KPIs’).
Our KPIs include a set of financial and non-financial
measures and are discussed further in the CEO
and CFO reviews.
Financial KPIs
GROUP REVENUE
_£m
£2,000.9m
GROUP GROSS PROFIT
_£m
£228.1m
GROUP ADJUSTED
OPERATING PROFITΔ_£m
£18.2m
GROUP OPERATING
PROFIT_£m
£(15.0)m
2020
2019
2018
2,000.9
2,254.8
2,267.3
2020
2019
2018
228.1
274.1
277.5
2020
2019
2018
18.2
31.1
35.7
2020
2019
2018
(15.0)
13.9
22.5
MEASUREMENT EXPLAINED
Revenue generated from sales
of contract workers, permanent
placement fees and other income
generated from provision
of staffing services.
MEASUREMENT EXPLAINED
Revenue less cost of sales,
predominately the sum of
contract gross profit and fees
for the placement of permanent
candidates, less any directly
attributable adjustments
or rebates.
MEASUREMENT EXPLAINED
Underlying profitability of the
Group before interest and taxes
with adjustments for impairments
and amortisations of acquired
intangibles and impairment of
right-of-use leased assets.
MEASUREMENT EXPLAINED
Profitability of the Group before
tax and finance costs.
RATIONALE
Indicates the volume of business
generated in the year.
RATIONALE
Indicates the volume of business
generated in the year.
RATIONALE
Demonstrates the profitability
of the Group and how efficient it
is at managing its controllable
cost base.
RATIONALE
Demonstrates the profitability
of the Group.
CONVERSION RATIO –
ADJUSTED OPERATING
PROFITΔ %
8.0%
GROUP NET DEBT
(PRE-IFRS 16)
_£m
£(4.1)m
GROUP NET CASH
GENERATED FROM
OPERATIONS_£m
£94.5m
ADJUSTED
EARNINGS PER
SHARE _PENCE
18.2p
2020
2019
2018
8.0%
11.3%
2020
2019
2018
14.9%
(4.1)
(72.3)
(71.7)
2020
2019
2018
49.5
33.4
94.5
18.2
2020
2019
2018
39.2
61.5
MEASUREMENT EXPLAINED
Adjusted operating profitΔ
expressed as a percentage of
gross profit.
MEASUREMENT EXPLAINED
Total Group debt excluding lease
liabilities, less any cash and cash
equivalents, after capitalised
financing costs.
MEASUREMENT EXPLAINED
The amount of cash generated
from operating activities and
after tax paid.
RATIONALE
Indicates the efficiency of fee
earners in generating gross profit
and the Group’s ability to control
central costs.
RATIONALE
Net debt is a key element
of the Group’s capital structure.
RATIONALE
Demonstrates how efficient the
Group is in converting operating
activities to cash and therefore
the ability to manage its capital.
MEASUREMENT EXPLAINED
The amount of adjusted
operating profitΔ per one share
in the Group; calculated as
the adjusted operating profitΔ
attributable to the Group’s
shareholders, divided by the
average number of shares in
issue throughout the year.
RATIONALE
A strong indication as to the
underlying profitability of a
company for its shareholders.
Page_16
STRATEGIC REPORT Operational KPIs
INTERNATIONAL
MIX %
40.8%
GROSS PROFIT
MIX %
31.1%
CLIENT RETENTION –
TOP 50 CLIENTS %
98%
GROUP ADJUSTED
EBITDA_£m
£27.6m
2020
2019
2018
40.8
36.7
37.6
2020
2019
2018
31.1
28.2
27.2
2020
2019
2018
98
98
96
2020
2019
2018
27.6
41.8
49.8
MEASUREMENT EXPLAINED
Total gross profit from business
operations outside of the UK,
expressed as a percentage of
Group gross profit.
MEASUREMENT EXPLAINED
Total gross profit generated from
Managed Services businesses
expressed as a percentage of
Group gross profit.
MEASUREMENT EXPLAINED
The percentage of the top 50
clients in 2019 who we continued
to supply in 2020 and have not
been exited during the year.
RATIONALE
Geographic diversification
spreads risk and reduces reliance
on any one economy.
RATIONALE
Gross profit from Managed
Services provides visibility of
income and generates long-term
relationships with our clients and
aligns to our strategic priorities.
RATIONALE
Client retention links to improved
profitability and efficiencies in
service delivery alongside
improved quality of service.
MEASUREMENT EXPLAINED
operating profit of the Group
before interest, tax, depreciation
and amortisation and excludes
IFRS 16 adjustments, separately
disclosed items and share-based
payments.
RATIONALE
The Group continues to
measure EBITDA which is used
for banking covenants and
internal performance measures.
It is also used externally for
valuation purposes.
GROUP FILL
%
17%
2020
2019
2018
AVERAGE GROSS
PROFIT PER FTE
£’000
£83,000
GROSS PROFIT PER £
STAFF COST
£1.52
CONVERSION RATIO –
ADJUSTED EBITDA
%
12.1%
17
17
17
2020
2019
2018
83.0
87.5
85.6
2020
2019
2018
1.52
1.58
1.59
2020
2019
2018
12.1
15.2
17.9
MEASUREMENT EXPLAINED
The percentage of Spend Under
Management supplied from our
Group brands into our Managed
Services programmes.
MEASUREMENT EXPLAINED
Total gross profit divided by the
average number of full-time
equivalents in the Group.
MEASUREMENT EXPLAINED
Total gross profit divided by the
annual staff costs.
MEASUREMENT EXPLAINED
Adjusted EBITDA expressed as a
percentage of gross profit.
RATIONALE
Enables our Specialist Staffing
brands to support the Managed
Services programmes and
generate gross profit with
an existing client.
RATIONALE
Indicator of staff productivity
and efficiency, with growth
demonstrating improved
efficiency or a higher percentage
of fee earners at full capacity.
RATIONALE
Indicator of staff productivity
and reflecting the operational
efficiency of the business as
a whole.
RATIONALE
Indicates the efficiency of fee
earners in generating gross profit
and the Group’s ability to control
direct costs.
For more information
Glossary: page_122
Page_17
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Performance reviews
Global Talent
Acquisition and
Managed Workforce
Solutions
Page_18
OPERATING IN A CHALLENGING WORLD
In a turbulent year for the global managed services market,
several factors have impacted temporary, and permanent,
staffing. Covid-19 was the most significant of these, severely
affecting many of our core client and target industry sectors
including aerospace and aviation, travel, hospitality, oil & gas
and manufacturing. In contrast, hiring in other sectors such as
healthcare, government, essential and online retail, business
services and life sciences remained strong or increased during
the pandemic. on balance, many more clients were forced to
downsize their temporary workforces.
FINANCIAL AND OPERATING REVIEW
Despite the impact of Covid-19, the Managed Services
business delivered a sound performance with revenue down
6.2% from 2019 (on a constant exchange rate basis) and gross
profit falling 8.6% to £70.9m.
With cost savings of £6.8m, adjusted operating profitΔ
increased by 2.3% on 2019 (on a constant exchange rate basis).
Additionally, conversion of gross profit to adjusted operating
profitΔ increased to 18.9%.
our Managed Services businesses performed well in the
context of the wider market. The uncertainty created by
Covid-19 had a positive impact on customer retention. 29 of
Comensura’s customers, who contribute 32% of annual gross
profit, were successfully retained during the year. During
2020, Guidant Global won several significant new customers
and lost only one large client. These new contracts mean we
are well positioned for a strong recovery and a robust
performance in 2021.
We continued to deliver on our strategic priorities by bringing
Guidant Global and Comensura under single leadership. Whilst
retaining their distinct brand specialisms, the new portfolio
structure maximises collaboration and further embeds
best practice.
In response to rapidly changing market conditions, we have
evolved our business model, streamlining processes,
leveraging technology and realigning job roles to enable our
Virtuosos to spend more time with customers and candidates.
We expect these moves to have a significant impact on our
operations, driving up margins and adjusted operating profit.
The Group continued to invest in technology, improving the
recruitment experience for customers, candidates and supply
chain partners. In 2019 the Group acquired Flexy, a SaaS digital
employment platform at the forefront of flexible working in
the UK. In 2020 we launched Flexy in Australia and it is now live
in 27 different councils in the State of Victoria and delivers the
payroll solution for eight different councils across other
Australian states. This investment demonstrates our increased
digital innovation and collaboration across our major territories.
STRATEGIC REPORT We also expanded our adoption of Clientshare, a leading-edge
customer engagement platform. This is currently deployed in all
Guidant Global customers and provides market intelligence,
industry insight and quarterly business reviews via an encrypted
private network.
We continue to invest in c.net, our proprietary VMS platform,
and develop our service offering. In 2020, we launched a new
Statement of Work module on our c.net platform, built and
deployed by Comensura. This new proposition gained its first
UK customer in the year, Dorset Council, and we now have a
total of 14 customers using Comensura SoW services, ten of
whom are using the c.net platform. This supports Comensura’s
diversification strategy, to manage procurement categories
outside of temporary and permanent recruitment.
our Managed Services brands continue to win awards and
achieve accolades. For the second year running, Everest Peak
Matrix recognised our Global Managed Services and there
were accolades for Guidant Global as best Managed Service
Provider and for Diversity and Inclusion in the 2020 TALiNT
International Awards. Five of our colleagues were also rated as
influential staffing leaders in the Staffing Industry Analysts
(‘SIA’) 2020 Staffing 100 list.
Equality, Diversity and Inclusion (‘ED&I’) is firmly on our
agenda; Guidant’s award-winning INfluence programme is
helping clients with their ED&I strategies and to drive
positive change.
Despite the challenging circumstances, our people have
adapted seamlessly to a virtual working environment, remaining
committed, resilient and productive throughout lockdowns
across our regions. our customers have played key roles in
national responses to Covid-19 and we have been proud to
support them in this mission critical work. As we emerge from
Covid restrictions, we are well placed to support our customers
in other industry sectors as they return to growth.
In this new era, external talent has become an inextricable part
of an enterprise’s strategic workforce plan and a critical
competitive differentiator that can set businesses up for the
best possible growth in a post-Covid world. The contingent
workforce is delivering significant value for employers across a
range of sectors and specialisms. There are three key
contingent workforce trends that employers will look to
further leverage in the next 12 months: increasing ED&I of the
contingent workforce and talent within it; heightened scrutiny
of Statement of Work spend and better management of
outcome-based projects and deliverables; and giving a strong
contingent voice a seat at the table to drive external
workforce engagement and leverage opportunities for total
talent management. Through the extension of our INfluence
programme, ongoing investment in our proprietary VMS
platforms to drive SoW solutions and the launch of the
Impellam Customer office, our Managed Services businesses
are well positioned to guide our clients, providing consultative
and fluid workforce solutions that give them the edge as they
return to growth.
Revenue
Gross profit
Global Managed Services
2020
£m
709.7
70.9
2019
£m
% change*
(LFL)
757.1
78.0
(6.2)%
(8.6)%
Admin expenses
(57.5)
(64.3)
(10.6)%
Adjusted operating
profit Δ
13.4
13.7
(2.3)%
Gross profit %
10.0%
10.3%
Adjusted operating
profitΔ conversion
ratio %
Permanent fees %
*Using constant exchange rates
18.9%
2.2%
17.6%
4.4%
“ RAPID RESPONSE
TO DEMAND FOR
CONTINGENT
WORKERS DURING
THE COVID-19
PANDEMIC.”
For more information
Glossary: page_122
Page_19
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Performance reviews continued
Global Specialist
Staffing
Page_20
OPERATING IN A CHALLENGING MARKET
The economic and pandemic conditions in 2020 impacted
our global technology and life sciences brands to different
degrees across our two core regions.
In both the UK and North America Covid-19 had an immediate
effect. During Q2 2020 almost all clients ceased permanent
hiring activity as they focused attention on the impact of the
pandemic. Contract and temporary staffing was also affected
significantly, although the fall in demand was not as
immediate and also returned more quickly at the end of the
initial lockdown phases in both regions, and particularly in the
US where lockdowns eased earlier.
In the UK, the IT contractor business was also impacted by
the planned implementation of IR35. Although this was
subsequently deferred to April 2021, many businesses had
already taken decisions which resulted in the reduced usage
of contractors, coinciding with the start of the pandemic.
In both geographies the shift to remote working further
highlighted the importance of technology to our customers
and in Q4 we saw a consistent increase in demand for
developers and software engineers as businesses accelerated
their digital transformation programmes. In the US our
contracts with hyperscale data centre operators remained
buoyant throughout the year as their businesses benefitted
from the spike in demand for cloud services as companies
pivoted to remote working.
The UK life sciences business was undoubtedly one of
the most Covid-19 resilient parts of the Impellam portfolio.
The increase in demand linked to Covid-related projects
contributed to year-on-year growth for SRG, with over 50%
of scientific placements made in H2 2020 linked to Covid-
related projects, across both the private and public sector.
FINANCIAL AND OPERATING REVIEW
The impact of Covid-19, combined with the proposed
introduction of IR35, drove revenue down by 19.4% and gross
profit by 17.6% on a constant exchange rate basis, primarily
impacting Lorien in the UK. Although adjusted operating
profitΔ for the portfolio overall fell by 26.2%, our gross profit
margin held up well at 8.8%, slightly ahead of 2019.
Within the portfolio, SRG in the UK and Lorien in the US
both performed well. Notably, SRG in the UK improved
adjusted operating profitΔ conversion by 7.3% to 41.0% and
productivity by 18.2%. There were significant new wins in
the UK and US, including a strategic relationship built by SRG
in the UK with a Covid-19 related organisation, as well as a
large building society for Lorien and continued growth
through a large financial services business.
Despite challenging conditions across our geographies,
sector-based talent and skills shortages and legislative changes
in the UK and US, we continued to invest in our Global
Specialist Staffing portfolio in line with our strategic priorities.
STRATEGIC REPORT These factors highlighted how critical STEM skills are for the
future world of work and underlined our strong position in
this market. Whilst we plan to launch a differentiated STEM
proposition to the market in 2021, we made significant steps
to build our scale and capabilities during the year.
Following the merger of our life sciences businesses in 2019
(SRG in the UK with SRG Woolf in the US), we consolidated our
portfolio of technology staffing businesses across the UK and
Europe and North America, rebranding onezeero, s.com and
Lorien all as Lorien. The move to a single global business
enables us to provide clients with the scale, agility and
expertise to meet all their technology and telecoms needs
anywhere in the world, particularly in the US, a key growth
market for Impellam. This consolidation is already delivering
results, with a measurable rise in the number of customers
working with us internationally in 2020.
our Global Specialist Staffing brands continued to drive
collaboration with our Global Managed Services businesses.
Together they are delivering key scientific, technology and
telecommunications talent to support the requirements of
our global customer base. This collaboration enabled us to
deliver £6.5m in gross profit through Group Fill.
The international response to Covid-19 is a clear example of
Virtuosity in action, including setting up a new Covid testing
recruitment hub to support the significant increase in demand
for scientists for Covid testing projects as well as a Covid-19
response team, delivering laboratory staff for Synergy and
other new clients, placing over 440 candidates in this market.
our customer focus was recognised once again in 2020 when
Lorien UK won a Gold award at the In-House Recruitment
Awards for the Total Talent Management Solution it provides
for the Re-Assure Group and was highly commended at the
Diversity and Inclusion awards.
The impact of the pandemic has brought the vital role of our
technology and life sciences businesses into the spotlight and
highlighted our strength and depth in STEM skills. We intend
to build on this strategic advantage and will focus our
investments to meet our customers’ growing requirement
for scientists, technologists and engineers in both the UK,
Europe and US.
Revenue
Gross profit
Global Specialist Staffing
2020
£m
523.2
45.8
2019
£m
% change*
(LFL)
649.1
(19.4)%
55.5
(17.6)%
Admin expenses
(34.6)
(40.3)
(14.1)%
Adjusted operating
profit Δ
Gross profit %
Adjusted operating
profit Δ conversion
ratio %
Permanent fees %
*Using constant exchange rates
11.2
8.8%
15.2
(26.2)%
8.6%
24.5%
16.9%
27.4%
19.6%
“ STEM SKILLS ARE
CRITICAL FOR THE
FUTURE WORLD
OF WORK AND
UNDERLINE OUR
STRONG POSITION
IN THIS MARKET.”
For more information
Glossary: page_122
Page_21
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Performance reviews continued
Regional Specialist
Staffing
Page_22
OPERATING IN A CHALLENGING MARKET
After a promising start in the first two months of the year
across our regional businesses, Covid-19 severely impacted our
clients and markets in both the US and UK.
In the UK, the healthcare market generated increased demand
for cleaning, driving and ancillary services in contrast to the
well-documented difficulties faced in the aviation, retail,
catering and hospitality sectors. The uncertainty caused by the
pandemic, combined with juggling the impact of Brexit, has
resulted in clients remaining cautious about their future hiring
plans. Temporary staffing has increased as companies are
reluctant to make long-term staffing commitments, leading to
a slower recovery in permanent recruitment and we face an
increasingly competitive market with pressure on margins.
In North America, 2020 started strongly but, as in the UK,
the impact of Covid-19 was swift, resulting in nationwide
lockdowns in March. Whilst across the globe white-collar
workforces pivoted to working remotely, our light industrial
and manufacturing workers were unable to do so as
manufacturing plants and retail businesses were closed.
US restrictions were lifted more quickly than those in the UK
and by mid-May all 50 states had reopened to some degree.
Some of our clients shifted their businesses to produce PPE
and ventilators, resulting in increased demand for temporary
labour benefitting Bartech’s performance. Corestaff also
benefitted from an immediate need for temperature takers,
health screeners and Covid call centre skills. Both brands
returned to pre-pandemic worker numbers by the end of
the year.
FINANCIAL AND OPERATING REVIEW
Against a challenging backdrop we delivered £581.5m of
revenue, down 11.0% (on a constant exchange rate basis)
due to the impact of Covid-19 on our markets.
Gross profit fell by 25.8% to £69.6m (on a constant exchange
rate basis) and despite reducing costs by 20.4%, adjusted
operating profitΔ was significantly down from £6.3m in 2019 to
a loss of £0.2m, with Catering (Blue Arrow), office (Tate) and
Education (Career Teachers and Celsian) particularly affected
with hospitality, offices and schools all shut for large parts of
the year. In response, decisive action was taken to reduce the
cost base. This was achieved through improved efficiencies,
sharing of resources, reducing duplication and driving
collaboration. Total headcount was reduced from 956 to 748
and 450 colleagues in the UK were furloughed during the year.
As more flexible ways of working became the norm, our teams
operated virtually across geographical boundaries. This gave
us the opportunity to consolidate our property assets, closing
18 physical branches and offices whilst maintaining 14
virtual locations.
STRATEGIC REPORT JobScience, our front office system, came into its own in 2020.
It not only enabled the business to respond quickly to virtual
working when the pandemic forced the closure of offices,
but it also produced paperless timesheets for clients and
candidates through the roll-out of client portals. It led to at
least six significant client wins as it gave us greater agility to fill
critical roles in exceptionally tight timescales. For example,
JobScience was instrumental in enabling Blue Arrow to recruit
more ‘last mile’ delivery drivers to satisfy the upturn in online
shopping, supplying over 200% more driving hours in May
2020 compared with May 2019. More virtual ways of working
accelerated the creation of a new Blue Arrow ‘Customer
Success Hub’. We now deliver our service to our National
Accounts from this Hub, providing dedicated teams that cover
their business nationally.
Against a challenging backdrop, the portfolio delivered client
retention of 45.6% and significant new client contracts which
will deliver strong returns in 2021.
A significant increase in collaboration both across the portfolio
and with the wider Group yielded strong results in 2020. For
example, our UK brands worked closely with our Healthcare
business, MGG, to deliver services at the heart of the nation’s
response to Covid-19 by creating strong workforces for the
testing and vaccination programme. Alongside this, working
closely with our Global Managed Services brands to drive
Group Fill delivered £5.4m gross profit.
As our customers responded to the demands of the pandemic,
our brands have supplied people across the NHS, Ambulance
Services and the Nightingale Hospitals in the UK. In North
America, support was provided to an organisation that
manufactures and distributes heart monitors. Customer
service operatives were also in high demand, working at home
dealing with patient queries for crisis management hotlines.
As Covid-19 restrictions begin to ease, we expect to see the
hospitality, travel and retail sectors start to recover, staff
return to offices and schools reopen, opening up demand for
our services that have been on hold for much of the year. With
our new streamlined business model and our investment in
digital technology we are well placed to take advantage of the
opportunities this will generate.
Revenue
Gross profit
Regional Specialist Staffing
2020
£m
581.5
69.6
2019
£m
% change*
(LFL)
650.3
(11.0)%
94.0
(25.8)%
Admin expenses
(69.8)
(87.7)
(20.4)%
Adjusted operating
profit Δ
(0.2)
6.3
(106.0)%
Gross profit %
12.0%
14.5%
Adjusted operating
profit Δ conversion
ratio %
Permanent fees %
*Using constant exchange rates
(0.3)%
8.6%
6.7%
14.3%
“ A SIGNIFICANT
INCREASE IN
COLLABORATION
BOTH ACROSS
THE PORTFOLIO
AND WITH THE
WIDER GROUP.”
For more information
Glossary: page_122
Page_23
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Performance reviews continued
Healthcare (MGG)
Page_24
OPERATING IN A CHALLENGING MARKET
2020 has been dominated by the Covid-19 pandemic, with
far-reaching effects on the Healthcare market. In Australia,
New Zealand (‘ANZ’) and the UK and Ireland, elective surgery
was cancelled along with non-urgent activities and
international borders have been closed, as well as state
borders in Australia. This contrasts with acute medical services,
where demand remained significantly above the previous year
throughout 2020. National healthcare systems were able to
divert clinical resources to the most needed areas during peak
Covid periods; however, candidate availability tightened with
exposure to the virus on the frontline leading to significant
numbers of health professionals isolating.
We were deeply saddened by the deaths of eight clinicians
closely associated with MGG in the UK, which served as a stark
reminder of the selfless role played by those on the frontline
during this pandemic.
FINANCIAL AND OPERATING REVIEW
Although revenue fell by 5.8% (on a constant exchange rate
basis) compared with 2019, gross profit was down 9.6%,
reflecting the impact of Covid-19.
Whilst costs were held to support demand, filling vacancies
was affected by supply side issues reflecting candidate
availability and sickness. Although cost savings of 6.9% offset
some of the gross profit loss, adjusted operating profitΔ fell
by £1.6m to a loss of £1.1m in 2020.
After a surge in demand in March 2020, demand in the
UK healthcare staffing market declined, reflecting the
postponement of elective procedures. Demand started to
return during Q3 and stabilised after August 2020, whilst not
returning to pre-Covid levels. This led to margin volatility,
especially in the locum doctors business across the portfolio.
In Australia, the State Health Departments handled the initial
wave so efficiently this presented a new challenge of
oversupply, and most of the medical recruitment industry
directly felt the strain of contract cancellations and border
closures, which impacted our locum business. Trading
conditions were also challenging early in the year due to
extensive bushfires resulting in office and business closures.
Conversely, demand for nursing staff has been strong,
up 25% year-on-year, driven by the high nurse to patient ratios
required in acute Covid-related units and the increased demand
resulting from the high percentage of nurses self-isolating.
Across the portfolio, the negative impact of the pandemic on
permanent hiring was felt throughout the year as international
travel was restricted, although there was some margin
recovery in Q4 as borders reopened.
In the UK, the profitability of the Health Assessment business
has also been significantly impacted as face-to-face
assessments were halted due to Covid. We responded by
seconding clinical staff from the Health Assessment unit to
support the efforts of the NHS.
STRATEGIC REPORT our Homecare business rapidly adapted to the pandemic,
issuing PPE to our workers and ensuring all home carers were
trained and equipped to deliver care to the most vulnerable in
our community, in the safest possible way. In Ireland, trading
was challenging throughout the year as the cancellation of
elective surgery reduced demand for doctors.
Revenue
Gross profit
Healthcare
2020
£m
231.3
41.8
2019
£m
% change*
(LFL)
245.8
46.6
(5.8)%
(9.6)%
Customer retention and new wins have remained strong
during the period. In the UK, we have successfully
maintained our status on all UK Staffing and Managed
Service Frameworks and are now included on the NHS
occupational Health Framework.
Admin expenses
(42.9)
(46.1)
(6.9)%
Adjusted operating
profitΔ
(1.1)
0.5
(251.3)%
Gross profit %
18.1%
19.0%
Adjusted operating
profitΔ conversion
ratio %
(2.6)%
1.1%
Permanent fees %
10.0%
12.9%
*Using constant exchange rates
“ WE ARE
TREMENDOUSLY
PROUD OF THE WAY
OUR PEOPLE AND
OUR HEALTHCARE
PROFESSIONALS
HAVE RESPONDED
TO SUPPORTING
THE FIGHT AGAINST
THE PANDEMIC.”
The award of a substantial Managed Services Programme
(‘MSP’) to provide clinical and non-clinical staff to support
the Government’s response to Covid-19, demonstrated
collaboration across the Group at its best. The unique
combination of MGG’s NHS expertise, SRG’s scientific footprint
and Blue Arrow’s surge recruitment expertise, ably supported
by Guidant’s MSP expertise, has enabled the recruitment of
scientific and associated roles. We have also secured contracts
to supply nurses, clinical leads, and associate roles, for a wide
range of other Covid-19 related projects, supporting both
public and private sector clients to track and control
transmission and infection rates.
In December 2020, as a result of our expertise in mobilising
healthcare workforces, we were awarded an MSP to support
the national vaccination efforts, with MGG and Blue Arrow
staffing the clinical and non-clinical requirements across
Berkshire, oxfordshire and Buckinghamshire.
We continued to invest in technology with the implementation
of Robotic Process Automation to keep candidates engaged
and databases refreshed. This enabled MGG to deliver over
200 more nurses every week to one NHS Trust alone.
Whilst we are tremendously proud of the way our people and
our healthcare professionals have responded to supporting
the fight against the pandemic, we look forward to the return
of elective surgery and routine clinical activity in the NHS and
other regional healthcare systems, where our expertise in this
sector and the commitment of our dedicated loyal workforce
means we are well positioned to return to growth.
During 2020, MGG became an integral part of Impellam’s
integrated business model and from this strategic move came
significant collaboration. As a consequence, we are well placed
to continue delivering strategic and financial benefits to MGG
as well as other brands across the ANZ and the UK and Europe
portfolio of businesses in 2021.
For more information
Glossary: page_122
Page_25
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
CFO review
Financial performance
impacted by Covid-19
Tim Briant
Chief Financial Officer
“ CONTINUED
FOCUS ON COST
CONTROL AND
CASH SUPPORTS
RESULTS DURING
A CHALLENGING
YEAR.”
INTRODUCTION
Revenue for the year was down 11.3% (11.3% at constant
exchange rates) and gross profit decreased by 16.8% (16.7% at
constant exchange rates) reflecting the impact of the Covid-19
pandemic on demand for temporary and permanent staff
across our businesses. Q1 2020 started well with trading in line
with prior year until the first lockdowns across our regions.
Trading reductions were most severe in the second quarter
when restrictions were at their highest level and improved
steadily through the second half of the year as these were
lifted and businesses adapted to new ways of working.
The decline in gross profit was mitigated by a £33.1m (13.6%)
reduction in costs through savings from voluntary pay cuts,
reduced bonus and commission payments, headcount
reductions, property closures and reduced travel and facilities
costs. In addition, we received £7.4m of government support
through the Job Retention Scheme, rates deferrals and retail
grants. These savings were offset by restructuring costs
of £2m and a £3.6m increase in provisions for bad debt.
Page_26
Adjusted operating profitΔ reduced by 41.5% to £18.2m
due to the impact of Covid-19, with the UK experiencing
the most significant declines.
In response to the challenges faced in the year the Group
also impaired former acquisition intangibles by £22.2m
(2019: £7.0m). This non-cash charge was recognised in the
first half of the year. £14.3m was recognised against the
Information Technology Cash Generating Unit (‘CGU’) in the
GSS reporting segment. Just under £2.1m was recognised
against the Engineering CGU, just under £0.3m against the
online platform CGU and £5.6m on the Education brand
value, all of which are in the RSS reporting segment.
As a result of the impact of CoVID-19 and the impairment
charges, the Group recorded an operating loss in the year
of £15.0m (2019: profit £13.9m).
STRATEGIC REPORT Financial performance
impacted by Covid-19
The difference between adjusted operating profitΔ and
operating profit is reconciled on page 120 and is principally
due to the impairment of intangibles previously discussed,
and the amortisation of acquired intangibles.
GOVERNMENT SUPPORT
In the UK, the Group received £5m under the Job Retention
Scheme (‘JRS’) where almost 800 staff were furloughed
between April and November. In addition, the Group received
rates relief of £1.7m and retail grant income of £0.7m. From
a cash flow perspective, the Group was able to defer VAT
payments of £36.4m which will be repaid over 11 months
from March 2021. In the US, $16m (£11.6m) of federal tax was
deferred under the CARES initiative and will be repaid in two
equal instalments in December 2021 and December 2022.
We have also administered the JRS for the temporary staff
we provide to clients. The net effect of these programmes
on our gross profit and cost of sales was not material as
these programmes were used to compensate the temporary
staff affected. It allowed us to maintain these temporary
colleagues on our payroll without charging these to clients
and preventing ending of their contracts.
FOREIGN EXCHANGE
Currency movements versus Sterling adversely impacted
our reported performance. over the course of the year to
December 2020, the total impact of exchange movements
on gross profit and adjusted operating profitΔ were £0.7m
adverse and £0.5m adverse, 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 £0.5m per annum and adjusted
operating profitΔ by £0.1m per annum. The rate of exchange
between the US Dollar and Sterling over the year ended
1 January 2021 averaged US$1.2840 and closed at US$1.3494.
As the Group expands further in overseas territories the
impact of changes in exchange rates will be greater.
OPERATING PROFIT TO NET CASH GENERATED 2020_£m
60.3
(2.7)
94.5
(48.0)
9.5
42.4
(15.0)
Operating
profit
Non-cash
IFRS 16
non-cash
Working
capital
Tax paid
Net cash
generated
Government
support
46.5
Net cash
generated
excluding
support
NET CASH GENERATED
£94.5m
(2019: £49.5m)
DECREASE IN NET DEBT (BEFORE IFRS 16)_£m
75
75
60
45
30
15
0
£72.3m
£48.0m decrease due to government support
£24.3m decrease excluding government support
£24.3m
2019
2020
excl support
£4.5m
2020
incl support
NET DEBT
£4.1m
(2019: £72.3m)
For more information
Glossary: page_122
Page_27
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
CFO review continued
Whilst the year-on-year average strength of the US Dollar
against Sterling positively affected trading results, the strength
of Sterling at the balance sheet date (2020: US$1.3494; 2019:
US$1.3093) led to a lower re-translation of cash balances
denominated in foreign currencies and resulted in a £1.3m
year-on-year increase in net debt.
CAPITAL INVESTMENT
Capital expenditure on tangible and intangible fixed assets
in the period was £3.5m (2019: £10.4m), as we restricted
our spending in response to the impact of Covid-19. The
net repayment of finance leases amounted to £8.3m
(2019: £9.2m).
INTEREST AND DEBT
Net cash generated from operations during the period was
£94.5m, £46.5m after adjusting for the deferral of UK VAT and
US Federal Taxes (2019: £49.5m). Strong underlying cash
performance was the result of the continued focus on cash
collections, overdue debt reduction and working capital
management activities. Excluding the deferral of tax payments,
the conversion of adjusted operating profitΔ to net cash
generated is 256% (2019: 138%). At the end of 2020, Days
Sales outstanding (‘DSo’) stood at 37.1 days (2019: 39.4 days).
Finance expenses were lower than the prior year at £5.7m
(2019: £9.0m). Lease interest was lower at £0.8m (2019:
£1.3m) and interest cost on facilities reduced to £4.6m (2019:
£6.5m) as a result of reduced borrowings.
At the balance sheet date net debt was £26.3m. Excluding the
adjustments for IFRS 16, net debt was £4.1m compared to
£72.3m in 2019, a decrease of £68.2m. The net cash flow from
operations was primarily utilised as follows:
•
• Net lease repayment: £8.3m
• Share buybacks: £4.3m
• Net interest paid on borrowings and leases: £5.4m
Investment in fixed assets and software development: £3.5m
£3.0m of the share buyback was prior to the suspension of the
programme due to Covid-19.
The Group’s operations are financed by retained earnings and
bank borrowings.
The Group has in place a £240m global revolving credit facility
(‘RCF’) with an accordion element of an additional £50m which
is available to 1 April 2021 and in March 2020 the Group
exercised the option to extend £220m of the facility by one
year to 1 April 2023. This provides the Group with the
flexibility to fund its working capital as well as future potential
acquisitions. Rates of interest for the RCF are based on LIBoR
plus a margin calculated on the net debt to adjusted EBITDAΔ
leverage. The RCF also includes a letter of credit facility which
amounted to £3.23m (2019: £3.35m) at the end of 2020.
