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The third quarter results. The Impel Group facing new amendments of law increasing labour costs

15 f 2016

Consolidated revenue of the Impel Group after three quarters of 2016 amounted to PLN1.504 million, in a yearly perspective the growth dynamics exceeded 12%. The consolidated operating profit after nine months totalled PLN 35.1 million (-12.5%), and net profit (attributable to shareholders of the Parent undertaking) was  PLN 21.6 million (-6.5%). The third quarter generated the highest in history sales of PLN 527.7 million, but at the same time lower results of operating activity, resulting from successive changes in legal environment – introduction of the Act on minimum wage announced in July 2016 and effective in January 2017. From the announcement date the Impel Group focuses on adjusting prices for services to the increasing labour costs burdening the employer. A similar situation was in the previous year – increase in social security contributions resulting from including fixed-term contracts with these statutory contributions up to the level of minimum wage, announced in September 2015 and coming to force as of 2016 also decreased Q4 2015 and Q1 2016 results – through loss of part of sales. However, a consistent policy of increasing rates in the valorisation process resulted in good Q2 2016 results. The Management Board expects that also this time a decisive move in increasing rates in valorisation will allow achieving good results as early as in Q2 2017. This time the legislative change coincides with fast growth on the labour market, which gives an even better position for the Impel Group in its valorisation efforts. The introduction of minimum hourly rates (the hourly remuneration in fixed-term contracts will be PLN 13 as of January 2017) and an increase in minimum wage (increase by 8% compared to 2016 is a challenge for the second half of 2016 and the beginning of 2017.

Grzegorz Dzik, President of Impel SA stresses: “Our experience resulting from valorisation and imposing social security on the entire remuneration to the level of national minimum wage, allows us to claim that the majority of customers will still accept the rise in prices compensating the increase in labour costs incurred by service providers. Bearing in mind the government’s policy leading to increasing remuneration, determination of inspection bodies in observing labour law, and growing advantage of demand over supply on the labour market, we believe the inevitable rise in labour costs will also be accepted by the market in the case of increase in in the lowest hourly rates as of January 2017. In our opinion both customers and providers who believe that rise in labour costs can be avoided will bear great risk, as we notice growing remuneration expectations of workers in our segments.

 

See: results of the Impel Group for Q3 2016

 

The FM segment recorded over 12% increase in sales in the three quarters of 2016 – PLN 1,373.3 million. The sales in Business Process Outsourcing (BPO) segment after three quarters totalled PLN 131.5 million with 8% growth dynamics. Consolidation of services in BPO and the creation a finance-accounting package and IT service increased the segment’s profitability up to 12%.

 

Jakub Dzik, Vice-President of Impel SA in charge of BPO says: “The Group’s IT company SI-Consulting successfully develops new tools, programs and applications. This year responding to the systemic change in ta area in Poland, Si-Consulting produced Kreator JPK – a tool allowing to prepare a Uniform Control File (JPK) using the data of a given business entity embedded on SAP ERP platform. The change in regulations obliging companies to provide accounting books and receipts in an electronic form was very quickly recognized by the company; programming work was initiated and the product expected by the market was made available. The current strategy of Impel targets the directions based on automation and IT support for the model of service provision.

 

In this year, the Management Board of the Impel Group adopted its strategy for 2016-2018. The new strategy distinguishes three areas of focus for the Impel Group. The first is Facility Management (FM), i.e. integrated services related to providing facility management services, including cleaning, security and property technologies. The second one is  BPO &  Digital Services, i.e. support for business processes such as IT services, accounting payroll&personnel, archiving and digitization of documents, and the third one to be developed - Industrial Services – services dedicated to the industrial sector.

 

Grzegorz Dzik, President of Impel SA says: “Abrupt increase in labour costs in Poland, introduced within a short period of time, resulted in a change of perceiving providers of services – an outsourcer – and forces a redefinition of partnership with customers. Customers are more and more aware of the fact, that automation and robotization of processes, creation of packages and integration of services becomes a necessity. Customers expect tailor-made solutions adapted to their internal processes, before service implementation they want the provider to audit the current state and provide up-to-date scope and features of the service. We intend to largely integrate several services for one Customer; cooperation of provider with Customer to seek new values begins at the stage of forming the scope of order and should continue in the course service provision during the agreement period”

 

Legal environment, development of technology, automation, ongoing work on increasing employees’ remuneration, growing demand for work and greater demand for services, made the sector introduce immense changes.

 

Grzegorz Dzik, President of Impel SA stresses: “the market shows greater interest in service providers who offer digitization, automation and introduce innovative solutions. This is the strategy we want to  implement. We offer contract-based partnership and contractual regulations concerning cooperation in generating new and innovative solutions while the agreement lasts. We understand that building an edge is not only better financial result, but most of all increase value for both the Customer and the service provider. We sense the imminent (with economic growth and pressure for competitiveness) revolution in the customers’ needs, their approach to cooperation, in terms of solutions they are buying. Conscious acceptance of the market trend (increase in wages) will speed up customers’ interest with a new model and scope of purchased services. The best will quickly compensate the increase of labour costs by increasing the value of their businesses.