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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Hydrogen Group Plc | LSE:HYDG | London | Ordinary Share | GB00B1DJTV45 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 42.50 | 35.00 | 50.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From May 2019 to May 2024
TIDMHYDG
RNS Number : 4829B
Hydrogen Group PLC
04 April 2017
4 April 2017
HYDROGEN GROUP PLC
("Hydrogen" or the "Company" or the "Group")
(AIM: HYDG)
Final results for the year ended 31 December 2016
Hydrogen, the global specialist recruitment group, announces final results for the year ended 31 December 2016.
Key points
-- Group revenue to 31 December 2016 totalled GBP116.2m (2015: GBP123.6m*)
-- Full year Net Fee Income(+) was 8.8% lower, at GBP17.7m (2015: GBP19.4m*) with Energy declining by GBP1.6m (EMEA decline of GBP1.5m and APAC decline of GBP0.1m).
-- Growth in contract NFI of 11% to GBP11.6m (2015: GBP10.5m) -- Adjusted** PBT GBP0.8m (2015: GBP0.2m*) -- Profit before tax and exceptional items of GBP1.7m (2015: GBP0.1m*) -- Profit before tax of GBP1.7m (2015: loss GBP5.4m*) with APAC returning to profitability
-- No exceptional items in 2016 (2015: GBP5.5m including goodwill impairment charge of GBP3.5m)
-- Strong balance sheet with net cash at year end GBP2.0m (2015: GBP2.6m)
-- Basic EPS in the year of 6.8p (2015: loss of 24.1p). Adjusted*** basic EPS in the year of 6.8p (2015: 0.5p).
(+) Net Fee Income - which is the equivalent of gross profit
* Restated for the change in accounting policy on revenue as set out in note 20
** Adjusted for foreign exchange gains, share based payments and exceptional items.
*** Adjusted for exceptional items
Stephen Puckett, Chairman, commented:
"2016 was a solid performance given the challenges faced from the continued decline in the Energy market and the UK's decision to leave the EU holding back activity in the UK. The business now has a firm foundation, the Energy market is showing early signs of stabilisation and we remain focused on building a growing, profitable business."
Enquiries:
Hydrogen Group plc 020 7090 7702
Ian Temple CEO
Stephen Puckett Chairman
Shore Capital (NOMAD and Broker) 020 7408 4090
Bidhi Bhoma
Edward Mansfield
Notes to Editors:
Hydrogen is a specialist recruitment business with a proven global platform with clients' in over 50 countries. Our mission is to empower the careers of our candidates whilst powering businesses by providing their key people. We deliver by building market leading specialist teams that develop a deep understanding of candidate and clients' needs and developing solutions.
http://www.hydrogengroup.com
CHAIRMAN'S STATEMENT
The business had a decline in NFI of 8.8%, at GBP17.7m (2015: GBP19.4m as restated) caused largely by the decline in NFI from the Energy sector of GBP1.6m. This sector has been in decline since the oil price dropped but is now showing signs of stabilisation. The referendum decision for the UK to withdraw from the EU also affected the volume of transactions in the UK business during the year. However, the group benefited from the consequent decline in the value of sterling with 43% of NFI earned in overseas currency.
We changed accounting policy for permanent recruitment during the year in order to better reflect the commercial economics of permanent placements, improve our short-term forecasting of income and increase the emphasis on time to bill and collect. As set out in Note 20 this change in accounting policy resulted in a GBP0.8m increase in the 2015 NFI. If the accounting policy was not changed the 2016 NFI would have been GBP0.2m higher. We are pleased to report that our decision to continue to invest in our international offices during 2015 has resulted in them returning to profit in 2016. Despite continued challenging conditions in the Energy sector and the uncertainty surrounding Brexit, the business has stabilised and has returned to profitability with a profit before exceptional items and taxation for the year of GBP1.7m (2015: profit GBP0.1m as restated). The Group's Business Transformation and Life Science practices performed strongly together with a reduction in overheads, which took the Group to an adjusted profit before tax in 2016 of GBP0.8m (2015: GBP0.2m as restated) after adjusting for GBP1.0m foreign exchange gains on intercompany loans, GBP0.2 on trading foreign exchange gains and a share-based payment cost of GBP0.3m.
There were no reported exceptional items in the year (2015: GBP5.5m). A continued key focus for management during 2016 was cash generation and the business had another strong cash performance ending the year with year-end net cash of GBP2.0m (2015: GBP2.6m) despite the growth of working capital needed to grow the contractor book.
Strategy
The business was built on building market leading specialist teams and in 2016 we re-established the focus organically building our team journey from incubator through fast growth to market leader. The ultra-niche model is even more relevant today than when the business started 20 years ago, with the ability to utilise digital marketing to build and maintain relationships. We have a wealth of high value information with over 2.6 million contacts which we are unlocking for our consultants to the benefit of our candidates and clients. We have invested in key platforms that we believe will unlock this value and increase our consultant productivity. We looked carefully at why people worked with us and ultimately it came down to empowering the careers of our candidates and staff and powering our clients and own businesses.
Having stabilised and returned to profitability in 2016, the Group aim's to further develop its market leading ultra-niche teams through taking advantage of the Group's global platform. The combination of our market leading knowledge and our immersion into tight markets, unlocks the relationships that make a difference to both clients and candidates and guarantees we work with the best clients and candidates available.
Dividend
While the Groups operating profit before exceptional items increased to GBP0.8m the Group experienced a net outflow of cash during the period to support the growth of the contract business. The Board considers that the first use of cash should be to support the investment and growth of the business and as a result the Board does not propose paying a dividend in respect of 2016 (2015: Nil).
The Board
As previously announced Colin Adams gave notice of his intention to step down from the Board and his role as company secretary with effect from today. I would like to thank Colin for his efforts during the turnaround of the business and wish him success in his future endeavours.
The Group has a strong Group Financial Controller and the three remaining directors are all Chartered Accountants. In the Board's opinion, there is sufficient financial expertise within the Group and on the Board and accordingly it will not seek an immediate replacement CFO.
Outlook
Hydrogen's plan for the year ahead is to focus on growing and developing its niche businesses on their journeys from incubator, to fast growth through to market leading businesses. This will be achieved by backing high performing individuals and by taking advantage of our global digital marketing platform. Whilst mindful of the uncertainty in the UK, the Group is well placed to continue to invest in both our international and UK businesses and to explore new investment opportunities.