Page_28
The Group takes advantage of a number of non-
recourse financing agreements organised by clients
of the Group to allow for the acceleration of payment
of the Group’s receivables. At the end of 2020,
these amounted to £6.3m (2019: £12.6m). These
agreements accrue interest at between 0.65% and
1.75% over LIBoR.
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 debt less loan notes and restricted
cash to adjusted EBITDAΔ) 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. At December 2020, US$20m of
the RCF was drawn in US Dollars to provide a natural
hedge against the US operations’ profit streams and
net assets which, when reported at a Group level, are
affected by movements in exchange rates. Exposure
to currency risk at a transactional level is generally
minimal, with most transactions being carried out in
local currency.
TAXATION
The tax charge in the period of £1.0m (2019: £0.9m)
represents an effective tax rate of -4.9% (2019: 15.8%).
The tax charge is comprised of corporate tax charges
arising on the Group’s activities in the UK and overseas.
The overseas tax charge arises mainly in the US where
the highest federal corporate income tax rate is 21%
and also includes state taxes which range from 2%-9%
on average.
The Group’s contribution to the UK Treasury in the
period amounted to £212.3m (2019: £288.0m) 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 of £24.5m (2019: £50.0m) was a cost to the business.
EARNINGS PER SHARE
Continuing basic earnings per share decreased to
(46.2)p (2019: 9.8p) as underlying profit after tax from
continuing operations reduced by £26.2m. This
decrease was driven by the impact of Covid-19 and the
increase in impairment of acquired intangible assets.
STRATEGIC REPORT The weighted average number of shares in 2020 was 46.2m,
2.3m lower than 2019 due to the ongoing share buyback
programme.
Continuing adjusted earnings per share decreased to 18.2p
(2019: 39.2p) 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 (note 29) 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
approval of extended payment terms requires senior finance
involvement. 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,
and in the light of the continued uncertainties related to the
global pandemic, Covid-19, have run downside scenarios
representing the potential impact on the trading performance
and cash flows of the Group.
The projections assess our potential debt requirements
against the Group’s £240m of committed facilities and against
the key covenant ratios over this period. The Group has cyclical
working capital requirements which increase during periods of
higher trading levels so if there is any short-term decline in
trading, the working capital requirements and net debt would
initially reduce, providing a natural hedge against any sudden
downturn. In the projections, as business activity increases,
working capital requirements and net debt levels would rise,
but to levels well within our facility. There would be an initial
increase in the Group’s operating leverage but manageable
against covenant requirements. These scenarios include cost
mitigation actions that the Group can implement, such as
reduced performance bonus, travel and entertainment,
marketing activity, reduced capital expenditure and reductions
in share buybacks, and, if required, a short period of reduced
working hours.
The scenarios do not include headcount reductions. In the
event that there is a more significant downturn than in these
scenarios there are further mitigating actions which could
include, but are not limited to, further reductions in capital
expenditure and share buyback, further reductions in non-
business critical expenditure as well as the potential to reduce
working hours and headcount reductions.
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
Following the outbreak of Covid-19, the Board suspended the
share buyback programme whilst retaining the authorities to
buy back shares on an ad hoc basis if deemed appropriate by
the Board. In 2020 a total of 1,397,789, £4.3m of shares, were
purchased and cancelled by the Company, of which £3m was
purchased prior to the suspension of the programme.
In January 2021 the Board announced a reduced share
buyback programme, where it will purchase ordinary shares in
the Company up to an aggregate market value of £0.5m per
calendar month until the next AGM to be held in June 2021.
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.
BREXIT
on 31 January 2020 the UK left the European Union, and
the transition period ended on 31 December 2020. There is
continued uncertainty as to the future trading relationship
that will exist between the UK and the European Union and
to some extent the rest of the UK’s global trading partners.
The continued uncertainty could have a detrimental impact
on candidate confidence to move jobs, or business confidence
to invest and take on new staff. The impact on this could be
reduced volumes of placements in our UK business leading
to reduced fees. Forward visibility remains limited and the
outlook uncertain, but as ever we will monitor activity
levels closely.
OUTLOOK
Through 2020 our focus on cost and cash management were
key in delivering a robust financial performance against the
backdrop of the global pandemic. Although the speed and
extent of the economic recovery in our global markets remains
uncertain, trading conditions have been improving. With the
actions we took in 2020 underpinned by our strategies across
our balanced portfolio, we are well placed to take advantage
of a return to growth.
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STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Principal risks
We recognise that effective risk management is fundamental to delivery of
the Group’s strategic objectives. Each business segment considers strategic,
operational and financial risks on a regular basis, evaluates existing controls
and identifies further actions required to mitigate risks. Risks that are
considered significant at Group level are set out below.
THREAT
MITIGATION
STATUS
STRATEGIC RISKS
ECONOMIC ENVIRONMENT
Global and regional economic conditions can be affected by numerous
factors including political change or unrest, pandemic disease and
weather events.
There continues to be economic uncertainty in most nations due to
the Covid-19 pandemic which is clearly a significant risk to our ability
to maintain and grow gross profit, either through reduced
requirements for temporary staff, by discouraging clients to hire
permanent staff, or by encouraging clients to adopt cheaper
delivery options.
A prolonged delay in economic recovery and the re-introduction
of more severe lockdown measures in the geographies
in which we operate also poses significant risk.
POLITICAL ENVIRONMENT
The UK left the EU on 31 December 2020 and whilst an exit agreement
was finalised there is some uncertainty regarding the arrangements.
This leads to general economic uncertainty, along with a more specific
risk regarding labour movement restrictions.
In the public sector, ongoing financial constraints may limit growth
and/or create pressure on margins on existing business.
Geographical diversity and the Group’s mixed
portfolio of Managed Services and Specialist
Staffing businesses mitigate the potential
impacts of economic changes in specific
regions. Risk is further mitigated by the
diversity of sectors in which the Group’s
clients operate and close management
of operating costs across all brands
and functions.
The diversity and mixed portfolio of the Group
has also supported continuing performance
during the Covid-19 pandemic. Some of our
clients and sectors have been able to operate
relatively unaffected whilst others have been
forced to shut down.
Management maintain open dialogue with key
clients in relation to both short and long-term
plans generally, as well as with specific regard
to Brexit.
The Group continues to monitor Brexit-related
exposures and developments and
communicate with clients, employed staff
and candidates.
ATTRACTING AND RETAINING TALENT
Any constraints on the Group’s ability to attract and retain key talent in
an increasingly competitive market could result in loss or weakening of
client relationships, lack of appropriate leadership and/or erosion of
the Group’s talent base, impacting achievement of both financial and
other objectives.
Planned business transformation initiatives will create a need for new
skill sets in the Group in the medium term. Factors such as Brexit and
changes to the UK immigration rules may impact on the availability of
talent more generally.
The Group’s high-retention business model
ensures that brands and central functions are
focused on talent management and
development, performance review and
succession planning.
Leadership development programmes are in
place and the Group’s Virtuoso-based culture
encourages talent development and
progression.
The Group’s Equality, Diversity and Inclusion
policy is outlined on page 37.
H
M
M
Page_30
STRATEGIC REPORT
Risk trend
H
H
H
M
M
M
Increased compared to 2019 Annual Report
Stable compared to 2019 Annual Report
Decreased compared to 2019 Annual Report
THREAT
MITIGATION
CUSTOMER CONCENTRATION
General decline in a particular industry sector, loss of a key customer or
a significant reduction in business volume on a key account could result
in reduced revenue and/or increased pressure on gross profit.
The outbreak of Covid-19 has created significant economic uncertainty
for our clients.
Management discuss and review market
conditions and sales and account management
pipelines on an ongoing basis. ‘Top customer’
reporting includes analysis by sector and
geography, highlighting any emerging
exposures.
Management also hold regular meetings with
key customers to discuss sales pipelines,
current service performance and
opportunities to add new services lines or
extend existing services.
All clients are vetted and credit checked prior
to trading and we hold credit insurance across
the Group.
DELIVERY OF STRATEGIC PROJECTS
The Group is committed to investing in a range of strategic
transformation projects that will drive revenue growth and/or improve
operational efficiency.
Failure to operate rigorous control and oversight of such projects may
result in returns on such investment being lower than expected.
Strategic projects, each owned by a senior
leader directly accountable to the Group CEo,
are managed using a promise management
platform (Mosaic).
A Group PMo oversees and governs our
transformation programme. An assurance
programme reports to the Audit Committee
to ensure delivery of our IT Roadmap.
DISRUPTIVE TECHNOLOGY
Use of digital technologies in the recruitment market is expanding
rapidly and disrupting ‘traditional’ people-based processes. This trend
is expected to accelerate as new technologies are developed and
enable new ways of working.
The relevance of relationships between candidates, clients and
recruitment agencies is declining and any failure by the Group to
adapt its business model appropriately could lead to competitive
disadvantage.
The Group actively monitors and assesses
emerging technologies through both IT and
origin, our innovation hub. The origin team
work closely with the Virtuoso Alliance and
across regions. origin runs pilots and
experiments and partners with new service
providers. During 2019 this led to the purchase
of Flexy, an online marketplace for workers
seeking temporary roles, which in 2020 was
launched in Australia.
The Group has developed a strategic IT
Roadmap during 2020.
STATUS
H
M
M
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STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS
IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Principal risks continued
THREAT
MITIGATION
STATUS
OPERATIONAL RISKS
TECHNOLOGY SYSTEMS
The Group is reliant on many different technology systems that may
have limited useful life in a fast-changing business environment.
The legacy nature of some systems may also hinder optimisation
of end-to-end business processes.
Systems may also be vulnerable to factors beyond the Group’s control
e.g. power failures or internet connectivity outages.
CYBER AND INFORMATION SECURITY
The risk of external cyber-attacks continues to increase. A successful
attack could result in loss of sensitive data, business disruption and/or
damage to the Group’s reputation.
The Group has a stable systems infrastructure
and an ongoing IT investment programme.
M
Core systems are replicated across two
geographically separate data centres and
regular monitoring of systems performance
is undertaken.
An analysis of opportunities for development
and standardisation of key systems was
developed during 2019 and a cloud-based
IT Roadmap was agreed in 2020 such that
investment was given Board approval in
December 2020.
A programme to enhance security of the
Group’s systems against cyber-attack has been
implemented.
H
ongoing monitoring is in place and regular
exercises are undertaken. A cyber security
upgrade is underway including obtaining
Cyber Essentials Plus certification in May 2021.
The Group is already ISo 27001 and Cyber
Essentials accredited.
GDPR was implemented across the relevant
parts of the Group in 2018 and regular
reminders are published to staff to promote
awareness of cyber risk.
BUSINESS CONTINUITY
A major disruptive event, such as a fire, severe weather or the current
Covid-19 pandemic affecting one or more of the Group’s operating
locations, could lead to loss of business and/or adverse impacts on
staff and assets.
The current focus on Covid-19 means attention is diverted from
other potential business critical risks.
Comprehensive systems and operational
business continuity plans are in place and
tested on a regular basis. These are updated
at least annually.
M
Contingency plans such as remote working
and redeployment of staff to other Group
sites are in place to ensure minimal disruption.
SERVICE AND CONTRACTUAL COMPLEXITY
In certain markets, the Group’s clients are becoming increasingly
sophisticated in their procurement and buying activity. Competitive
tendering activity and commercial contracts are becoming increasingly
complex, with longer lead times in decision-making. This necessitates
constant development of the Group’s service offer, the sophistication
of our selling activities and the management of tendering processes.
Complexity and changing client requirements also present challenges
around measuring and monitoring service delivery and compliance
with contract SLAs.
The Group has a standardised contract review
process in place involving operational,
commercial and legal oversight.
M
The Group also continues to invest in specialist
resource to support business development,
implementation and service delivery activities.
Page_32
STRATEGIC REPORT
Risk trend
H
H
H
M
M
M
Increased compared to 2019 Annual Report
Stable compared to 2019 Annual Report
Decreased compared to 2019 Annual Report
THREAT
MITIGATION
STATUS
REGULATORY, COMPLIANCE AND FINANCIAL RISKS
REGULATORY ENVIRONMENT
Regulatory changes can lead to increased costs and workload,
particularly where they relate to candidates’ rights, eligibility to
work or corporate reporting e.g. payment practices, diversity.
The planned extension of IR35 off-payroll worker regulations to the
private sector in the UK, which was delayed to April 2021, has caused
some short-term disruption as both clients and contractors adapted.
Expansion into new geographies in support of clients’ needs brings
exposure to unfamiliar regulatory environments.
CASH AND LIQUIDITY MANAGEMENT
Poor cash and liquidity management may result in strain on the
Group’s credit facilities and/or operational cash flow issues.
The outbreak of the Covid-19 pandemic now creates significant
economic uncertainty for our clients which could impact their ability
to settle outstanding liabilities.
Legal, Finance and Compliance functions at
both Group and brand levels monitor risks
and compliance, taking appropriate action
where necessary.
H
Appropriate policies and codes of conduct are
in place across the Group and regular training
is provided to colleagues.
Process and system changes required to
ensure effective management of IR35
changes have been identified and are
being implemented.
External professional advice is sought
where insufficient knowledge exists within
the Group.
The Group has a central Treasury function in
place with regular forecasting, reporting and
review procedures.
M
The Group also maintains a revolving credit
facility with a syndicate of banks to provide
additional flexibility in its funding
arrangements. This was renewed during 2019.
A Group Credit Policy sets out the policies and
procedures that must be implemented across
the Group to mitigate credit risk.
FINANCIAL CONTROL
A failure of financial control could lead to a material loss to
the business.
The Group operates several shared services
arrangements where transaction processing
and management accounting are independent
of operations.
M
A clearly defined schedule of delegated
authority limits for various types of decisions
and transactions is in place and appropriate
segregation of duties is maintained in all
finance processes.
Key business processes are subject to periodic
internal audit review with clearly defined
action plans established to address any control
weaknesses.
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STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS
IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Stakeholder engagement and our S172 statement
INTRODUCTION
Section 172 of the Companies Act 2006 requires Directors to take
into consideration the interests of stakeholders and other
matters in their decision-making. We believe we have a history of
collaborative, informative stakeholder engagement and decision-
making based on long-term success, and we maintain governance
structures and processes that support good decision-making.
REOPENING OUR GLOBAL OFFICES IN LINE
WITH COVID-19 SECURE GUIDANCE
As local lockdown measures were introduced around the
world, we maintained operational capacity throughout
long periods of remote working before reopening our
offices safely.
This section articulates how the Directors have acted to
promote the success of the Group for the benefit of its
stakeholders. In meeting this responsibility, the Directors have
had regard, amongst other matters, to:
a) the likely consequences of any decisions in the long term;
b) the interests of the Group’s colleagues;
c) the need to foster the Group’s business relationships with
suppliers, customers and others;
d) the impact of the Group’s operations on the community
and environment;
e) the Group’s reputation for high standards of business
conduct; and
f) the need to act fairly as between members of the Group.
STAKEHOLDER ENGAGEMENT
Impellam Group’s stakeholders are clients, candidates, suppliers,
colleagues, investors and lenders and the Board recognises the
need to regularly engage with its stakeholders as it makes
decisions. We develop and encourage long-term relationships
with our stakeholders based upon Impellam’s vision ‘to be the
world’s most trusted staffing company – trusted by our people,
our clients and our investors in equal measure’.
As part of this vision, our stakeholders’ interests have been
forefront when the Board of Directors set the strategic
priorities of the Group. The strategic priorities of: Enabling
our Virtuosos; Transforming our Portfolio; and Improving
Resilience include consideration of the key stakeholder groups
and how we engage with them.
In addition to regular stakeholder engagement, as the Board
of Directors, our intention is to take into account our
operational impacts on the community and environment,
and our wider societal responsibilities, and in particular,
how we impact the regions we serve. We support our
communities by finding them good work, supporting local
corporate social responsibility initiatives and ensuring our
impact on the environment is minimal, as demonstrated by
our ISo 14001 accreditation.
PRINCIPAL DECISIONS IN 2020
The Board considered the interests of, and the impact on,
all stakeholders when making a number of key decisions
during the year, as demonstrated by the following examples.
Stakeholder considerations:
Colleagues
There have undoubtedly been operational, financial and
environmental benefits from enabling our workforce to work
remotely over this time. However, our people also thrive on
face-to-face interaction, building collaboration and rapport.
In addition, some individuals have struggled from a wellbeing
perspective throughout this time.
We undertook a number of colleague surveys, assessing how
people were coping as well as equipment and infrastructure
requirements to understand how we could support our
colleagues. We have also trained 55 mental health first aiders
across the Group who are able to offer confidential support
to any colleague.
We committed to supporting our colleagues where they need
either access to an office environment to work from, or the
ability to safely interact in person with colleagues. As local
guidance was released regarding opening of offices, we
reviewed this in detail and assessed each office against these
requirements and undertook the necessary steps to make
them ‘Covid safe’. We then prioritised which offices could
reopen and identified the colleagues who could use them.
Whenever the local guidance changed, immediate action was
taken to ensure we were operating within the updated rules.
We offered continued support to our colleagues who remained
working remotely.
Suppliers
our property team worked with our landlords where necessary
to ensure each property was Covid safe prior to reopening.
Clients, candidates, investors and lenders
By keeping our people safe in their working environment, we
are able to continue to meet client requirements, support our
candidates and deliver effective business results throughout
the pandemic.
Outcome
our offices have opened safely where possible, enabling
suitable working environments for those struggling to
work remotely. We continue to review our property
requirements and are actively reducing the number
of properties in our portfolio.
Page_34
STRATEGIC REPORT GOVERNMENT SUPPORT FOR COVID-19
As the pandemic continued, the UK Government offered
support for affected companies which comprised of the Job
Retention Scheme (‘JRS’), retail grants and deferral of tax
payments in the UK. The US government also allowed deferral
of federal tax payments. As a Group we evaluated the options
available and the benefit we and our stakeholders would gain
from the various schemes. We took this action after the Board
and leaders across the business had taken salary reductions.
Stakeholder considerations:
Colleagues
As demand from our clients fell drastically from the end of
March due to the impact on some of our key industries –
education, catering and hospitality, aviation and retail – we
had to consider work we had available for our colleagues. As a
result, we used the JRS for colleagues from April 2020 until
November 2020, with up to 800 colleagues furloughed. This
enabled us to protect jobs for as long as possible as we
re-organised strategically and agreed our long-term structure.
Clients and candidates
We worked closely with our clients to understand their
requirements during the pandemic, and in particular their
requirements for our workers. Where applicable, we have
administered the JRS for candidates.
Investors and lenders
Due to Covid-19 we re-assessed the share buyback programme
whilst we considered the impact on our ability to deliver
acceptable financial results both in 2020 and for the longer
term. By using the available government support we ensured
that we protected effective business outcomes whilst
continuing to support colleagues and candidates.
Outcome
We have used the Government support schemes to protect
jobs, manage cash flow and offset costs incurred when offices
remain closed.
GROUP TRANSFORMATION
A decision was made in early 2020 to accelerate the
transformation work which started in 2019. The
transformation programme will deliver the Virtuoso operating
model, an integrated and collaborative business. In 2020 our
work has focused on the organisational design of the Group,
including spans and layers and decision-making paths, and the
supporting IT systems. As a result, strategic investments were
approved for a Customer office, a Managed Services Centre
of Excellence and a new People Services function with the
intention of ensuring there is never a reason for a customer,
candidate or colleague to leave Impellam.
Stakeholder considerations:
Colleagues
The changes to the organisational design and structure of the
Group due to the transformation programme, alongside the
impact of Covid-19 on the business, led to a number of
redundancies being required. In July we started a redundancy
process that put up to 600 roles across the Group at risk
through to the end of 2020 and into 2021. After identifying
the 551 at-risk individuals we entered into the required
consultation process. Alongside this we continued to consider
using the JRS if appropriate.
We considered the impact this would have on the entire Group
in line with our Company values. our approach was to protect
jobs for the long term by building a fighting fit Virtuoso
business, so we consistently talked to colleagues about the
benefits of an integrated business which has increased
collaboration and enabled shared resource across the Group
in a challenging period. our people now have a greater voice,
there are fewer layers, decision-making is quicker and internal
mobility is increasing.
Clients, candidates and suppliers
The Virtuoso operating model has been designed to accelerate
the delivery of the strategy and to make sure that our
Virtuosos are close to our clients, candidates and suppliers
and can innovate our services to them. All restructuring and
redundancy decisions were made with this at front of mind.
Investors and lenders
The Virtuoso operating model will drive increased shareholder
value by accelerating margin growth through cross sell and
Group Fill and reducing costs by reducing duplication and
re-work. It will enable us to continue to meet our cash flow
targets and manage our lender requirements accordingly.
Outcome
The transformation programme continued in 2020 despite the
difficulties faced with Covid-19 and will continue into 2021 as
we implement the new IT systems and further organisational
changes. Combined with the impacts of Covid-19 on the
business, the process resulted in 300 roles being made
redundant. This will result in annualised savings of £15m
across the Group and will contribute to delivery of the Group
transformation programme.
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STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Stakeholder engagement and our S172 statement continued
STAKEHOLDER GROUP WHY THEY ARE IMPORTANT
HOW WE ENGAGE
Clients
Colleagues
Candidates
Suppliers
We work with our clients to find people for
good work to help them build better
businesses. We retain them, continuing to
understand their evolving requirements.
We review client satisfaction and our
performance either quarterly, biannually or
annually. This is supported by feedback via
face-to-face meetings, Net Promoter Scores
and surveys.
our colleagues are fundamental to the
delivery of our vision, mission, strategic and
financial promises to our stakeholders.
our mechanisms for engaging with colleagues
include: a shadow board, the Virtuoso Alliance,
colleague councils across the Group, surveys,
Net Promoter Scores and Best Companies’
surveys, and our communication and
collaboration platform, Workplace.
our mission as a business is to ‘provide a sense
of purpose and fulfilment for our people to
help our customers build better businesses in
a changing world’ which includes the
candidates we provide to our customers.
We engage with our candidates using Net
Promoter Scores, real-time feedback and
surveys, via our websites and apps which
digitise the job-seeking process.
We depend on a myriad of partners to meet
our needs – whether they are supplying
stationery or sourcing workers for our
programmes. We place the highest
expectations on our supply chain and, in turn,
we treat them as real partners.
All suppliers are expected to abide by our
Supplier Code of Conduct. In 2020 we
introduced audits of key suppliers not only to
measure their progress against the Code of
Conduct but also to give them some coaching
guidance, where necessary, in achieving the
standards we expect.
Investors and lenders
Access to capital through the capital markets
and our lenders is important to the long-term
success of our business.
The Board has regular meetings with our
institutional investors and lenders to explain
the Company’s strategy, progress and plans,
and to share how we are addressing market
challenges. Due to Covid-19 these meetings
have continued through online forums rather
than in person.
The Annual General Meeting is open to
all investors.
Shareholders can view relevant information
about Impellam in the Investors section of
impellam.com.
Page_36
STRATEGIC REPORT Responsible business
Our commitment to sustainability underlines
our responsibility to build long-term value for
all our stakeholders, supported by sound
policies, good governance and positive actions.
PEOPLE AND CULTURE
Colleague engagement and communications
All 2,500 Impellam people across the world are connected by
Workplace, an internal social network. Workplace combines the
structure of a traditional intranet with the capabilities of
Enterprise-wide Social Networking software: a place to organise
and disseminate information securely, and also a place for our
people to connect, communicate and collaborate.
The Group CEo holds quarterly strategy cascades with leaders
across the Group and connects with all 2,500 people on a
regular basis through Workplace, using video and written
updates, wellbeing check-ins, a monthly newsletter, live Q&A
sessions, and other multimedia to provide strategic
information and financial updates. Covid-19 has changed the
way we work, and as a consequence we have increased the
frequency and media we use to communicate with colleagues.
our managers hold regular 1:1 meetings with their people,
team meetings, and wider business-area conferences and
townhalls to facilitate sharing of information, consultation,
and two-way communication, supported by tools like
openBlend.
The Virtuoso Alliance (our shadow board) operates alongside
the Leadership Team to provide opinions, ideas, insight and
observations on the world in which we operate. Its purpose
is to make sure the Group CEo and the Leadership Team
remain connected to our colleagues and in turn our customers
and candidates.
The Impellam communications model and associated
technology means we can connect with our colleagues quickly,
wherever they are. The platform and communication strategy
facilitates faster knowledge sharing, communication and
collaboration. This dynamic approach to communications is
key to our strategy and culture of enabling our Virtuosos to
achieve our vision of becoming the world’s most trusted
staffing company.
Covid-19 and our people
In order to keep our people safe and able to continue
delivering services to customers and candidates, we formed
an Incident Management Team and implemented Business
Continuity protocols. National lockdowns and extensive
restrictions resulted in our offices closing as well as client
sites across multiple sectors in all key regions. In response,
we mobilised operational support teams from IT to HR to
ensure our people and candidates could rapidly move to
working from home. our day-to-day ways of working changed
and technology was used extensively. Collaboration and
telecommunications technologies enabled team working,
virtual recruitment platforms enabled our people to interview
and onboard candidates remotely and robotic process
automation helped to keep candidates engaged and databases
refreshed. We held Microsoft Teams training events to support
all Impellam people with the virtual tools they need to work
efficiently and we continued to make significant investment in
the modernisation of our IT systems, further digitalising the
way our people work using AI, automation and mobile
solutions. over 400 Impellam managers attended ‘Leadership
in a Changed World’ sessions to enable them to think, behave
and act like Virtuosos at a time of intense uncertainty, so they
could support their teams in the right way.
Equality, Diversity and Inclusion (‘ED&I’)
We actively encourage diversity in the workplace and have a
wide and varied colleague base with a variety of social and
ethnic groups represented at all levels of the business. We
believe that breaking down the barriers that have traditionally
restricted access to the labour market will encourage job
opportunities for all. our global Impellam Group ED&I team
includes representation from our key regions: North America,
Australia and New Zealand, and the UK and Europe. Under the
direction and leadership of the Group CEo and People
Directors it brings together leadership and governance
balanced with Group-wide, regional and brand-specific actions.
our strategy is based on data, qualitative intelligence from
a global survey, participation from regional committees and
aims to make Impellam a more diverse and inclusive business
wherever we operate. In 2020, our progress has received
several accolades. For the second year running, Everest Peak
Matrix recognised Guidant Global and Lorien for Diversity
and Inclusion in the 2020 TALiNT International Awards. ED&I
is firmly on our agenda; Guidant’s award-winning INfluence
programme is helping clients with their ED&I strategies and
to drive positive change.
Training
We provide our people with a multi-faceted and agile
development pathway to enable high performance and
increase retention of our people and customers alike.
We focus on freeing our people from old habits, unlocking
their potential and enabling them to thrive through change.
In response to Covid-19 and fast-changing ways of working,
we launched our ‘Leadership through Change’ live training
programme with over 400 managers logging on across the
world. We reinvigorated our Mental Health and Wellbeing
network with mental health first aiders supporting our people
globally, along with campaigns running through Workplace
every week to signpost advice, helplines and the contact
details of trained colleagues who are well placed to help and
listen. our people also had access to Gladis, our online training
platform, where the most accessed courses were digital and
IT, wellbeing and managing change.
Page_37
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Responsible business continued
Our culture of Virtuosity
At the heart of our integrated, collaborative business
model is a virtuous circle of making and keeping promises,
engendering trust and loyalty. By keeping our promises, we
retain clients, candidates, colleagues and investors for longer,
and reap the benefits of that longevity. our culture of
Virtuosity is created by passionate people who are committed
and driven to find better ways to deliver the right solutions.
We make sure that ‘the beautiful basics’ are in place and
deeply embedded in all of our businesses, all of the time,
and we make investment promises to sustain, enhance and
innovate our combined portfolio.
Modern slavery
As part of the Group’s mission to find people fulfilling work,
we strongly oppose modern slavery in all its forms and will try
to prevent it by any means that we can. We expect anyone
who has any suspicions of modern slavery in our business or
our supply chain to raise their concerns without delay. In line
with the Modern Slavery Act 2015 we annually review internal
and external measures to ensure we are doing what we can to
prevent slavery and human trafficking in our businesses and in
our supply chains. our policy is available on our website at
www.impellam.com.
HEALTH AND SAFETY
We are committed to meeting all the requirements of relevant
health and safety legislation. Formal policies are in place
throughout the Group and they are regularly reviewed and
updated to reflect changes in legislation and best practice.
The Group requires all colleagues to comply with these.
Anti-bribery
We have a commitment to carrying out business fairly,
honestly and openly. We also have zero tolerance towards
bribery. our Bribery Policy is in place to provide relevant
guidance and information to all our people in compliance with
the law relating to bribery and corruption, in particular the
Bribery Act 2010 (‘the Act’). We are determined to maintain
our reputation as a business that will not tolerate fraudulent
or corrupt dealings – whether they are attempted against us
from outside, from within our own workforce, or towards our
clients or suppliers.
COMMUNITY
Impellam people work extensively with their local
communities. This includes supporting national and local
charities through volunteer work and raising funds. During the
pandemic, Impellam people across the world undertook a wide
range of initiatives including doorstep pick-ups and drop-offs
of food, the crafting of masks and visors, reading to children
and the elderly online and delivering medication to those in
need as well as collecting and distributing food to schools
and the vulnerable. In the UK, NHS frontline workers received
donations of hand creams and balms as skin was badly
affected by wearing PPE. our consultants provided support to
those who had lost their jobs due to Covid-19 via webinars and
virtual briefings, helping them identify their transferable skills
and move into roles in active industry sectors. Guidant Global
also launched the Superstar Home-schooling Programme
with colleagues volunteering to teach science, maths, PE and
language lessons to support working parents when schools
were closed.
ENVIRONMENT
Although we are a service-based organisation with no
manufacturing facilities and limited transportation
requirements, we are still committed to following
environmental best practices in the day-to-day conduct of
our business. This includes the use of sustainable and/or
recyclable materials when available. A regular review of
the potential impacts on the various businesses is undertaken
and parts of the Group have achieved accreditation to ISo
14001 in relation to their environment management systems.
2020 energy and carbon reporting
This year we have calculated our environmental impact across
scope 1, 2 and 3 (selected categories) emission sources for
the UK only. our emissions are presented on a location basis
(using the UK grid emissions intensity) and our emissions are
1,082,778 kgCo2e, which is an average impact of 715 kgCo2e
per £m revenue. We have calculated the emission intensity
metrics on both a revenue and colleague basis, which we
will monitor to track performance in our subsequent
environmental disclosures.
The methodology used to calculate the Greenhouse Gas
(‘GHG’) emissions is in accordance with the UK Government
GHG Conversion Factors for Company Reporting (2020).
Page_38
STRATEGIC REPORT Energy and carbon action
Whilst the Covid-19 pandemic has artificially deflated our
emissions during 2020, it has also helped us accelerate our
transformation strategy, which in turn aids meeting our
environmental objectives. This includes the rationalisation
of our property portfolio, reducing our physical footprint.
We had already moved to predominantly online communications
throughout the business pre-pandemic but continued to
centralise our operational teams.
We continued planned capital investment, for example
replacing all lighting at our Head office with efficient LEDs.
This will save 159,500KwH and approximately 21 tCo2e
annually as identified in ESoS Stage 2 reporting. We have also
completed the roll-out of smart printers across the estate.
All new and existing colleagues are required to undertake
mandatory environmental awareness training in Q1 of 2021
and new communication channels are in place to provide
regular information and feedback on the Group’s
environmental objectives.
Whilst the Group’s objective is to reduce UK carbon emissions
from 2019 levels by 10% by the end of the 2022 financial year,
this is kept under regular review and we intend to increase
that reduction target during 2021 as work location and travel
protocols are reviewed and refined post pandemic restrictions.
The Group will also begin environmental audits of key
suppliers throughout 2021 and seek to positively engage and
influence environmental behaviours.
We recognise that reliance on estimated readings provided
by the energy brokerage or suppliers is not sufficient and have
taken measures to roll out automated meters across the
estate to provide accurate, easy-to-monitor data.
