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HYDG Hydrogen Group Plc

42.50
0.00 (0.00%)
28 Mar 2024 - Closed
Delayed by 15 minutes
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 00:00:00
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
0 0 N/A 0

Hydrogen Group PLC Interim Results (0234L)

03/09/2019 7:44am

UK Regulatory


Hydrogen (LSE:HYDG)
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TIDMHYDG

RNS Number : 0234L

Hydrogen Group PLC

03 September 2019

Hydrogen Group Plc

UNAUDITED RESULTS FOR THE HALF YEARED 30 JUNE 2019

The Board of Hydrogen Group plc ("Hydrogen Group" or the "Group") (AIM: HYDG) announces its unaudited results for the half year ended 30 June 2019.

Highlights

-- Underlying** Profit Before Tax ("PBT") increased by 51% to GBP1.9m (H1 2018 as restated^: GBP1.2m) and profit conversion of Net Fee Income* ("NFI") increased to 12.1% (H1 2018 as restated: 8.3%)

   --    Reported PBT increased by 19% to GBP1.4m (H1 2018 as restated: GBP1.2m) 
   --    NFI increased by 4% to GBP15.3m (H1 2018: GBP14.8m) 
   o    Permanent NFI grew 8% to GBP9.2m (H1 2018: GBP8.5m) 
   o    Contract NFI decreased by 2% to GBP6.1m (H1 2018: GBP6.3m) 
   o    Group contract margin increased to 11.2% (H1 2018: 10.4%) 
   --    Net cash of GBP3.4m at 30 June 2019 (31 December 2018: GBP4.9m and 30 June 2018: GBP1.3m) 
   --    Underlying EPS*** in the period increased by 1.3p, 38%, to 4.7p (H1 2018 restated: 3.4p) 
   --    Reported EPS in the period increased to 3.6p (H1 2018 restated: 2.9p) 
   --    20% increase in interim dividend to 0.6p per share (2018: 0.5p per share) 

* Net Fee Income is the equivalent of gross profit

** Adjusted for foreign exchange (gains)/losses, share based payments, non-controlling loss/(interest), amortisation of acquired intangibles and exceptional items.

*** Underlying PBT less tax divided by weighted average number of shares

^ Restated in respect of the first-time adoption of the new IFRS 16 standard applicable for periods beginning on or after 1 January 2019 and applied retrospectively

Commenting, Ian Temple, CEO of Hydrogen Group plc said:

"I am delighted to be able to report continued strong earnings growth despite the Group experiencing more challenging market conditions in a number of Asian markets, and the impact of Brexit related uncertainty on demand levels for certain skill sets in the UK. The performance is a testament to both the operating model that we have developed and our agile business model that has allowed us to pivot investment into higher growth markets, particularly in the USA. Our balance sheet remains strong, and the Group continues to be well placed to make acquisitions and investigate potential targets. The Board remains confident that the full year outturn will be in line with current market expectations.

"I would like to take this opportunity to thank all our staff for their commitment and hard work over the period."

Enquiries:

 
 Hydrogen Group plc                 020 7090 7702 
 Ian Temple, CEO 
  John Hunter, COO & CFO 
                                   -------------- 
 Shore Capital (NOMAD and Joint 
  Broker)                           020 7408 4090 
                                   -------------- 
 Edward Mansfield / James Thomas 
                                   -------------- 
 Whitman Howard Limited (Joint 
  Broker)                           020 7659 1234 
                                   -------------- 
 Hugh Rich 
                                   -------------- 
 

Notes to the editor

Hydrogen Group is a group of specialist recruitment and people solutions businesses with a proven global platform with clients' in over 50 countries. We deliver by building market leading niche specialist teams that develop a deep understanding of candidate and clients' needs and developing solutions.

Overview

The Hydrogen Group's operational focus during the period has primarily been:

-- further developing and refining the implementation of its operating model centred on its four core strategic pillars: Proposition, Platform, People and Performance. The new global CRM, the roll out of which was completed in Q4 2018, operated well across all parts of the business driving both the development of new client relationships and the cross fertilisation of existing clients, further diversifying the Group's client base;

-- the active management of the Group's existing portfolio of niche businesses to ensure that resource and investment are concentrated on businesses in high growth markets that present the best opportunity of progressing their journey from incubator, through fast growth, to market leader, where they enjoy higher margins and much greater profit conversion, and conversely either reducing resource levels or withdrawing from lower growth and lower opportunity markets;

-- researching new potentially high growth markets. The Group has launched a number of new niche businesses during the period including, for example, in the US medical devices, and EMEA artificial intelligence sectors; and

-- driving further efficiencies in the back office through both automation and offshoring. A new "pay & bill" system was rolled out in the UK, the Group's largest contract market.