Stephen Puckett
Chairman
3 April 2017
BUSINESS REVIEW
We are pleased to report that having set out a turnaround plan for the business in 2015 we continued to make progress during 2016 despite the dual challenge of continued decline in Energy and the UK's vote to exit the EU. The consequent depreciation of the pound against international currencies has flattered our results but nevertheless adjusted profits increased by 300% to GBP0.8m (2015: GBP0.2m as restated). During the year, we have seen some strong performances in some of our business sectors such as Life Sciences with growth in NFI of 28% along with Business Transformation which has grown by 13%. The proportion of the Group's NFI from contract placements grew from 54% to 65% (GBP10.5m to GBP11.6m) driven by our growth in contract business in APAC and a strong performance in EMEA. The permanent recruitment market in the UK was severely affected across the summer months by the Brexit vote but the year finished strongly with the market starting to return to normal. The Energy business also declined by GBP1.6m (EMEA GBP1.5m and APAC GBP0.1m) as a result of the reduction in the oil price. With the price of oil now trading around the $50 a barrel mark we are seeing the first signs of stabilisation. We have continued to invest in our people and the Group is now well positioned to continue offering high quality services to all our clients and stakeholders.
The key factors and highlights affecting the business in 2016 were as follows:
-- The continued suppressed oil price affecting the Energy practice (NFI dropped by 48% from GBP3.1m to GBP1.6m)
-- The referendum result for the UK to leave the EU -- Growth in contractor NFI (gross profit) by GBP1.1m (11%) -- The reduction in the value of the pound increasing profits by GBP1.2m -- Increases in profits from APAC to GBP0.3m (2015: loss of GBP0.5m restated)
Having reviewed the market drivers and our business model we have refocused on building market leading ultra-niche teams. This is the original model that built Hydrogen and with the power of digital marketing presents a huge opportunity to the business. Hydrogen has a strong brand name that is highly recognisable within the international marketplace and we have the clients, candidates, staff and infrastructure to take advantage of these opportunities.
EMEA (including USA)
NFI has declined by GBP1.3m during the year largely as a result of the decline in the Energy sector (decline of GBP1.5m) and the result of the UK referendum to withdraw from the EU which affected permanent recruitment during the year.
Operating profit has fallen by 23% in the year to GBP1.5m (2015: GBP2.0m) as a result of the decline in the Energy business.
APAC
It has been a positive year within the APAC market which has returned to profitability with the actions taken during a challenging 2015 and focus on improving profitability leading to operating profit in the year of GBP0.3m compared to a loss of GBP0.5m in 2015.
During 2016 we continued to focus on our contract business in APAC which grew 110% to GBP1.4m NFI during the year representing 42% of NFI for the region (2015: 18%) giving greater visibility of earnings.
Permanent and Contract
We place candidates in both permanent and contract roles. Permanent placements play to our experience in finding rare skills and satisfying the demand for niche, specialist skills. Contract provides more predictable revenue. Permanent placements generate one off revenue which historically we have recognised when the candidate accepts the client's offer. As a result of increasing candidate compliance, increasing notice periods and complexity of Visa and candidate onboarding requirements we have decided to change our revenue recognition policy. The revenue from permanent placements is now recognised when the candidate starts employment with a client. The implications of this change in policy is that the short-term revenue forecasts are more accurate, there is less estimation of back out provisions and there is greater operational focus on timeliness and accuracy of invoicing. The new policy provides improved visibility of year-on-year earnings and better reflects the timing of the satisfaction of the Group's performance. The impact of the change in policy is to restate and increase 2015 revenue and operating profit by approximately GBP0.8m. If the policy were not changed, 2016 revenue and operating profits would have been approximately GBP0.2m higher.
Contract represented 65% of total NFI in 2016 (2015: 54% as restated) as we grew our contract revenue and permanent NFI declined due to the Oil Price drop and change in accounting policy.
Clients and Candidates
We have built strong and effective relationships with all our clients based around our longstanding track record of delivery and powering their businesses forward. We would like to thank all our clients for their support over the last year.
We have a very strong candidate database and proven methodology for building candidate relationships in our core practices. We work with highly talented candidates and contractors and would like to thank them for trusting us to empower their careers.
Our people
I would like to thank all our staff for their efforts and the high level of ownership they have shown to deliver an improved performance in challenging circumstances during 2016.
FINANCIAL REVIEW
Revenue
Group revenue to 31 December 2016 totalled GBP116.2m (2015: GBP123.6m as restated).
Key performance measures
We measure our progress against our strategic objectives of the Group using the following key performance indicators:
Productivity per head
Productivity per head represents total NFI divided by the average number of employees. This is important to the business to monitor the levels of activity in the business and identify fee earners who are not at full productivity.
In 2016, productivity per head reduced to GBP83,000 (2015: GBP86,000). This was due to the continued investment in staff towards the end of the year which in turn should grow the business in the future.
NFI split between the UK and the rest of the world
This is the total NFI expressed as a % over the UK and the rest of the world. This is valuable as it gives an indication of how the business has diversified its operations away from the historic UK marketplace.
NFI within the overseas market place has continued to increase and now accounts for 43% of the total NFI generated by the Group (2015: 37%). This is a result of our continued investment in international operations.
Net fee income (NFI - Gross profit)
Overall, there was a reduction in Group NFI of 8.8% to GBP17.7m (2015: GBP19.4m as restated). The major driver for this fall was the loss of NFI from the Energy Practice which declined by 46% (GBP1.5m within the EMEA segment and GBP0.1m within the APAC segment) to GBP1.9m NFI.
Contract NFI grew in the year by 11% to GBP11.6m with particular success in growing contractor numbers in APAC. Permanent NFI was held back by the result of the UK referendum of exiting the EU.
The devaluation of sterling increased the value of reported NFI from overseas by 11% (GBP0.4m) during the year if on a constant currency basis.
Operating segments
There has been a change to how we report the segmental analysis, previously these segments were Professional Support Services and Technical and Scientific. As part of the restructure and for clearer reporting purposes, current management reporting focuses on performance of our EMEA (including USA) and APAC businesses. The new segmental analysis disclosed in Note 1 reflects this. Within these operating segments are the individual practices; Technology, Finance, Energy, Legal, Life Sciences and Business Transformation.
NFI from the EMEA (including USA) operating segment totalled GBP14.4m (2015: GBP15.7m as restated), and contributed 81% (2015: 81% as restated) of total NFI. NFI from the APAC operating segment totalled GBP3.3m (2015: GBP3.7m as restated). The decrease from 2015 is due to the continued decline in the Energy sector across all global regions.
Exceptional Costs
The Group had no reported exceptional items in 2016, having recorded an exceptional charge of GBP5.5m in 2015. The majority of the exceptional charge was due to goodwill impairment (GBP3.5m), fixed asset impairment (GBP1.0m) with the remainder associated with one-off costs of restructuring.
Headcount
Total headcount at 31 December 2016 was 8% higher than the prior year, at 215 (2014: 199). Average total headcount for the year was 214, 6% down on the previous year (2015: 227).
Net Finance income/ costs
A foreign exchange gain of GBP1m (2015: nil) recognised on the translation of the long term intercompany loan balances with the Group's foreign operations has been included in net finance income.