Emissions and energy usage
Scope 1 (kgCo2e)
Total Scope 1 (kgCO2e)
Scope 2 (kgCo2e)
Scope 3 (kgCo2e)
Total kgCO2e
Total energy usage (kWh)
Normaliser
Normaliser
Emissions source
Natural gas
Company and leased vehicles
Heating oil
Electricity
Colleague cars
kgCo2e per £m revenue
kgCo2e per FTE
2020
154,496
306,146
5,516
466,158
557,263
59,357
1,082,778
4,904,605
715
436
This Strategic Report from pages 1 to 39 was approved by the Board on 7 April 2021 and signed on its behalf by:
Rebecca Watson
Company Secretary
800 The Boulevard, Capability Green, Luton, Bedfordshire LU1 3BA
Page_39
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
The Impellam
Board is committed
to a high standard
of corporate
governance
CORPORATE GOVERNANCE
41_ Governance report
42_ Board of Directors
44_ QCA Code compliance
46_ Corporate governance statement
52_ Directors’ report
55_ Statement of Directors’ responsibilities
For more information visit
www.impellam.com
Page_40
CORPORATE GOVERNANCE Governance report
Corporate governance
The primary responsibility of the Chair is to lead the Board
effectively and this includes overseeing the adoption, delivery
and communication of the Company’s corporate governance
model. The Chair ensures that the Board as a whole plays a full
and constructive part in the development and determination of
the Company’s strategy and overall commercial objectives. The
Board has overall responsibility for corporate governance
within the Group and this is underpinned by a framework
aligned to the requirements of the business. The full Board
retains certain matters for its own review and decision-making
while other responsibilities are delegated to sub-committees of
the Board, namely the Audit Committee and the Remuneration
Committee. As a company whose shares are traded on the AIM
of the London Stock Exchange, the Company complies with the
Quoted Companies Alliance (‘QCA’) Corporate Governance
Code (‘the Code’) and its Statement of Compliance with the
same can be found on the Company website www.investors.
impellam.com/corporate-governance/.
AUDIT COMMITTEE
• oversees the Group’s internal risk
and controls strategy, including
whistleblowing arrangements.
• Reviews the Annual Report and
interim financial statements prior
to submission to the full Board.
• Reviews reports from the
external auditor.
• Reviews the Group’s risk register.
• Approves financial policies.
• Sets and reviews the activities
of internal audit.
Audit Committee
page_48
BOARD OF DIRECTORS
• Monitors and reviews the strategy
and its development, the financial
and operational performance of the
Company and risk management.
• Monitors and reviews internal and
external factors that affect the
Company.
• Sets standards, values and policies.
• Ensures the Company is meeting
its objectives and has the correct
resources in place.
• Approves financial policies.
• Reports to shareholders.
• oversees internal controls.
• Responsible for corporate governance.
REMUNERATION COMMITTEE
Sets, reviews and recommends to the
Board remuneration for Directors and
other senior executives, and sets overall
remuneration strategy and policy for
the Group.
Remuneration Committee
page_50
STRATEGY AND DEVELOPMENT TEAM (VUCA)
• Devises the Group strategy and financial plan for approval by the Board.
• Approves the strategic and financial plans of the sub-brands and divisions and monitors the implementation and delivery of those plans.
• VUCA (Volatile, Uncertain, Complexity, Ambiguity) focuses on Impellam’s overriding strategic and financial promises for the mid-long
term and the challenges and opportunities the team sees to achieve the promises.
SENIOR LEADERSHIP TEAM
(WAR ROOM)
• Responsible for the day-to-day
management of the Group and
its operations.
• Implementation of the strategy
and financial plan.
VIRTUOSO TEAM
(THE VIRTUOSO ALLIANCE)
• Provides advice, guidance and a fresh
perspective to the Group CEo, our
Executive Team and Board on our
strategic priorities and their impact
on the business, our customers, the
industry and the wider world of work.
INVESTMENT COMMITTEE
• Reviews and monitors strategic
investments and makes investment
decisions.
Page_41
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Board of Directors
LORD ASHCROFT KCMG PC
Non-Executive Chairman
Appointed: December 2014
JULIA ROBERTSON
Group Chief Executive Officer
Appointed: April 2013
Lord Ashcroft is an international businessman,
philanthropist, author and pollster. His many, varied business
interests include significant investments and participation in
both public and private companies in the UK, US and the
Caribbean. He was appointed Non-Executive Chairman of
the Company in December 2014. In 2012, he was appointed
a member of the Privy Council and was made the Prime
Minister’s Special Representative for Veterans’ Transition,
working with all departments to ensure military personnel
receive the support they need when making the transition
to civilian life. He stepped down from this role in 2018. Lord
Ashcroft supports a wide range of charities, including those
dealing with crime prevention and education. He is the
founder and Chairman of Trustees of both Crimestoppers
and the Ashcroft Technology Academy, Patron of the Forces
in Mind Trust Research Centre, Vice Patron of the
Intelligence Corps Museum and a Trustee of the Cleveland
Clinic in the US. He resigned from the House of Lords in
2015 to concentrate on other areas of his work. He is a
former Trustee and President of the West India Committee,
a former Trustee of the Imperial War Museum and former
Chancellor of Anglia Ruskin University (which awarded him
an Honorary Doctorate in 1999). In 2016, Lord Ashcroft was
made Knight Grand Cross of The Imperial order of The Holy
Trinity (Ethiopia) and a Fellow of the Royal Canadian
Geographical Society. In 2017, he was made a Senior Fellow
of the International Strategic Studies Association and in the
same year he became an Honorary Belize Rotarian. He has
written 21 books, mainly on politics and bravery, and is
widely respected for his political polling.
TIM BRIANT
Chief Financial Officer
Appointed: February 2020
Tim Briant joined the Group on 1 october 2019 and was
appointed to the Board on 3 February 2020 as the Group
Chief Financial officer. Tim is a Chartered Accountant and
has over ten years’ experience working within the
recruitment sector within listed and private equity backed
global recruitment companies. Tim spent over ten years at
Adecco in a number of finance roles, with his last there
being the CFo of Adecco UK and Ireland. Prior to this
Tim worked for Spring Group plc, a listed recruitment
company, where he was Group Financial Controller and
Company Secretary and played a key role in its acquisition
by Adecco. Prior to this Tim worked at KPMG in audit and
transaction services. Tim has a strong background in
mergers and acquisitions and business integrations having
been involved in the disposal and subsequent integration
of Spring Group plc to Adecco and the acquisition and
integration of Penna plc by Adecco.
Page_42
Julia was appointed as Group Chief Executive officer
in April 2013 having previously been responsible for the
Group’s UK operations between 2008 and 2013.
Julia’s career in recruitment spans some four decades,
always driven by the burning belief that there has to
be a ‘better way’. This belief has guided her through her
entire career which has included founding her own
recruitment business in 1986 which was sold to the
Group alongside Tate in 2000, and also serving as Chief
Executive of the Institute of Employment Consultants (now
known as the REC), the professional body for the UK
recruitment industry.
MIKE ETTLING
Independent Non-Executive Director
Appointed: September 2013
Mike Ettling was appointed a Non-Executive Director of
the Company in September 2013. With strong sector
and non-executive experience, Mike was President of
SAP-Successfactors globally. He has had an extensive
executive career in global technology businesses including
at NGA HR, Unisys, Synstar and EDS and was formerly a
Non-Executive Director of Backoffice Associates LLC,
a US PE-backed data business, and also formerly a
Non-Executive Director of Telkom BCX Ltd, a South African
IT and telecommunications business. Mike is currently
CEo of Unit4, a world leader in enterprise applications
for services and people organisations. He is also a
Non-Executive Director of NCC Group PLC, a London
listed cyber security business.
CORPORATE GOVERNANCE Key to Committee membership
Audit Committee
Chair of Audit Committee
Remuneration Committee
Chair of Remuneration Committee
ANGELA ENTWISTLE
Non-Executive Director
Appointed: September 2012
Angela Entwistle was appointed a Non-Executive Director
of the Company in September 2012. Angela is a Corporate
Communications Specialist working with companies in the
private sector including Deacon Street Partners Limited and
Conservative Home Limited. She is a Non-Executive
Director of Biteback Publishing, a leading publisher of
political and current affairs titles, and Dods Group, a leading
technology company specialising in business intelligence,
media and technology resourcing.
Angela was Corporate Communications Director of
ADT Limited, an international business services company
and the world’s leader in electronic security solutions, from
1986 to 1997. She is significantly involved in a number of
charities including acting as Trustee of Crimestoppers, the
only UK charity dedicated to solving crimes, and Trustee
and Vice-Chairman of Prospect Education (Technology)
Trust Limited, the umbrella trust responsible for the
operation of Ashcroft Technology Academy. Angela is not
considered to be independent due to her links with the
major shareholder.
MICHAEL LAURIE
Independent Non-Executive Director
Appointed: July 2014
Michael Laurie was appointed a Non-Executive Director
of the Company in July 2014. He is also Non-Executive
Chairman of SUSD Limited, a property development
company that promotes sustainable architecture. Michael
was an army officer for 34 years. He held the role of
Major General at the Ministry of Defence until 2003,
when he became the CEo of the Crimestoppers Trust,
retiring from that position in 2013.
BARONESS TINA STOWELL OF BEESTON MBE PC
Independent Non-Executive Director
Appointed: october 2017
Tina Stowell has held a number of senior positions in
media and government throughout her career. Since 2011,
she has been a member of the House of Lords and was
Leader of the House from 2014 to 2016. Before entering
the House of Lords, she worked at the BBC between 2001
and 2010 and was Head of Corporate Affairs. She is a
Non-Executive Director of ABTA and was Chairman of
the Charity Commission for England and Wales until
February 2021.
REBECCA WATSON
Group Company Secretary and
General Counsel and Portfolio CEO
Appointed: May 2008
Rebecca Watson was appointed as Group Company
Secretary and General Counsel of the Company in
May 2008. She spent the previous five years as Company
Secretary and General Counsel for The Corporate Services
Group Plc, having joined the Group in 1998 as Company
Solicitor. In addition, in July 2018 she was appointed
Portfolio CEo responsible for the Regional Specialist
Staffing brands within the Group. Prior to this, she was
in a private practice, acting for a range of corporate clients.
She has been a qualified solicitor since 1993.
Page_43
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS
IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Corporate governance statement
QCA Code compliance
QCA PRINCIPLE
Deliver growth
EXPLANATION
FURTHER READING
1
Establish a strategy and
business model which promote
long-term value for
shareholders.
By providing staffing solutions and support
to both clients and candidates across a
wide spectrum of markets, we provide
good work for our candidates and good
people for our clients.
For more information
page_14
2
Seek to understand and meet
shareholder needs and
expectations.
The CEo and CFo communicate regularly
with shareholders, investors and analysts.
The full Board is available at the Annual
General Meeting (‘AGM’) to communicate
with shareholders.
For more information
https://investors.
impellam.com/
corporate-governance/
3
Take into account wider
stakeholder and social
responsibilities and their
implications for long-term
success.
In addition to our shareholders, our
clients, candidates, contractors, suppliers
and colleagues are our most important
stakeholders. We engage with these
communities via regular communications
in our day-to-day activities, and via formal
feedback requests.
For more information
page_15
4
Embed effective risk
management, considering both
opportunities and threats,
throughout the organisation.
Ultimate responsibility for risk
management rests with the Board,
but day-to-day management of risk is
delivered through the way we do
business and our culture.
For more information
pages_30 to 33
Maintain a dynamic management framework
5
Maintain the Board as a
well-functioning, balanced
team led by the chair.
The Board has two established
Committees for Audit and Remuneration.
The composition and experience of the
Board is reviewed regularly.
For more information
pages_48 to 51
Page_44
CORPORATE GOVERNANCE
QCA PRINCIPLE
EXPLANATION
FURTHER READING
6
7
Ensure that between them the
directors have the necessary
up-to-date experience, skills
and capabilities.
The Board is satisfied that its current
composition includes an appropriate
balance of skills, experience and
capabilities.
For more information
pages_42 and 43
Evaluate board performance
based on clear and relevant
objectives, seeking continuous
improvement.
The Board regularly considers the
effectiveness and relevance of its
contributions, any learning and
development needs and the level of
scrutiny of the Senior Management Team.
For more information
page_47
8
Promote a corporate culture
that is based on ethical values
and behaviours.
our internal social network (Workplace)
sets out our corporate values and
behaviours, which are reinforced via
training and performance management.
For more information
page_37
9
Maintain governance structures
and processes that are fit
for purpose and support good
decision-making by the board.
The Board is responsible for the
Group’s overall strategic direction and
management, and for the establishment
and maintenance of a framework of
delegated authorities and controls
to ensure the efficient and effective
management of the Group’s operations.
For more information
page_41
Build trust
10
Communicate how the company
is governed and is performing
by maintaining a dialogue with
shareholders and other relevant
stakeholders.
The Investors section of our website
includes our results, presentations and
communications to shareholders. We
release the results of general meetings
through a regulatory news service and
also on the Regulatory News section of
our website.
For more information
https://investors.
impellam.com/
Page_45
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS
IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Corporate governance statement continued
The Board of Directors currently comprises the Non-Executive
Chairman, two Executive Directors and four other Non-
Executive Directors. The Board is responsible for overseeing
the management of the Group’s strategy and its businesses,
reviewing trading performance, ensuring adequate funding,
maintaining a system of internal controls and risk assessment,
ensuring good corporate governance and reporting to
shareholders. The Board meets when required and at least
eight times per annum, either in person or virtually.
The annual minimum time commitment is nine days for the
Non-Executive Directors based on eight Board meetings per
annum and the AGM. They are also required to spend
appropriate preparation time ahead of each meeting. The
Executive Directors are full-time colleagues.
During the period ended 1 January 2021, the Board met on
nine occasions. Relevant high-quality information, consisting
of detailed reports and presentations, is circulated to the
Directors in advance of meetings by the Company Secretary.
The number of scheduled Board meetings and Committee
meetings attended as a member by each Director during the
period are set out below:
Lord Ashcroft
Julia Robertson
Tim Briant
Angela Entwistle
Mike Ettling
Michael Laurie
Baroness Stowell
Board
9 (9)
9 (9)
9 (9)
9 (9)
9 (9)
9 (9)
9 (9)
Audit
Committee
Remuneration
Committee
n/a
n/a
3 (3)
n/a
3 (3)
3 (3)
n/a
n/a
n/a
n/a
1 (1)
n/a
1 (1)
n/a
Figures in brackets indicate the maximum number of meetings the individual could attend in
the period.
The Non-Executive Chairman and Angela Entwistle are not
considered to be independent due to their links with the
Company’s major shareholder. All the other Non-Executive
Directors are considered to be independent.
The role of the Chairman is to lead the Board and ensure its
effective operation. In chairing the Board the Chairman is
responsible for setting the agenda, style and tone of the Board
discussions and ensuring that all Directors receive clear,
accurate and timely information. The Chairman is responsible
for ensuring effective communications with shareholders.
on appointment, the Directors receive relevant information
about the Group: the role of the Board and the matters
reserved for its decision-making; membership of the principal
Board Committees and the powers delegated to those
Committees; the Group’s corporate governance policies and
procedures and the latest financial information. Throughout
their period in office, the Directors are regularly updated on
the Group’s business and the environment in which it operates.
Page_46
All Directors receive regular and timely information on the
Group’s operational and financial performance and any legal or
governance requirements of the Group and those which affect
them as Directors.
The Directors have direct access to the advice and services of
the Company Secretary and Chief Financial officer and are
able to take professional advice in the furtherance of their
duties at the Company’s expense, where required. The Board
is satisfied that, between the Directors, it has an executive and
appropriate balance of skills and experience, including in the
areas of HR, technology, finance, communications, media
and government.
The Board seeks advice from external sources on matters as
they arise in the business, including legal and accounting
advice. There is an appropriate gender balance with the Board
consisting of four male and three female members. The
biographies of all Directors appear on the Company investor
website: www.investors.impellam.com
The Company Secretary acts as the secretary to the Board and
its Committees, provides legal and governance support to the
Board as a whole and Directors individually, and ensures the
Group complies with all relevant legal, regulatory and
governance requirements.
The Chairman assesses the individual contribution of each of
the members of the Board to ensure a well-balanced and
committed team. The Board has carried out an annual
assessment of its performance to ensure its members
collectively function in an efficient and productive manner.
Section 172 of the Companies Act 2006 requires Directors to
take into consideration the interests of stakeholders and other
matters in their decision-making. Within our Section 172
report we set out how the Directors have addressed key
decisions that are consistent with the Company’s objectives,
strategy and the overall culture. We believe we have a history
of collaborative, informative stakeholder engagement and
decision-making based on long-term success, and we maintain
governance structures and processes that support good
decision-making.
This Section 172 report articulates how the Directors have
acted to promote the success of the Group for the benefit of
its stakeholders. In meeting this responsibility, the Directors
have had regard, amongst other matters, to:
• the likely consequences of any decisions in the long term;
• the interests of the Group’s colleagues;
• the need to foster the Group’s business relationships with
suppliers, customers and others;
• the impact of the Group’s operations on the community and
environment;
• the Group’s reputation for high standards of business
conduct; and
• the need to act fairly as between members of the Group.
CORPORATE GOVERNANCE
Results of the AGM appear on the Company investor website:
www.investors.impellam.com with between 99.67% and 100%
of votes cast being for the resolutions.
BOARD TENURE AS AT MARCH 2021
Lord Ashcroft KCMG PC
Julia Robertson
Tim Briant
Angela Entwistle
Mike Ettling
Michael Laurie
Baroness Tina Stowell
Rebecca Watson
6 years, 3 months
7 years, 11 months
1 year, 1 month
8 years, 6 months
7 years, 6 months
6 years, 8 months
3 years, 5 months
12 years, 10 months
RE-ELECTION OF DIRECTORS AT THE 2021 AGM
In accordance with the Company’s Articles of Association and
the principles of the Code, all Directors of the Company will
offer themselves for re-election by shareholders at the 2021
AGM. The Board is satisfied that each Director is qualified for
re-election by the quality of their skills, experience and
commitment to the Board.
THE BOARD AND ITS COMMITTEES
Board evaluation
The performance of the Board, its Committees and individual
Directors will be reviewed at the Board meeting in April 2021.
The Board recognises the importance of the evaluation to help
the Board continuously improve its and the Company’s
performance and to address any areas where necessary. In its
evaluation the Board considers a number of areas including
the balance of the membership, its effectiveness as a team,
strategy and purpose and stakeholder engagement.
objectives going forward are agreed and a review of
succession planning undertaken.
The roles of the Chairman and Chief Executive are separate,
with a clear division of responsibilities between them. This
separation of roles enhances the independent oversight of
executive management by the Board and more closely aligns
the Board with shareholders. It also means that no one
individual within the Company has unfettered powers of
decision-making.
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IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Corporate governance statement continued
Audit Committee
The Board has an Audit Committee whose
responsibilities include oversight of the Group’s internal
risk and controls strategy, including establishing
whistleblowing arrangements, reviewing interim and
Annual Reports and financial statements prior to their
submission to the full Board and reviewing reports from
the external auditor and internal audit. The Audit
Committee makes whatever recommendations to the
Board it deems appropriate, on any area within its remit,
including where action or improvement is needed.
COMMITTEE MEMBERS
Mike Ettling (Chair)
Michael Laurie
MEETINGS ATTENDED
Mike Ettling
Michael Laurie
3/3
3/3
MEETINGS
The Committee operates under written Terms of Reference,
and during the period ended 1 January 2021 it met on three
occasions. The Audit Committee invites the Chief Financial
officer to all of its meetings and senior representatives of the
external auditor are routinely invited to Committee meetings,
although it reserves the right to request any of these
individuals to withdraw from the meeting. The Audit
Committee comprises two Non-Executive Directors: Mike
Ettling (Chair) and Michael Laurie.
FINANCIAL AND BUSINESS REPORTING
During the year, the Audit Committee has reviewed the 2019
and 2020 financial statements, the 2020 interim statement
(unaudited) and carried out a going concern review. Reviews
of the financial statements included the accounting policies,
significant financial reporting issues and key judgements and
estimates underpinning the financial statements. For the areas
discussed, the Committee was satisfied with the assumptions
made and the accounting treatments adopted.
Risk management and internal control
Risk management is the responsibility of the Board. Further
details about the process followed and principal risks and
uncertainties that could affect business operations can be
found in the Strategic Report on pages 1 to 39. The Audit
Committee keeps under review the adequacy and
effectiveness of the Company’s internal controls and risk
management systems.
A summary of the internal controls for Group companies is
presented to the Audit Committee, including updates on the
resolution of any control weaknesses identified.
The internal controls are reviewed by the Group
Finance function.
Every year the Audit Committee reviews the Group’s risk
framework reports, to be presented to and discussed by
the Board.
The Group’s whistleblowing policy contains arrangements for
the Company Secretary to receive, in confidence, complaints
on accounting, risk issues, internal controls, auditing issues
and related matters.
The Group has a mandatory Code of Conduct, which sets out
the minimum expected behaviours for all colleagues.
Page_48
CORPORATE GOVERNANCE External audit
The Audit Committee is responsible for the development,
implementation and monitoring of the Group’s policy on
external audit. The Terms of Reference assign responsibility to
the Audit Committee for overseeing the relationship with the
external auditor. During 2020, the Audit Committee managed
the relationship with the external auditor, reviewed and
monitored their independence and objectivity and the
effectiveness of the audit process.
The Group’s policy on non-audit related services prescribes the
types of engagements for which the external auditor can be
used and those engagements which are prohibited. For
engagement for services which are non-recurring in nature,
prior approval must be sought from the Audit Committee.
Note 4 to the consolidated financial statements includes
disclosure of the auditor’s remuneration for the year.
Assessment of the Audit Committee
The Board will conduct an assessment of the Audit
Committee’s performance at the April 2021 meeting. The
Chair of the Audit Committee will be available at the 2021
Annual General Meeting to answer any questions about the
work of the Audit Committee.
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STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Corporate governance statement continued
Remuneration
Committee
The Board has a Remuneration Committee that is
responsible for making recommendations to the Board
on Directors’ remuneration. It also reviews
recommendations from the Group Chief Executive
officer on other senior executives’ remuneration,
including performance-related remuneration. The
Committee operates under written Terms of Reference,
and during the period ended 1 January 2021 it met on
one occasion. The Remuneration Committee comprises
two Non-Executive Directors: Angela Entwistle (Chair)
and Michael Laurie.
COMMITTEE MEMBERS
Angela Entwistle (Chair)
Michael Laurie
MEETINGS ATTENDED
Angela Entwistle
Michael Laurie
1/1
1/1
REMUNERATION PRACTICES
The Remuneration Committee recommends and monitors the
level and structure of remuneration for senior management as
well as monitoring remuneration trends across the Group and
periodically reviews the ongoing appropriateness and
relevance of the remuneration policy; no review was
conducted during the year.
Assessment of the Remuneration Committee
The Board will conduct an assessment of the performance of
the Remuneration Committee at the April 2021 meeting. The
Chair of the Remuneration Committee will be available at the
2021 Annual General Meeting to answer any questions about
the work of the Remuneration Committee.
Remuneration policy for the Executive Directors
Remuneration packages are designed to attract, retain,
motivate and reward Executive Directors, whilst aligning
rewards with the business objectives and performance of the
Group and the interests of shareholders.
Link between business objectives and remuneration policy
It is the Group’s policy for performance-related pay of
Executive Directors to be linked to key performance indicators
of the Group. The Group’s key objectives include developing
sustainable growth in earnings and profits, through a
combination of organic growth and investments, and increase
in share price. The key performance measures chosen in
2020 to link executive remuneration to the achievement
of these objectives were profits, organic growth and a
cash-related target.
Directors’ contracts and letters of appointment
It is the Group’s policy that Executive Directors should have
contracts with indefinite terms providing for a maximum of
12 months’ notice by the employing Group company or the
individual. In the event of termination, the Executive Directors’
contracts provide for compensation up to a maximum of the
basic remuneration package for the notice period.
Page_50
CORPORATE GOVERNANCE The details of the Executive Directors’ contracts are
summarised as follows:
The Effective date of contract and Notice period for Julia
Robertson were 5 April 2013 with 12 months’ notice from
either party. The Effective date of contract and Notice period
for Tim Briant were 1 october 2019 with six months’ notice
from either party. Non-Executive Directors serve under
letters of appointment, which either party can terminate on
three months’ written notice. The Non-Executive Directors
have no right to compensation on the termination of
their appointments.
Annual fees of Directors
The basic annual salary of each Executive Director and senior
management is reviewed annually by the Remuneration
Committee. The remuneration for the Non-Executive Directors
is determined by the Board within the limits set by the Articles
and is based on information on fees paid in similar companies
and the skills and expected time commitment of the individual
concerned. The fees are reviewed each year as part of the
annual budgeting process. The Non-Executive Directors
receive additional remuneration for chairing Committees.
Aggregate Directors’ remuneration is set out in note 5.
Annual bonus
The Remuneration Committee establishes the objectives that
must be met for each financial year if a cash bonus is to be
paid to the Executive Directors. Based on the Remuneration
Committee’s assessment of the performance against those
targets, it was determined that there was £0.2m bonus
payment for delivery of key performance indicators (‘KPIs’).
Shareholding guidelines
There are no requirements for Executive Directors or senior
executives to hold shares in the Company. Details of the
shareholdings of Directors who served during the year are set
out on page 53.
INTERNAL CONTROL
The Board has responsibility for the Group’s overall system of
internal controls and for reviewing their effectiveness. They
recognise that the system is designed to manage and mitigate,
rather than eliminate, the risk of failure to achieve business
objectives. It can provide only reasonable and not absolute
assurance against material financial misstatement or loss. The
Board has established an organisational structure with clear
Terms of Reference that must be adhered to by all subsidiaries.
There is a programme of regular review by the Board and
executive management, which provides assurance that the
control environment is operating as intended. A key element
of this review is strategic business planning and subsequent
performance monitoring. Each business has defined financial
performance plans that are agreed by the Board at the beginning
of each financial period to meet Company objectives.
These plans contain measurable performance targets, which
are continuously monitored to identify shortfalls, so that
corrective actions can be taken. In addition, the Company and
its subsidiaries maintain risk registers that are updated regularly.
The Group risk register is reviewed by the Audit Committee
whilst reviewing generally the effectiveness of the Company’s
internal control system. The Group Financial Controller is also
responsible for reporting to the Audit Committee on internal
audit, utilising internal and external expertise.
The Group operates in ‘The Virtuoso Way’, which embeds a
consistent Company-wide culture, based on trusted behaviours,
delivered by entrepreneurial Virtuoso leaders, who can drive
competitive advantage and deliver on the Group’s commitments.
The Board is committed to maintaining appropriate standards
for all the Company’s business activities and ensuring that these
standards are set out in written policies. Key examples of such
standards and policies include the ‘Code of Business Conduct’.
The Company ‘Code of Business Conduct’ demonstrates
its commitment to maintaining the high levels of ethical
standards and behaviours, wherever it operates in the world.
DIALOGUE WITH SHAREHOLDERS
The Company remains committed to listening to and
communicating openly with its shareholders to ensure that
its vision, mission, strategy, business model and performance
are clearly understood.
The Company communicates with shareholders through
the Annual Report and Accounts, full-year and half-year
announcements, the Annual General Meeting (‘AGM’) and
one-to-one meetings with large existing or potential new
shareholders. The Non-Executive Directors will attend the
AGM and are available to answer any questions relevant to the
Committees they chair. The Board receives regular updates on
the views of shareholders through briefings and reports from
the Group Chief Executive officer, Chief Financial officer and
Company Secretary. Corporate information, including all
Company announcements, is available to shareholders,
investors and the public on the Company’s website
(www.investors.impellam.com).
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STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Directors’ report
The Directors present their Annual Report on the affairs of the Group and the Company, together with the audited consolidated
financial statements and auditor’s reports, for the period ended 1 January 2021.
PRINCIPAL ACTIVITIES
The principal activities of the Group comprise the provision of staffing solutions, human capital management and outsourced
people-related services in the UK, Ireland, North America, mainland Europe, Australasia and New Zealand. The principal activity
of the Company is that of a holding company that provides strategic planning and management services to its portfolio
of subsidiaries.
RESULTS AND DIVIDENDS
The audited consolidated financial statements for the period ended 1 January 2021 are set out on pages 66 to 119. The Group
loss for the period was £21.4m (year ended 3 January 2020: £5.5m profit). on 31 July 2020 the Company suspended the Share
Purchase Plan due to the Covid-19 pandemic. on 25 January 2021 the Group announced a new Share Purchase Plan to buy back
shares, whereby it will purchase ordinary shares in the Company up to an aggregate market value of £0.5m per calendar month
until the next AGM to be held in June 2021.
FUTURE DEVELOPMENTS
The Group’s future developments are outlined within the Strategic Report. Key areas are covered within the Strategic review,
Strategic priorities and outlook sections of the Chief Executive officer’s review and within the outlook section of the Chief
Financial officer’s review.
CAPITAL STRUCTURE
The Company ‘Impellam Group plc’ has no limit to its authorised share capital. At 1 January 2021, there were 45,919,871
(2019: 47,333,660) allotted, fully paid shares of 1p in issue.
POST BALANCE SHEET EVENTS
Between the end of the year and 30 March 2021, a further 78,916 ordinary shares of 1p each have been repurchased in the
market for total consideration of £0.2m and have been cancelled.
POLITICAL DONATIONS
The Group has made no political donations during the current or prior years.
MAJOR SHAREHOLDINGS
As at 23 March 2021, the Company had been notified of the following disclosable interests representing 3% or more of the
issued ordinary share capital of the Company:
Lombard Trust
Hof Hoorneman Bankiers
Hendrik M. Van Heijst
Lord Ashcroft
Schroder Investment Management Limited
InsingerGilissen Bankiers
56.15%
10.37%
7.17%
4.96%
4.04%
3.62%
DIRECTORS
The Directors who held office during the period and up to the date of signing these financial statements were:
Executive Directors
Julia Robertson
Tim Briant
Non-Executive Directors
Lord Ashcroft KCMG PC
Angela Entwistle
Mike Ettling
Michael Laurie
Baroness Tina Stowell
Page_52
Group Chief Executive officer
Chief Financial officer
Appointed April 2013
Appointed February 2020
Non-Executive Chairman
Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Appointed December 2014
Appointed September 2012
Appointed September 2013
Appointed July 2014
Appointed october 2017
CORPORATE GOVERNANCE
To read all of our Directors’ biographies, see pages 42 and 43.
DIRECTORS’ SHAREHOLDINGS
As at 23 December 2020, the following Directors held shares in the Company:
Lord Ashcroft (Non-Executive Chairman)
Julia Robertson (Group Chief Executive officer)
Mike Ettling (Non-Executive Director)
Angela Entwistle (Non-Executive Director)
Number of shares held
2,273,755
153,910
10,860
13,800
CONTROL
The Group has identified Lord Ashcroft as the ultimate controlling party as he has influence over more than 50%, but less than
75%, of both the shares and voting rights of Impellam Group plc and together with being Chairman of Impellam Group plc has
significant influence over the Group.
FINANCIAL RISK MANAGEMENT
The Group’s objectives and policies relating to financial risk management are fully explained in note 29 on pages 108 to 110.
PRINCIPAL RISKS
The Board’s assessment of the principal risks and uncertainties, the Group’s policy and its mitigations are detailed on pages
30 to 33.
ENGAGEMENT WITH COLLEAGUES AND OTHER STAKEHOLDERS
The Directors have given much focus as to how they engage and build relationships with colleagues, suppliers, customers
and other stakeholders; and how these stakeholders’ interests are considered when making significant decisions. The Group’s
engagement with colleagues and other stakeholders is explained in the Stakeholder Engagement and Responsible business
sections of the Strategic Report, on pages 34 to 39.
We actively encourage diversity in the workplace and have a wide and varied colleague base with a variety of social and ethnic
groups represented at all levels of the business. We believe that breaking down the barriers that have traditionally restricted
access to the labour market will encourage job opportunities for all. We see it as our responsibility both to understand and to
address the root causes of gender pay gaps. We are pleased that Impellam is leading by example by appointing and promoting
women into senior roles. We are one of only a small number of AIM listed companies to be led by a woman, and in addition, 43%
of our Board members and 50% of our Senior Leadership Team are women. With this in mind, we work hard to help our clients
and suppliers achieve their diversity objectives.
The Group is committed to providing all our colleagues with a work environment free of discrimination related to sex, race,
colour, orientation, religion, age, ethnicity, national origin, disability or any other inappropriate basis. Applications for
employment by people with disabilities are considered, like all others, bearing in mind the aptitudes of the candidate concerned.
In the event of members of staff becoming disabled, every effort is made to ensure that their employment within the Group
continues and that appropriate adjustments are made. It is our policy that the training, career development and promotion of
people with disabilities should, as far as possible, be the same as for all other colleagues.
STRATEGIC REPORT
Information in respect of the Group’s approach to Colleague Engagement & Communications (including in respect of Modern
Slavery), Health & Safety, Anti-Bribery, Community and Environment are not shown within the Directors’ Report because they
are presented within the Responsible business section of the Strategic Report on pages 37 to 39.
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STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS
IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Directors’ report continued
ENVIRONMENTAL AND SUSTAINABLE OPERATIONS
Environmental
Although we are a service-based organisation with no manufacturing facilities and limited transportation requirements,
we are still committed to following environmental best practices in the day-to-day conduct of our business. This includes
the use of sustainable and/or recyclable materials when available. A regular review of the potential impacts on the various
businesses is undertaken and parts of the Group have achieved accreditation to ISo 14001 in relation to their environment
management systems.
