It has been a tough year for Impellam (IPEL). The staffing company saw gross profits drop in three of its four divisions, leading gross profit at constant currencies to come in flat at the end of the year. Management attributed this to challenging conditions in UK healthcare, education and retail markets, but curiously both managed services and specialist staffing dropped in North America.
The difficulties did not, however, end there. Management said “the increased cost of doing business compliantly” compounded these difficult markets, leading adjusted cash profits to fall 16 per cent to £50.2m. If this wasn’t enough, the group impaired £8.6m of goodwill against its education business. All of these issues together meant statutory EPS et the end of 2018 were less than half the level of the previous year.
Investors may be concerned Impellam still offers no dividend payment, but in July last year management declared its shares were undervalued and opted to axe its payout in favour of a £12m buyback scheme. In 2017 the group paid out £10.3m in dividends, and £8.6m the year before, so the size of the buyback looks broadly consistent with dividend increases.
Bloomberg consensus forecasts for adjusted EPS tumbled 23 per cent to 57.4p following the announcement, compared with 49.6p in 2018.
| IMPELLAM (IPEL) | ||||
| ORD PRICE: | 460p | MARKET VALUE: | £ 227m | |
| TOUCH: | 450-470p | 12-MONTH HIGH: | 647p | LOW: 438p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 17 | |
| NET ASSET VALUE: | 546p* | NET DEBT: | 27% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 1.30 | 31.6 | 59.6 | 14.0 |
| 2015 | 1.78 | 39.4 | 72.2 | 17.0 |
| 2016 | 2.14 | 39.8 | 87.4 | 20.5 |
| 2017 | 2.17 | 37.9 | 61.9 | 20.5 |
| 2019** | 2.28 | 16.1 | 26.5 | nil |
| % change | +5 | -58 | -57 | - |
| Ex-div: | na | |||
| Payment: | na | |||
*Includes intangible assets of £287m, or 583p a share **2019 numbers pertain to 53-week period to 4 Jan 2019. 2017 figures pertain to 52-week period to 29 Dec 2017 | ||||