This gain arises as a result of fluctuations in foreign exchange rates and capital movements within the loan balances to the Group's foreign subsidiaries. While the loan balances eliminate on consolidation, the foreign exchange movements have been recognised in the Statement of Comprehensive Income given the trading nature of the loans.
Finance costs in the year have remained stable at GBP0.1m (2015: GBP0.1m).
Profit before taxation
Profit before taxation ("PBT") for the year was GBP1.7m (2015: GBP0.1m as restated before exceptional items).
An adjusted PBT of GBP0.8m (2015: GBP0.2m as restated) has been calculated to exclude share-based costs of GBP0.3m (2015: GBP0.2m) and foreign exchange related gains of GBP1.2m (2015: GBP0.1m).
Taxation
There was a GBP0.1m tax charge for the year (2015: GBPNil), giving an effective tax rate of 8% (2015: 0%).
At 31 December 2016 the Group had unutilised tax losses of GBP3.7m (2015: GBP3.9m) available for offset against future profits. No deferred tax assets have been recognised due to the recent restructuring of the business and that it remains uncertain whether the overseas operations will be consistently profitable in the future.
Dividend
The Board does not propose paying a dividend in respect of 2016 (2015: Nil).
Earnings per share
Basic earnings per share was 6.8p (2015: restated loss of 24.1p). Diluted earnings per share was 6.5p (2015: restated loss of 24.1p).
An adjusted basic earnings per share has been calculated, excluding exceptional items of 6.8p (2015: restated profit of 0.5p). Adjusted diluted earnings per share of 6.5p (2015: restated profit of 0.5p).
Balance Sheet
Net assets at 31 December 2016 increased by GBP1.7m to GBP19.0m (2015: GBP17.3m as restated).
There were no impairments to the carrying value of goodwill in 2016 (2015: GBP3.5m) and the value remained at GBP10.1m.
Current trade and other receivables increased by 25% to GBP17.9m (2015: GBP14.3m as restated). The main reason for this was the increased trade receivables balance at year end which has risen by GBP3.3m to GBP9.7m (2015: GBP6.4m). The main contributor to this increase was the growth in contract NFI and the number of contractors working for the Group. The trade debtor balance at the year-end was also higher than anticipated as several major customers delayed remittances; these were all received in early 2017. As a consequence of these delays, days sales outstanding at the end of 2016 increased to 30 days (2015: 19 days as restated).
The increase of GBP1.2m in trade and other payables in the current year is mainly as a result of timing differences of payments to trade payables at the year end. Accruals principally comprise amounts owed to contract staff which grew in line with the growth in contactors.
Short term bank deposits remain positive at GBP3.1m (2015: GBP3.0m) and we have a strong net cash position of GBP2.0m (2015: GBP2.6m).
Reserves
As a result of the Group's positive trading performance in the year and the impact of foreign exchange movements, total equity has increased in the year by GBP1.7m to GBP19.0m (2015: GBP17.3m as restated).
Treasury management and currency risk
Approximately 77% of the Group's revenue in 2016 (2015: 80% as restated) was denominated in Sterling. For contract revenue, the Group aims to pay and bill in the same currency to provide a natural hedge for the majority of its revenues. The Group has not utilised foreign currency options during the year to manage the foreign exchange risk on its non-Sterling fees.
Cash flow and cash position
The Group started 2016 with net cash of GBP2.6m. There was an outflow of GBP1.2m from operating activities (2015: inflow GBP10.1m as restated) which is mainly in relation to the increased trade receivables balance noted above.
The cash impact of exceptional items was an outflow of GBPNil (2015: GBP1.2m).
There were no dividend payments during the year.
At 31st December 2016, the Group had net cash of GBP2.0m (2015 net cash: GBP2.6m).
Bank facilities
The Group has an Invoice Discounting Facility of GBP18.0m, which was renewed in February 2015 with a commitment to April 2018. After this date the facility shall continue until ended by either party giving to the other not less than three months' written notice. The average facility available during the year stood at GBP5.3m. Average utilisation in the year was noted at 51% (GBP2.7m).
Foreign Exchange Risk
There was a foreign exchange gain of GBP1.2m made up of GBP1.0m foreign operation loan balances and GBP0.2m trading in the current year (2015: gain of GBP0.1m).
The weakness of Sterling during the year resulted in a positive impact on the translation of the Group's overseas subsidiaries. The extent of the depreciation of Sterling is detailed below:
Hot Features
Premium
Currency Depreciation in
Sterling over the
2016 financial
year (Average rates)
Australian Dollar 10%
Euro 11%
Hong Kong Dollar 11%
Malaysian Ringgit 6%
Norwegian Kroner 7%
Singapore Dollar 11%
Swiss Franc 9%
United Arab Emirates
Dirham 11%
United Stated
of America Dollar 11%
The Group are currently not hedged against this translation exposure.
Going concern
It should be recognised that any consideration of the foreseeable future involves making a judgement, at a particular point in time, about future events, which are inherently uncertain.
The Group has two revenue streams, permanent and contract recruitment. The cash flow characteristics of the two streams interact in a complementary fashion. The permanent business, which has minimal working capital requirement, is cash generative during the growth phase, and with tight cost control, near to cash neutral in a downturn. By contrast, the contract business has a large working capital requirement, and requires significant cash investment during a period of growth, but is cash generative in the first periods of a downturn which is what we experienced in 2015.
The Group has prepared financial forecasts for the period ending 30 June 2018 and the directors have a reasonable expectation that the Group will have sufficient cash flow and available resources to continue operating in the foreseeable future. On these grounds the Board has continued to adopt the going concern basis for the preparation of the financial statements.
Ian Temple
Chief Executive Officer
3 April 2017
2016 2015
As restated
Note GBP'000 GBP'000
---------------------------- ------- ---------- -------------
Revenue 1 116,246 123,610
Cost of sales (98,508) (104,200)
---------------------------- ------- ---------- -------------
Gross profit 1 17,738 19,410
---------- -------------
Other administrative
expenses (17,541) (19,437)
Exceptional administrative
expenses 4 - (5,493)
---------- -------------
Administrative expenses (17,541) (24,930)
Other income 1 553 219
Operating profit before
exceptional items 750 192
Exceptional items - (5,493)
---------- -------------
Operating profit/(loss) 1 750 (5,301)
Finance costs 2 (63) (80)
Finance income 3 980 5
Profit/(loss) before
taxation 1,667 (5,376)
Income tax expense 6 (135) -
---------------------------- ------- ---------- -------------
Profit/(loss) for the
year 1,532 (5,376)
---------------------------- ------- ---------- -------------
Other comprehensive
gains and losses:
Items that may be reclassified
subsequently to profit or loss:
Exchange differences on
translating foreign operations
(539) (137)
Exchange differences on
intercompany loans 347 -
Other comprehensive losses for
the year, net of tax (192) (137)
------------------------------------- ---------- -------------
Total comprehensive gain/(loss)
for the year 1,340 (5,513)
------------------------------------- ---------- -------------
Attributable to:
Equity holders of the
parent 1,340 (5,513)
---------------------------- ------- ---------- -------------
Profit/ (Loss) per share:
Basic profit/ (loss)
per share (pence) 18 6.8p (24.1p)
Diluted profit/ (loss)
per share (pence) 18 6.5p (24.1p)
The above results relate
to continuing operations.