Modern slavery
As part of the Group’s mission to find people fulfilling work, we strongly oppose modern slavery in all its forms and will try to
prevent it by any means that we can. We expect anyone who has any suspicions of modern slavery in our business or our supply
chain to raise their concerns without delay. In light of the Modern Slavery Act 2015 we annually review internal and external
measures to ensure we are doing what we can to prevent slavery and human trafficking in our businesses and in our supply
chains. our policy is available on our website at www.impellam.com.
ANNUAL GENERAL MEETING
The Notice of AGM, to be held at 3.00pm on Tuesday 29 June 2021 at the Impellam offices, 9 Devonshire Square, London
EC2M 4HP, is contained in a separate circular to shareholders. It is being mailed or otherwise provided to shareholders, after the
publication of the Annual Report. The Notice of Meeting sets out the resolutions to be proposed at the AGM and gives details of
the voting record date and proxy appointment deadline for that meeting. The meeting may be held virtually if Covid-19
restrictions are in place.
DIRECTORS’ INDEMNITY PROVISIONS
During the year and to the date of these accounts, the Company had in force an indemnity provision in favour of one or more
Directors of the Company against liability in respect of proceedings brought by third parties, subject to the conditions set out in
the Companies Act 2006.
DISCLOSURE OF INFORMATION TO AUDITOR
In the case of each Director in office at the date the Directors’ report is approved and in accordance with Section 418 of the
Companies Act 2006:
(a) so far as the Director is aware, there is no relevant audit information of which the Company’s auditor is unaware; and
(b) he/she has taken all the steps that he/she ought to have taken as a Director in order to make himself/herself aware
of anyrelevant audit information and to establish that the Company’s auditor is aware of that information.
REAPPOINTMENT OF AUDITOR
In accordance with Section 489 of the Companies Act 2006, a resolution for the reappointment of BDo LLP as auditor
of the Company is expected to be proposed at the Annual General Meeting being held on 29 June 2021.
DIRECTORS’ REPORT
This report was approved by the Board on 7 April 2021 and is signed on its behalf by:
RJ Watson
Company Secretary
800 The Boulevard
Capability Green
Luton
Bedfordshire
LU1 3BA
Page_54
CORPORATE GOVERNANCE Statement of Directors’ responsibilities
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law
and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have
elected to prepare the Group financial statements in accordance with International Financial Reporting Standards (‘IFRSs’) as
adopted by the European Union and the Company financial statements in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the Directors must not
approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group
and Company and of the profit or loss of the Group for that period. The Directors are also required to prepare financial
statements in accordance with the rules of the London Stock Exchange for companies trading securities on AIM.
In preparing these financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
• state whether they have been prepared in accordance with IFRSs as adopted by the European Union (Group) or
under UK GAAP (Parent), subject to any material departures disclosed and explained in the financial statements; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company
will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to
ensure that the financial statements comply with the requirements of the Companies Act 2006. They are also responsible
for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud
and other irregularities.
WEBSITE PUBLICATION
The Directors are responsible for ensuring the Annual Report and the financial statements are made available on a website.
Financial statements are published on the Company’s website in accordance with legislation in the United Kingdom governing
the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The
maintenance and integrity of the Company’s website is the responsibility of the Directors. The Directors’ responsibility also
extends to the ongoing integrity of the financial statements contained therein.
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STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Financial
statements
FINANCIAL STATEMENTS
57_ Independent auditor’s report
66_ Consolidated income statement
67_ Consolidated statement of comprehensive income
68_ Consolidated balance sheet
69_ Consolidated statement of changes in equity
70_ Consolidated cash flow statement
71_ Notes to the consolidated financial statements
113_ Company balance sheet
114_ Statement of changes in equity
115_ Notes to the Company balance sheet
120_ Alternative Performance Measures
122_ Glossary
124_ Company information
For more information visit
www.impellam.com
Page_56
FINANCIAL STATEMENTS Independent auditor’s report to the members of Impellam Group plc
OPINION ON THE FINANCIAL STATEMENTS
In our opinion:
• the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at
1 January 2021 and of the Group’s loss for the period then ended;
• the Group financial statements have been properly prepared in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006;
• the Parent Company financial statements have been properly prepared in accordance with United Kingdom Generally
Accepted Accounting Practice; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of Impellam Group plc (‘the Parent Company’) and its subsidiaries (‘the Group’)
for the 52-week period ended 1 January 2021 which comprise:
Composition
Financial reporting framework
Group
Parent Company
• Consolidated Income Statement
• Consolidated Statement of
Comprehensive Income
• Consolidated Balance Sheet
• Consolidated Statement of Changes in Equity
• Consolidated Cash Flow Statement
• Notes to the financial statements, including
a summary of significant accounting policies.
• Company Balance Sheet
• Company Statement of Changes in Equity
• Notes to the financial statements, including
a summary of significant accounting policies.
Applicable law and international
accounting standards in conformity
with the requirements of the
Companies Act 2006.
Applicable law and United Kingdom
Accounting Standards, including
Financial Reporting Standard 101
Reduced Disclosure Framework
(United Kingdom Generally
Accepted Accounting Practice).
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (UK) (‘ISAs (UK)’) and applicable law. our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial
statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Independence
We remain independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant
to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we
have fulfilled our other ethical responsibilities in accordance with these requirements.
CONCLUSIONS RELATING TO GOING CONCERN
Conclusion
Approach
Based on the work we have performed, we have not identified any material uncertainties relating to
events or conditions that, individually or collectively, may cast significant doubt on the Group’s or the
Parent Company’s ability to continue as a going concern for a period of at least 12 months from when
the financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the Directors’ use of the going concern
basis of accounting in the preparation of the financial statements is appropriate. our evaluation of the
Directors’ assessment of the Group’s and the Parent Company’s ability to continue to adopt the going
concern basis of accounting included:
• Review and challenge, through enquiry and consideration of historical performance, of key
assumptions applied by the Directors in preparation of cash flow forecasts, including growth
assumptions and movements in headcount and base costs, and the Group’s ability to meet working
capital requirements over the going concern period.
• Review of management’s stress tested forecasts, including the impact of the ‘downside’ scenarios
on covenant and cash ’headroom’ and consideration of the likelihood of occurrence and feasible
actions to increase headroom.
• Consideration of the adequacy of the Group’s banking facilities and ability to meet key financial
covenants.
our responsibilities and the responsibilities of the Directors with respect to going concern are
described in the relevant sections of this report.
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STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS
IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Independent auditor’s report to the members of Impellam Group plc
continued
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
The Group has diverse international operations. our Group audit was scoped by obtaining an understanding of the Group and
its environment, including the Group’s system of internal control, and assessing the risks of material misstatement in the
financial statements. We also addressed the risk of management override of internal controls, including assessing whether
there was evidence of bias by the Directors that may have represented a risk of material misstatement.
We designed an audit strategy to ensure we have obtained the required audit assurance for each component for the purposes
of our Group audit opinion (ISA 600 (UK)). Components were scoped in to address aggregation risk and to ensure sufficient
coverage was obtained of Group balances on which to base our audit opinion. The coverage of our audit procedures is
summarised graphically below and then detailed in the following table.
ABSOLUTE ADJUSTED
OPERATING PROFIT
ABSOLUTE LOSS
BEFORE TAXATION
REVENUE
GROSS ASSETS
Significant components 67%
18%
Specific scope
15%
Analytical review
Significant components 83%
8%
Specific scope
9%
Analytical review
Significant components 82%
13%
Specific scope
5%
Analytical review
Significant components 86%
11%
Specific scope
3%
Analytical review
Absolute calculations are the total sum of losses and profits together, but with negative amounts (losses) converted to
positive amounts.
Significant components
• We focused our Group audit scope primarily on the audit work at nine significant components,
which were subject to full scope audit procedures.
• These significant components contribute 67% (2019: 84%) of the Group Absolute Adjusted
operating ProfitΔ, 83% (2019: 82%) of the Group Absolute Profit/Loss before Tax, 82% (2019: 77%)
of the Group revenue and 86% (2019: 82%) of Group Gross Assets.
• The nine components considered significant were Impellam Group Plc, Impellam UK Limited,
Impellam Holdings Limited, Carlisle Staffing Plc, Lorien Resourcing Limited, Blue Arrow Limited,
Comensura Limited, Carbon60 Limited and the US division (incorporating all US entities).
• BDo UK audited all significant components with the exception of the US division, which was audited
by BDo US. Significant components are subject to full scope audit procedures.
• For the US division, following involvement in risk assessment and setting the overall audit approach
and strategy with the component auditor (a BDo Member Firm) at the planning stage, we
performed a detailed review of the testing performed and attended remote meetings with local
management and the component auditor to challenge the conclusions reached.
• one further component – Science Recruitment Group Limited – was subject to full scope audit
procedures in addition to the nine identified significant components to ensure sufficient coverage
over financial statement areas was obtained for the purposes of the Group audit opinion (ten in
total).
• This component contributes 7% (2019: 5%) of the Group Absolute Adjusted operating ProfitΔ, 5%
(2019: 5%) of the Group Absolute Profit before Tax, 4% (2019: 10%) of the Group revenue and 2%
(2019: 7%) of Group Gross Assets.
• Full scope audit procedures were performed on this component located in the UK, with the audit
performed by the Group audit team.
Full scope audits
Page_58
FINANCIAL STATEMENTS Specified audit procedures
• Specified audit procedures were performed to address the risk of material misstatement arising
from key balances in non-significant components, with testing performed on all material balances
within these components.
• All testing was performed by BDo Member Firms under direction and supervision of the Group
audit team.
• This specific scope testing was performed on components that contribute 11% (2019: 6%) of the
Group Absolute Adjusted operating ProfitΔ, 3% (2019: 6%) of the Group Absolute Profit before Tax,
9% (2019: 9%) of the Group revenue and 9% (2019: 8%) of Group Gross Assets.
• These components included:
– Global Medics PTY Limited
– Global Medics IRL Limited
– Medacs Healthcare Plc
– Comensura Pty Limited
• The Senior Statutory Auditor and Group audit team directed work for the specified procedures via
detailed instructions, briefings and via review of selected working papers on significant risk areas.
Remaining components
• All other components were scoped in for analytical review procedures to confirm our conclusion that
there were no significant risks of material misstatement of the aggregated financial information.
Parent Company
and consolidation
• The Parent Company is located in the UK and was audited by the Group audit team. The Parent
Company is treated as a significant component for the Group.
• The Group audit team have performed testing of the consolidation and related consolidation
adjustments posted in preparation of the Group financial statements.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due
to fraud) that we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of
resources in the audit, and directing the efforts of the engagement team. These matters were addressed in the context of our
audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.
Key audit matter
Description
How we addressed the key audit matter in the audit
Fraud in revenue
recognition –
incomplete
temporary
contractor
revenue
(Notes 2, 3 and 17)
The Group processes a large volume of data in
relation to contractor revenue involving a number
of systems that operate independently from
each other.
The risk in relation to temporary contractors is
that the judgements and estimates applied by
management concerning the completeness
and accuracy of revenue cut off are materially
misstated, in order to meet financial targets or
commissions in relation to candidate placements.
on a sample basis focused around the year end, we agreed the
revenue recognised was in agreement with underlying
supporting evidence (such as customer-approved timecards,
evidence of payment to the contractor and evidence of
receipt of cash from the end customer). Where there were
judgements involved in the estimate of revenue for
timesheets relating to the period but not received, these
have been corroborated to evidence supporting these
judgements.
We considered the appropriateness of the cut-off
adjustments made by management by agreeing a sample of
temporary placements to timesheets with reference to the
period worked.
We inspected a sample of credit notes raised subsequent to
the year end in order to assess the validity of the sales invoices
raised in the financial period.
Key observations communicated to the Audit Committee
We identified no matters to report concerning the
completeness and accuracy of temporary contractor revenue.
The judgements and estimates applied were consistent with
our expectations.
Page_59
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS
IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Independent auditor’s report to the members of Impellam Group plc
continued
Key audit matter
Description
How we addressed the key audit matter in the audit
Revenue
recognition –
complex contract
accounting on
global managed
service contracts
(Notes 2, 3 and 17)
Certain entities within the Group provide managed
services to their clients, which can be complex.
The applicable contracts usually span several
financial periods, and have costs incurred prior
to the contract revenue being recognised.
These contracts also contain associated
rebate agreements.
We audited a sample of contract terms covering the
significant revenue streams in the business. We understood
the types of costs included in implementation costs with
reference to timecards and the job roles of the individuals. We
ensured that these met the IFRS 15 criteria to be recognised
as implementation costs and the appropriateness of the
release period.
The risk relates to the accounting and potential
understatement of these rebate agreements that
could result in a material error within the revenue
stated for the period.
There is also management judgement involved in
appropriately recognising implementation costs in
relation to the upfront implementation costs and
subsequent release over the contract life.
The audit risk includes all aspects noted above.
We considered the completeness of the rebate liability by, on
a sample basis, vouching estimates to key contracts and/or
correspondence. our analysis of the customers compared
against the rebates payable in the current and prior year
allowed us to form an expectation as to the liability position
at period end.
We re-calculated the rebate liability with reference to the
terms of the supplier contracts/correspondence and volume
of placements obtained from the information held on the
audited entity’s system.
Key observations communicated to the Audit Committee
We found no matters to report concerning the judgemental
areas surrounding the implementation costs and the rebates
noted within the global managed service contracts.
Page_60
FINANCIAL STATEMENTS Key audit matter
Description
How we addressed the key audit matter in the audit
Goodwill, brand
intangibles
(Notes 2, 14 and 15)
Group risk
The Group’s consolidated balance sheet includes
goodwill and brand intangibles, principally arising
from historical acquisitions.
and Parent
Company
investment
recoverability
(Note 3)
The risk is that the goodwill and brand values
allocated to cash-generating units are not
recoverable and should be impaired. Management
prepare assessments at a cash-generating unit
(‘CGU’) level, and assess whether the present value
of cash flows over a terminal period support the
assets held.
Due to the inherent uncertainty involved in
forecasting and discounting cash flows, which are
the basis of the assessment of recoverability, this is
a key judgemental area of the audit.
The financial statements disclose the sensitivity
estimated by the Group in note 14.
Company risk
Related to the goodwill risk noted above, the
carrying amount of the investment in subsidiaries
held by the Parent Company is a significant balance
that in the current economic environment may be
at greater risk of impairment.
Group risk
our work was focused on the Education, Healthcare and UK
General Staffing CGUs due to the sensitivity of the discounted
cash flow model inputs. The key sensitivities in the model
relate to the revenue growth rate, profitability assumptions
and the discount rate. We have also focused on the CGUs for
which impairments were realised during the interim reporting
and considered the possibility of error within the interim
calculations.
Due to the impact of Covid-19 on the budgeting process, we
compared interim forecasts against the Group’s results, to
gain an understanding of the Group’s ability to produce robust
and accurate forecasts.
We challenged the robustness of key assumptions, including
revenue growth rates, profitability assumptions and the
discount rate, based on our understanding of the CGUs. We
also compared the assumptions used with other, similar,
recruitment firms. Where appropriate, we have sensitised
management’s judgements to consider the impact of these
not being achieved.
We utilised an auditor’s internal valuation expert to assess
management’s key assumption inputs noted above. This was
done with comparison to industry standard data points that
are utilised in such models.
There is a risk that the judgements and estimate
applied to the impairment model may not be
congruent with the underlying data and facts
available to management.
Parent Company investment
We compared the investment value held to the market
capitalisation of the Group, adjusting for factors that would
affect the valuation of the shares. This work was assisted by
the auditor’s valuation expert.
We utilised underlying discounted cash flow forecasts to form
an expectation of the recoverable amount, and in addition
considered the asset position of the subsidiary entities and
current performance.
Key observations communicated to the Audit Committee
We have confirmed the estimates and judgements utilised
within the models applied in relation to the impairment of
goodwill, brand intangibles and company investment
impairments are within acceptable ranges.
Page_61
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS
IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Independent auditor’s report to the members of Impellam Group plc
continued
Key audit matter
Description
How we addressed the key audit matter in the audit
Compliance
with laws and
regulations
(Notes 2, 6 and 22)
The Group is subject to both local and international
legal and regulatory requirements that vary
between the different industries that the Group
operates. The Group has an in-house legal team
who assist management in the determination of its
financial obligations.
The Group holds a number of balances in relation
to its ongoing obligations to comply with the
regulatory and legal environment – varying levels
of judgement are required to estimate the impact
of these on the financial statements.
The key areas of compliance relate to workers’
rights, such as holiday pay, and retention of
customer unclaimed payments.
Any non-compliance may result in fines,
unrecorded liabilities and reputational damage to
the Group – a combination of these may affect the
Group’s ability to continue trading.
New accounting
treatments as a
result of Covid-19
(Notes 2, 4 and 5)
The Group utilised certain government support
schemes in the year as a direct result of Covid-19.
The utilisation of these schemes required the
Group to comply with the requirements of
the scheme.
Any non-compliance may result in fines,
unrecorded liabilities and reputational damage
to the Group – a combination of these may affect
the Group’s ability to continue trading.
There is a risk that these new accounting
treatments are incorrectly accounted for.
We held meetings with the Group’s legal counsel both in the
UK and in the USA to understand areas of non-compliance
with laws or regulation and the progress of any significant
ongoing legal areas.
We circulated legal confirmations to key external counsel to
confirm the existence of any potential claims or areas of
non-compliance.
We assessed whether the disclosures in relation to the
liabilities and judgements made within the consolidated
financial statements are complete and accurate in relation to
the ongoing legal claims and compliance matters.
We specifically assessed by brand, the Group’s policies and
practices in relation to holiday pay, in the context of relevant
legal requirements. We reviewed the basis and
appropriateness of holiday pay accruals and level of payout
by sampling contractors and employees to underlying
contracts and system generated reports.
We assessed the Group’s treatment of the provision for client
credits and unclaimed payments.
Key observations communicated to the Audit Committee
We have no matters to report concerning compliance with
key laws and regulations applicable to the Group.
We understood the underlying government support schemes
utilised by the Group and the terms attached to these – the
most significant scheme to the Group was support for the
ongoing employment of both contractors working for clients
and internal staff members. For any other material schemes
utilised by the Group, we have agreed compliance to the
underlying rule governing these schemes.
our work ensured that the financial statements correctly
disclosed the support as required by the relevant reporting
standards.
on a sample basis, we agreed the calculation for individual
employee claims to supporting scheme documentation and
correspondence to determine compliance with the
underlying rules.
This covered both internal employees and external temporary
contractors.
Key observations communicated to the Audit Committee
We have no matters to communicate in respect of the
government support received relating to the continued
employment of employees and contractors.
Page_62
FINANCIAL STATEMENTS OUR APPLICATION OF MATERIALITY
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements.
We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic
decisions of reasonable users that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower
materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below
these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements,
and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole and performance
materiality as follows:
Materiality
Basis for
determining
materiality
Rationale for
the benchmark
applied
Group
£1.10m (2019: £1.25m)
Parent Company
£1.04m (2019: £1.19m)
c.3.5% of Adjusted operating ProfitΔ (see note 3
and page 120 for definition)
Capped at 95% of Group materiality
Adjusted operating ProfitΔ is considered the most
appropriate benchmark based on market practice
and investor expectations.
Net assets is considered the most appropriate benchmark
as the Parent Company does not trade.
An average of three years has been applied to
normalise results for the atypical impact of
Covid-19 in the year.
our materiality metric has changed from Adjusted
EBITDA in the prior year, to Adjusted operating
ProfitΔ in the current year. This reflects the change
in reporting metric by the Group that is the primary
focus of a user of the financial statements.
The materiality applied equates to 0.5% of Group
Gross Profit, 0.5% of Group Net Assets and 3.5% of
adjusted EBITDA.
Further materiality measures applied in the conduct of the audit include:
Measure
Application
Performance
materiality
£715k (65% of materiality)
(2019: £687k – 55% of materiality)
Component
materiality
The range of materiality used for components
ranged from £1,045k to £150k.
Clearly trivial
£22k (2019: £18.75k)
(2019: £1,200k to £625k).
The application of materiality at the individual account or
balance level is set at an amount to reduce to an appropriately
low level the probability that the aggregate of uncorrected
and undetected misstatements exceeds materiality. The audit
team selected 65% for the current period due to it being our
second year audit and as a result of their assessment of the
control environment.
our audit work at each component has been executed at
levels of materiality applicable to each individual entity based
on its size and risk as approved by the Group audit team and in
each case, lower than that applied to the Group.
All audit differences in excess of ‘clearly trivial’ are reported
to the Audit Committee, as well as differences below that
threshold that, in our view, warranted reporting on
qualitative grounds.
Quantitative
and qualitative
disclosures
We also report to the Audit Committee on disclosure matters that we identified when assessing the overall
presentation of the financial statements.
Page_63
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS
IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Independent auditor’s report to the members of Impellam Group plc
continued
OTHER INFORMATION
The Directors are responsible for the other information. The other information comprises the information included in the
Annual Report other than the financial statements and our auditor’s report thereon. our opinion on the financial statements
does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express
any form of assurance conclusion thereon.
our responsibility is to read the other information and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be
materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work
we have performed, we conclude that there is a material misstatement of this other information, we are required to report
that fact.
Comment
We have nothing to report in this regard.
OTHER COMPANIES ACT 2006 REPORTING
Based on the responsibilities described below and our work performed during the course of the audit, we are required by the
Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.
Strategic and
Directors’ report
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the Strategic report and the Directors’ report for the financial period for which the
financial statements are prepared is consistent with the financial statements; and
• the Strategic report and the Directors’ report have been prepared in accordance with applicable legal
requirements.
In the light of the knowledge and understanding of the Group and Parent Company and its environment obtained
in the course of the audit, we have not identified material misstatements in the Strategic report or the
Directors’ report.
MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION
Companies Act
2006
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires
us to report to you if, in our opinion:
• adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have
not been received from branches not visited by us; or
• the Parent Company financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
RESPONSIBILITIES
Directors
As explained more fully in the Statement of Directors’ Responsibilities, the Directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view, and for such
internal control as the Directors determine is necessary to enable the preparation of financial statements that are
free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Parent
Company or to cease operations, or have no realistic alternative but to do so.
Page_64
FINANCIAL STATEMENTS Auditors
our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
Extent to which
the audit was
capable of
detecting
irregularities,
including fraud
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor’s report.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. The extent to which our
procedures are capable of detecting irregularities, including fraud, is detailed below:
We obtained an understanding of the legal and regulatory frameworks that are applicable to Impellam Group plc.
We determined that the most significant laws and regulations which are directly relevant to specific assertions in
the financial statements are those related to the reporting framework (IAS, UK GAAP and the Companies Act
2006), labour regulations and tax in key territories in which the Group operates. Please refer to the Key Audit
Matter section of this report for our response to the compliance with laws and regulations, as well as the
procedures listed below:
• We understood how the Group is complying with those legal and regulatory frameworks by making enquiries of
management and those responsible for legal and compliance procedures. We corroborated our enquiries
through our review of board minutes, legal correspondence or confirmations (where relevant) and specific audit
testing within significant component and full scope entities.
• We assessed the susceptibility of the Group’s financial statements to material misstatement, including how fraud
might occur, by meeting with management to understand where it is considered there was a susceptibility of
fraud. our considerations included enquiries with component management and component auditors.
• We also considered potential fraud drivers, including: financial or other pressures, opportunity, and personal or
corporate motivations. We considered the programmes and controls that the Company has established to
address risks identified, or that otherwise prevent, deter and detect fraud; and how senior management
monitors those programmes and controls. Where the risk was considered to be higher, we performed audit
procedures to address each identified fraud risk. These procedures included testing manual journals and key
areas of estimation uncertainty or judgement, for example: cut off of revenue, revenue rebate accruals, expected
credit loss provisions, provisions in relation to ongoing legal cases, inputs to the models utilised in Goodwill and
Brand Intangible value-in-use models and certain key assumptions underpinning the IFRS 16 right-of-use asset
and lease liability calculations.
• We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team
members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout
the audit.
our audit procedures were designed to respond to risks of material misstatement in the financial statements,
recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not
detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery,
misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the
further removed non-compliance with laws and regulations is from the events and transactions reflected in the
financial statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
USE OF OUR REPORT
This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. our audit work has been undertaken so that we might state to the Parent Company’s members those
matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by
law, we do not accept or assume responsibility to anyone other than the Parent Company and the Parent Company’s members
as a body, for our audit work, for this report, or for the opinions we have formed.
Mark Cardiff (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, UK
7 April 2021
BDo LLP is a limited liability partnership registered in England and Wales (with registered number oC305127).
Page_65
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS
IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Consolidated income statement
FoR THE 52 WEEKS ENDED 1 JANUARY 2021
Revenue
Cost of sales
Gross profit
Administrative expenses
Impairment losses from receivables
Operating (loss)/profit
operating profit before impairments, amortisation of brand value and customer
relationships
Amortisation of brand value and customer relationships
Impairment of goodwill
Impairment of other intangible assets
operating (loss)/profit
Finance income
Finance expense
(Loss)/profit before tax
Tax charge
(Loss)/profit from continuing operations
Profit from discontinued operation, net of tax
(Loss)/profit for the period
(Loss)/profit for the period attributable to:
Equity holders of the Parent Company
Non-controlling interest
Earnings per share
Attributable to equity holders of the Parent Company:
– basic
– diluted
Notes
3
17
3 & 4
15
14
15
3 & 4
7
8
9
11
26
10
1 January
2021
£m
2,000.9
(1,772.8)
228.1
(239.5)
(3.6)
(15.0)
3 January
2020
£m
2,254.8
(1,980.7)
274.1
(261.4)
1.2
13.9
18.2
(11.0)
(16.6)
(5.6)
(15.0)
0.3
(5.7)
(20.4)
(1.0)
(21.4)
–
(21.4)
(21.4)
–
(21.4)
31.1
(10.2)
(1.6)
(5.4)
13.9
0.8
(9.0)
5.7
(0.9)
4.8
0.7
5.5
5.8
(0.3)
5.5
(46.2)p
(46.2)p
11.2p
11.2p
Page_66
FINANCIAL STATEMENTS Consolidated statement of comprehensive income
FoR THE 52 WEEKS ENDED 1 JANUARY 2021
(Loss)/profit for the period
Other comprehensive income:
Items that may be subsequently reclassified into income:
Foreign currency translation differences – foreign operations
Total comprehensive income for the period, net of tax
Total comprehensive income for the period attributable to:
Equity holders of the Parent Company
Non-controlling interest
Notes
1 January
2021
£m
(21.4)
3 January
2020
£m
5.5
(2.0)
(23.4)
(23.4)
–
(23.4)
(4.3)
1.2
1.5
(0.3)
1.2
26
Page_67
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS
IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Consolidated balance sheet
AS AT 1 JANUARY 2021
Non-current assets
Property, plant and equipment
Right-of-use assets
Goodwill
other intangible assets
Financial assets
Deferred tax assets
Trade and other receivables
Current assets
Trade and other receivables
Tax receivable
Cash and cash equivalents
Total assets
Current liabilities
Short-term borrowings
Lease liabilities
Trade and other payables
Tax payable
Provisions
Net current assets
Non-current liabilities
Long-term borrowings
Lease liabilities
other payables
Provisions
Deferred tax liabilities
Total liabilities
Net assets
Equity
Issued share capital
Share premium account
other reserves
Retained earnings
Total equity attributable to equity holders of the Parent Company
Non-controlling interest
Total equity
1 January
2021
£m
Notes
12
13
14
15
16
23
17
17
18
20
13
19
22
21
13
19
22
23
24
24
25
26
5.1
21.3
129.1
96.2
1.6
10.3
3.3
266.9
563.9
2.8
117.9
684.6
951.5
0.1
9.2
558.0
0.5
7.2
575.0
109.6
119.0
17.3
–
3.3
18.1
157.7
732.7
218.8
0.5
30.1
30.6
118.3
70.2
219.1
(0.3)
218.8
(Restated)
3 January
2020
£m
6.6
27.6
148.0
117.8
1.5
13.6
5.7
320.8
574.7
2.5
132.3
709.5
1,030.3
24.7
10.7
550.4
1.8
3.6
591.2
118.3
140.9
23.1
1.6
5.5
21.5
192.6
783.8
246.5
0.5
30.1
30.6
120.3
95.9
246.8
(0.3)
246.5
The consolidated financial statements of Impellam Group plc (registered number: 06511961) on pages 66 to 112 were
approved by the Board on 7 April 2021.
Tim Briant
Chief Financial Officer
Page_68
FINANCIAL STATEMENTS Consolidated statement of changes in equity
FoR THE 52 WEEKS ENDED 1 JANUARY 2021
5 January 2019
Profit for the period
other comprehensive income (note 25)
Total comprehensive income in period
Transactions with owners, recorded directly in equity
Purchase and cancellation of own shares (note 24)
Demerger charge (note 11)
3 January 2020
4 January 2020
Loss for the period
other comprehensive income (note 25)
Total comprehensive income in period
Transactions with owners, recorded directly in equity
Purchase and cancellation of own shares (note 24)
1 January 2021
Total share
capital and
share
premium
(note 24)
£m
30.6
–
–
–
–
–
other
reserves
(note 25)
£m
124.6
–
(4.3)
(4.3)
–
–
30.6
30.6
120.3
120.3
–
–
–
–
–
(2.0)
(2.0)
–
30.6
118.3
Retained
earnings
£m
110.7
5.8
–
5.8
(10.8)
(9.8)
95.9
95.9
(21.4)
–
(21.4)
(4.3)
70.2
Total equity
attributable
to equity
owners of
the parent
£m
Non-
controlling
interest
(note 26)
£m
Total
equity
£m
265.9
5.5
(4.3)
1.2
(10.8)
(9.8)
–
(0.3)
–
(0.3)
–
–
(0.3)
246.5
(0.3)
246.5
–
–
–
–
(21.4)
(2.0)
(23.4)
(4.3)
265.9
5.8
(4.3)
1.5
(10.8)
(9.8)
246.8
246.8
(21.4)
(2.0)
(23.4)
(4.3)
219.1
(0.3)
218.8
Page_69
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS
IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Consolidated cash flow statement
FoR THE 52 WEEKS ENDED 1 JANUARY 2021
Cash flows from operating activities
(Loss)/profit before tax
Adjustments for:
Depreciation of property, plant and equipment
Amortisation of right-of-use assets
Amortisation of other intangible assets
Impairment of goodwill
Impairment of other intangible assets
(Profit)/loss on disposal of property, plant and equipment
Finance income
Finance expense
Discontinued operations
Decrease/(increase) in trade and other receivables
Increase in trade and other payables
Increase in provisions
Cash from operations
Tax paid
Net cash from operating activities
Cash flows from investing activities
Acquisition of subsidiary
Purchase of property, plant and equipment
Purchase of intangible assets
Receipt from lease debtors
Increase in other financial assets
Interest received
Net cash from investing activities
Cash flows from financing activities
Drawdown of short-term borrowings
Repayment of short-term borrowings
Decrease in overdraft
Purchase and cancellation of own shares
Interest paid on lease liabilities
Interest paid on borrowings
Repayment of lease liabilities
Cash flow on discontinued operations, net of cash disposed of
Net cash from financing activities
Net (decrease)/increase in cash and cash equivalents
opening cash and cash equivalents
Effect of foreign exchange rate movements
Closing cash and cash equivalents
Page_70
Notes
1 January
2021
£m
(20.4)
12
13
15
14
15
4
7
8
11
22
12
15
28
16
7
28
28
28
24
8
8
28
11
28
18
2.8
9.5
17.6
16.6
5.6
(0.2)
(0.3)
5.7
–
36.9
8.1
50.8
1.4
97.2
(2.7)
94.5
–
(1.2)
(2.3)
3.2
(0.1)
0.3
(0.1)
167.1
(213.4)
(36.1)
(4.3)
(0.8)
(4.6)
(11.5)
–
(103.6)
(9.2)
132.3
(5.2)
117.9
(Restated)
3 January
2020
£m
5.7
3.2
9.0
17.2
1.6
5.4
0.2
(0.8)
9.0
0.7
51.2
(8.1)
6.0
4.8
53.9
(4.4)
49.5
(2.9)
(3.6)
(6.8)
2.9
(0.1)
0.8
(9.7)
260.0
(243.2)
(0.9)
(10.8)
(1.3)
(6.8)
(12.1)
(2.5)
(17.6)
22.2
117.1
(7.0)
132.3
FINANCIAL STATEMENTS Notes to the consolidated financial statements
FoR THE 52 WEEKS ENDED 1 JANUARY 2021
1. CORPORATE INFORMATION
The financial statements of Impellam Group plc and all of its subsidiaries (‘the Group’) for the 52 weeks ended 1 January 2021
were authorised for issue by the Board of Directors on 7 April 2021 and the balance sheet was signed on behalf of the Board
by Tim Briant.