Together, these initiatives have driven an increase in underlying profit conversion rates. The conversion rate of NFI to underlying profit before tax grew to 12.1% (H1 2018 as restated: 8.3%).

The Board continues to believe that, in order to accelerate the Group's development, future organic growth can be supplemented by selective acquisitions. Therefore, it is continuing to review opportunities that may meet its strict acquisition criteria relating to strategic, financial, operational, and cultural fit.

Financial Highlights

The Group has adopted IFRS 16, with respect to the recognition and measurement of leases, retrospectively from 1 January 2018. The impact of this change in accounting policy on the comparative figures previously reported is disclosed in note 15. The change resulted in a GBP1.0m decrease in net assets as at 1 January 2018 and an increase of GBP0.1m to profit before tax in H1 2018.

Although it was somewhat offset by increased and higher margin contract activity in the USA, lower demand for contractors in the UK drove a decline in Group revenue for the period of 7% (9% in constant currency terms) to GBP64.1m (H1 2018: GBP68.6m).

Group NFI increased by 4% (fell by 2% in constant currency terms) to GBP15.3m (H1 2018: GBP14.8m) due to both permanent revenue growth and improved contract margins. This increase in NFI was achieved despite a significant drop in activity levels at the Group's largest client, which accounted for just 3% of NFI (H1 2018: 8%) during the period.

The Group has continued to improve the geographic diversification of its revenues, reducing its reliance on the UK market in relative terms. The percentage of NFI denominated in currencies other than Sterling has increased to 57% (H1 2018: 53%). Foreign currency income, in general, is naturally hedged against foreign currency expenditure.

EMEA NFI was broadly flat at GBP8.6m (H1 2018: GBP8.7m) on both a reported and constant currency basis. While our Middle East business grew strongly, in the UK, which accounts for the greater part of the Group's EMEA operations, client demand and confidence levels have been impacted by Brexit related uncertainty. Notwithstanding this, NFI grew in all core UK practice areas save for Business Transformation, where demand was particularly adversely impacted by the significant fall in activity levels, due to the completion of existing projects and a lack of new projects, at the Group's largest client.

In APAC, NFI fell by 12% (16% in constant currency terms) to GBP4.9m (H1 2018: GBP5.5m). Market conditions have been challenging in Hong Kong and Singapore, which has been partially offset by continued growth in Australia and Thailand. Activity levels have improved during Q3, positioning the region for a more robust performance in H2.

USA NFI grew exceptionally strongly by 255% (233% in constant currency terms) to GBP1.9m (H1 2018: GBP0.5m). Growth was driven by the Life Sciences and Technology practices both across our more established office in Houston together and our newer offices in Austin and San Diego. A fourth office in the region was opened during the period in Charlotte.

The split between contract and permanent NFI for H1 2019 has remained broadly stable at 40% contract (H1 2018: 42%); 60% permanent (H1 2018: 58%). The small change in mix towards permanent recruitment was driven by an increase in permanent NFI of 8% to GBP9.2m (H1 2018: GBP8.5m) and a marginal fall in contract NFI of 2% to GBP6.1m (H1 2018: GBP6.3m). The trend of improving contract margins experienced in recent periods has continued, with the Group achieving a contract margin of 11.2% in H1 2019 (H1 2018: 10.4%).

Operating profit for the period grew to GBP1.4m. (H1 2018 as restated: GBP1.3m), while profit before tax was GBP1.4m (H1 2018 as restated: GBP1.2m).

Underlying PBT remains the Board's preferred measure of trading performance of the business and has increased by GBP0.7m to GBP1.9m (H1 2018 as restated: GBP1.2m).

 
                                                         Six months ended 
                                                   2019               2018 
                                                               As restated 
                                                GBP'000            GBP'000 
--------------------------------------    -------------  ----------------- 
 
   Profit Before Tax                              1,448              1,212 
 Exceptional items (note 5)^                        283                  - 
 Amortisation of acquired intangibles                45                 45 
 Non-controlling loss/(interest)                     42              (134) 
 Share based payments                                60                 33 
 Foreign exchange (gains)/losses                   (26)                 71 
----------------------------------------  -------------  ----------------- 
 
   Underlying PBT                                 1,852              1,227 
----------------------------------------  -------------  ----------------- 
 

^Exceptional items relate to non-trading M&A costs.