Company no: 05563206 2016 2015 2014
As restated As restated
Note GBP'000 GBP'000 GBP'000
-------------------------- ------- --------- ------------- -------------
Non-current assets
Goodwill 7 10,141 10,141 13,658
Other intangible
assets 8 792 778 1,212
Property, plant
and equipment 9 858 687 1,536
Deferred tax assets 10 104 138 52
Other financial
assets 11 99 108 278
-------------------------- ------- --------- ------------- -------------
11,994 11,852 16,736
-------------------------- ------- --------- ------------- -------------
Current assets
Trade and other
receivables 11 17,852 14,341 28,982
Current tax receivable 232 - -
Cash and cash
equivalents 12 3,106 3,034 5,975
-------------------------- ------- --------- ------------- -------------
20,967 17,375 34,957
-------------------------- ------- --------- ------------- -------------
Total assets 33,184 29,227 51,693
-------------------------- ------- --------- ------------- -------------
Current liabilities
Trade and other
payables 13 (12,493) (11,258) (15,124)
Borrowings 14 (1,087) (454) (12,704)
Current tax liabilities - (5) (80)
Provisions 15 - - (308)
-------------------------- ------- --------- ------------- -------------
(13,580) (11,717) (28,216)
-------------------------- ------- --------- ------------- -------------
Non-current liabilities
Deferred tax liabilities 10 (280) (98) (34)
Provisions 15 (309) (68) (60)
-------------------------- ------- --------- ------------- -------------
(589) (166) (94)
-------------------------- ------- --------- ------------- -------------
Total liabilities (14,169) (11,883) (28,310)
-------------------------- ------- --------- ------------- -------------
Net assets 19,015 17,344 23,383
-------------------------- ------- --------- ------------- -------------
Equity
Share capital 16 239 239 239
Share premium
account 3,520 3,520 3,520
Merger reserve 16,100 16,100 16,100
Own shares held (1,338) (1,338) (1,338)
Share option reserve 2,544 2,213 2,041
Translation reserve (788) (596) (459)
(Deficit)/ Retained
earnings (1,262) (2,794) 3,280
-------------------------- ------- --------- ------------- -------------
Total equity 19,015 17,344 23,383
-------------------------- ------- --------- ------------- -------------
The financial statements on pages 31 to 64 were approved by the Board of Directors and authorised for issue on 3 April 2017 and were signed on its behalf by:
Ian Temple
Chief Executive
Share Own Share Trans-lation (Deficit)/
Share premium Merger shares option reserve Retained Total
capital account reserve held reserve GBP'000 earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------- ---------- --------- --------- --------- --------- -------------- ------------- ----------
At 1 January
2015 (As
previously
reported) 239 3,520 16,100 (1,338) 2,041 (196) 4,857 25,223
Prior year
adjustment
(Note 27) - - - - - (263) (1,577) (1,840)
At 1 January
2015 (As
restated) 239 3,520 16,100 (1,338) 2,041 (459) 3,280 23,383
Dividends - - - - - - (698) (698)
Share option
charge - - - - 172 - - 172
Transactions
with owners - - - - 172 - (698) (526)
Loss for
the year - - - - - - (5,376) (5,376)
Other comprehensive
loss:
Foreign
currency
translation
loss - - - - - (137) - (137)
----------------- ---------- --------- --------- --------- --------- -------------- ------------- ----------
Total
comprehensive
loss for
the year - - - - - (137) (5,376) (5,513)
At 31 December
2015 (As
restated) 239 3,520 16,100 (1,338) 2,213 (596) (2,794) 17,344
Share option
charge - - - - 331 - - 331
----------------- ---------- --------- --------- --------- --------- -------------- ------------- ----------
Transactions
with owners - - - - 331 - - 331
----------------- ---------- --------- --------- --------- --------- -------------- ------------- ----------
Profit for
the year - - - - - - 1,532 1,532
Other comprehensive
income:
Exchange
differences
on intercompany
loans - - - - - 347 - 347
Foreign
currency
translation
loss - - - - - (539) - (539)
----------------- ---------- --------- --------- --------- --------- -------------- ------------- ----------
Total
comprehensive
profit for
the year - - - - - (192) 1,532 1,340
At 31 December
2016 239 3,520 16,100 (1,338) 2,544 (788) (1,262) 19,015
----------------- ---------- --------- --------- --------- --------- -------------- ------------- ----------
2016 2015
As restated
GBP'000 GBP'000
Note
------------------------------ ------- ------------- -------------
Net cash (used in)/generated
from operating activities 19a (1,244) 10,069
Investing activities
Proceeds from disposal
of property, plant
and equipment - 23
Purchase of property,
plant and equipment 9 (285) (1)
Purchase of software
assets 8 (216) (138)
Net cash used in investing
activities (501) (116)
------------------------------ ------- --------- -------------
Financing activities
Increase/(decrease)
in borrowings 14 633 (12,250)
Equity dividends paid 5 - (698)
Net cash generated
from/ (used by) financing
activities 633 (12,948)
------------------------------ ------- --------- -------------
Net (decrease) in cash
and cash equivalents (1,112) (2,995)
Cash and cash equivalents
at beginning of year 12 3,034 5,975
Exchange gain on cash
and cash equivalents 1,184 54
------------------------------ ------- --------- -------------
Cash and cash equivalents
at end of year 12 3,106 3,034
------------------------------ ------- --------- -------------
Basis of preparation
Hydrogen Group plc is the Group's ultimate parent company. The Company is a limited liability company incorporated and domiciled in the United Kingdom. The registered office address and principal place of business is 30 Eastcheap, London, EC3M 1HD, England. Hydrogen Group plc's shares are listed on the AIM Market. Registered company number is 05563206.
The consolidated financial statements of Hydrogen Group plc have been prepared in accordance with International Financial Reporting Standards ("IFRS") as endorsed by the European Union and also comply with IFRIC interpretations and Company Law applicable to companies reporting under IFRS. The Group's accounting policies, as set out below, have been consistently applied to all the periods presented.
The factors considered by the Directors in exercising their judgement of the Group's ability to continue to operate in the foreseeable future are set out in the Annual Report and summarised in the Financial Review. The Group has prepared financial forecasts for the period to 30 June 2018. and the directors have a reasonable expectation that the Group will have sufficient cash flow and available resources to continue operating in the foreseeable future. Consequently, the Board has continued to adopt the going concern basis for the preparation of the financial statements.
The consolidated financial statements for the year ended 31 December 2016 (including comparatives) are presented in GBP '000, and were approved and authorised for issue by the Board of Directors on 3 April 2017.
