27th Apr 2020 10:45
(Alliance News) - Impellam Group PLC on Monday reported a sharp dive in annual profit as it said it expects the virus pandemic to have a "pronounced impact" on second quarter trading results.
Shares in the recruitment company were trading 1.6% lower at 312.08 pence each on Monday morning in London.
For the 52-week period to January 3, Impellam posted pretax profit of GBP5.7 million, down from a restated GBP15.7 million in the 53-week year prior. Revenue was down 0.6% at GBP2.25 billion from GBP2.27 billion. Revenue was down 1.2% on a like-for-like basis.
Adjusted earnings before interest, tax, depreciation, and amortization for 2019 fell by 6.3% to GBP46.7 million, partly due to the additional trading week in 2018. Administrative expenses increased by 1.1% to GBP261.4 million from GBP254.0 million.
No dividend was declared.
Impellam said that gross profit for the first quarter of 2020 fell by 5.1% due to the Covid-19 outbreak. Per country, gross profit in the UK declined by 6.9% and in Australia by 2.3%. However, the US saw gross profit for the period rise by 2.1%. Of its segments, the Regional Specialist segment has been hurt the most severely.
The company added that it expects a further decline in its results for the second quarter adding that it has implemented cash conservation measures such as cutting salaries, restricting spend, suspending its GBP12 million share buyback programme, and taking advantage of the UK government's VAT deferral scheme.
Impellam expressed confidence in the future performance of the business, stating that it believes the company can withstand both a material and prolonged decline in revenue.
"We are actively and urgently preparing for different outcomes and situations by scenario planning. We, like all organisations, have no experience of this type of crisis, at this stage it is hard to predict the full extent of the impact of Covid-19, however we have modelled various downturn scenarios. Our stress testing shows that the group can withstand both a material and prolonged decline in revenue, however, there are also certain material uncertainties that exist. As a result, we gain reasonable comfort that we have the resources to continue to support our customers and candidates through this period and beyond as the economy recovers," said Chief Executive Julia Robertson.
By Ife Taiwo; [email protected]
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