The Group provides staffing solutions, human capital management and outsourced people-related services from offices
located in the UK, Ireland, North America, mainland Europe, Australia and New Zealand.
Impellam Group plc (‘the Company’) is a public limited company incorporated and registered in England and Wales and
domiciled in the UK under the Companies Act 2006 with a listing on the London Stock Exchange, trading on AIM.
Its registered office is located at:
800 The Boulevard
Capability Green
Luton
Bedfordshire LU1 3BA
United Kingdom
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation and going concern
The consolidated financial statements have been prepared on a going concern basis in accordance with International Financial
Reporting Standards (‘IFRS’) in conformity with the requirements of the Companies Act 2006. In coming to their conclusion,
the Directors have considered the Group’s profit and cash flow plans for the coming period, and have run various downside
‘stress test’ scenarios. These scenarios assess the speed that economies in our key trading markets of the UK, USA and
Australia expand as current restrictions on business are relaxed. These stress tests indicate the Group can withstand the
increased working capital commitments that arise as a result of increased business in the staffing industry.
The projections assess our potential debt requirements against the Group’s £240m of committed facilities and against the key
covenant ratios over this period. The Group has cyclical working capital requirements which increase during periods of higher
trading levels and therefore if there is a significant increase in trading over a short period, the working capital requirements
and therefore net debt could increase significantly. In our projections, as business activity increases our working capital
requirements and net debt levels would rise, but to levels within our facility. In these projections the Group’s key covenant
ratio of net debt being less than 2.5x the last 12 months’ EBITDA is not breached at the quarterly testing points.
In preparing these stress test scenarios, we have included the cash outflows from various government programmes, across the
jurisdictions in which the Group operates, to account for the deferral of certain tax payments during the current period, which
was a cash benefit of £48.0m at the end of the current period. The scenarios include certain cost mitigation actions, such as
reduced performance bonus, travel and entertainment, marketing activity, reduced capital expenditure and postponement in
share buybacks that may be required to ease the working capital impact as trading levels recover. In the event that there is a
more significant cash requirement than in these scenarios there are further mitigating actions which could include, but are not
limited to, further reductions in capital expenditure and further reductions in non-business critical expenditure.
The financial statements have been prepared on the historical cost basis except where otherwise identified and as modified
for the revaluation of certain financial assets at fair value through the income statement. The principal accounting policies
adopted are set out below. The financial statements are presented in Pound Sterling and all values are rounded to the nearest
£0.1 million (£0.1m) except where otherwise indicated. Foreign operations are included in accordance with note 2(C) below.
Any references to 2020 in these statements refer to the 52-week financial period ended 1 January 2021. Any references to
2019 in these statements refer to the 52-week financial period ended 3 January 2020.
Page_71
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS
IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Notes to the consolidated financial statements continued
FoR THE 52 WEEKS ENDED 1 JANUARY 2021
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CoNTINUED
Basis of consolidation
The consolidated financial statements comprise the financial statements of the Group as at 1 January 2021. The financial
statements of subsidiaries are prepared for the same reporting period as the Parent Company. Each company, including the
parent, uses locally applicable generally accepted accounting practice (‘GAAP’) for the preparation of their individual financial
statements. Adjustments are made to bring these into line with the IFRS policies adopted by the Group, as required.
Subsidiaries are consolidated from the date on which the Group obtains control using the acquisition method and cease to be
consolidated from the date on which the Group ceases its control. Accounting policies have been applied consistently.
A component of the Group’s business is classified as a discontinued operation if the operations and cash flows of the
component can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the Group and
if the component either has been or is classified as held for sale, and:
• represents a separate major line of business or geographical area of operations;
•
•
is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations; or
is a subsidiary acquired exclusively with a view to resale.
When an operation is classified as a discontinued operation the consolidated income statement and consolidated cash flow
statement are restated and presented as if the operation has been classified as such from the start of the comparative year.
IFRS 3 Business combinations – Amendments
A) Changes in accounting policies and disclosures
New standards, amendments and interpretations effective in financial year 2020
•
• Amendments to IAS 1 Presentation of financial statements and IAS 8 Changes in accounting policies
• Amendments to IFRS 9, IAS 39 and IFRS 7 on financial instruments
•
IFRS 16 Leases – Covid-19 related rent concessions
The above amendments have not materially impacted the Group’s results.
Standards and interpretations to existing standards that are not yet effective and have not been early adopted by the Group
The following new standards and interpretations to existing standards have been published that are mandatory for the
Group’s future accounting and effective for the Group as follows, which are all effective for periods starting on or after
1 January 2021:
• Amendments to IFRS 4 Insurance contracts
• Amendments to IFRS 9, IAS 39 and IFRS 7 on financial instruments, IFRS 4 Insurance contracts and IFRS 16 Leases
The above amendments are not expected to materially impact the Group’s results.
B) Significant accounting judgements and estimates
In applying the Group’s accounting policies, the following judgements and estimates have been made that may have a
significant effect on the amounts recognised in the financial statements in the current or future years:
i) Judgements
Agent versus principal
The Group assesses whether it is acting as agent or principal depending on whether the client has a direct relationship with
the Group, whether the Group has the primary responsibility for providing the services and whether the Group contracts
directly with either the worker placed or any other recruitment agency. Account is also made of the degree of latitude the
Group has in establishing the charging rates with all parties.
Where the Group provides a Managed Service, in which it acts as agent for the client (which is mainly Managed Services
contracts), the amount of revenue recognised is limited to the management fee receivable for that service after making
provision for any losses foreseen, volume rebates and amounts payable under gain-share arrangements rather than the full
amount invoiced. Trade receivables and payables related to these sales are recorded at full invoice value.
Page_72
FINANCIAL STATEMENTS Lease end dates
Under IFRS 16 Leases a right-of-use asset and lease liability need to be recognised in line with the expected lease term, which
may not be the same as the term of the lease. This has led to a level of judgement over the leases in our portfolio on the
expected lease termination date. Depending on the circumstances of the individual lease, the Group has taken either the
break date (for those circumstances where the break is expected to be exercised), the actual lease end date or an estimate
of how long we will stay in a property for those leases which are held over.
Ageing of borrowing
The Group has signed up to a revolving credit facility which is committed until at least April 2023 (note 29). Borrowings made
under this facility are over a set period, which is usually less than a year, but are available to be renewed as and when they fall
due. The Group assesses an element of this borrowing to be due in less than one year based upon optimal cash holding
positions and planned repayments of the debt, in total, over the coming 12 months.
Deferred tax asset recoverability
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is
no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be
utilised. Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent
that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.
ii) Estimates
Impairment of goodwill and other intangible assets
The Group determines whether goodwill and other intangible assets are permanently impaired on an annual basis or
otherwise when changes in events or situations indicate that the carrying value may not be recoverable. This requires an
estimation of the recoverable amount of the cash-generating unit to which the assets are allocated. Estimating the value-in-
use requires the Group to make an estimate of the future cash flows from the cash-generating unit and also to choose a
suitable discount rate in order to calculate the present value of those cash flows. More details of the carrying value and
impairment review, including sensitivities, are given in notes 14 and 15.
Legal provision
The Group measures and recognises provisions related to pending litigation or other outstanding claims subject to negotiated
settlement, mediation and arbitration. A significant level of estimation is required to quantify the possible ranges of financial
settlement. Due to the inherent uncertainty in this evaluation process, actual losses may be different from the originally
estimated provision (see note 22).
Held-over lease end dates
The Group has estimated the lease end date for certain property leases where the lease has finished but the property is still in
use under the holding-over provisions of the Tenant and Landlord Act 1954. In these cases, the Group has had discussions with
the brand occupying the specific property and the landlord to determine the expected future of the property and used these
discussions as a basis of estimating the expected future period the Group will retain access to the property.
Lease interest rates
The Group has estimated the interest rates implicit in the lease when calculating the lease liability and related right-of-use
asset under IFRS 16 Leases. Unless stipulated clearly when taking on the liability, the Group uses an incremental borrowing
rate calculation to determine the relevant rate. Consideration is taken over the term of the lease, the credit risk of the acquirer
and any specific risks relating to the assets acquired by an individual lease.
Change in critical estimates and critical judgements
During the year, the Group reviewed the critical estimates and critical judgements and removed the judgements over
discontinued operations and brand value amortisation as the judgements over these areas were completed in the prior period.
Page_73
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS
IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Notes to the consolidated financial statements continued
FoR THE 52 WEEKS ENDED 1 JANUARY 2021
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CoNTINUED
C) Currencies and foreign currency translation
The functional and presentational currency of the Company and its UK subsidiaries is Pound Sterling. Foreign operations are
located mainly in North America, Europe, Australia and New Zealand, which use their local currencies as their functional
currencies.
on consolidation, at the reporting date, the assets and liabilities of the Group’s foreign operations are translated into the
presentation currency of the Group at rates ruling on the balance sheet date. Income and expense items are translated at
average exchange rates monthly during the reporting period, as this is considered a reasonable approximation to actual
translated rates.
The exchange differences arising from this retranslation are recognised in the consolidated statement of comprehensive
income and accumulated to a foreign currency translation reserve in equity.
Transactions in foreign currencies are initially recorded in the functional currency using the rate of exchange ruling at the
date of the transaction. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies
are retranslated at the rates prevailing on the balance sheet date. All differences are taken to the income statement.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate
as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using
exchange rates at the date when the fair value was determined.
Exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither
planned nor likely to occur, therefore forming part of the net investment in the foreign operation, and the tax charges and
credits attributable to the exchange differences on these balances, are dealt with in the statement of comprehensive income
and accumulated to a foreign currency translation reserve in equity.
D) Property, plant and equipment
Property, plant and equipment is stated at historic cost less accumulated depreciation and any impairment in value. Historical
cost includes expenditure that is directly attributable to the acquisition of the items. Depreciation is calculated on
a straight-line basis over the estimated useful life of the asset as follows:
Freehold property:
Short leasehold property improvements:
Furniture, fixtures and fittings:
Computer equipment:
over 50 years
over the term of the lease
between three and ten years or to the end of the lease, whichever is shorter
at the start of the asset’s life
between two and five years
The residual value and estimated useful lives of assets are reviewed, and adjusted if appropriate, at each balance sheet date.
The carrying value of property, plant and equipment is reviewed for impairment when events or changes in circumstances
indicate that the carrying value may not be recoverable.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected
to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference
between the net disposal proceeds and the carrying value of the item) is included in the income statement in the period the
item is derecognised.
E) Goodwill
Goodwill acquired in a business combination represents the excess of the consideration paid (at the date of exchange) over
the fair value of the identifiable assets, liabilities and contingent liabilities acquired on the date of acquisition.
Acquisition-related costs are expensed to the income statement as incurred.
Goodwill is recognised as an asset in the consolidated balance sheet of the Group and is recorded at cost less any accumulated
impairment losses. The carrying value of goodwill is reviewed for impairment annually or more frequently if events or changes
in circumstances indicate that the carrying value may be impaired. Any impairment charge is recognised immediately in the
income statement and is not subsequently reversed.
Page_74
FINANCIAL STATEMENTS
For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to
each of the Group’s cash-generating units (business segments) that is expected to benefit from the combination. Each group
of cash-generating units to which the goodwill is so allocated represents the lowest level within the Group at which the
goodwill is monitored for internal management purposes. Impairment is determined by assessing the recoverable amount
of the cash-generating unit to which the goodwill relates. Where the recoverable amount of the cash-generating unit is less
than the carrying amount, an impairment loss is recognised.
F) Other intangible assets
other intangible assets represent the carrying value of brands and client relationships, identified on business combinations,
and of computer software and licences.
Carrying value is equal to cost less accumulated amortisation and impairment or, in the case of assets acquired through
business combinations, fair value at date of acquisition less accumulated amortisation and impairment.
Brands are defined as having finite useful lives and the costs are amortised on a straight-line basis over the estimated useful
lives of each of the assets (ranging between three and 20 years). The expense is taken to the income statement through the
‘depreciation and amortisation’ line within administrative expenses.
Client relationships are defined as having finite useful lives and the costs are amortised on a straight-line basis over the
estimated useful lives of each of the assets (ten years). The expense is taken to the income statement through the
‘depreciation and amortisation’ line within administrative expenses.
Externally acquired computer software and licences are capitalised at the costs incurred to acquire and bring into use the
specific software. Internally generated computer software programs are capitalised to the extent that costs can be separately
identified and attributed to particular software programs, measured reliably, and where the asset developed can be shown to
generate future economic benefits and the Group intends to and has the technical ability and sufficient resources to complete
development. Computer software and licences are defined as having finite useful lives and the costs are amortised on a
straight-line basis over the estimated useful lives of each of the assets, considered to be between three and five years. The
expense is taken to the income statement through the ‘depreciation and amortisation’ line within administrative expenses.
All costs relating to the ‘research’ phase of the software development cycle, together with costs not separately identifiable
and attributable to particular program development, are expensed directly to administrative expenses in the income
statement in the period in which they are incurred.
All intangible assets are also reviewed for impairment whenever there is an indication that the carrying amount may be
impaired, or where the asset is not yet available for use. Useful lives are also examined on an annual basis and adjustments,
where applicable, are made on a prospective basis.
G) Implementation costs
Costs directly attributable to the implementation of a contract and which can be separately identified and measured reliably
are capitalised when income from that contract is virtually certain and where they relate directly to the specific contract and
are directly incremental to the implementation. These costs are included within trade and other receivables on the balance
sheet so long as the estimated future cash flows from the contract are not less than the capitalised amount. These capitalised
costs are amortised over the life of the contract on a straight-line basis. If the contract becomes loss-making, any unamortised
costs are written off immediately.
H) Financial assets
Financial assets are classified as ‘financial assets at fair value through the income statement’, ‘financial assets at fair value
through other comprehensive income’, or as ‘financial assets at amortised cost’, as appropriate. The Group determines the
classification of its financial assets at initial recognition and, where allowed and appropriate, re-evaluates this designation at
each financial period end. When financial assets are recognised initially, they are measured at fair value, being the transaction
price plus, in the case of financial assets not at fair value through the income statement, directly attributable
transaction costs.
Page_75
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS
IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Notes to the consolidated financial statements continued
FoR THE 52 WEEKS ENDED 1 JANUARY 2021
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CoNTINUED
Investments
The Group’s investments are classified as held at fair value through the income statement. They are further classified as non-
current unless management expects to dispose of the investment within 12 months of the balance sheet date.
These investments relate to the deferred compensation plan detailed in note 2(P) below, where the employee’s entitlement is
limited to the market value of the fund. on this basis, the use of fair value through the income statement is permitted because
it eliminates a measurement inconsistency (‘accounting mismatch’) that would otherwise arise from measuring assets or
liabilities or recognising the gains or losses on them on a different basis.
Subsequent to initial recognition these investments are held at fair value; the fair values are based upon bid prices ruling at the
balance sheet date. Fair value adjustments are recognised through the income statement.
I) Other non-current financial assets
other non-current financial assets represent security deposits with non-financial institutions that have no fixed date of
repayment and that are not expected to be repaid within the next 12 months. on initial recognition these assets are held
at cost and subsequently at amortised cost.
Impairment
The Group assesses at each balance sheet date whether a financial asset is impaired by reference to any known evidence
indicating that the Group may not be able to collect all amounts due in full.
J) Trade and other receivables
Trade receivables, which have various terms, are non-interest-bearing and are recognised and carried at fair value and
subsequently measured at amortised cost, being the original invoice amount less an allowance for uncollectible amounts,
credit notes and expected credit losses.
The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss
provision for trade receivables and contract assets. To measure expected credit losses on a collective basis, trade receivables
and contract assets are grouped based on similar credit risk and ageing. The contract assets have similar risk characteristics to
the trade receivables for similar types of contracts.
The expected loss provision is based on the Group’s expectation of future credit losses over the current receivables balance.
These expectations are based upon known issues effecting specific debtors as well as general forward-looking information on
factors affecting the Group’s customers as a whole as well as an awareness of the economic conditions in the countries where
the Group operates. These risk factors are considered both on initial recognition of the receivable and as part of the ongoing
assessment. If there has been a significant increase in the credit risk since the initial recognition then an increased loss
provision is recognised.
Trade and other receivables also include contract assets which primarily arise either costs incurred when implementing a new
contract or where services have been provided but the amount incurred and margin earned has yet to be invoiced to the client
due to timing of the completion of the performance obligation and are considered contract assets for disclosures required
under IFRS 15 Revenue from Contracts with Customers.
K) Cash and cash equivalents
Cash and short-term deposits in the consolidated balance sheet comprise cash at bank and in hand and short-term deposits
with an original maturity of three months or less. For the purpose of the consolidated cash flow statement, cash and cash
equivalents consist of cash and short-term deposits as defined above. Bank overdrafts are due on demand and part of the
day-to-day cash management of the Group and are shown within trade and other payables on the consolidated balance sheet.
L) Trade and other payables
Trade and other payables are classified as financial liabilities and measured at amortised cost which approximates to the fair
value. The balances are not interest-bearing.
Page_76
FINANCIAL STATEMENTS M) Taxes
Current tax
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from
or paid to the taxation authorities. The tax rates and the tax laws used to compute the amount are those that are enacted or
substantively enacted by the balance sheet date.
Deferred tax
Deferred income tax is provided, using the liability method, on temporary differences at the balance sheet date between the
tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences, except:
• where the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a
•
transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor
taxable profit or loss; and
in respect of taxable temporary differences associated with investments in subsidiaries, where the timing of the reversal
of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the
foreseeable future.
Deferred income tax assets are recognised on an undiscounted basis for all deductible temporary differences, carry-forward
of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which
the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised
except:
• where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition
•
of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither
the accounting profit nor taxable profit or loss; and
in respect of deductible temporary differences associated with investments in subsidiaries, deferred tax assets are
recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and
taxable profit will be available against which the temporary differences can be utilised.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the
asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at
the balance sheet date. Income tax relating to items recognised directly in equity is recognised in equity and not in the income
statement.
Deferred tax assets and liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax
liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
Deferred tax liabilities are not recognised on unremitted earnings from subsidiaries where the Group can control the timing of
the reversal and the temporary difference is not expected to reverse in the foreseeable future.
Sales taxes
Revenues, expenses and assets are recognised net of the amount of sales tax except:
• where the sales tax incurred on a purchase of goods or services or assets is not recoverable from the taxation authority,
in which case the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as
applicable; and
• receivables and payables that are stated with the amount of sales tax included.
The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or
payables in the balance sheet.
Page_77
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS
IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Notes to the consolidated financial statements continued
FoR THE 52 WEEKS ENDED 1 JANUARY 2021
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CoNTINUED
N) Provisions
Provisions, such as those over property or ongoing legal cases, are recognised when the Group has a present legal or
constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to
settle the obligation; and the amount has been reliably estimated.
If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows
at a pre-tax rate that reflects current market assessments of the time value of money. When discounting is used, the increase
in the provision due to the passage of time is recognised as an interest expense in the income statement.
As part of the normal course of business the Group is exposed to various claims. Provisions are made for amounts that satisfy
the recognition criteria in IAS 37 and accordingly are not recognised when the likelihood of any claim being settled and the
associated settlement amount cannot be estimated.
O) Financial liabilities
Financial liabilities are classified on initial recognition as either ‘financial liabilities at fair value through the income statement’
or ‘at amortised cost’. All Group borrowings have initially been recognised as ‘at amortised cost’ and measured at fair value
of the consideration received less directly attributable issue costs.
After initial recognition, interest-bearing borrowings are subsequently measured at amortised cost. This cost is computed
as the amount initially recognised minus principal repayments, plus or minus the cumulative amortisation, using the effective
interest rate method of any difference between the initially recognised amount and the maturity amount. Amortised cost
is calculated by taking into account any issue costs, and any discount or premium on settlement.
Gains and losses are recognised in the income statement when the liabilities are derecognised as well as through the
amortisation process.
A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires.
P) Employee benefits
Short-term benefits – bonus arrangements
The Group operates a number of annual bonus arrangements for Directors and employees. The cost of these arrangements is
recognised in the income statement when the entity has an obligation to make such payments as a result of the achievement
of Board-approved performance targets and when a reliable estimate of this obligation can be made.
Defined contribution pension obligations
The Group provides pension arrangements for its UK-based Directors and employees through defined contribution schemes
administered by third party providers. The Group has no further payment obligations once the contributions have been made.
Contribution costs are expensed to the income statement as they become due.
Other post-employment obligations
In the US, the Group operates a deferred compensation plan for certain key employees. The plan allows the employee to defer
receipt of a portion of their emoluments together with, in some cases, a contribution from the Group. The deferred amounts
plus the Group contribution are paid into an external trust fund. Employees’ entitlement is limited to the market value of the
fund; therefore, both the investment and the liability to the employee are marked to market on an annual basis, with
movements passing through the administrative expenses line (salaries and wages) in the income statement.
Q) Leases
All leases are accounted for by recognising a right-of-use asset and a lease liability except for leases of low-value assets and
leases with an expected full term of 12 months or less.
Lease liabilities are measured at the present value of the unpaid contractual payments over the expected lease term, with
the discount rate determined by reference to the rate inherent in the lease unless (as is typically the case) this is not readily
determinable, in which case the Group’s incremental borrowing rate on commencement of the lease is used.
on initial recognition, the carrying value of the lease liability also includes amounts expected to be payable under any residual
value guarantee; the exercise price of any purchase option granted in favour of the Group if it is reasonably certain to exercise
that option; and any penalties payable for terminating the lease, if the term of the lease has been estimated on the basis of
the termination option being exercised.
Page_78
FINANCIAL STATEMENTS Right-of-use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and
increased for lease payments made at or before commencement of the lease and initial direct costs incurred.
Subsequent to initial measurement, lease liabilities increase as a result of interest charged at a constant rate on the balance
outstanding and are reduced for lease payments made. Right-of-use assets are amortised on a straight-line basis over the
remaining term of the lease or over the remaining economic life of the asset if this is judged to be shorter than the lease term.
When the Group revises its estimate of the term of any lease, it adjusts the carrying amount of the lease liability to reflect the
payments to make over the revised term, which are discounted at a revised discount rate that is implicit in the lease for the
remainder of the lease term. The carrying value of lease liabilities is similarly revised if any variable element of future lease
payments dependent on a rate or index is revised. In both cases, an equivalent adjustment is made to the carrying value of
the right-of-use asset, with the revised carrying amount being amortised over the remaining lease term.
When the Group renegotiates the contractual terms of a lease with the lessor, the accounting depends on the nature of the
modification. If the renegotiation results in one or more additional assets being leased for an amount similar to the standalone
price for the additional rights-of-use obtained, the modification is accounted for as a separate lease in accordance with the
above policy. In all other cases where the renegotiation increases the scope of the lease (whether that is an extension to the
lease term, or one or more additional assets being leased), the lease liability is remeasured using the discount rate applicable
on the modification date, with the right-of-use asset being adjusted by the same amount. If the renegotiation results in a
decrease in the scope of the lease, both the carrying amount of the lease liability and right-of-use asset are reduced by the
same proportion to reflect the partial or full termination of the lease with any difference recognised in profit or loss. The lease
liability is then further adjusted to ensure the carrying amount reflects the amount of the renegotiated payments over the
renegotiated term, with the modified lease payments discounted at the rate applicable on the modification date. The right-of-
use asset is adjusted by the same amount.
Right-of-use assets are reviewed regularly to ensure that the useful economic life of the asset is still appropriate based on
the usage of the asset. Where the asset has reduced in value the Group considers the situation on an asset-by-asset basis and
either treats the reduction as an acceleration of depreciation or as an impairment under IAS 36 Impairment of Assets. An
acceleration of depreciation occurs in those cases where there is no opportunity or intention to utilise the asset before the
end of the lease. An impairment is recognised in those few cases where the current value-in-use of the asset is significantly
less than the carrying amount and there is no intention or opportunity known of that mitigates this impairment.
For contracts that both convey a right to the Group to use an identified asset and require services to be provided to the Group
by the lessor, the Group has elected to account for the entire contract as a lease.
Where the Group acts as a lessor by sub-letting specific leases, each such lease is classed either as a finance lease, if the sub-let
transfers substantially all the risks and rewards of the underlying asset to the lessee, or an operating lease, if not. The Group
endeavours to ensure that any sub-lease covers the full remaining term of the lease.
Where the Group recognises an asset from a finance lease, such asset replaces the right-of-use asset arising from the head
lease and is recorded as a receivable called net investment in the lease. Subsequent to initial measurement, the net investment
in the lease increases as a result of interest charged at a constant rate on the balance outstanding and is reduced for lease
payments made. These assets are reviewed for recoverability using the simplified arrangements under the expected credit
loss model creating a lifetime expected credit loss provision.
Where the Group recognises an operating lease, lease payments received are treated as income on a straight-line basis.
Page_79
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS
IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Notes to the consolidated financial statements continued
FoR THE 52 WEEKS ENDED 1 JANUARY 2021
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CoNTINUED
R) Revenue
Revenue derived from temporary staffing services is recognised and accrued by reference to hours worked (representing the
service provided) in accordance with submitted authorised timesheets and pre-agreed charge rates (which include an element
of salary and related costs) which are together used to determine the transaction price. This applies both when there is a
direct supply as well as when there is supply of a Managed Service to the client, as the timing of performance obligations and
the raising of invoices can vary. Timesheets are submitted mainly on a weekly basis, with a limited number being submitted
either daily or monthly, so any variable aspect of contract assets is limited due to the financial period finishing at the end of
a week.
The Group assesses whether it is acting as agent or principal depending on whether the client has a direct relationship with
the Group, whether the Group has the primary responsibility for providing the services and whether the Group has control
of or holds the inventory risk over the worker placed.
Where the Group acts as a principal in the supply, revenue is recognised as the gross amount due, net of value-added tax,
rebates and discounts and after eliminating sales made within the Group. Where the Group provides a service in which it acts
as agent for the client, the amount of revenue recognised is limited to the management fee receivable for that service after
making provision for any losses foreseen, volume rebates and any other amounts payable rather than the full amount invoiced.
Trade receivables and payables related to these sales are recorded at full invoice value. The Group does conduct business on
both a principal and an agent basis and each new contract is reviewed to identify the most appropriate basis. Most segments
within the Group act as principals as they have the primary relationship with the worker placed and can control when and
where they are placed. The examples of the agent-basis relationship are all found in the Global Talent Acquisition and
Managed Workforce Solutions segment. These contracts have secondary relationships with the workers placed and act more
as intermediaries for processing and consolidating contact rather than sourcing the individual workers. The contractual
obligations around both the billing of clients and payments to suppliers in these cases also highlights the lack of control over
the specific service provided and so reinforces the recognition of revenue on an agent basis.
Revenue derived from permanent placements is recognised and accrued when the employment of the individual commences
with provision made for potential refunds which can be payable if the placement is terminated within a set period ranging
from 14 to 100 days. Revenue recognised from a permanent placement uses a transaction price typically based on a
percentage of the candidate’s remuneration package and is recognised when the candidate commences work with the client,
which is the only performance obligation and point at which control was transferred involved in the supply.
For revenue derived from both temporary staffing and permanent placements, payment is due following the completion
of the performance obligations and an agreed period of credit dependent on the agreed contract with the client.
other revenue, including fees received for one-off services which are not dependent on hours worked or placed workers, is
recognised when all parties agree the relevant performance obligations have been performed.
Interest income receivable on deposits with financial institutions is recognised on an accrued basis. Contract liabilities are
recognised when an invoice has been raised in advance of the service provision discussed above.
S) Separately disclosed items
Separately disclosed items are costs or income that have been recognised in the income statement which the Directors
believe, due to their nature or size, should be disclosed separately to give a more comparable view of the year-on-year
underlying financial performance. These are separately disclosed in the notes.
T) Borrowing costs
Borrowing costs are recognised as an expense when incurred unless they are qualifying assets under IAS 23 Borrowing Costs
when they are capitalised.
U) Equity instruments
The ordinary shares issued by the Company are classified as equity. They are recorded as the proceeds received, net of direct
issue costs.
Where any Group company purchases the Company’s equity instrument (treasury shares), the consideration paid, including
any directly attributable incremental costs (net of taxes) is deducted from equity attributable to the Company’s equity
shareholders, until the shares are cancelled or reissued. Upon cancellation, a reserve equal to the nominal value of the shares
is transferred from retained earnings into a capital redemption reserve.
Page_80
FINANCIAL STATEMENTS V) Dividend distribution policy
Dividend distributions to the Company’s shareholders are recognised as a liability in the Group financial statements in the
period in which the dividends are paid or approved by the Company’s shareholders.
W) Government grants
Government grants are recognised against expenses in the period in which they are intended to compensate. Grants are only
recognised when there is reasonable assurance that any conditions attached to the grant will be complied with and that the
grant will be received.
X) Prior year adjustment
A prior year adjustment has been made in relation to the timing of recognition of leases under IFRS 16 and a reclassification of
receipts in relation to lease debtors within the cash flow statement (see note 13).
3. SEGMENT INFORMATION
The Group is reporting under IFRS 8 operating Segments which requires that the Group firstly:
•
identifies its ‘Chief operating Decision Maker’ (‘CoDM’), which has currently been assessed as the Group Chief Executive
officer who, along with the ‘Leadership Team’, reviews the Group’s internal reporting in order to assess performance and
allocate resources
and secondly:
• by reference to the information supplied to the CoDM, identifies its operating segments and from these to identify its
reportable segments.
The CoDM discusses performance with management of the following reportable segments plus an allocation of shared costs
and corporate costs:
• Global Talent Acquisition and Managed Workforce Solutions
• Global Specialist Staffing
• Regional Specialist Staffing
• Healthcare
The CoDM does not review balance sheet reports in detail by segment, only in total for the Group. As such, no information
relating to assets and liabilities on a segmental basis has been presented.
1 January 2021
Global Talent Acquisition and Managed Workforce Solutions
Global Specialist Staffing
Regional Specialist Staffing
Healthcare
Inter-segment revenues
Operating segments
Revenue
£m
Gross profit
£m
709.7
523.2
581.5
231.3
(44.8)
70.9
45.8
69.6
41.8
–
2,000.9
228.1
Adjusted
operating
profit
£m
13.4
11.2
(0.2)
(1.1)
–
23.3
Page_81
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS
IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Notes to the consolidated financial statements continued
FoR THE 52 WEEKS ENDED 1 JANUARY 2021
3. SEGMENT INFORMATION CoNTINUED
(Restated)
3 January 2020
Global Talent Acquisition and Managed Workforce Solutions
Global Specialist Staffing
Regional Specialist Staffing
Healthcare
Inter-segment revenues
Operating segments
Revenue
£m
Gross profit
£m
757.1
649.1
650.3
245.8
(47.5)
2,254.8
78.0
55.5
94.0
46.6
–
274.1
Adjusted
operating
profit
£m
13.7
15.2
6.3
0.5
–
35.7
Reconciliation of segment adjusted operating profit to profit from continuing operations is as follows:
Segment adjusted operating profit
Corporate costs
Adjusted operating profit
Amortisation of brand value and customer relationships (note 15)
Impairment of goodwill (note 14)
Impairment of intangible assets (note 14)
Operating (loss)/profit from continuing operations
Finance income (note 7)
Finance expense (note 8)
Tax charge (note 9)
(Loss)/profit from continuing operations
1 January
2021
£m
(Restated)
3 January
2020
£m
23.3
(5.1)
18.2
(11.0)
(16.6)
(5.6)
(15.0)
0.3
(5.7)
(1.0)
(21.4)
35.7
(4.6)
31.1
(10.2)
(1.6)
(5.4)
13.9
0.8
(9.0)
(0.9)
4.8
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.
As disclosed in the prior year and as a result of the adoption of IFRS 16 in the previous financial year, 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, and comparatives have been restated accordingly. The Group has also
allocated separately disclosed items into the comparative results, rather than showing them separately as in the prior year,
as this is now considered a more inclusive view of the segmental results for the period.
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.