1 Segment reporting
Segment operating profit is the profit earned by each operating segment excluding the allocation of central administration costs, and is the measure reported to the Group's Board, the Group's Chief Operating Decision Maker (CODM), for performance management and resource allocation purposes.
(a) Revenue, gross profit, and operating profit by discipline
For management purposes, the Group is organised into the following two operating segments based on the discipline of the candidate being placed:
- EMEA including (USA); and - APAC
The operating segments noted reflect the information that is regularly reviewed by the Group's Chief Operating Decision Maker which is the Board of Hydrogen Group plc. Both operating segments have similar economic characteristics and share a majority of the aggregation criteria set out in IFRS 8:12.
2016 2015 (As restated)
EMEA APAC Group Total EMEA APAC Group Total
(and Cost (and Cost
USA) GBP'000 GBP'000 GBP'000 USA) GBP'000 GBP'000 GBP'000
GBP'000 GBP'000
---------- ---------- ---------- --------- ---------- ---------- ---------- ---------
Revenue 104,428 11,818 - 116,246 116,403 7,207 - 123,610
Gross profit
(Net Fee
income) 14,403 3,335 - 17,738 15,712 3,698 - 19,410
Depreciation
and
Amortisation (310) (8) - (318) (383) (30) - (413)
Other income 553 - - 553 219 - - 219
Operating
profit/
(loss)
before
exceptional
items 1,547 323 (1,120) 750 2,014 (475) (1,347) 192
---------- ---------- ---------- --------- ---------- ---------- ---------- ---------
Finance
costs (63) (80)
Finance
income 980 5
Profit before tax
and exceptional
items 1,667 117
========= =========
1 Segment reporting (continued)
Group costs represent central management costs that are not allocated to operating segments.
The exceptional items in 2015 were not allocated between the segments given the bulk of this cost related to goodwill impairment of GBP3.5m, accounted for at the Group level. The remainder of the exceptional items included employee restructuring, property costs and tangible asset write downs in EMEA (including USA), with an insignificant portion allocated to APAC.
Revenue reported above represents revenue generated from external customers. There were no sales between segments in the year (2015: GBPNil).
The accounting policies of the operating segments are the same as the Group's accounting policies described above. Segment profit represents the profit earned by each segment without allocation of central administration costs, finance costs and finance income.
There is one external customer that represented 31% (2015: 32%) of the entity's revenues, with revenue of GBP36.3m (2015: GBP39.4m), and approximately 16% (2015: 16%) of the Group's Net Fee Income ("NFI") which is included in the EMEA segment.
(b) Revenue and gross profit by geography:
Revenue Gross profit
---------- ------------------------ -------------
2016 2015 2016 2015
As restated As restated
GBP'000 GBP'000 GBP'000 GBP'000
--------- --------- ------------- ----------------- -------------
UK 90,007 99,506 10,190 12,325
Rest of
world 26,239 24,104 7,548 7,085
--------- ------------- ----------------- -------------
116,246 123,610 17,738 19,410
--------- --------- ------------- ----------------- -------------
The 'Rest of world' revenue and gross profit numbers disclosed above have been accumulated for geographies outside of the UK on the basis that no one geography is significant in its entirety, other than the UK.
(c) Revenue and gross profit by recruitment classification:
Revenue Gross profit
----------- ------------------------ ------------------------
2016 2015 2016 2015
As restated As restated
GBP'000 GBP'000 GBP'000 GBP'000
----------- --------- ------------- --------- -------------
Permanent 6,122 8,924 6,105 8,889
Contract 110,124 114,686 11,633 10,521
--------- ------------- --------- -------------
116,246 123,610 17,738 19,410
----------- --------- ------------- --------- -------------
The information reviewed by the Chief Operating Decision Maker, or otherwise regularly provided to the Chief Operating Decision Maker, does not include information on total assets and liabilities. The cost to develop this information would be excessive in comparison to the value that would be derived.
2 Finance costs
2016 2015
GBP'000 GBP'000
----------------------------------- --------- ---------
Interest on invoice discounting 63 57
Interest on bank overdrafts
and loans - 23
------------------------------------- --------- ---------
63 80
----------------------------------- --------- ---------
3 Finance income
2016 2015
GBP'000 GBP'000
---------------------------- --------- ---------
Bank interest receivable - 5
Other interest and income 980 -
receivable*
---------------------------- --------- ---------
980 5
---------------------------- --------- ---------
*Foreign exchange gains recognised on the translation of intercompany financing balances.
4 Exceptional items
Exceptional items are costs that are separately disclosed due to their material and non-recurring nature. They have arisen as a result of the comprehensive review of the Group's operations and actions taken to reduce the Group's administration costs:
2016 2015
GBP'000 GBP'000
------------------------- ---------- ---------
Goodwill impairment - 3,517
Tangible asset write
down and disposal - 988
Employee restructuring
costs - 939
Property costs - 223
Release of onerous
lease provision - (212)
Advisor's costs - 31
Other - 7
------------------------- ---------- ---------
Total - 5,493
------------------------- ---------- ---------
5 Dividends
2016 2015
GBP'000 GBP'000
-------------------------------------- ---------- -------------------
Amounts recognised and distributed
to shareholders in the year
Final dividend for the year ended
31 December 2016 of Nil p per share
(2015: 3.1p per share) - 698
-------------------------------------- ---------- -------------------
- 698
------------------------------------------------- -------------------
No interim dividend during the year was paid in respect of the year ended 31 December 2016 (2015: Nil p per share).
The final dividend in relation to 2014 was recommended on 3 March 2015, and was not recognised as a liability in the year ended 31 December 2014. This was distributed to the shareholders in the 2015 financial year.
The Board does not propose a final dividend for the year ended 31 December 2016 (2015: Nil p per share).
6 Tax
(a) Analysis of tax charge
for the year: 2016 2015
As restated
The charge based on the GBP'000 GBP'000
profit for the year comprises:
--------------------------------- --------- -------------
Corporation tax:
UK corporation tax on
profits for the year 139 76
Adjustment to tax charge
in respect of previous
periods (217) (42)
----------------------------------- --------- -------------
Foreign tax (78) 34
Current tax 10 4
Prior year tax - (19)
Total current tax (68) 19
----------------------------------- --------- -------------
Deferred tax:
Origination and reversal
of temporary differences 16 (19)
Adjustment to tax charge 190 -
in respect of previous
periods
Effect of tax rate change (3) -
--------------------------------- --------- -------------
Total deferred tax 203 (19)
----------------------------------- --------- -------------
Tax charge on profit for 135 -
the year
--------------------------------- --------- -------------
6 Tax (continued)
UK corporation tax is calculated at 20% (2015:
20.25%) of the estimated assessable profits
for the year. Taxation for other jurisdictions
is calculated at the rates prevailing in the
respective jurisdictions.
