Impellam : Annual Report 2021

STRATEGIC REPORT

The Company

Impellam is a leading Global Talent Acquisition and managed Workforce solutions provider

• 2_ Impellam at a glance

• 4_ our awards

• 5_ Chairman's statement

• 6_ Ceo review

• 14_ our business model

• 16_ Key performance indicators

• 18_ Performance reviews

• 28_ CFo review

• 32_ Principal risks

• 36_ stakeholder engagement and our s172 statement

• 39_ Responsible business

• 44_ Board of Directors

46_ QCA Code compliance

48_ Corporate governance statement

54_ Directors' report

57_ statement of Directors' responsibilities

Words with the symbol Δ are defined in the Alternative Performance measures section of the Annual Report on page 120.

STRATEGIC REPORT

• 1_ Progress and performance

  CORPORATE GOVERNANCE

  • 43_ Governance report

    FINANCIAL STATEMENTS

    • 59_ Independent auditor's report

    • 68_ Consolidated income statement

    • 69_ Consolidated statement of comprehen- sive income

    • 70_ Consolidated balance sheet

    • 71_ Consolidated statement of changes in equity

    • 72_ Consolidated cash flow statement

    • 73_ 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

    Our Managed Services businesses are enabled 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, Asia Pacific and Europe.

    Working with them are 2,900

    Impellam people, bringing a wealth of expertise through our 13 market-leading brands across 70 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 largest Global Talent Acquisition and Managed Workforce Solutions provider in the UK, and 8th1 in the world.

Progress and performance

Headlines

Impellam delivered on its promise for the year with a strong return to growth coupled with conversion improvement and further strategic progress. Group revenue was up 13.1% (14.7%*) on the prior year at £2.3bn (2020: £2.0bn) and 1.8%* up on 2019. Adjusted operating profitΔ up 61.0% (70.5%*) to £29.3m (2020: £18.2m).

OPERATIONAL

• 1. our new, regional organisation model, supported by our four key operating segments - sTem, Global managed services ('Gms'), Regional specialist Staffing ('RSS') and Healthcare - enabled us to innovate and respond quickly to rapidly changing customer needs and candidate availability whilst enjoying the economic benefits of increased demand.

• 2. strong operational gearing in the UK region following strategic delayering initiatives, with conversion of gross profit to adjusted operating profit reaching 14.2% (2019: 10%).

• 3. Year one of our Customer Office exceeded our expectations, delivering 100% account retention and a 21% increase in Life Time Value ('LTV')2.

• 4. our key strategic investments were in people and technology with both investment cases underpinning our core principle that Virtuosity makes the difference. The core systems road map moved into the delivery phase with on premises servers moved to the cloud and a staged delivery of new

• systems and upgrades continuing through 2022.

• 5. In north America, following a strategic review of the scale and limited geographic footprint of Corestaff, our light industrial business, and a subsequent expression of interest resulted in its post year-end divestment of Corestaff to swipejobs Inc, a US private digital staffing company, for a cash consideration of approximately £14m ($19m).

FINANCIAL

• 1. Gross profit increase of 17.1% (19.5%*), with H2 2021 up 6.5%* on H2 2019.

• 2. Strong rebound in the UK and NA with gross profit growth on the prior year of 22.6%* and 16.7%* respectively. In APAC, which experienced prolonged lockdowns in 2021, gross profit increased by 4.9%*.

• 3. The Gms and the sTem portfolios, representing over 60% of the Group's gross profit, were up 14.8%* and 29.0%* respectively on 2020 and up 4.8%* and 8.0%* on 2019 gross profit.

• 4. Strong rebound in RSS with gross profit up 26.9%* year on year, though still 12.1%* below 2019 levels.

• 5. Investment in headcount to support growth with 440 net joiners during 2021, although headcount remains 77 below the 2019 year end position.

  Gross profit per FTE (productivity) was 12.8% above 2019 levels.

• 6. Adjusted operating profitΔ growth of 61.0% to £29.3m (2020: £18.2m).

• 7. net debtΔ increased by £5.2m to £31.5m (2020: £26.3m) following £38.9m of deferred UK VAT and US federal taxes repayment, with the final VAT repayment made in Q1 2022. Pre- IFRs 16 net debtΔ of £15.0m (2020:

• £4.1m) with covenant leverage ratio less than 1x throughout 2021.

• 8. Following strong operational cash generation of 167.6%, excluding deferred tax repayments, banking facilities replaced at £182.5m, representing a £57.5m reduction on the previous facility. net debt before IFRs 16Δ has reduced by £57.3m since 2019.

GROUP REVENUE_£m

£2,262.4m

2021 2,262.4

2020 2,000.9

2019 2,254.8

GROUP GROSS PROFIT_£m

£267.0m

2021 267.0

2020 228.1

2019 274.1

GROUP ADJUSTED OPERATING PROFIT∆_£m

£29.3m

2021	29.3
2020	18.2
2019	31.1

GROUP OPERATING PROFIT_£m

£19.5m

2021 2020 2019

GROUP NET DEBT (BEFORE IFRS 16)Δ _£m

£(15.0)m

2021 (15.0)

2020 (4.1)

2019 (72.3)

GROUP NET CASH GENERATED FROM OPERATIONS_£m

£10.2m

2021 10.2

94.5

2020 2019 49.5

For more informationGlossary: page_122

* Calculated by multiplying the prior year functional currency amount by the current year foreign currency exchange rate. 2 Life Time Value (LTV) is defined as average margin per client x average length of contract.

19.5

(15.0)

13.9

STRATEGIC REPORT

At a Glance

our operating segments

We organise our portfolio of Global Managed Services and Specialist Staffing businesses regionally and by specialist operating segments.

GLOBAL MANAGED SERVICES We take care of the whole staffing process, so that our customers can focus on building better businesses. We do this by providing robust multidisciplinary and blended talent solutions to enterprise-level organisations, including partial and complete outsourcing.

our Global managed services brands are Guidant Global, Comensura and Flexy.

REGIONAL SPECIALIST STAFFING

Our Regional Specialist Staffing

('Rss') businesses in the UK 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 secretaries, call centre operatives, lawyers, drivers, teachers, chefs, HR and marketing professionals.

our Rss brands are Blue Arrow, Tate, Career Teachers and Chadwick nott.

STEM

our portfolio of global sTem brands brings together a wealth of specialist recruitment expertise under one umbrella. our sTem brands work collaboratively to provide specialist contract and permanent recruitment services and statement of work across the sTem sectors. By attracting the very best of sTem talent, our businesses combine the unique and complementary skill sets of scientists, clinicians, engineers, IT and digital specialists to collaborate, innovate and co-create a better future for us all, by solving some of the world's toughest problems.

our sTem brands are Carbon60, sRG and Lorien in the UK & europe and Bartech, sRG and Lorien in north America.

HEALTHCARE

medacs Global Group ('mGG') is a leading international healthcare workforce solutions provider operating under a variety of brands, including medacs Healthcare, Global medics, and Litmus Workforce solutions. mGG provides healthcare staffing, managed services, staff bank, occupational health, insourcing, social care and home care services.

Within its healthcare brands, mGG delivers locum, temporary and permanent doctors, nurses, allied health professionals and care workers. It is the largest provider of locum doctors to the nHs in the UK and to the Hse in Ireland 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.

For more information visit

www.impellam.com