IFRS 15 requires entities to disaggregate revenue recognised from contracts with customers into relevant categories that
depict how the nature, amount and cash flows are affected by economic factors. As a result, we consider the following
information to be relevant:
Page_82
FINANCIAL STATEMENTS 1 January 2021
Primary geographic markets
UK
Europe
North America
Australasia
Total
Major service lines
Temporary placements
Permanent placements
other
Total
Timing of revenue recognition
Service transferred at a point in time
Total
3 January 2020
Primary geographic markets
UK
Europe
North America
Australasia
Total
Major service lines
Temporary placements
Permanent placements
other
Total
Timing of revenue recognition
Service transferred at a point in time
Total
Global Talent
Acquisition and
Managed
Workforce
Solutions
£m
546.1
15.3
142.2
6.1
709.7
702.1
2.7
4.9
709.7
709.7
709.7
Global Talent
Acquisition and
Managed
Workforce
Solutions
£m
597.9
17.4
134.2
7.6
757.1
744.7
5.3
7.1
757.1
757.1
757.1
Global
Specialist
Staffing
£m
Regional
Specialist
Staffing
£m
Healthcare
£m
Inter-segment
revenues
£m
450.7
1.1
71.4
–
523.2
510.1
8.0
5.1
523.2
523.2
523.2
383.5
9.8
187.9
0.3
581.5
574.1
6.0
1.4
581.5
581.5
581.5
130.1
47.7
–
53.5
231.3
224.8
6.0
0.5
231.3
231.3
231.3
(44.8)
–
–
–
(44.8)
(44.8)
–
–
(44.8)
(44.8)
(44.8)
Global
Specialist
Staffing
£m
Regional
Specialist
Staffing
£m
Healthcare
£m
Inter-segment
revenues
£m
573.7
0.8
74.6
–
649.1
612.6
12.1
24.4
649.1
649.1
649.1
437.8
7.3
205.0
0.2
650.3
615.6
13.6
21.1
650.3
650.3
650.3
128.2
51.9
–
65.7
245.8
236.9
8.6
0.3
245.8
245.8
245.8
(47.5)
–
–
–
(47.5)
(47.5)
–
–
(47.5)
(47.5)
(47.5)
The revenue information above is based on location of the Group entity directly involved in the supply.
Total
£m
1,465.6
73.9
401.5
59.9
2,000.9
1,966.3
22.7
11.9
2,000.9
2,000.9
2,000.9
Total
£m
1,690.1
77.4
413.8
73.5
2,254.8
2,162.3
39.6
52.9
2,254.8
2,254.8
2,254.8
Page_83
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS
IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Notes to the consolidated financial statements continued
FoR THE 52 WEEKS ENDED 1 JANUARY 2021
3. SEGMENT INFORMATION CoNTINUED
Non-current assets
UK
North America
Europe
Australasia
Total
1 January
2021
£m
126.8
119.0
12.5
8.2
266.5
3 January
2020
£m
167.7
124.9
13.7
12.3
318.6
Non-current assets above consist of Property, plant and equipment, Goodwill, other intangible assets, Deferred tax assets,
Financial assets and Trade and other receivables due in more than one year.
4. OPERATING (LOSS)/PROFIT
a) Operating (loss)/profit has been arrived at after charging:
Separately disclosed items (note 6)
Depreciation of property, plant and equipment (note 12)
Amortisation of right-of-use assets (note 13)
Amortisation of intangible assets (note 15)
Impairment of goodwill (note 14)
Impairment of intangible assets (note 15)
Loss on disposal of property, plant and equipment
Minimum lease payments recognised as an operating lease expense (note 13)
Charge/(release) for bad and doubtful trade receivables (note 17)
1 January
2021
£m
3 January
2020
£m
–
2.8
9.5
17.6
16.6
5.6
(0.2)
0.3
3.6
4.9
3.2
9.0
17.2
1.6
5.4
0.2
1.9
(1.2)
operating profit is stated net of £7.4m income received from governments globally in respect of various support schemes
following the Covid-19 pandemic.
b) Auditor’s remuneration
Fees payable to the auditor for the audit of the Group’s annual financial statements
Fees payable to the Group’s auditor and their associates for other services:
The audit of the Company’s subsidiaries pursuant to legislation
Total
5. EMPLOYMENT COSTS
a) Employees (including Directors) whose costs are included in administrative expenses
Costs of employment
Wages, salaries and bonuses
Social security costs
Expenses related to defined contribution plan
Total
1 January
2021
£m
3 January
2020
£m
0.3
0.8
1.1
1 January
2021
£m
134.3
12.2
3.4
149.9
0.2
0.7
0.9
3 January
2020
£m
155.5
14.9
3.2
173.6
Page_84
FINANCIAL STATEMENTS Monthly average number of employees
Global Talent Acquisition and Managed Workforce Solutions
Global Specialist Staffing
Regional Specialist Staffing
Healthcare
Corporate staff (including Directors)
Total
1 January
2021
Number
745
396
1,006
588
8
2,743
3 January
2020
Number
808
448
1,197
669
11
3,133
The table above includes a monthly average of 262 staff who were placed on furlough during the period.
b) Employees whose costs are included in cost of sales
In addition to the above, the Group employs some of the staff who are supplied to clients and whose costs are part of the
Group’s cost of sales.
Costs of employment
Wages, salaries and bonuses
Social security costs
Expenses related to defined contribution plan
Total
1 January
2021
£m
557.4
40.1
2.3
599.8
3 January
2020
£m
577.7
41.0
2.1
620.8
The costs above are net of government grants in respect to job support schemes that have been administered for staff
supplied to clients. A prior year adjustment has been made to social security costs following the calculation this year which
revealed that £22.3m of expenses within cost of sales had been omitted from the disclosure.
Monthly average number of employees
Global Talent Acquisition and Managed Workforce Solutions
Global Specialist Staffing
Regional Specialist Staffing
Total
c) Information on Directors’ remuneration
The total emoluments for all Directors during the period were:
Emoluments (including benefits)
Contribution to defined contribution pension plans
Total emoluments excluding pension contributions:
Lord M Ashcroft
J Robertson
T Briant
AE Entwistle
ME Ettling
M Laurie
Baroness T Stowell
Total
1 January
2021
Number
4,730
1,338
12,476
18,544
1 January
2021
£000
1,102
91
1,193
3 January
2020
Number
6,399
1,550
14,107
22,056
3 January
2020
£000
684
68
752
1 January
2021
£000
3 January
2020
£000
46
544
358
38
40
38
38
1,102
42
477
–
40
45
40
40
684
Page_85
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS
IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Notes to the consolidated financial statements continued
FoR THE 52 WEEKS ENDED 1 JANUARY 2021
5. EMPLOYMENT COSTS CoNTINUED
Pension contributions
J Robertson
T Briant
All pension payments relate to defined contribution schemes.
The emoluments of the highest paid Director during the period were:
Emoluments (including benefits)
Pension contributions
1 January
2021
£000
3 January
2020
£000
68
23
91
68
–
68
1 January
2021
£000
544
68
612
3 January
2020
£000
477
68
545
The total emoluments for J Robertson and T Briant include benefits, both non-cash and cash, to the value of £95,000
(2019: £95,000) and £36,000 (2019: £nil) respectively, and bonuses for J Robertson and T Briant of £90,000 (2019: £nil) and
£83,000 (2019: £nil) respectively. The £38,000 (2019: £40,000) paid for the services of AE Entwistle as a Non-Executive
Director is paid to Deacon Street Partners Limited. No Director has been in receipt of either a loan from the Group or a long-
term incentive plan in the current or prior periods.
6. SEPARATELY DISCLOSED ITEMS
Group transformation costs(a)
Group demerger costs(b)
Adjustments to contingent consideration(c)
Legal claim costs(d)
Total included in operating (loss)/profit
Finance expense – separately disclosed(e)
1 January
2021
£m
3 January
2020
£m
–
–
–
–
–
–
3.8
0.7
(0.3)
0.7
4.9
0.9
a) In 2019 the Group commenced a transformation programme looking at all aspects of the business including structure, people, IT and individual businesses. These costs are one-off in
nature and have been disclosed in order not to distort the underlying trading performance of the business.
b) The Group demerged Carlisle Support Services Group in 2019, incurring costs of £0.7m. These costs are one-off in nature and have been disclosed in order not to distort the underlying
trading performance of the business.
c) Contingent consideration payments linked to individuals’ continuing employment in the business generated a £0.3m credit in relation to the acquisition of Global Group (UK) Ltd (2015:
£0.5m). These are of such significance that they are shown separately so as to not distort the reporting of the underlying performance of the respective businesses.
d) In 2018 the Group had an ongoing litigation matter for which a provision for settlement and associated legal costs of £3.0m has been made. Following further legal advice, in 2019 the
provision has been reduced to £1.0m. The Group is also considering a settlement in relation to a contract for which a provision of £2.3m has been made. These are disclosed separately
due to their one-off nature and significance.
e) Finance costs previously capitalised have been written off due to the negotiation of a new revolving credit facility during the period.
The Group has allocated separately disclosed items into the comparative results, rather than showing them separately as in
the prior year, as this is now considered a more inclusive view of the segmental results for the period.
7. TOTAL FINANCE INCOME
Bank interest receivable
Interest on lease debtors
Total finance income
Page_86
1 January
2021
£m
3 January
2020
£m
0.2
0.1
0.3
0.5
0.3
0.8
FINANCIAL STATEMENTS 8. TOTAL FINANCE EXPENSE
Revolving credit facilities
Write off capitalised finance costs (note 6)
Lease interest payable
Unwind discount on provisions
other interest expense
Total finance expense
9. TAXATION
a) Tax charge in the income statement
Current income tax
UK Corporation Tax on results for the period
Adjustments in respect of previous periods
Foreign tax in the period
Adjustments in respect of previous periods
Total current income tax
Deferred tax credit
Total tax charge in the income statement
The deferred tax credit comprises the following:
Utilisation of tax losses brought forward
Recognition of assets not previously recognised
origination and reversal of other temporary differences
Change in tax rate used for deferred tax carried forward
Adjustment in respect of previous periods
Total deferred tax credit (note 23)
1 January
2021
£m
3 January
2020
£m
4.4
–
0.8
0.3
0.2
5.7
6.5
0.9
1.3
–
0.3
9.0
1 January
2021
£m
3 January
2020
£m
0.8
(0.9)
(0.1)
2.1
(0.8)
1.2
(0.2)
1.0
0.8
(0.1)
0.7
1.3
–
2.0
(1.1)
0.9
1 January
2021
£m
3 January
2020
£m
5.4
–
(7.6)
1.6
0.4
(0.2)
2.4
(3.0)
(0.1)
(0.2)
(0.2)
(1.1)
b) Reconciliation of the total tax charge
The standard rate of Corporation Tax in the UK is 19%. Accordingly, the Group’s result from this period is taxed at an effective
rate of 19.0% (2019: 19.0%). The tax charge for the period is £0.6m (2019: £0.9m) for the Group. A tax reconciliation explaining
differences from the expected statutory rate is summarised below:
Tax charge at UK standard rate
Differences in tax rates in other countries
(Income)/expenses not taxable/allowable in determining taxable profits
Losses in period carried forward but not recognised as assets
Recognition of losses not previously recognised (note 23)
Change in tax rate used for deferred tax carried forward
Adjustments to deferred tax in respect of previous periods
Adjustments in respect of previous periods
Effective total tax rate
1 January
2021
%
3 January
2020
%
19.0
(1.2)
(22.8)
1.2
–
(7.7)
(1.8)
8.4
(4.9)
19.0
8.9
43.5
5.8
(52.6)
(3.2)
(4.4)
(1.2)
15.8
Income not taxable in determining taxable profits is comprised of various adjustments in respect of items not treated as
taxable under local tax rules (such as non-deductible interest and capital costs in administrative expenses), plus expenses
previously added back as non-deductible being treated as allowed for tax.
Page_87
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS
IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Notes to the consolidated financial statements continued
FoR THE 52 WEEKS ENDED 1 JANUARY 2021
9. TAXATION CoNTINUED
Adjustments in respect of previous periods (current and deferred) arise as a result of a reduction in non-tax-deductible
expenses and estimated timing differences in the prior year filed UK tax returns. See note 23 for an explanation of deferred
tax balances.
Factors affecting tax charges in future periods
A change to the main UK Corporation Tax rate was substantively enacted on 17 March 2020. The rate applicable from 1 April
2020 now remains at 19%, rather than the previously enacted reduction to 17%. The UK deferred tax balances at 1 January
2021 have been calculated at 19%, as the relevant rate enacted at the balance sheet date.
on 3 March 2021 it was announced that the UK Corporate Tax rate would increase to 25% from 1 April 2023. This is likely to
result in an increase in the Group’s UK tax charge from that date. UK deferred tax balances will also be calculated at the
increased rate from that date. The most significant impact on this is expected to be in relation to the deferred tax liability
carried on intangible assets. Based on the current net book value of intangible assets and the related expected future
amortisation charge to 1 April 2023, the deferred tax liability is expected to increase by approximately £2.5m.
10. 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.
Diluted earnings per share amounts are calculated on the same basis but after adjusting the denominator for the effects of
dilutive options. The only dilutive effect relates to 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 2020 is 46,208,380 (2019: 48,543,107) and the fully diluted average number of shares is 46,228,221
(2019: 48,562,948). The calculations of both basic and diluted earnings per share (‘EPS’) are based upon the following
consolidated income statement data:
Continuing profit for the period
Discontinued profit for the period
Profit for the period
Impairment of goodwill
Impairment of other intangible assets (net of tax)
Acquired intangibles amortisation (net of tax)
Total adjusted profit for the period
Continuing adjusted profit
Discontinued adjusted profit
EPS – basic calculation
Continuing unadjusted basic earnings per share
Discontinued unadjusted basic earnings per share
Total unadjusted basic earnings per share
Impairment of goodwill
Impairment of other intangible assets (net of tax)
Customer relationship and brand amortisation (net of tax)
Adjusted basic earnings per share1
Continuing adjusted basic earnings per share
Discontinued adjusted basic earnings per share
1 January
2021
£m
(Restated)
3 January
2020
£m
(21.4)
–
(21.4)
16.6
4.5
8.6
8.3
8.3
–
4.8
0.7
5.5
1.6
4.4
8.2
19.7
19.0
0.7
1 January
2021
Pence
(Restated)
3 January
2020
Pence
(46.2)
–
(46.2)
36.0
9.8
18.6
18.2
18.2
–
9.8
1.4
11.2
3.3
9.2
16.9
40.6
39.2
1.4
1 Additional earnings per share calculations have been presented in order to provide information on the underlying performance of the Group before impairment of goodwill and
intangible assets and the amortisation of customer relationships and brands.
Page_88
FINANCIAL STATEMENTS EPS – diluted calculation
Continuing unadjusted diluted earnings per share
Discontinued unadjusted diluted earnings per share
Total unadjusted diluted earnings per share
Impairment of goodwill
Impairment of other intangible assets (net of tax)
Customer relationship and brand amortisation (net of tax)
Adjusted diluted earnings per share1
Continuing adjusted diluted earnings per share
Discontinued adjusted diluted earnings per share
1 January
2021
Pence
(Restated)
3 January
2020
Pence
(46.2)
–
(46.2)
36.0
9.8
18.6
18.2
18.2
–
9.8
1.4
11.2
3.3
9.2
16.9
40.6
39.2
1.4
1 Additional earnings per share calculations have been presented in order to provide information on the underlying performance of the Group before impairment of goodwill and
intangible assets and the amortisation of customer relationships and brands.
11. DISCONTINUED OPERATIONS
In March 2019 the Group demerged Carlisle Support Services Group Ltd and its subsidiaries (‘CSS’) by way of a dividend-in-
specie and, as such, the demerger was accounted for through reserves.
The CSS segment was not previously classified as held-for-sale or as a discontinued operation as, at the release of the 2018
results, no decision had been made as to the disposal of the segment. The comparative consolidated statement of profit
or loss and consolidated statement of comprehensive income has been re-presented to show the discontinued operation
separately from continuing operations.
Subsequent to the disposal, the Group has continued to trade with the discontinued operation. Intra-Group transactions
have been fully eliminated in the consolidated financial results and management has elected not to attribute the elimination
of transactions between the continuing operations and the discontinued operation before the disposal as the level of this
is small in comparison to the total trade of both the continuing and discontinued operation.
Results from discontinued operations
Revenue
Cost of sales
Gross profit
Administrative expenses
Profit from operating activities
Taxation
Profit from discontinued operations
Cash flows relating to discontinued operations
Net cash generated by operating activities
Net cash (outflow) from financing activities
Net cash flows for discontinued operations
3 January
2020
£m
9.6
(8.7)
0.9
(0.2)
0.7
–
0.7
3 January
2020
£m
0.5
(0.1)
0.4
Page_89
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS
IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Notes to the consolidated financial statements continued
FoR THE 52 WEEKS ENDED 1 JANUARY 2021
11. DISCONTINUED OPERATIONS CoNTINUED
Effect of disposal on the financial position of the Group
Property, plant and equipment
Goodwill
Deferred tax assets
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Defined benefit pension asset
Lease liabilities
Net assets and liabilities
on disposal
£m
0.5
4.8
0.3
9.0
2.5
(8.8)
0.1
(0.3)
8.1
The demerger charge of £9.8m is comprised of the net assets disposed of (£8.1m) and the value of the intercompany amounts
(£1.7m).
12. PROPERTY, PLANT AND EQUIPMENT
Net carrying value – 5 January 2019
Cost – 5 January 2019
Additions
Disposals
Foreign exchange
Cost – 3 January 2020
Accumulated depreciation – 5 January 2019
Charge for the period
Disposals
Foreign exchange
Accumulated depreciation – 3 January 2020
Net carrying value – 3 January 2020
Cost – 4 January 2020
Additions
Disposals
Foreign exchange
Cost – 1 January 2021
Accumulated depreciation – 4 January 2020
Charge for the period
Disposals
Foreign exchange
Accumulated depreciation – 1 January 2021
Net carrying value – 1 January 2021
Freehold
property
£m
Short leasehold
property
£m
Furniture, fixtures
and fittings
£m
Computer
equipment
£m
0.2
0.2
–
–
–
0.2
–
–
–
–
–
0.2
0.2
–
–
–
0.2
–
–
–
–
–
0.2
1.5
2.6
0.5
(0.2)
(0.1)
2.8
1.1
0.6
(0.2)
–
1.5
1.3
2.8
0.2
(0.1)
0.1
3.0
1.5
0.4
(0.1)
0.1
1.9
1.1
2.9
6.8
2.0
(0.9)
–
7.9
3.9
1.3
(0.7)
–
4.5
3.4
7.9
0.6
(1.0)
–
7.5
4.5
1.3
(1.0)
–
4.8
2.7
2.1
6.1
1.1
(0.5)
(0.2)
6.5
4.0
1.3
(0.4)
(0.1)
4.8
1.7
6.5
0.4
(1.6)
0.1
5.4
4.8
1.1
(1.6)
–
4.3
1.1
Total
£m
6.7
15.7
3.6
(1.6)
(0.3)
17.4
9.0
3.2
(1.3)
(0.1)
10.8
6.6
17.4
1.2
(2.7)
0.2
16.1
10.8
2.8
(2.7)
0.1
11.0
5.1
Included in computer equipment are assets with net carrying value of £0.2m (2019: £0.3m) held under a finance lease.
Depreciation of £0.1m (2019: £0.1m) was charged on these assets.
Page_90
FINANCIAL STATEMENTS 13. LEASES
During the period, the Group accounted for 149 leased properties (2019: 157) under IFRS 16 across the jurisdictions in which it
operates. In some jurisdictions it is customary for lease contracts to provide for payments to increase each year by inflation or
at a fixed rate and in others to be reset periodically to market rental rates, whilst in others the periodic rent is fixed over the
lease term. Some leases have provisions for early termination (see lease end dates judgements 2(B)i). The Group also leased
125 vehicles (2019: 201), all of which have a fixed lease fee over the term. The weighted average incremental borrowing rate
used to calculate the lease liability was 2.80% (2019: 3.15%).
of the 149 property leases accounted for under IFRS 16 during the period, 10% recognised future uplifts in rent. Should the
lease payments on these increase by 5% there could be a resulting increase in the right-of-use asset of £0.3m.
Following the publication on the amendment to IFRS 16 in relation to rent concessions, the Group has applied the practical
expedient in all cases where the relevant conditions were met. These concessions totalled a credit to the result for the period
of £0.1m. Changes in leases which do not fulfil the criteria of the practical expedient have been treated as additions or
disposals in line with normal IFRS 16 accounting.
A prior year adjustment has been made affecting cost and liabilities which relates to the impact of modifications to leases
which were effective from dates during 2020 which should have been reflected in the 2019 financial statements. The
adjustment resulted in an increase of £2.2m to right-of-use assets, £2.1m to lease liabilities and £0.1m to property provisions
(see note 22). The adjustment had no effect on balances at 4 January 2019. A prior year adjustment has also been made to
reclassify the receipts from lease debtors within the cash flow statement from financing activities to investing activities to
better reflect the nature of these amounts in line with IAS 7. There is no impact to the results or balance sheet position from
this reclassification.
Right-of-use assets
Net carrying value – 4 January 2019
Cost – 5 January 2019
Additions – restated
Disposals
Foreign exchange
Cost – 3 January 2020 – restated
Accumulated depreciation – 5 January 2019
Charge for the period
Disposals
Foreign exchange
Accumulated depreciation – 3 January 2020
Net carrying value – 3 January 2020 – restated
Cost – 4 January 2020 – restated
Additions
Disposals
Foreign exchange
Cost – 1 January 2021
Accumulated depreciation – 4 January 2020
Charge for the period
Disposals
Foreign exchange
Accumulated depreciation – 1 January 2021
Net carrying value – 1 January 2021
Land and
buildings
£m
Vehicles
£m
–
39.8
6.5
(11.2)
(0.2)
34.9
–
8.5
(0.2)
–
8.3
26.6
34.9
5.0
(4.6)
–
35.3
8.3
8.9
(2.8)
–
14.4
20.9
–
1.4
0.4
(0.4)
–
1.4
–
0.5
(0.1)
–
0.4
1.0
1.4
–
(0.2)
–
1.2
0.4
0.6
(0.2)
–
0.8
0.4
Total
£m
–
41.2
6.9
(11.6)
(0.2)
36.3
–
9.0
(0.3)
–
8.7
27.6
36.3
5.0
(4.8)
–
36.5
8.7
9.5
(3.0)
–
15.2
21.3
£1.4m (2019: £10.4m) of the disposals relate to the de-recognition of lease assets of various Group properties which have been
sub-let on similar terms for the remaining period of the lease. Such disposals have been recognised as lease receivables.
Page_91
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS
IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Notes to the consolidated financial statements continued
FoR THE 52 WEEKS ENDED 1 JANUARY 2021
13. LEASES CoNTINUED
Lease receivables
Net carrying value – 4 January 2019
on adoption
Interest
Receipts
Foreign exchange
Net carrying value – 3 January 2020
Additions
Interest
Receipts
Disposals
Foreign exchange
Net carrying value – 1 January 2021
Due in year 1
Due in year 2
Due in year 3
Due in year 4
Undiscounted lease payments
Unearned finance income
Total lease receivables (note 17)
Current
Non-current
Total lease receivables (note 17)
Lease liabilities
Net carrying value – 4 January 2019
on adoption
Additions – restated
Interest
Payments
Disposals
Foreign exchange
Net carrying value – 3 January 2020 – restated
Additions
Interest
Payments
Disposals
Foreign exchange
Net carrying value – 1 January 2021
Page_92
Land and
buildings
£m
Vehicles
£m
–
10.4
0.3
(2.9)
(0.5)
7.3
1.4
0.1
(3.2)
(1.4)
0.1
4.3
–
–
–
–
–
–
–
–
–
–
–
–
Total
£m
–
10.4
0.3
(2.9)
(0.5)
7.3
1.4
0.1
(3.2)
(1.4)
0.1
4.3
1 January
2021
£m
3 January
2020
£m
2.5
1.3
0.7
–
4.5
(0.2)
4.3
2.9
1.9
1.9
1.0
7.7
(0.4)
7.3
1 January
2021
£m
3 January
2020
£m
2.4
1.9
4.3
Land and
buildings
£m
Vehicles
£m
–
37.9
6.0
1.2
(11.5)
–
(0.8)
32.8
6.1
0.8
(10.8)
(3.0)
0.3
26.2
–
1.4
0.4
0.1
(0.6)
(0.3)
–
1.0
–
–
(0.7)
–
–
0.3
2.7
4.6
7.3
Total
£m
–
39.3
6.4
1.3
(12.1)
(0.3)
(0.8)
33.8
6.1
0.8
(11.5)
(3.0)
0.3
26.5
FINANCIAL STATEMENTS Current
Non-current
Total lease liabilities (notes 28 and 29)
1 January
2021
£m
9.2
17.3
26.5
(Restated)
3 January
2020
£m
10.7
23.1
33.8
Included in operating lease expenditure for 2020 are expenses relating to leases which have not been recognised under
IFRS 16. The value of expense recognised for low-value leases for the period is £0.3m (2019: £0.2m) and for short-term leases is
£nil (2019: £1.6m).
14. GOODWILL
Opening balance at 4 January 2019
Additions in the period
Impairment in the period
Disposals in the period
Foreign exchange and other movements
Closing balance at 3 January 2020
Impairment in the period
Foreign exchange and other movements
Closing balance at 1 January 2021
Cost
£m
Impairment
£m
Net carrying value
£m
178.8
0.3
–
(18.8)
(2.1)
158.2
–
(2.3)
155.9
(22.6)
–
(1.6)
14.0
–
(10.2)
(16.6)
–
(26.8)
156.2
0.3
(1.6)
(4.8)
(2.1)
148.0
(16.6)
(2.3)
129.1
Goodwill acquired through business combinations has been allocated for impairment testing purposes to nine principal
cash-generating unit (‘CGU’) groups as follows:
• Education
• Engineering
• Healthcare
•
• online platform
• Science and clinical
• UK General staffing
• US Staffing
• Vendor procurement
Information technology
Foreign exchange and other movements to goodwill arises from the retranslation of goodwill balances held in foreign
currencies relating to the acquisition of Bartech Holdings Corporation, in the US Staffing CGU.
The £14.0m provision release in 2019 relates to an historic impairment of the goodwill of the Support Services CGU. This was
released as the entire CGU was demerged during the period.
Due to the challenging trading period as a result of Covid-19, an impairment of £14.3m was recognised against the Information
technology CGU which is in the Global Specialist Staffing reporting segment. Just under £2.1m was recognised against the
Engineering CGU and just under £0.3m against the online platform CGU, both of which are in the Regional Specialist Staffing
reporting segment. An impairment of £5.6m (2019: £3.4m) was also recognised against the brand value of the Education CGU
(note 15). As noted, these impairments have been driven by Covid-19 and the subsequent revisions to our assumptions on
discount factors, which have increased due to changes in the risk premium, and future growth assumptions.
Page_93
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS
IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Notes to the consolidated financial statements continued
FoR THE 52 WEEKS ENDED 1 JANUARY 2021
14. GOODWILL CoNTINUED
The carrying amount of goodwill and other indefinite assets allocated to cash-generating units at the period end is:
Engineering
Healthcare
Information technology
online platform
Science and clinical
UK General staffing
US Staffing
Total
1 January
2021
£m
3 January
2020
£m
–
7.9
11.4
–
8.5
28.6
72.7
2.1
7.9
25.7
0.3
8.5
28.6
74.9
129.1
148.0
The recoverable amount of the Information technology CGU is £48.6m, the Engineering CGU is £12.9m, the Education CGU is
£3.2m and the online platform CGU is £nil using the value-in-use model. The Group tests this and other assets (note 15) for
impairment on an annual basis, and otherwise when changes in events or situations indicate that the carrying value may not be
recoverable. If such a test indicates that the carrying amount is too high, a recoverable amount is established for the asset,
which is the higher of the fair value less costs to sell and the value in use.
The recoverable amount for each of the above CGUs has been determined based upon a value-in-use calculation. Value-in-use
is established by discounting anticipated future cash flows attributable to each CGU that goodwill has been allocated to.
Pre-tax cash flow projections are based on financial budgets approved by the Board covering the next financial period and
high level management forecasts for the following four years.
Key assumptions
The key assumptions are based upon a combination of market data tempered by our own historical experience. The calculation
of value-in-use is most sensitive to the following assumptions:
• Gross profit – this takes the average gross profit achieved in the two years preceding the start of the five plan years and
adjusts, as appropriate, for anticipated changes to business mix and market conditions over the five plan years and range
from 5.1% to 27.9% depending on the CGU;
• Discount rate – this reflects the Directors’ estimate of an appropriate market rate of return taking into account the relevant
risk factors; this has been adjusted to reflect current and expected future economic conditions as well as to account for
geographic influences (see table below for rates);
• Growth rate used to extrapolate beyond the plan year and terminal values are based upon the long-term average growth
rate of the UK and US economies and range from 2.0% to 15.0% depending on how long it is anticipated the CGU will take
to recover from the impacts of Covid-19. Management recognises that the staffing and support services market growth
rates fluctuate both above and below this rate; and
• Terminal value growth rate – the cash flow projections include growth rates that are not expected to exceed the long-term
growth rates of the UK and US economies, currently 2.0% (2019: 2.0%).
Sensitivity to changes in assumptions
The impairment calculation is sensitive to changes in the above assumptions. Sensitivity analyses were performed over each
subsidiary CGU to model the effects of adverse changes in the forecasts and growth assumptions. The table below shows how
the results of the impairment tests for each significant CGU (being those subject to impairment, having limited excess of
recoverable amount over carrying amount, or representing a substantial amount of the total goodwill) would be impacted
(with all other variables being equal) by an increase in discount rate of 0.5% or a decrease of 0.5% in the long-term growth
rate. The impact of all of the scenarios together has also been considered and is disclosed in the final column.
Page_94
FINANCIAL STATEMENTS Education
Healthcare
Information technology
Science and clinical
UK General staffing
US Staffing
Excess of
recoverable
amount over
carrying value
£m
1.4
2.5
7.5
14.7
19.0
46.4
Pre-tax
discount rate
0.5% increase
in discount rate
£m
Long-term
growth rates
decrease by 0.5%
£m
Increase in
impairment using
combined
sensitivity
£m
Combined
sensitivity
£m
14.9%
14.9%
14.9%
14.9%
14.9%
18.0%
(0.2)
(1.4)
(2.4)
(1.8)
(5.7)
(5.0)
(0.9)
(6.8)
(4.1)
(2.6)
(10.1)
(12.7)
(1.1)
(7.8)
(6.2)
(4.2)
(15.0)
(16.9)
–
(5.3)
–
–
–
–
The pre-tax discount rate used for management’s best estimates in 2019 was between 14.0% and 18.7%. Management
continue to monitor closely the performance of all CGUs and consider the impact of any changes to the key assumptions.
In conclusion, other than disclosed above with regard to the CGU impaired in the year, management believes there is no
reasonable possible change in the underlying assumptions that would result in a further significant impairment charge in the
consolidated income statement.
15. OTHER INTANGIBLE ASSETS
Net carrying value – 4 January 2019
Cost – 5 January 2019
Additions
on acquisition
Disposals
Impairment
Foreign exchange
Cost – 3 January 2020
Accumulated amortisation – 5 January 2019
Charge for the period
Disposals
Foreign exchange
Accumulated amortisation – 3 January 2020
Net carrying value – 3 January 2020
Cost – 4 January 2020
Additions
Disposals
Impairment
Foreign exchange
Cost – 1 January 2021
Accumulated amortisation – 4 January 2020
Charge for the period
Disposals
Foreign exchange
Accumulated amortisation – 1 January 2021
Net carrying value – 1 January 2021
Software
£m
Brand values
£m
Client
relationships
£m
16.6
28.6
6.8
3.2
(1.8)
(2.0)
(0.1)
34.7
12.0
7.0
(1.6)
(0.1)
17.3
17.4
34.7
2.3
(1.3)
–
(0.2)
35.5
17.3
6.6
(1.3)
–
22.6
12.9
87.9
88.4
–
–
–
(3.4)
(0.4)
84.6
0.5
6.3
–
–
6.8
77.8
84.6
–
–
(5.6)
(0.5)
78.5
6.8
6.1
–
(0.2)
12.7
65.8
26.6
55.1
–
–
–
–
(0.4)
54.7
28.5
3.9
–
(0.3)
32.1
22.6
54.7
–
–
–
(0.5)
54.2
32.1
4.9
–
(0.3)
36.7
17.5
Total
£m
131.1
172.1
6.8
3.2
(1.8)
(5.4)
(0.9)
174.0
41.0
17.2
(1.6)
(0.4)
56.2
117.8
174.0
2.3
(1.3)
(5.6)
(1.2)
168.2
56.2
17.6
(1.3)
(0.5)
72.0
96.2
Included in software additions for the 52 weeks ended 1 January 2021 are internally generated software development costs
of £0.7m (2019: £3.4m) which have been capitalised at cost. These costs have been assessed as having a finite life of between
three and five years (2019: three and five years) and are amortised, from the date the software is available for use, on
a straight-line basis over this period.
Page_95
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS
IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Notes to the consolidated financial statements continued
FoR THE 52 WEEKS ENDED 1 JANUARY 2021
15. OTHER INTANGIBLE ASSETS CoNTINUED
Client relationships have resulted from business combinations and have been assessed as having a finite life of ten years.
They are amortised, from the date of acquisition, on a straight-line basis over this period.
Brand values have resulted from business combinations and have been assessed as having a finite life of between three
and 20 years depending on the prominence of the brand. They are amortised on a straight-line basis over this period.