(b) The charge for the year can be reconciled
to the profit per the Consolidated Statement
of Comprehensive Income as follows:
Profit/(loss) before tax 1,667 (5,376)
----------------------------------- --------- -------------
Tax at the UK corporation tax
rate of 20% (2015: 20.25%) 333 (1,089)
Effects of:
Goodwill impairment - 712
Fixed asset differences 9 -
Expenses not deductible
for tax purposes 219 188
Effect of difference in
tax rates (11) (85)
Utilisation of tax losses (379) -
and other deductions
Tax losses carried forward
not recognised for deferred
tax 4 465
Adjustment to tax charge
in respect of prior periods 30 (42)
Prior year adjustment - (166)
Share-based payments (66) 35
Other short term timing
differences (4) 1
Foreign tax suffered - (19)
Tax charge for the year 135 -
----------------------------------- --------- -------------
In relation to the prior year adjustment, the tax effect has been deemed immaterial to the statutory accounts and no change to prior year numbers has been recorded.
There has been no deferred tax charge relating to share options charged directly to equity (2015: GBPNil).
In total, at the reporting date, the Group had tax losses of GBP3.7m (2015: GBP3.9m) available for offset against future profits. No deferred tax assets have been recognised due to the recent restructuring of the business as it remains uncertain whether the overseas operations will be consistently profitable in the future.
7 Goodwill
2016 2015
GBP'000 GBP'000
------------------------------------ ---------- ----------
Cost
At 1 January and 31 December 19,228 19,228
Accumulated impairment losses
At 1 January (9,087) (5,570)
Impairment charge for the
year - (3,517)
At 31 December (9,087) (9,087)
Carrying amount at 31 December 10,141 10,141
------------------------------------ ---------- ----------
Allocation of goodwill to
cash generating units (CGU):
EMEA (including USA) Professional
Support Services 10,141 10,141
------------------------------------ ---------- ----------
7 Goodwill (continued)
Goodwill arising on business combinations is tested annually for impairment or more frequently if there are indications that the value of goodwill may have been impaired. Goodwill has been tested for impairment by comparing the carrying value with the recoverable amount.
The recoverable amount is determined on a value-in-use basis utilising the value of cash flow projections over five years with a terminal value added. Multiple scenarios were tested, firstly using the 2016 actuals (of which key assumptions are detailed below) and secondly using detailed budgets prepared as part of the Group's performance and control procedures. Subsequent years are based on further extrapolations using the key assumptions listed below. Cashflows are discounted by the cash generating unit's weighted average cost of capital. Management believes that no reasonably possible change to the key assumptions given below would cause the carrying value to materially exceed the recoverable amount.
Management determines that there has been no further impairment in the carrying value of goodwill in 2016.
The key assumptions for revenue growth rates and discount rates used in the impairment review are stated below:
Growth rates
Discount
EMEA (including USA) Professional rate
Support Services 2017 2018-2021 %
% %
Net fee income growth rate
on actuals 2.5% 2.5% 6.5%
------------------------------------ --------- -------------- ----------
For the purposes of the goodwill impairment review, the Board consider it prudent to assume a 2.5% revenue growth on pre-tax actuals for 2017 through to 2021. The revenue growth rates for 2017-2021 are the Group's own internal forecasts, supported by external industry reports predicting improving conditions in the industry, with demand for the industry's services anticipated to pick up.
The discount rate used is an estimate of the Group's weighted average cost of capital, based on the risk adjusted average weighted cost of its debt and equity financing. The Group has sensitised both the discount rate and growth rate by 1% with no material impact (and no impairments) noted.
8 Other intangible assets
Computer
software
GBP'000
----------------------------- ----------
Cost
At 1 January 2015 1,983
Additions 138
Exchange differences (20)
At 31 December 2015 2,101
Additions 216
At 31 December 2016 2,317
-------------------------------- ----------
Amortisation and impairment
At 1 January 2015 (771)
Charge for the year (218)
Impairment (355)
Exchange differences 21
At 31 December 2015 (1,323)
Charge for the year (202)
At 31 December 2016 (1,525)
-------------------------------- ----------
Net book value at 31
December 2016 792
-------------------------------- ----------
Net book value at 31
December 2015 778
-------------------------------- ----------
Net book value at 31
December 2014 1,212
-------------------------------- ----------
Amortisation on intangible assets is charged to administration expenses in the Consolidated Statement of Comprehensive Income.
9 Property, plant and equipment
Computer
and Motor Leasehold
office vehicles improvements Total
equipment GBP'000 GBP'000 GBP'000
GBP'000
-------------------------- ----------- ----------- -------------- ----------
Cost
At 1 January 2015 819 41 1,708 2,568
Additions 1 - - 1
Disposals (6) (41) - (47)
Exchange differences (46) - (6) (52)
At 31 December 2015 768 - 1,702 2,470
Additions 69 - 216 285
Exchange differences 22 - - 22
At 31 December 2016 859 - 1,918 2,777
-------------------------- ----------- ----------- -------------- ----------
Accumulated depreciation
and impairment
At 1 January 2015 (631) (24) (377) (1,032)
Charge for year (123) - (72) (195)
Impairment loss - - (633) (633)
Disposals 4 24 - 28
Exchange differences 44 - 5 49
At 31 December 2015 (706) - (1,077) (1,783)
Charge for the year (66) - (50) (116)
Exchange differences (20) - - (20)
At 31 December 2016 (792) - (1,127) (1,919)
-------------------------- ----------- ----------- -------------- ----------
Net book value at
31 December 2016 67 - 791 858
-------------------------- ----------- ----------- -------------- ----------
Net book value at
31 December 2015 62 - 625 687
-------------------------- ----------- ----------- -------------- ----------
Net book value at
31 December 2014 188 17 1,331 1,536
-------------------------- ----------- ----------- -------------- ----------
Depreciation on property, plant and equipment is charged to administration expenses in the Consolidated Statement of Comprehensive Income.
10 Deferred tax
Share
Accelerated based
Other depreciation payments Total
Deferred tax asset GBP'000 GBP'000 GBP'000 GBP'000
--------------------- --------- ------------------- ---------- ---------------------
At 1 January 2015 15 (99) 136 52
Credited/ (Charged)
to profit or loss 4 99 (17) 86
At 31 December 2015 19 - 119 138
Credited/(Charged)
to profit or loss (10) - (24) (34)
At 31 December 2016 9 - 95 104
--------------------- --------- ------------------- ---------- ---------------------
Accelerated
capital
allowances
Deferred tax (liability) GBP'000
--------------------------- --------------
At 1 January 2015
and 1 January 2016 (98)
Credited/(charged)
to profit or loss (182)
At 31 December 2015 (280)
------------------------------ --------------
No reversal of deferred tax is expected within the next twelve months (2015: Nil).