These assets are all reviewed for impairment when there are changes in events or situations that indicate the carrying value
may not be recoverable. Details of the sensitivities over such impairment reviews are included in note 14.
Following on from the challenging trading performance around the Education CGU an impairment of £5.6m (2019: £3.4m) was
recognised against the value of the Education brand values which are within the Regional Specialist Staffing reporting
segment.
16. FINANCIAL ASSETS
Financial assets – non-current
Marketable investments designated at fair value through the income statement
Other financial assets (loans and receivables) – non-current
Deposits with non-financial institutions
Total
1 January
2021
£m
3 January
2020
£m
1.2
0.4
1.6
1.0
0.5
1.5
Financial assets include:
• The marketable investments at fair value through the income statement represent investments held in trust on behalf
of certain US employees (see note 2(P)). The plan allows certain key employees to defer receipt of a portion of their
compensation. These deferred compensation liabilities are funded by making contributions into a trust. The employees’
entitlements are limited to the market value of the fund. Investments in the trust comprise shares in US mutual funds.
At 1 January 2021, these investments have been adjusted to the market value of £1.2m (2019: £1.0m). This movement
is matched by an equivalent movement in other payables as disclosed in note 19; and
• Deposits with non-financial institutions represent amounts held by suppliers, clients and landlords as security for provision
of facilities and services.
Information on fair values and credit risks is given in notes 29 and 30.
17. TRADE AND OTHER RECEIVABLES
Current assets
Trade receivables (note 2(J))
other receivables
Lease debtor (note 13)
Prepayments
Contract assets
Total
1 January
2021
£m
496.5
5.1
2.4
5.5
54.4
563.9
3 January
2020
£m
511.7
2.3
2.7
6.9
51.1
574.7
• Trade receivables also include gross receivables of £274.7m (2019: £231.7m) under master-vendor agency arrangements in
the UK and US where the Group only recognises the management fee element of the receivable as revenue – note 2(R);
• Contract assets comprise accrued income and costs incurred in the implementation of new contracts; and
• The above trade and other receivables fall into the ‘loans and receivables’ category of the Group’s financial assets.
Page_96
FINANCIAL STATEMENTS
Non-current assets
Contract assets
Lease debtor (note 13)
Total
Information on fair values and credit risks is given in notes 29 and 30.
Contract balances
At the beginning of the period
Net amounts recognised as revenue in the period
At the end of the period
1 January
2021
£m
1.4
1.9
3.3
3 January
2020
£m
1.1
4.6
5.7
Contract assets
1 January
2021
£m
52.2
3.6
55.8
3 January
2020
£m
69.0
(16.8)
52.2
Contract assets are included within ‘trade and other receivables’ on the face of the statement of financial position. Contract
assets comprise accrued income and costs incurred in the implementation of new contracts (note 2(J)).
The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss
provision for trade receivables and contract assets. To measure expected credit losses on a collective basis, trade receivables
and contract assets are grouped based on similar credit risk and ageing. The contract assets have similar risk characteristics
to the trade receivables for similar types of contracts.
The expected loss provision is based on the Group’s expectation of future credit losses over the current receivables balance.
These expectations are based upon known issues effecting specific debtors as well as general forward-looking information on
factors affecting the Group’s customers as a whole as well as an awareness of the economic conditions in the countries where
the Group operates. These risk factors are considered both on initial recognition of the receivable and as part of the ongoing
assessment. If there has been a significant increase in the credit risk since the initial recognition then an increased loss
provision is recognised.
The lifetime expected loss provision for trade receivables is as follows:
3 January 2020
Expected loss rate (%)
Gross carrying amount
Loss provision
1 January 2021
Expected loss rate (%)
Gross carrying amount
Loss provision
Current
£m
0.1%
437.1
0.2
Current
£m
0.3%
428.5
1.4
<60 days
past due
£m
1.8%
56.6
1.0
<60 days
past due
£m
4.5%
51.0
2.3
60–120 days
past due
£m
4.3%
7.0
0.3
60–120 days
past due
£m
7.3%
6.1
0.4
>120 days
past due
£m
5.3%
13.2
0.7
>120 days
past due
£m
6.3%
16.1
1.1
Total
£m
0.4%
513.9
2.2
Total
£m
1.0%
501.7
5.2
All non-current receivables are due within three years of the end of the period. None of those receivables has been subject to
a significant increase in credit risk since initial recognition and, consequently, 12-month expected credit losses have been
recognised, and there are no non-current receivable balances lifetime expected credit losses.
Page_97
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS
IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Notes to the consolidated financial statements continued
FoR THE 52 WEEKS ENDED 1 JANUARY 2021
17. TRADE AND OTHER RECEIVABLES CoNTINUED
Movements in the provision for impairment of trade receivables were as follows:
Balance at beginning of period
Charged/(released) for the period
Utilised for the period
Foreign exchange
Balance at end of period
1 January
2021
£m
3 January
2020
£m
2.2
3.6
(0.5)
(0.1)
5.2
3.4
(1.2)
–
–
2.2
The creation and release of provisions for impaired trade receivables have been included in ‘administrative expenses’ in the
income statement. Amounts are generally written off to the provision account where there is no expectation of recovery.
Included in the Group’s receivables are the following balances denominated in foreign currency:
Trade receivables (note 2(J))
other receivables
Lease debtors
Prepayments
Accrued income
Total
1 January
2021
£m
312.9
3.9
4.1
2.3
15.8
339.0
3 January
2020
£m
285.9
2.0
7.2
4.7
16.4
316.2
18. CASH AND CASH EQUIVALENTS
For the purpose of the consolidated cash flow statement, cash and cash equivalents comprise the following:
Cash
Included within cash is £2.5m (2019: £1.6m) of cash which has restrictions on its use.
Information on fair values, credit risks and interest rates is given in notes 29 and 30.
19. TRADE AND OTHER PAYABLES
Current liabilities
Bank overdraft
Trade payables
other tax and social security costs
Accruals
Contract liabilities
other payables
Total
1 January
2021
£m
117.9
3 January
2020
£m
132.3
1 January
2021
£m
2.9
375.2
86.5
54.7
0.6
38.1
558.0
(Restated)
3 January
2020
£m
39.0
366.7
47.2
44.5
0.4
52.6
550.4
Trade payables include £341.0m (2019: £324.5m) of amounts payable under master-vendor arrangements in the UK and US,
which are related to certain of the trade receivables – note 17. Arrangements are such that the payable amount is not due
by the Group until a few days after receipt of the receivable.
other tax and social security costs include £48.0m of taxes deferred under government schemes across various jurisdictions.
Page_98
FINANCIAL STATEMENTS Included in other payables and accruals are:
• £1.2m (2019: £1.0m) in respect of liabilities accruing to certain US employees in respect of a deferred compensation plan.
These amounts are payable to members of the plan on retirement (note 16);
• £3.5m (2019: £2.3m) for contributions due to be made to defined contribution pension schemes on behalf of certain
employees of the Group;
• £4.2m (2019: £4.4m) for customer unclaimed payments, which includes a re-analysis of £4.2m from trade payables in the
prior period; and
• Remaining amounts within other payables are largely payroll-related creditors.
Terms and conditions of the above financial liabilities:
• Trade payables are non-interest-bearing and are normally settled within one month from the end of the month of invoice;
• other tax and social security costs are non-interest-bearing and are normally settled within one to three months; and
• other payables and accruals are non-interest-bearing and have an average term of three months.
Non-current liability
other payables
Total
1 January
2021
£m
–
–
3 January
2020
£m
1.6
1.6
•
Included in other payables is £nil (2019: £1.6m) representing monies held on deposit from a client relating to a
sub-let property.
Information on fair values and credit risks is given in notes 29 and 30.
20. SHORT-TERM BORROWINGS
Financial liabilities measured at amortised cost:
Revolving credit borrowings – secured
Hire purchase – secured
Total
Information on fair values, credit risks, interest rates and security is given in notes 29 and 30.
21. LONG-TERM BORROWINGS
Financial liabilities measured at amortised cost:
Revolving credit borrowings – secured
Hire purchase – secured
Total
Information on fair values, credit risks, interest rates and security is given in notes 29 and 30.
1 January
2021
£m
3 January
2020
£m
–
0.1
0.1
24.6
0.1
24.7
1 January
2021
£m
118.9
0.1
119.0
3 January
2020
£m
140.7
0.2
140.9
Page_99
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS
IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Notes to the consolidated financial statements continued
FoR THE 52 WEEKS ENDED 1 JANUARY 2021
22. PROVISIONS
Current – 3 January 2020
Non-current – 3 January 2020 – restated (see note 13)
At 3 January 2020 – restated (see note 13)
Additions in the period
Reversals of unused amounts
Utilised during the period
Unwind of discount
Foreign exchange
At 1 January 2021
Current – 1 January 2021
Non-current – 1 January 2021
Total
Property
£m
Workers’
compensation
£m
0.8
3.9
4.7
0.4
(0.2)
(0.5)
0.3
–
4.7
1.4
3.3
4.7
0.5
–
0.5
0.2
–
(0.5)
–
–
0.2
0.2
–
0.2
Legal
£m
2.3
1.6
3.9
1.7
–
–
–
–
5.6
5.6
–
5.6
Total
£m
3.6
5.5
9.1
2.3
(0.2)
(1.0)
0.3
–
10.5
7.2
3.3
10.5
Property
Property provisions relate to the full expected cost of dilapidations and have been discounted to a present value using the
relevant lease interest rate.
Workers’ compensation
The US operations maintain, or maintained, insurance policies with significant excesses, below which claims are borne by the
operations. Provision is made for estimated costs of claims or losses arising from past events.
The level of provision made is based upon independent actuarial estimates. These estimates take into account the ultimate
cost, less amounts paid to date, in respect of accidents occurring between the inception of the policy and the end of the
current period, the period covered by these self-insurance arrangements. An allowance is made for claims incurred but not
reported in line with standard actuarial practice.
Claims are expected to be settled between one and five years.
Legal
The Group holds a provision for expected legal and contractual costs that are probable to cause an outflow of resources over
an extended period. Management exercises judgements to determine the amount of this provision on a case-by-case basis.
Provision is made for known issues based on past experience of similar items and other known factors. Each provision is
considered separately, and the amount provided reflects the best estimate of the most likely amount, being the single most
likely amount in a range of possible outcomes. owing to the inherent uncertainty within many legal proceedings, the amount
and timings of such outflow could differ significantly from the amount and ageing provided.
With reference to the prejudicial exemption in IAS 37, the Group will not disclose any further information about the
assumptions for the provision, including any details about current and the expected number of lawsuits and settled claims.
The disclosure of such information is believed to be detrimental to the Group in connection with the ongoing confidential
negotiations and could inflict financial losses on the Group and its shareholders.
Contingent liabilities
The Group is aware of a contingent liability in relation to late filing penalties within the US which may become due. To date no
penalties have been raised for any company in the US due to this issue and all relevant documents have been filed. This has not
been accounted for as a provision as there are significant uncertainties over the financial impact as well as the likelihood and
timing of any potential outflow.
Page_100
FINANCIAL STATEMENTS 23. DEFERRED TAXATION
Non-current deferred tax assets:
Total deferred tax asset – UK
Total deferred tax asset – overseas
Total deferred tax asset
Deferred tax liabilities:
Non-current deferred tax liabilities
Total deferred tax liabilities
1 January
2021
£m
3 January
2020
£m
1.9
8.4
10.3
1.6
12.0
13.6
1 January
2021
£m
3 January
2020
£m
18.1
18.1
21.5
21.5
Deferred tax liabilities primarily relate to fair value adjustments on acquisitions.
At 5 January 2019
Recognised in income
Acquired in business combination
Disposal
Foreign exchange
At 3 January 2020
Deferred tax assets – 3 January 2020
Deferred tax liabilities – 3 January 2020
At 4 January 2020
Recognised in income
Foreign exchange
At 1 January 2021
Deferred tax assets – 1 January 2021
Deferred tax liabilities – 1 January 2021
Property, plant
and equipment
£m
Intangible
assets
£m
Provisions
£m
Tax value of loss
carry-forwards
£m
Total deferred
taxation
£m
1.1
0.4
–
(0.1)
–
1.4
1.4
–
1.4
1.4
0.1
–
1.5
1.5
–
1.5
(21.1)
1.6
(0.5)
–
–
(20.0)
0.2
(20.2)
(20.0)
(20.0)
2.1
(0.2)
(18.1)
–
(18.1)
(18.1)
3.3
0.1
–
(0.2)
(0.1)
3.1
4.4
(1.3)
3.1
3.1
3.4
(0.2)
6.3
6.3
–
6.3
8.9
(1.0)
–
–
(0.3)
7.6
7.6
–
7.6
7.6
(5.4)
0.3
2.5
2.5
–
2.5
(7.8)
1.1
(0.5)
(0.3)
(0.4)
(7.9)
13.6
(21.5)
(7.9)
(7.9)
0.2
(0.1)
(7.9)
10.3
(18.1)
(7.8)
The Group has gross deductible temporary differences relating to provisions and deferred capital allowances of £33.0m (2019:
£13.5m). Deferred tax assets of £7.8m (2019: £6.0m) have been recognised in respect of these temporary differences, leaving
£4.1m (2019: £0.5m) as unrecognised differences. They have no expiry date.
The Group has gross tax losses that arose in the UK of £33.5m (2019: £33.5m) and tax losses that arose outside the UK (mostly
in the US) of £13.5m (2019: £47.4m) that are available for offset against future taxable profits of the right type arising in the
companies in which the losses arose. The reduction in tax losses in the US at the end of the current period compared to the
previous period is due to the utilisation of these losses against taxable profits in the current period. There is no expiry date on
the UK losses, but the US losses expire between 2028 and 2033. The Group has performed sensitivity analysis on the utilisation
of US losses looking at forecasts of profitability and these show that the tax losses will be fully utilised within two or three
years, well in advance of their expiry. All losses are subject to legislation restricting the right to offset them. Deferred tax
assets of £2.5m (2019: £7.6m) have been recognised as they relate to companies that are trading profitably or can expect to
have taxable profits in the foreseeable future. Deferred tax assets have not been recognised in respect of UK losses of £33.5m
(2019: £33.5m) and outside the UK of £1.8m (2019: £11.2m) as they may not be used to offset taxable profits elsewhere in the
Group and they have either arisen in subsidiaries where future use is uncertain, or are capital losses for which there is limited
scope for future offset.
Page_101
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS
IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Notes to the consolidated financial statements continued
FoR THE 52 WEEKS ENDED 1 JANUARY 2021
24. ISSUED SHARE CAPITAL
5 January 2019
Shares repurchased
3 January 2020
4 January 2020
Shares repurchased
1 January 2021
Number of
issued
shares
Millions
49.7
(2.4)
47.3
47.3
(1.4)
45.9
Issued share
capital
£m
Share premium
account
£m
Total
share capital
£m
0.5
–
0.5
0.5
–
0.5
30.1
–
30.1
30.1
–
30.1
30.6
–
30.6
30.6
–
30.6
Dividend and dividend policy
In 2020, 1,413,789 ordinary shares of 1p each (2019: 2,410,855), representing 3.0% (2019: 4.8%) of the opening number of
issued shares, were repurchased in the market for consideration of £4.3m (2019: £10.8m), and cancelled.
on 27 April 2020 the Board announced the suspension of the share buyback programme, though maintained authority to
acquire shares on an ad hoc basis if deemed appropriate by the Board. on 30 June 2020, the Company announced it would
reinstate the Share Purchase Plan for the period to the release of the interim statement and during this period purchased
77,411 shares at a cost of £0.2m. From 31 July 2020, the Share Purchase Plan was once again suspended, though the Company
retained the authorities to buy back shares in the future.
on 25 January 2021 the Company announced a new Share Purchase Plan allowing the Company to purchase ordinary shares
to the value of £0.5m per calendar month up to the date of the Company’s next Annual General Meeting, currently due to be
held on 29 June 2021.
Impellam Group plc
The Company has no limit to its authorised share capital. The above number represents the number of allotted, fully paid
shares of 1p in issue.
25. OTHER RESERVES
5 January 2019
Currency translation differences
3 January 2020
4 January 2020
Currency translation differences
1 January 2021
Merger
reserve
£m
19.0
–
19.0
19.0
–
19.0
other
reserve
£m
92.2
–
92.2
92.2
–
92.2
Foreign currency
translation
reserve
£m
13.4
(4.3)
9.1
9.1
(2.0)
7.1
Total other
reserves
£m
124.6
(4.3)
120.3
120.3
(2.0)
118.3
Merger reserve
The merger reserve arises under Section 612 of the Companies Act 2006 as a result of the acquisition of Bartech Holding
Corporation and Lorien Limited using the issue of shares as part consideration. The excess of fair value over nominal value
of shares is transferred to a merger reserve rather than share premium. This reserve is not distributable.
Page_102
FINANCIAL STATEMENTS Other reserve
The other reserve comprises £92.2m contributed surplus arising on a historical demerger transaction (2019: £92.2m). It also
contains £41,000 contributed surplus arising on a historical demerger transaction and a special reserve arising from the capital
reduction in December 2012 (2019: £41,000); and £47,000 capital redemption reserve arising from the purchase and
cancellation of treasury shares (2019: £32,000). This reserve is not distributable.
Foreign currency translation reserve
The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial
statements of foreign subsidiaries.
26. NON-CONTROLLING INTEREST
The following table summarises the information relating to each of the Group’s subsidiaries that has material non-controlling
interest (‘NCI’), before any intra-Group eliminations.
1 January 2021
Net assets attributable to NCI
Loss allocated to NCI
other comprehensive income allocated to NCI
3 January 2020
Net assets attributable to NCI
Loss allocated to NCI
other comprehensive income allocated to NCI
Individual
immaterial
subsidiaries
£m
Total
£m
(0.3)
(0.3)
–
–
Individual
immaterial
subsidiaries
£m
(0.3)
(0.3)
–
–
–
Total
£m
(0.3)
(0.3)
–
The individually immaterial subsidiaries include the share of results for Barpellam Inc, Bartech Belgium NV and Younifi Limited
which are not wholly owned by the Group (note 27).
Page_103
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS
IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Notes to the consolidated financial statements continued
FoR THE 52 WEEKS ENDED 1 JANUARY 2021
27. RELATED PARTY DISCLOSURES
The consolidated financial statements include those of the holding company, Impellam Group plc, and all of its subsidiaries.
All subsidiaries have the same period end as the Group and are wholly owned at the period end unless otherwise specified.
800 The Boulevard
Capability Green
Luton
LU1 3BA
United Kingdom
Level 2
14 Martin Place
Sydney
NSW 2000
Australia
Straatsburgdok-Noordkaai 3
2030 Antwerp, Belgium
Po Box 71, Road Town
Tortola VG1110
British Virgin Islands
250 Howe Street
20th Floor Vancouver
BC V6C 3R8
Canada
Page_104
– Blue Arrow Financial Services Limited*
– Blue Arrow Holdings Limited
– Blue Arrow Limited
– BMS Limited
– Carbon60 Limited
– Career Teachers Limited
– Carlisle Cleaning Services Holdings Limited*
– Carlisle Events Services Limited*
– Carlisle Group Limited
– Carlisle Nominees Limited*
– Carlisle Staffing plc
– Carlisle Staffing Services Holdings Limited
– Carlisle Staffing Services Limited
– Celsian Group Limited
– Chadwick Nott (Holdings) Limited
– Chrysalis Community Care Group Limited
– Comensura Limited(a)
– Doctors on Call Limited
– Flexy Corporation Limited
– Global Group (UK) Limited
– Global Medics Limited
– Guidant Global-Europe Limited
– Impellam Holdings Limited
– Impellam UK Limited
– Laybridge Limited*
– Litmus Workforce Solutions Limited
– Lorien Limited
– Lorien Resourcing Limited
– Medacs Global Group Limited
– Medacs Healthcare Australasia Group Limited
– Medacs Healthcare plc
– oneTrue Limited
– PRN Recruitment Limited
– Science Recruitment Group Limited
– Younifi Limited (90% owned)
– Allied Employment Group Pty Limited(b)
– Carbon60 Pty Limited(b)
– Comensura Pty Limited(b)
– Flexy Services Pty Limited(b)
– Global Medics Pty Limited(b)
– Litmus Workforce Solutions Pty Ltd(b)
– Medacs Healthcare (Pty) Limited(b)
– Medacs Healthcare Australia Pty Limited(b)
– Bartech Belgium NV(h) (73% owned)
– Sabertooth Services Limited
– Bartech Technical Services of Canada Limited(c)
– Canada Corporate Employment Resources ULC(c)
– Global & Medical Recruitment Consultancy Inc.(c)
– Guidant Group Canada ULC(c)
FINANCIAL STATEMENTS
Anna-Schneider-Steig 22
50678 Cologne, Germany
Beethovenplatz 2
80336 Munich, Germany
– Guidant Global Germany GmbH(c)
– Impellam GmbH(c)
57/63 Line Wall Road, Gibraltar
– Kenard Investments Limited
Block 9, Blackrock Business Park
Blackrock
Co. Dublin, A94 E4X2
Ireland
Via Filippo Turati 29
20121 Milan, Italy
Rio Tiber 40 102
Col Cuauhtemoc 06500
Cuauhtemoc, Distrito Federal, Mexico
Level 6, 3 Ferncroft Street
Graft, Auckland 1010
New Zealand
oriental Center, Suite P1
254 Muñoz Uñoz Rivera Avenue San Juan
PR 00918 Puerto Rico
133 New Bridge Road
#10-05, Chinatown Point
Singapore 059413
Martin-Disteli-Strasse 9
4600 olten, Switzerland
2711 Centerville Road Suite 400
Wilmington
Delaware 19808
USA
17199 N Laural Park Drive
Suite 224 Livonia
Michigan 48152 USA
– Carlisle Security (Holdings) Limited(e)
– Carlisle Security Limited(e)
– Carlisle Staffing Services Ireland Limited(e)
– Irish Recruitment Consultants Limited(e)
– Litmus Workforce Solutions Ireland Limited (h)
– Medacs Global Group Limited(h)
– Guidant Global Italy SRL(h)
– Bartech Mexico S, de RL de CV(c)
– Global Medics NZ Limited(f)
– Healthlink New Zealand Group Limited(f)
– Medacs Healthcare Limited(f)
– Guidant Global Puerto Rico Inc(c)
– Guidant Global SG Pte Ltd(g)
– Latitudes Group International Management Pte Limited(g)
– Carbon60 AG(d)
– Guidant Global Switzerland AG(d)
– Barpellam Inc (49% owned)(c)
– CER Canada Holding Inc.(c)
– Corestaff Support Services Inc.(c)
– Corporate Employment Resources Inc.(c)
– Corporate Services Group Holdings Inc.(c)
– Guidant Global Canada Holding Inc.(c)
– Guidant Global Holding Corporation(c)
– Guidant Global Inc.(c)
– Guidant Group Inc.(c)
– Bartech Mexico Holding LLC(c)
– Bartech Technical Services LLC(c)
Companies marked with a * above are exempt from the Companies Act 2006 requirements relating to the audit of their
individual accounts by virtue of Section 480 of the Act relating to dormant companies.
All subsidiaries are indirect holdings of the Company other than Impellam Holdings Ltd, Impellam UK Ltd and the Medacs
Global Group Ltd which has its registered office in the UK.
Shares for all companies are classed as ordinary and a nominal value of £1 per share except as disclosed below:
(a) ‘A’ ordinary shares of £1
(b) ordinary shares of A$1
(c) Common stock with no par value
(d) ordinary shares of 1000 CHF
(e) ordinary shares of €1.27
(f) ordinary shares of NZ$1
(g) ordinary shares of SG$1
(h) ordinary shares of €1
Page_105
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS
IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Notes to the consolidated financial statements continued
FoR THE 52 WEEKS ENDED 1 JANUARY 2021
27. RELATED PARTY DISCLOSURES CoNTINUED
The Group owns 49% of the issued stock of Barpellam Inc but exercises control of the company in accordance with the
definitions of power and exposure to variability in returns required under IFRS 10 Consolidated Financial Statements.
The subsidiary undertakings listed below are exempt from the Companies Act 2006 requirements relating to the audit of their
individual accounts by virtue of Section 479A of the Act as this Company has guaranteed the subsidiary company under Section
479C of the Act:
Flexy Corporation Limited
Guidant Global-Europe Limited
Medacs Healthcare Australasia Group Limited
oneTrue Limited
Registered
number
Class of
shares held
09524785
07130856
03120991
01189888
ordinary
ordinary
ordinary
ordinary
ownership
1 January
2021
100%
100%
100%
100%
3 January
2020
100%
100%
100%
100%
Compensation of key management personnel of the Group
The Directors have considered the levels of responsibility delegated to senior management of the Group and have concluded
that, in addition to the Directors themselves, disclosure should include the Senior Leadership Team which comprises the
Company Secretary, the Chief Executives of Medacs Global Group, Lorien, Guidant Group, Impellam North America,
Comensura and Impellam Australasia as well as the Chief Financial officer, Chief Commercial officer, the Chief Information
officer, the Group Marketing Director and the Group Director of Talent. The total number of positions included in the
disclosure is 17 (2019: 15). The Directors receive dividends in proportion to their shareholdings held during the current and
prior periods.
Short-term employment benefits
Post-employment benefits
Compensation for loss of office
Total
1 January
2021
£m
3 January
2020
£m
4.3
0.2
–
4.5
3.0
0.2
0.2
3.4
Angela Entwistle is also a Director of a company called Deacon Street Partners Limited. The Group pays Deacon Street
Partners Limited for its provision of Angela Entwistle’s services as a Non-Executive Director – £38,000 (2019: £40,000).
The Group owed £4,000 to Deacon Street Partners Limited at the end of the period (2019: £8,000). Also, a company within
the Impellam Group provides a payroll bureau service to Deacon Street Partners Limited for which no charge is made as the
arm’s-length cost of such service is negligible.
In 2016, a company within the Group advanced a loan of $1,300,000 to David Barfield, a Director of various Group companies.
This loan is due for repayment on or before 25 January 2021 and $725,000 was outstanding at the period end (2019:
$1,051,000). Interest accrues at a rate of 1.81% per annum and during the period $14,000 (2019: $23,000) interest had been
accrued. David Barfield is also a significant shareholder in Bartech Acquisition Corporation LLC to whom the Group provides
accounting and management services at an arm’s length rate. During the period, the Group charged Bartech Acquisition
Corporation LLC $10,000 (2019: $249,000). At the end of the period, the Group wrote off $193,000 owed by Bartech
Acquisition Corporation LLC leaving an amount owed to the Group $nil (2019: $183,000). Bartech Acquisition Corporation LLC
is a shareholder in TechCentral LLC and the Group provides accounting and programme management services at an arm’s
length rate to TechCentral LLC. During the period, the Group charged TechCentral $175,000 (2019: $155,000) for these
services. At the end of the period, TechCentral LLC owed the Group $155,000 (2019: $133,000).
Page_106
FINANCIAL STATEMENTS During the period the Company entered into the following transactions with related parties who are not 100% owned by
the Group.
1 January 2021
Barpellam Inc
Bartech Belgium NV
Younifi Limited
Total
3 January 2020
Barpellam Inc
Bartech Belgium NV
Younifi Limited
Total
Sale of
services to
related parties
£m
Purchase of
services from
related parties
£m
Amounts owed
to related
parties
£m
Amounts owed
by related
parties
£m
–
–
0.1
0.1
36.5
0.2
–
36.7
26.1
–
–
26.1
18.8
0.2
4.2
23.2
Sale of
services to
related parties
£m
Purchase of
services from
related parties
£m
Amounts owed
to related
parties
£m
Amounts owed
by related
parties
£m
–
–
1.1
1.1
40.4
0.1
–
40.5
33.7
–
–
33.7
17.2
0.2
3.8
21.2
Sales to related parties relate to expenditure transferred at cost to encourage the expansion of the related party. As these
companies are controlled by the Group, no allowance has been made for bad and doubtful debts.
28. NET DEBT
3 January
2020
£m
IFRS 16
adoption
£m
Cash and short-term deposits (note 18)
Bank overdraft (note 19)
Revolving credit (notes 20 and 21)
Hire purchase (notes 20 and 21)
Lease liabilities (note 13)
Lease debtors (note 13)
Net debt
132.3
(39.0)
(165.3)
(0.3)
(33.8)
7.3
(98.8)
–
–
–
–
–
–
–
Cash and short-term deposits (note 18)
Bank overdraft (note 19)
Revolving credit (notes 20 and 21)
Hire purchase (notes 20 and 21)
Lease liabilities (note 13)
Lease debtors (note 13)
Net debt
4 January
2019
£m
IFRS 16
adoption
£m
117.1
(39.9)
(148.5)
(0.4)
–
–
(71.7)
–
–
–
–
(39.3)
10.4
(28.9)
Cash
flow
£m
(9.2)
36.1
46.2
0.1
11.5
(3.2)
81.5
Cash
flow
£m
22.2
0.9
(16.9)
0.1
12.1
(2.9)
15.5
Interest
charged
£m
Interest
paid
£m
Drawdown
£m
Foreign
exchange
£m
1 January
2021
£m
–
–
(4.4)
–
(0.8)
0.1
(5.1)
–
–
4.4
–
0.8
(0.1)
5.1
–
–
–
–
(3.9)
–
(3.9)
(5.2)
–
0.2
–
(0.3)
0.2
(5.1)
117.9
(2.9)
(118.9)
(0.2)
(26.5)
4.3
(26.3)
Interest
charged
£m
Interest
paid
£m
Drawdown
£m
Foreign
exchange
£m
3 January
2020
£m
0.2
–
(7.4)
–
(1.3)
0.3
(8.2)
(0.2)
–
6.5
–
1.3
(0.3)
7.3
–
–
–
–
(7.4)
–
(7.4)
(7.0)
–
1.0
–
0.8
(0.2)
(5.4)
132.3
(39.0)
(165.3)
(0.3)
(33.8)
7.3
(98.8)
The Group takes advantage of a number of non-recourse financing agreements organised by clients of the Group to allow for
the acceleration of payment of the Group’s receivables. At the end of 2020, these amounted to £6.3m (2019: £12.6m). These
agreements accrue interest at between 0.65% and 1.75% over LIBoR.
Page_107
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS
IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Notes to the consolidated financial statements continued
FoR THE 52 WEEKS ENDED 1 JANUARY 2021
29. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s principal financial liabilities comprise bank overdrafts, revolving credit facilities, leases and trade payables.
overdrafts and revolving credit facilities are used to satisfy short-term cash flow requirements. The main purpose of these
financial liabilities is to raise finance for the Group’s trading operations. The Group also has various financial assets such as
investments, trade receivables, cash and short-term deposits which arise directly from trading operations.
The main risks arising from the Group’s financial instruments are set out below. The Board reviews and agrees policies for
managing each of these risks and these are summarised below.
It is, and has been throughout the period under review, the Group’s policy that no trading in financial instruments such as
derivatives shall be undertaken. The Group’s policy with regard to interest rate and foreign exchange contracts is to only
hedge specific risks with a determinable date that arise from operations or financing.
Interest rate risk
None of the Group’s borrowings are at a fixed rate of interest. All borrowings are subject to changes in market interest rates,
primarily the revolving credit facility, which is subject to floating rates. The floating rate borrowings are not exposed to
changes in fair value; however, the Group is exposed to interest rate risk as costs increase if market rates rise or cash flow
opportunity as costs decrease if market rates fall.
The Group also earns interest on credit bank balances at a floating rate of interest. The Group’s policy is to manage its interest
rate cost by the use of variable rate debts while rates are low.
Interest rate risk table
The following table demonstrates the sensitivity to a reasonably (based upon market expectations for the next 12 months)
possible change to interest rates, with all other variables held constant, of the Group’s profit before tax (through the impact
of floating rate borrowings).
1 January 2021
Pound Sterling
US Dollar
3 January 2020
Pound Sterling
US Dollar
Increase/
decrease in basis
points
Effect on profit
before tax
£m
Effect
on equity
£m
+50
-25
+50
-25
+50
-25
+50
-25
(0.6)
0.3
(0.1)
0.1
(0.8)
0.4
(0.2)
0.1
(0.5)
0.2
(0.1)
0.1
(0.6)
0.3
(0.1)
0.1
Liquidity risk
The Group’s funding strategy is to maintain funding flexibility through the use of cash, deposits, revolving credit facilities,
overdrafts and leasing contracts. The Group aims to ensure that it has committed borrowing facilities in place in excess of
its peak forecast borrowings for at least the next 12 months. Short-term flexibility is achieved by the use of deposits and
revolving credit facilities.
Under the Group’s revolving credit facilities, £240m was available for drawdown (2019: £240m). The amount not utilised at
1 January 2021 was £114.9m (2019: £69.9m). This facility also includes an accordion element of an additional £50m which could
be added to the facility. There are no restrictions to the free transfer of funds between fully owned subsidiaries. The facility
covers all territories the Group operates in. on 10 March 2020, the Group exercised the option to extend £220m of the facility
by one year to 1 April 2023. The revolving credit facility includes financial covenants linked to the Group’s debtor cover,
leverage cover and interest cover using adjusted EBITDA (before separately disclosed items and share-based payment) –
note 3. At 3 January 2020, and throughout the period, the Group was in compliance with its financial covenants and expects
to continue to be so.
Page_108
FINANCIAL STATEMENTS The table below summarises the maturity profile of the Group’s financial liabilities at 1 January 2021 and 3 January 2020 based
on contractual discounted payments.
1 January 2021
Revolving credit facilities (notes 20 and 21)
Trade and other payables (note 19)
Finance lease liabilities (notes 20 and 21)
Lease liabilities (note 13)
Total
Restated
3 January 2020
Revolving credit facilities (notes 20 and 21)
Trade and other payables (note 19)
Finance lease liabilities (notes 20 and 21)
Lease liabilities (note 13)
Total
On
demand
£m
Less than
3 months
£m
–
2.9
–
–
2.9
on
demand
£m
–
39.0
–
–
39.0
–
446.5
–
2.3
444.4
Less than
3 months
£m
1.4
444.7
–
2.8
448.9
3–12
months
£m
–
22.1
0.1
6.9
28.7
3–12
months
£m
23.2
19.5
0.1
7.9
50.7
1–5
years
£m
118.9
–
0.1
13.0
134.9
1– 5
years
£m
140.7
1.6
0.2
18.1
160.6
5 years
or more
£m
–
–
–
4.3
4.3
5 years
or more
£m
–
–
–
5.0
5.0
Total
£m
118.9
471.5
0.2
26.5
617.1
Total
£m
165.3
504.8
0.3
33.8
704.2
Credit risk
The risk of financial loss due to a counterparty’s failure to honour its obligations arises principally in relation to transactions
where the Group provides services on deferred terms (note 17).
Group policies are aimed at minimising such losses. It is the Group’s policy that all clients who wish to trade on credit terms are
subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result
that the Group’s exposure to bad debts is kept to a minimum. The maximum exposure is the carrying amount as disclosed
in note 17.
In February 2019, the Group purchased a credit risk policy. The policy covers all clients except public sector, local government
and pay when paid contracts. There is a £500,000 aggregate first loss and maximum policy liability of £44.5m.
With respect to credit risk from other financial assets of the Group, which comprise cash and cash equivalents and
investments, the Group’s exposure to credit risk arises from the default of the counterparty, with a maximum exposure equal
to the carrying amount of these assets. These risks are primarily minimised by restricting deposits and investments to those
available from well-established reputable, financial institutions.
At 1 January 2021, the maximum exposure to credit risk for trade and other receivables by geographic region was as follows.
UK
North America
Europe
Australasia
Total
1 January
2021
£m
228.4
295.0
20.0
23.8
567.2
3 January
2020
£m
264.1
267.9
20.7
27.7
580.4
Page_109
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS
IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Notes to the consolidated financial statements continued
FoR THE 52 WEEKS ENDED 1 JANUARY 2021
29. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES CoNTINUED
Foreign currency risk
The Group has a significant investment in its operations in North America with some smaller interests in Europe and
Australasia. The Group’s consolidated balance sheet can be affected significantly by the movements in the US Dollar exchange
rate; however, movements in the exchange rates for Euro, Australian Dollar, Canadian Dollar, Swiss Franc, New Zealand Dollar
or other currencies have only a marginal impact on the Group’s results and balance sheet.
The Group does not hedge against the impact of exchange rate movements on the translation of foreign currency
denominated profits. Transactional currency exposures across the Group are minimal.
The following table demonstrates the sensitivity to a reasonably possible change in the exchange rates:
1 January 2021
US Dollars
3 January 2020
US Dollars
Percentage
change in rate
Effect on profit
before tax
£m
Effect
on equity
£m
+10
-10
+10
-10
0.8
(1.0)
0.9
(1.1)
0.3
(0.4)
0.3
(0.4)
Price risk
The Group has investments in marketable securities and as such is exposed to price risk. These securities are held in trust
on behalf of certain US employees and the underlying risk is borne by those employees. The Group’s liability is limited to the
market value of the securities (note 16).
Capital management
Capital consists of the total equity attributable to the equity holders of the Parent Company.
The primary objective of the Group’s capital management is to safeguard the Group’s ability to continue as a going concern,
to ensure that it maintains a good credit rating in order to support its business and maximise shareholder value. No changes
were made to the objectives, policies or processes during either period.
The Group considers capital less any net cash as components of funding. It monitors funding by reference to its ability to
borrow and to satisfy debt covenants. The principal measure is the EBITDA ratio, which is calculated by dividing the funding
of the Group by the Group’s adjusted earnings before interest, tax, adjusted depreciation and amortisation.
Net debt (note 28)
Equity per balance sheet
Funding: total capital less net cash
1 January
2021
£m
26.3
218.8
245.1
3 January
2020
£m
98.8
246.5
345.3
The revolving credit facility included a financial covenant linked to the Group’s leverage. At 1 January 2021, and throughout
the period, the Group was in compliance with this financial covenant whilst this facility was in place.
Page_110
FINANCIAL STATEMENTS 30. FINANCIAL INSTRUMENTS
Set out below is a comparison by category of the carrying amounts and fair values of all the Group’s financial instruments that
are carried in the consolidated balance sheet.
Financial assets
Investments (note 16)
other financial assets (non-current) (note 16)
other debtors
Cash and cash equivalents (note 18)
Financial liabilities
Bank overdraft (note 19)
Short-term borrowings (notes 20 and 21)
Long-term borrowings (notes 20 and 21)
1 January 2021
3 January 2020
Carrying
amount
£m
Fair
value
£m
Carrying
amount
£m
1.2
0.4
0.5
117.9
2.9
0.1
119.0
1.2
0.4
0.5
117.9
2.9
0.1
119.0
1.0
0.5
0.8
132.3
39.0
24.7
140.9
Fair
value
£m
1.0
0.5
0.8
132.3
39.0
24.7
140.9
The carrying value of trade receivables less impairment and trade payables are assumed to approximate fair value and are
excluded from the above table.
Fair value estimation hierarchy:
• Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities;
• Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
(that is, as prices) or indirectly (that is derived from prices); and
• Level 3 – Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).
The following table presents the fair value hierarchy of assets measured at fair value:
1 January 2021
Investments (note 16)
other debtors
3 January 2020
Investments (note 16)
other debtors
Level 1
£m
1.2
0.5
Level 1
£m
1.0
0.8
Level 2
£m
–
–
Level 2
£m
–
–
Level 3
£m
–
–
Level 3
£m
–
–
Total
£m
1.2
0.5
Total
£m
1.0
0.8
Level 1
Market values, based on published prices, have been used to determine the fair value of the marketable investments included
in other financial assets.
Fair value for short-term borrowings are equal to book value as they are repayable on demand and are subject to churn over
a period of less than three months.
Page_111
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS
IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Notes to the consolidated financial statements continued
FoR THE 52 WEEKS ENDED 1 JANUARY 2021
30. FINANCIAL INSTRUMENTS CoNTINUED
Interest rate risk
At 1 January 2021 and 3 January 2020, none of the Group’s borrowings are at fixed rates of interest. The following table sets
out the carrying amount, by maturity, of the Group’s financial instruments that are exposed to interest rate risk.
1 January 2021
Floating rate
Cash and short-term deposits (note 18)
Bank overdrafts (note 19)
Revolving credit facilities (notes 20 and 21)
Hire purchase (notes 20 and 21)
3 January 2020
Floating rate
Cash and short-term deposits (note 18)
Bank overdrafts (note 19)
Revolving credit facilities (notes 20 and 21)
Hire purchase (notes 20 and 21)
Within
1 year
£m
117.9
(2.9)
–
(0.1)
Within
1 year
£m
132.3
(39.0)
(24.6)
(0.1)
1–2
years
£m
–
–
(118.9)
(0.1)
1–2
years
£m
–
–
(140.7)
(0.2)
Total
£m
117.9
(2.9)
(118.9)
(0.2)
Total
£m
132.3
(39.0)
(165.3)
(0.3)
The effective interest rate on bank balances and other short-term deposits was less than 0.5% (2019: less than 0.5%).
US deposit interest rates were less than 0.5% (2019: less than 0.5%).
Bank overdrafts and revolving credit borrowings are secured by a guarantee and debenture with a fixed charge over certain
assets of the Company and the subsidiary undertakings concerned plus a floating charge over all other assets of the Company
and those subsidiary undertakings, supported by a cross-guarantee given by the Company and the various subsidiary
undertakings. Borrowings under these facilities incurred interest (including margin) between 1.35% and 2.30% over LIBoR
rate (2019: between 1.35% and 2.30% over LIBoR rate). All interest is charged monthly in arrears (note 29).
Collateral pledged
The self-insured workers’ compensation liability described in note 22 is covered by insurers on the basis that collateral is
provided sufficient to cover all potential claims. This collateral takes two forms:
• £3.2m – $4.4m (2019: £3.4m – $4.4m) in the form of letters of credit drawn upon the revolving credit facility in the US; and
• £0.4m – $0.5m (2019: £0.4m – $0.5m) in the form of cash deposits, shown on the balance sheet as non-current other
financial assets (note 16).
31. POST BALANCE SHEET EVENTS – SHARE PURCHASE AND CANCELLATION
Between the end of the year and 30 March 2021, a further 78,916 ordinary shares of 1p each have been repurchased in the
market for total consideration of £0.2m and have been cancelled.
32. CONTROL
The Group has identified Lord Ashcroft as the ultimate controlling party as he has influence over more than 50%, but less than
75%, of both the shares and voting rights of Impellam Group plc and together with being Chairman of Impellam Group plc has
significant influence over the Group.
Page_112
FINANCIAL STATEMENTS Company balance sheet
AS AT 1 JANUARY 2021
Non-current assets
Investments
Current assets
other receivables
Cash at bank and in hand
Other payables: amounts falling due within one period
Net current assets
Total assets less current liabilities
other payables: amounts falling due in more than one period
Net assets
Capital and reserves
Called-up share capital
Share premium account
Merger reserve
other reserves
Retained profit
Total shareholders’ funds
Notes
1 January
2021
3 January
2020
3
4
5
6
8
8
9
9
9
150.1
150.1
250.1
1.2
251.3
261.6
0.8
262.4
(178.2)
(153.3)
73.1
223.2
(118.9)
104.3
0.5
30.1
19.0
–
54.7
109.1
259.2
(140.7)
118.5
0.5
30.1
19.0
–
68.9
10
104.3
118.5
The accompanying notes are an integral part of this balance sheet.
The loss dealt with in the financial statements of the Company for the 52 weeks ended 1 January 2021 was £9.9m (2019:
£11.4). Dividends totalling £nil (2019: £1.7m) were declared and paid during the period. As allowed by Section 408 of the
Companies Act 2006, no separate profit and loss account is presented for the Parent Company.
The financial statements on pages 113 to 119 were approved by the Board on 7 April 2021 and are signed on its behalf by:
Tim Briant
Chief Financial Officer
Registered number: 06511961
Page_113
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS
IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Statement of changes in equity
FoR THE 52 WEEKS ENDED 1 JANUARY 2021
Share capital
and premium
(note 8)
£m
other reserves
(note 9)
£m
Retained
profit
£m
5 January 2019
30.6
19.0
Loss for the period
Purchase and cancellation of own shares (note 8)
Demerger charge
3 January 2020
4 January 2020
Loss for the period
Purchase and cancellation of own shares (note 8)
1 January 2021
–
–
–
30.6
30.6
–
–
30.6
–
–
–
19.0
19.0
–
–
19.0
92.8
(11.4)
(10.8)
(1.7)
68.9
68.9
(9.9)
(4.3)
54.7
Total
reserves
£m
142.4
(11.4)
(10.8)
(1.7)
118.5
118.5
(9.9)
(4.3)
104.3
The Company has considered the profits available for distribution to shareholders. At 1 January 2021, the Company had
retained earnings of £54.7m which were all available for distribution.
The Group also has retained profits in its subsidiary companies which are expected to flow up to the Company in due course to
further supplement its distributable reserves position.
Page_114
FINANCIAL STATEMENTS Notes to the Company balance sheet
FoR THE 52 WEEKS ENDED 1 JANUARY 2021
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A) Basis of accounting
Impellam Group plc (‘the Company’) is a company incorporated and registered in England and Wales and domiciled in the UK.
In preparing these financial statements, the Company applies the recognition, measurement and disclosure requirements of
International Financial Reporting Standards (‘IFRS’) in conformity with the requirements of the Companies Act 2006 and has
set out below where advantage of the FRS 101 disclosure exemptions has been taken.
Summary of disclosure exemptions
In these financial statements, the Company has applied the exemptions available under FRS 101 in respect of the
following disclosures:
• Comparative year reconciliations for share capital
• A cash flow statement and related notes
• Disclosures in respect of transactions with wholly owned subsidiaries
• Disclosures in respect of capital management
• The effects of new but not yet effective IFRSs
• Disclosures in respect of the compensation of key management personnel.
As the consolidated financial statements of Impellam Group plc include the equivalent disclosures, the Company has also
taken the exemptions under FRS 101 available in respect of the following disclosures:
• Certain disclosures required by IAS 36 Impairment of Assets in respect of the impairment of investments
• Certain disclosures required by IFRS 3 Business Combinations in respect of business combinations undertaken by the
Company in the current and prior years including the comparative year reconciliation for goodwill
• Certain disclosures required by IFRS 13 Fair Value Measurement and the disclosures required by IFRS 7 Financial Instruments
Disclosures.
The Company proposes to continue to adopt the reduced disclosure framework of FRS 101 in its next financial statements.
The accounting policies set out below have, unless otherwise stated, been applied consistently to all years presented in these
financial statements.
A separate profit and loss account dealing with the results of the Company only has not been presented as permitted under
Section 408 of the Companies Act.
Changes in accounting policy
None of the standards, interpretations and amendments effective for the first time from 1 January 2020 have had a material
effect on the financial statements.
Accounting policies have been applied consistently.
B) Investments
Shares in subsidiary companies are held as fixed assets and are stated at cost less provision for impairment. Impairment
reviews are conducted when changes in events or situations indicate that the carrying value may not be recoverable. More
details of the impairment methodologies are given in note 14 of the consolidated accounts.
Page_115
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS
IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Notes to the Company balance sheet continued
FoR THE 52 WEEKS ENDED 1 JANUARY 2021
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CoNTINUED
C) Other receivables
other receivables include amounts owed by Group companies which are assessed for impairment based upon the current
financial position and expected future performance of the subsidiary to which they relate. The transactions with Group
companies are interest-free demand loans.
The Company applies the IFRS 9 general approach to measuring expected credit losses. This approach requires an assessment
at the initiation of the loan as to the risk of default, and a further assessment when the credit risk profile of the loans change.
IFRS 9 applies a three-stage model that is applied when calculating the expected credit losses:
• Stage 1 is defined as having no Significant Increase in Credit Risk (‘SICR’) – a 12-month expected credit loss is recognised at
this point
• Stage 2 is defined as having a SICR – a lifetime expected credit loss is recognised at this point
• Stage 3 is defined as being credit impaired – a lifetime expected credit loss is recognised at this point.
There is no impact to any interest due to the Group company loans being interest free.
The Company defines the following:
• Definition of a default – A loan is considered to be in default when there is evidence that the borrower is in significant
financial difficulty such that it will have insufficient assets to repay the loan on demand.
• SICR assessment – The risk that the borrower will default on a demand loan depends on whether the subsidiary has
sufficient cash or other assets to repay the loan immediately (meaning that the risk of default is very low and the loan is in
Stage 1); or does not have sufficient cash or other assets to repay the loan immediately (meaning that the risk of default is
higher, and the loan could be in Stage 2 or Stage 3).
• The Company performs this assessment qualitatively by reference to the borrower’s immediate cash flow and asset
position.
• Credit-impaired indicators – A loan is considered to be credit impaired if it meets the definition of a defaulted loan.
D) Deferred taxation
Deferred income tax is provided, using the liability method, on temporary differences at the balance sheet date between the
tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax assets are recognised on an undiscounted basis for all deductible temporary differences, carry-forward
of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against
which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be
utilised except:
• where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition
•
of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither
the accounting profit nor taxable profit or loss; and
in respect of deductible temporary differences associated with investments in subsidiaries, deferred tax assets are
recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and
taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it
is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be
utilised. Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent
that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the
asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted
at the balance sheet date. Income tax relating to items recognised directly in equity is recognised in equity and not in the
income statement. Deferred tax assets and liabilities are offset if a legally enforceable right exists to set off current tax assets
against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
Page_116
FINANCIAL STATEMENTS
E) Employee benefits
Short-term benefits – bonus arrangements
The Company operates a number of annual bonus arrangements for Directors and employees. The cost of these arrangements
is recognised in the income statement when the entity has an obligation to make such payments as a result of the achievement
of performance targets and when a reliable estimate of this obligation can be made.
Pension obligations
The Company provides pension arrangements for its UK-based Directors and employees through defined contribution
schemes. Contribution costs are expensed to the income statement as they become due.
2. OPERATING COSTS
• The amount payable to the auditor in respect of the audit of the Company is £20,000 (2019: £20,000), all of which is payable
to BDo LLP.
• Details of emoluments for Directors can be found in note 5 of the consolidated financial statements.
• Monthly average staff numbers (including Directors) for the Company during 2020 was 28, eight Directors/Company
Secretary, nine managers and 11 administrators (2019: 32, eight Directors/Company Secretary, eight managers and 16
administrators).
• The total amount of employee costs charged to the Company’s income statement in the period is £4.5m (2019: £3.4m).
3. INVESTMENTS
Cost – 4 January 2020
Cost – 1 January 2021
Impairment provision – 4 January 2020
Charge for the period
Disposals
Accumulated amortisation – 1 January 2021
Net carrying value – 1 January 2021
Net carrying value – 3 January 2020
Subsidiary
undertakings
£m
150.1
150.1
–
–
–
–
150.1
150.1
Details of the principal subsidiary undertakings are given in note 27 of the consolidated financial statements. All of these
companies are unlisted.
Subsidiary undertakings
The carrying values of investments were tested against discounted future cash flows during the period using a discount
rate of between 14.9% to 18.0% (2019: between 14.0% to 18.7%), which include a country risk premium. The forecasts were
based on pre-tax cash flows derived from approved budgets for the 2021 financial period (2019: 2020 financial period).
Management believes the forecasts are reasonably achievable. No impairment in carrying value was identified.
4. OTHER RECEIVABLES
Amounts owed by subsidiary undertakings
other receivables
Prepayments
Total
1 January
2021
£m
238.7
10.9
0.5
250.1
3 January
2020
£m
246.2
14.9
0.5
261.6
Amounts owed by subsidiary undertakings are unsecured, repayable on demand and are not interest-bearing. These have been
reviewed for any expected credit loss and a charge of £0.4m (2019: £1.3m) has been recorded in the period, bringing the total
charge to £1.7m (2019: £1.3m).
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STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS
IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Notes to the Company balance sheet continued
FoR THE 52 WEEKS ENDED 1 JANUARY 2021
5. OTHER PAYABLES: AMOUNTS FALLING DUE WITHIN ONE PERIOD
Bank overdraft
Revolving credit facilities
Amounts owed to subsidiary undertakings
Contract liabilities
Accruals and other payables
Total
1 January
2021
£m
2.9
–
171.6
1.3
2.4
178.2
3 January
2020
£m
39.0
24.6
86.7
1.2
1.8
153.3
Amounts owed to subsidiary undertakings are unsecured, repayable on demand and are not interest-bearing. Contract
liabilities relate to amounts recharged to subsidiary undertakings for which the service has not been completed.
6. OTHER PAYABLES: AMOUNTS FALLING DUE IN MORE THAN ONE PERIOD
Revolving credit facilities
1 January
2021
£m
118.9
3 January
2020
£m
140.7
Details of security given over these liabilities are described in notes 29 and 30 to the consolidated accounts.
7. DEFERRED TAXATION
opening balance
Charged to profit and loss account in the period
Deferred tax asset
The total recognised and unrecognised deferred tax is as follows:
Assets
Losses
other short-term timing differences
Total
8. CALLED-UP SHARE CAPITAL
4 January 2019
Purchase and cancellation of own shares
3 January 2020
Purchase and cancellation of own shares
Total – 1 January 2021
1 January
2021
£m
–
–
–
3 January
2020
£m
0.2
(0.2)
–
Recognised
1 January
2021
£m
Unrecognised
1 January
2021
£m
Recognised
3 January
2020
£m
Unrecognised
3 January
2020
£m
–
–
–
0.2
–
0.2
–
–
–
0.2
–
0.2
Number of issued
shares
Millions
Issued share
capital
£m
Share premium
account
£m
Total
share capital
£m
49.7
(2.4)
47.3
(1.4)
45.9
0.5
–
0.5
–
0.5
30.1
–
30.1
–
30.1
30.6
–
30.6
–
30.6
In 2020, 1,413,789 ordinary shares of 1p each (2019: 2,410,855), representing 3.0% (2019: 4.8%) of the opening number of
issued shares, were repurchased in the market for consideration of £4.3m (2019: £10.8m), and cancelled.
Impellam Group plc
The Company has no limit to its authorised share capital. The above number represents the number of allotted, fully paid
shares of 1p in issue.
Page_118
FINANCIAL STATEMENTS Dividend and dividend policy
In 2020, 1,413,789 ordinary shares of 1p each (2019: 2,410,855), representing 3.0% (2019: 4.8%) of the opening number of
issued shares, were repurchased in the market for consideration of £4.3m (2019: £10.8m), and cancelled.
on 27 April 2020 the Board announced the suspension of the share buyback programme, though maintained authority to
acquire shares on an ad hoc basis if deemed appropriate by the Board. on 30 June 2020, the Company announced it would
reinstate the Share Purchase Plan for the period to the release of the interim statement and during this period purchased
77,411 shares at a cost of £0.2m. From 31 July 2020, the Share Purchase Plan was once again suspended, though the Company
retained the authorities to buy back shares in the future.
on 25 January 2021 the Company announced a new Share Purchase Plan allowing the Company to purchase ordinary shares
to the value of £0.5m per calendar month up to the date of the Company’s next Annual General Meeting, currently due to be
held on 29 June 2021.
9. RESERVES
3 January 2020
Loss for the period
Purchase and cancellation of own shares
1 January 2021
Merger
reserve
£m
19.0
–
–
19.0
Retained
profit
£m
68.9
(9.9)
(4.3)
54.7
Total
reserves
£m
87.9
(9.9)
(4.3)
73.7
Merger reserve
The merger reserve arises under Section 612 of the Companies Act 2006 as a result of the acquisition of Bartech Holding
Corporation and Lorien Limited using the issue of shares as part consideration. The excess of fair value over the nominal value
of shares is transferred to a merger reserve rather than a share premium. This reserve is not distributable.
Other reserves
other reserves comprise the following:
• £41,000 contributed surplus arising on a historical demerger transaction and a special reserve arising from the capital
reduction in December 2012 (2019: £41,000); and
• £47,000 capital redemption reserve arising from the purchase and cancellation of treasury shares (2019: £32,000).
These reserves are non-distributable. All other reserves are distributable.
10. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS
Loss for the financial period
Purchase and cancellation of own shares
Demerger charge
opening shareholders’ funds
Closing shareholders’ funds
3 January
2021
£m
(9.9)
(4.3)
–
118.5
104.3
4 January
2020
£m
(11.4)
(10.8)
(1.7)
142.4
118.5
11. RELATED PARTY TRANSACTIONS
The Board is not aware of any related party transactions other than those disclosed in note 27 to the consolidated
financial statements.
12. POST BALANCE SHEET EVENTS – SHARE PURCHASE AND CANCELLATION
Between the end of the year and 30 March 2021, a further 78,916 ordinary shares of 1p each have been repurchased in the
market for total consideration of £0.2m and have been cancelled.
Page_119
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS
In 2019 a number of items were reported as separately
disclosed items, however due to ongoing review these have
been restated as costs either within the relevant segment or
corporate costs.
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.
SPEND UNDER MANAGEMENTΔ (‘SUM’)
Definition: Total amount of client expenditure which our
Managed Services 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 the year.
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.
IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Alternative Performance Measures
ALTERNATIVE PERFORMANCE MEASURES
Certain discussions and analyses set out in this Annual Report
and Accounts 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 Performance Measure, to include depreciation
and amortisation of assets but excluding amortisation of
acquired intangibles.
Reconciliation of adjusted operating (loss)/profit to
operating profit:
Segmental adjusted operating
profit
Corporate costs
Adjusted operating profit
Amortisation of brand value and
customer relationships
Impairment of intangible assets
Operating profit
2020
£m
23.3
(5.1)
18.2
(11.0)
(22.2)
(15.0)
2019
£m
35.7
(4.6)
31.1
(10.2)
(7.0)
13.9
Page_120
FINANCIAL STATEMENTS Reconciliation of adjusted EPS to basic EPS:
2020
£m
Continuing profit for the period
Impairment of goodwill
Impairment of other intangibles
(net of tax)
Customer relationship and brand
value amortisation (net of tax)
Continuing adjusted profit
Weighted average number of
(21.4)
16.6
4.5
8.6
8.3
2019
£m
4.8
1.6
4.4
8.2
19.0
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 also
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:
shares
46,208,380
48,543,107
Unadjusted continuing EPS
Adjusted continuing EPS
(46.2)
18.2
9.8
39.2
Cash and short-term deposits
Bank overdraft
Revolving credit
Hire purchase
Net debt excluding IFRS 16
Lease liabilities
Lease debtors
Net debt
2020
£m
117.9
(2.9)
(118.9)
(0.2)
(4.1)
(26.5)
4.3
(26.3)
2019
£m
132.3
(39.0)
(165.3)
(0.3)
(72.3)
(33.8)
7.3
(98.8)
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STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS
IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Glossary
Adjusted EBITDA
EBITDA before separately disclosed items and impairment of goodwill
Adjusted EBITDA Conversion Ratio
Adjusted EBITDA divided by NFI/gross profit
Adjusted Operating Profit
Beautiful Basics
Business Process Outsourcing (‘BPO’)
Cash Conversion
Constant Exchange Rates
Contingent Labour
Cross-sell
operating profit before amortisation of, and impairment in, acquired
intangibles
Every brand in Impellam makes a simple promise to its customers and
candidates and then backs that promise up with whatever activities are
needed to fulfil, sustain and deliver the brand promise. We call these
promises the Beautiful Basics
Solutions which help businesses address back office needs strategically
and increase operational efficiency
Net cash from operating activities divided by operating profit
Calculated by multiplying the prior year functional currency amount by the
current year foreign currency exchange rate
Temporary and contract workers
All Impellam people are encouraged to refer new business leads to one
another. This happens when a consultant identifies an opportunity that is
outside the scope of the brand specialism and it will be referred to a brand
within the Group which is aligned to the requirement
CRM
Customer relationship management
Days Sales Outstanding (‘DSO’)
Total trade receivables divided by average daily invoiced sales
EBITDA
Earnings before interest, tax, depreciation and amortisation
Facilities Management
Providing cleaning, security, events and retail facilities support services
GDPR
Group Fill
High Road
Hybrid Vendor
IFRS
Ignite
General Data Protection Regulation which came into force on 5 May 2018
The percentage of Spend Under Management ∆ supplied from our Group
brands into our Managed Services programmes
Impellam provides good work for people and people for good work. We focus
on partnering with organisations that value engaged, fulfilled people which
serves to drive clear market segmentation and a compelling price point
Assignments are filled by a combination of suppliers that we manage for
the client and are filled directly by the Managed Services provider (including
Group supply)
International Financial Reporting Standards
CRM (customer relationship management), our recruiter operating system
Independent Contractor Solutions
Helping to reduce the risk and cost of worker misclassification
Managed Services
These businesses optimise the productivity of people by designing,
implementing, coordinating and reporting on the whole staffing process.
They provide multi-disciplinary workforce solutions, including all forms
of partial and complete outsourcing
Managed Services Programme (‘MSP’)
The outsourcing of contingent labour
Master Vendor
Net Debt
Net Fee Income (‘NFI’)
Neutral Vendor
Page_122
The majority of assignments are filled by the Managed Services provider
(including Group supply) and second-tier agencies are used when the
Managed Services provider is unable to supply
Total debt of the Group less cash in hand
Equivalent to gross profit
Assignments are filled by suppliers that we manage for the client, where
the Managed Services provider does not form part of the supply chain
FINANCIAL STATEMENTS Non-UK
Origin
Payroll Services
Productivity
Recruitment Process Outsourcing (‘RPO’)
ShiftWise
Specialist Staffing
Spend Under Management (‘SUM’)
Statement of Work (‘SOW’)
Value Chain
Vendor Management System (‘VMS’)
Vertical Specialist Managed Services
Virtuosity
Virtuoso
Virtuous Circle
Virtuoso Way
All countries Impellam operates in outside of the UK. This is the US,
Australasia and Europe (excluding the UK)
our innovation hub that acquires, invests in and partners with disruptive
start-ups in our markets as well as backing our Virtuosos’ ideas
Provide access to a fully compliant framework for managing and paying
contingent staff
Gross profit divided by Full Time Equivalent ('FTE') heads
Where a client outsources the management of the recruitment function
(in whole or part) to a third party expert
Technology solution for the NHS to build our Managed Services capability
Dedicated brands which provide expert recruitment services and skilled
workers for permanent, temporary, contact and fixed-price work
Total amount of client expenditure which our Managed Services 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
Solutions for spend in complex categories of service which include supplier
management, requisition facilitation, contract writing, negotiations and
invoicing and settlement support services
Different parts of our business share the belief that meaningful work really
matters to individuals, communities, societies and economies so they can
work together to create value that is greater than the sum of the parts
VMS technology enables the full procure-to-pay process, while providing
robust reporting and analytics
our brands which have specialist focus and expertise delivering sector
or function staffing solutions
Virtuosity is the art of seeing possibilities where others see none. It is a
mindset that enables our people to adapt with agility to changing market
conditions
People who see possibilities and can tune in to the needs of our customers
and candidates
A virtuous circle is at the core of our high-retention model. It provides the
continuous loop of making and keeping promises, which engenders trust
and ultimately builds loyalty
our consistent, collaborative Group-wide culture, based on trusted
behaviours, delivered by entrepreneurial leaders. At the heart of building
trust is the everyday practice in which people make promises to each other
to bring about a future that benefits all
Page_123
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIAL STATEMENTS
IMPELLAM GRoUP PLC_ANNUAL REPoRT AND ACCoUNTS_2020
Company information
Impellam is a leading Global Talent Acquisition and Managed Workforce Solutions provider supported by talent-focused
specialist staffing brands with deep heritages, vertical sector expertise and loyal candidate networks.
Clients across the world trust us to deliver Managed Services and talent-focused Specialist Staffing in the UK, North America,
Australasia and Europe. Working with them are 2,500 Impellam people, bringing a wealth of expertise through our 14 market-
leading brands across 76 locations. Every year, we connect carefully chosen candidates with good work at all levels. They
include technology and digital specialists, scientists, clinical experts, engineers, nurses, doctors, lawyers, teachers,
receptionists, drivers, chefs, administrators, warehouse and call centre operatives.
Underpinning everything we do is our Virtuoso strategy which recognises it is our people who make the difference. Virtuosos
make and deliver on promises and grow with their customers through sector, service or international expansion which ensures
there is never a need for a customer or candidate to leave Impellam. Impellam is the seventh1 largest Global Talent Acquisition
and Managed Workforce Solutions provider in the world.
For more information about Impellam Group, please visit: www.impellam.com
Nominated advisers and brokers
Canaccord Genuity Limited
88 Wood Street
London
EC2V 7QR
Principal solicitors
Allen & overy LLP
one Bishops Square
London E1 6AD
Registrars
Link Group
10th Floor, Central Square
29 Wellington Street
Leeds LS1 4DL
Principal bankers
Barclays Bank plc
1 Churchill Place
London E14 5HP
Independent auditor
BDo LLP
55 Baker Street
London W1U 7EU
Registered address
Impellam Group plc
800 The Boulevard
Capability Green
Luton
Bedfordshire LU1 3BA
Registered number
06511961
LSE symbol
IPEL
1 By revenue (2019 published numbers)
Page_124
FINANCIAL STATEMENTS revive silk is a white triple coated sheet,
manufactured from FSC® Recycled certified fibre
derived from 100% pre and post-consumer waste.
revive 50 silk is a high white triple coated paper
manufactured a combination of 50% Fsc® recycled
and 50% FSC® Mix virgin fibre pulp.
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IMPELLAM GROUP PLC
800 The Boulevard
Capability Green
Luton
Bedfordshire LU1 3BA
Registered number: 06511961
www.impellam.com