In total, at the reporting date, the Group had unutilised tax losses of GBP3.7m (2015 as restated: GBP3.9m) available for offset against future profits, for which no deferred tax assets had been recognised.
11 Trade and other receivables
Trade and other receivables 2016 2015 2014
are as follows: As restated As restated
GBP'000 GBP'000 GBP'000
----------------------------- --------- ------------- -------------
Trade receivables 9,687 6,428 16,186
Allowance for doubtful
debts (142) (319) (109)
Accrued income 7,532 7,704 12,405
Prepayments 561 372 445
Other receivables:
- due within 12 months 214 156 55
- due after more than
12 months 99 108 278
Total 17,951 14,449 29,260
------------------------------ --------- ------------- -------------
Current 17,852 14,341 28,982
Non- current 99 108 278
------------------------------ --------- ------------- -------------
As at 31 December 2016, the average credit period taken on sales of recruitment services was 30 days (2015 as restated: 19 days) from the date of invoicing, and the receivables are predominantly non-interest bearing. An allowance of GBP142,000
(2015: GBP319,000) has been made for estimated irrecoverable amounts. Due to the short-term nature of trade and other receivables, the Directors consider that the carrying value approximates to their fair value.
11 Trade and other receivables (continued)
Accrued income principally comprises accruals for amounts to be billed for contract staff for time worked in December. Other receivables due after more than 12 months are predominantly rental deposits on leasehold properties.
The Group does not provide against receivables solely on the basis of the age of the debt, as experience has demonstrated that this is not a reliable indicator of recoverability. The Group provides fully against all receivables where it has positive evidence that the amount is not recoverable.
The Group uses an external credit scoring system to assess the creditworthiness of new customers. The Group supplies mainly FTSE 100 and other major companies and major professional partnerships.
Included in the Group's trade receivable balances are receivables with a carrying amount of GBP2.1m (2015: GBP1.2m) which are past due date at the reporting date for which the Group has not provided as the amounts are still considered recoverable. The Group does not hold any collateral over these balances.
Ageing of past 30 days but 2016 2015 not impaired trade receivables: GBP'000 GBP'000 (Number of days overdue) -------------------------------------------- ---- --------- --------- 0-30 days 210 332 30-60 days 498 348 60-90 days 453 212 90+ days 952 271 -------------------------------------------------- --------- --------- 31 December 2,113 1,163 -------------------------------------------------- --------- --------- Movement in allowance 2016 2015 for doubtful debts: GBP'000 GBP'000 --------------------------------------- ---- --- --------- ----------- 1 January (319) (109) Impairment losses recognised on receivables (100) (274) Previous impairment losses reversed 277 64 Amounts written off the trade - - receivables ledger as uncollectable 31 December (142) (319) --------------------------------------- ---- --- --------- -----------
In determining the recoverability of trade receivables, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. The Directors believe that there is no further credit provision required.
There are no individually impaired trade receivables that have been placed in administration or liquidation included in the allowance for doubtful debts (2015: GBPNil).
2016 2015
Ageing of impaired trade GBP'000 GBP'000
receivables:
---------------------------- --------- ---------
30-60 days - -
60-90 days - -
90+ days 142 319
31 December 142 319
------------------------------ --------- ---------
As at 31 December trade receivables to a value of GBP4.6m were subject to an invoice financing facility (2015: GBP3.4m).
12 Cash and cash equivalents
Cash and cash equivalents 2016 2015
are as follows: GBP'000 GBP'000
--------------------------- --------- ---------
Short-term bank deposits 3,106 3,034
3,106 3,034
--------------------------- --------- ---------
Cash and cash equivalents comprise cash held by the Group and short-term bank deposits with an original maturity of three months or less, less bank overdrafts repayable on demand. The carrying amount of these assets approximates their fair value.
13 Trade and other payables
Trade and other payables 2015 2014
are as follows: 2016 As As restated
GBP'000 restated GBP'000
GBP'000
-------------------------- ---------- ---------- -------------
Trade payables 1,505 613 310
Other taxes and social
security costs 701 489 928
Other payables 947 1,121 804
Accruals 9,340 9,035 13,082
12,493 11,258 15,124
-------------------------- ---------- ---------- -------------
Accruals principally comprise accruals for amounts owed to contract staff for time worked in December, in addition to a rental accrual and a bonus and commission accrual.
The average credit period taken on trade purchases, excluding contract staff costs, by the Group is 35 days (2015: 32 days as restated), based on the average daily amount invoiced by suppliers. Interest charged by suppliers is at various rates on payables not settled within terms. The Group has procedures to ensure that payables are paid to terms wherever possible. Due to the short-term nature of trade and other payables, the Directors consider that the carrying value approximates to their fair value.
14 Borrowings
2016 2015
GBP'000 GBP'000
-------------------------------- --------- ---------
Invoice discounting (repayable
on demand) 1,087 454
1,087 454
-------------------------------- --------- ---------
The Invoice discounting borrowing is at a floating interest rate. Interest on the invoice discounting facility is charged at 1.7% over UK Base Rate on actual amounts drawn down, and the margin is fixed to April 2018.
15 Provisions
Leasehold Onerous
dilapidations contracts Total
GBP'000 GBP'000 GBP'000
---------------------- --------------- ----------- ----------
At 1 January 2015 60 308 368
New provision 28 - 28
Unutilised provision
released - (212) (212)
Utilised (20) (96) (116)
At 31 December
2015 68 - 68
New provision 241 - 241
----------------------- --------------- ----------- ----------
At 31 December
2016 309 - 309
----------------------- --------------- ----------- ----------
Current - - -
Non-current 309 - 309
----------------------- --------------- ----------- ----------
The dilapidations provisions relates to the Group's current leased offices in London and Singapore. This provision will unwind over the course of the leases agreements.
The onerous lease contracts relate to surplus accommodation within the Group's London HQ at 30 Eastcheap. In 2014, the Group made an exceptional charge for 18 months' costs, starting from 1 July 2014, relating to this space to cover the marketing void and rent free incentive that is assumed would be required to sublet this space. No rent shortfall/surplus was assumed for the duration of any sub-lease eventually granted. The space was sub-let during 2015 and 2016 and the unutilised portion of the provision was released and is included within exceptional items in 2015.
16 Share capital
The share capital at 31 December 2016 was as follows:
2016 2015
------------------------- ----------------------- -----------------------
Ordinary shares of Number Number
1p each of shares GBP'000 of shares GBP'000
------------------------- ----------- ---------- ----------- ----------
Authorised
----------- ---------- ----------- ----------
At 1 January and 31
December 40,000,000 400 40,000,000 400
----------- ---------- ----------- ----------
Issued and fully paid:
At 1 January 23,891,713 239 23,881,094 239
Issuance of new shares
for
employee share schemes 12,000 - 10,619 -
31 December 23,903,713 239 23,891,713 239
----------- ---------- ----------- ----------
During 2016, 12,000 options were exercised (2015: 10,619), all of which were satisfied by the issuance of new shares.
At 31 December 2016, 1,162,051 (2015: 1,162,051) shares were held in the EBT.
At 31 December 2016, 211,414 (2015: 211,414) ordinary shares were held in the Hydrogen Group plc Share Incentive Plan trust for employees.
17 Own shares held
During the year, there was no movement in the number of shares held by the EBT.
At 31 December 2016, the total number of ordinary shares held in the EBT and their values were as follows:
Shares held for share 2016 2015
option schemes
----------------------- ---------- ----------
Number of shares 1,162,051 1,162,051
GBP'000 GBP'000
Nominal value 12 12
Carrying value 1,338 1,338
Market value 418 349
18 Earnings/ (loss) per share
Earnings/ (loss) per share is calculated by dividing the profit/(loss) attributable to equity holders of the Group by the weighted average number of ordinary shares in issue.
Diluted earnings/ (loss) per share is calculated by adjusting the weighted average number of ordinary shares by existing share options and share incentive plans, assuming dilution through conversion of all existing options and shares held in share plans. The Employee Benefit Trust shares are ignored for the purposes of calculating the Group's earnings per share.
From continuing operations 2016 2015
As restated
GBP'000 GBP'000
---------------------------- --------- -------------
Earnings
Profit/(loss) attributable
to equity holders of
the parent 1,532 (5,376)
------------------------------ --------- -------------
Adjusted earnings
---------------------------- --------- -------------
Profit/ (loss) for the
year 1,532 (5,376)
Add back: exceptional
costs - 5,493
------------------------------ --------- -------------
1,532 117
---------------------------- --------- -------------
2016 2015
As restated
Number of shares
Weighted average number of shares
used for basic and adjusted earnings
per share 22,529,360 22,304,607
Dilutive effect of share
plans 1,212,308 2,553,982
Diluted weighted average
number of shares used
to calculate diluted
and adjusted diluted
earnings per share 23,741,668 24,858,589
----------------------------------------- ----------- -------------
Basic profit/ (loss)
per share (pence) 6.80p (24.10p)
Diluted profit/(loss)
per share (pence) 6.45p (24.10p)
Adjusted basic profit
earnings per share (pence) 6.80p 0.52p
Adjusted diluted profit
earnings per share (pence) 6.45p 0.47p
*The calculation of diluted earnings per share does not assume conversion, exercise, or other issue of potential ordinary shares that would have an antidilutive effect on earnings or loss per share. (An antidilution is a reduction in the loss per share or an increase in the earnings per share). The antidilutive effect of share plans in the 2015 year (in relation to dilutive loss per share) was 2,553,982 shares.
19 Notes to the cash flow statement
a. Reconciliation of profit before tax to net cash inflow from operating activities
2016 2015
As restated
GBP'000 GBP'000
------------------------------------------ --------- -------------
Profit before taxation
and exceptional items 1,667 117
Adjusted for:
Depreciation and amortisation 318 413
Increase/ (decrease) in
provisions 241 (88)
FX unrealised gains (315) (197)
Gain on sale of property,
plant and equipment - (4)
Share-based payments 331 172
Net finance (income)/costs (917) 75
-------------------------------------------- --------- -------------
Operating cash flows before movements
in working capital 1,325 488
(Increase)/decrease in
receivables (3,502) 14,811
Increase/ (decrease) in
payables 1,235 (3,866)
Income tax expense (135) -
------------------------------------------ --------- -------------
Cash (used in) /generated from
operating activities (1,077) 11,433
Income taxes paid (104) (89)
Finance costs (63) (80)
Finance income - 5
-------------------------------------------- --------- -------------
Net cash (outflow)/ inflow from
operating activities before exceptional
items (1,244) 11,269
Cash flows arising from exceptional
costs - (1,200)
-------------------------------------------- --------- -------------
Net cash (outflow)/inflow from
operating activities (1,244) 10,069
-------------------------------------------- --------- -------------
b. Reconciliation of net cash flow to movement in net debt:
2016 2015
GBP'000 GBP'000
------------------------------------ --------- ---------
Increase/ (decrease) in
cash and cash equivalents
in the year 72 (2,941)
(Increase)/ decrease in borrowings (633) 12,250
(Increase)/ decrease in
net debt during the year (561) 9,309
Net cash/ (debt) at the
start of the year 2,580 (6,729)
-------------------------------------- --------- ---------
Net cash at the end of
the year 2,019 2,580
-------------------------------------- --------- ---------
Represented by:
Cash and cash equivalents (note 12) 3,106 3,034 Borrowings (note 14) (1,087) (454) 20 Change in Accounting policy
During the year, the Group changed its accounting policy with respect to the recognition and measurement of revenue. Permanent recruitment revenue was previously recognised on the acceptance of the role by a candidate. This policy has been changed to recognise revenue on the start date of a candidate.
The impact of this change in accounting policy on the comparative figures previously reported is illustrated below on each line item of the Group financial statements that has been affected (note the tax impact of the below adjustments has not been taken into account due to the amounts being immaterial to the group results):
As reported Adjustments Restated under
under the previous the new accounting
accounting policy
policy
----------------------- ----------------------- ---------------------- -----------------------
2015 2014 2015 2014 2015 2014
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- ----------- ---------- ---------- ---------- ----------- ----------
Consolidated Statement
of Comprehensive Income
Revenue 122,765 845 123,610
Gross Profit 18,565 845 19,410
Other administrative
expenses* (19,412) (25) (19,437)
Profit/ (Loss)
before taxation (6,196) 820 (5,376)
Income tax - - - expense Profit/ (loss) for the year (6,196) 820 (5,376) Basic Earnings/(loss) per share (27.52p) 3.7p (23.88p) Diluted Earnings/ (loss) per share (27.52p) 3.7p (23.88p) Consolidated Statement of Financial Position Total Assets 30,517 53,825 (1,290) (2,132) 29,227 51,693 Total payables (12,152) (28,602) 269 292 (11,883) (28,310) Total Equity** 18,365 25,223 (1,021) (1,840) 17,344 23,383
*This excludes exceptional administrative expenses which were unaffected by the change in accounting policy.
** Included within the adjustment to equity as at 1 January 2015, is an amount of GBP263,000 in the translation reserve as a result of the revenue policy change. This arose from translating the foreign subsidiaries from their functional currencies to the Group's presentational currency.
21 Statutory report classification
The financial information for the year ended 31 December 2016 and the year ended 31 December 2015 does not constitute the company's statutory accounts for those years.
Statutory accounts for the year ended 31 December 2015 have been delivered to the Registrar of Companies. The statutory accounts for the year ended 31 December 2016 will be delivered to the Registrar of Companies following the Company's Annual General Meeting.
The auditors' reports on the accounts for 31 December 2016 and 31 December 2015 were unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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April 04, 2017 02:01 ET (06:01 GMT)
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