Cash flow and cash position

At 30 June 2019, the Group had net cash of GBP3.4m (31 December 2018: GBP4.9m and 30 June 2018: GBP1.3m). Net cash was impacted by a, largely seasonal, increase in working capital (increase in receivables less increase in payables) of GBP3.0m, and by non-trading payments in respect of the acquisition of the remaining minority interest in Argyll Scott Asia (GBP0.6m), and Group dividends (GBP0.3m). A more meaningful like for like cash comparison can be obtained by comparison to the position at 30 June 2018. Over this 12-month period, cash has increased by GBP2.1m.

Bank facilities

Hydrogen has an existing facility of GBP18.0m, with a commitment to January 2021. This facility shall continue until ended by either party giving to the other not less than three months' written notice.

Dividend

The Board is confident in the prospects of the Group. As a result, it will pay an interim dividend of 0.6p for 2019 (2018: 0.5p). The dividend will be paid on 11 October 2019 to shareholders on the register at the close of business on 13 September 2019 and the shares will go ex-dividend on 12 September 2019.

Share buyback

The Board was granted authority by shareholders at the Group's annual general meeting held on 23 May 2019, to purchase up to 3,422,792 Ordinary Shares. The Group has a robust balance sheet with a material cash position and, in light of recent share price weakness, the Board will continue to actively review opportunities to repurchase shares.

Current Trading

The Group has traded well since the period end, most notably in APAC where activity has returned to levels consistent with Q3 2018. The Group has a satisfactory pipeline of business moving into Q4. Although the Board is mindful of the potential impact of Brexit and of recent political unrest in Hong Kong, it remains confident that the full year outturn will be in line with current market expectations.

 
                                              Six months ended         Year ended 
                                            30 June        30 June    31 December 
--------------------------------- 
                                               2019           2018           2018 
                                                       As restated    As restated 
--------------------------------- 
                                    Note    GBP'000        GBP'000        GBP'000 
---------------------------------  -----  ---------  -------------  ------------- 
 
 Revenue                             4       64,071         68,575        135,637 
 
 Cost of sales                             (48,724)       (53,768)      (105,111) 
---------------------------------  -----  ---------  -------------  ------------- 
 
 Gross profit                                15,347         14,807         30,526 
 
 Other administrative expenses             (13,879)       (13,727)       (27,940) 
 Exceptional administrative 
  expenses                           5        (283)              -            (1) 
                                          ---------  -------------  ------------- 
 Administration expenses                   (14,162)       (13,727)       (27,941) 
 
 Other income                                   263            264            529 
---------------------------------  -----  ---------  -------------  ------------- 
 
 Operating profit                             1,448          1,344          3,114 
 
 Share of profit/(loss) from 
  associate                                      45           (23)             70 
 Finance costs                                 (64)          (119)          (213) 
 Finance income                                  19             10             22 
---------------------------------  -----  ---------  -------------  ------------- 
 
 Profit before taxation                       1,448          1,212          2,993 
 
 Taxation                            6        (320)          (148)          (358) 
---------------------------------  -----  ---------  -------------  ------------- 
 
 Profit for the period/year                   1,128          1,064          2,635 
---------------------------------  -----  ---------  -------------  ------------- 
 
 Profit attributable to: 
 Equity holders of the parent                 1,170            930          2,476 
 Non-controlling interest/(loss)               (42)            134            159 
---------------------------------  -----  ---------  -------------  ------------- 
 
 Other comprehensive profit: 
 
 Exchange differences on translating 
  foreign operations                             23             65            207 
 Exchange differences on intercompany 
  loans                                          39              9              6 
----------------------------------------             -------------  ------------- 
 
 Other comprehensive profit                      62             74            213 
---------------------------------  -----  ---------  -------------  ------------- 
 
 Total comprehensive profit for 
  the period/year                             1,190          1,138          2,848 
----------------------------------------  ---------  -------------  ------------- 
 
 Total comprehensive income 
  attributable to: 
 Equity holders of the parent                 1,232          1,004          2,689 
 Non-controlling interest                      (42)            134            159 
---------------------------------  -----  ---------  -------------  ------------- 
 
 Earnings per share 
 Basic profit per share (pence)      7        3.57p          2.90p          7.59p 
 Diluted profit per share 
  (pence)                            7        3.27p          2.62p          6.91p 
 

The notes to the accounts set out below form an integral part of this unaudited condensed consolidated interim report.

 
                                          30 June        30 June    31 December 
------------------------------- 
                                             2019           2018           2018 
                                                     As restated    As restated 
------------------------------- 
                                  Note    GBP'000        GBP'000        GBP'000 
-------------------------------  -----  ---------  -------------  ------------- 
 Non-current assets 
 Goodwill                                  12,198         12,291         12,244 
 Investment in associate            12        167             27            120 
 Other intangible assets                      748            727            710 
 Property, plant and equipment                964          1,002            947 
 Right of use assets                        2,933          3,914          2,885 
 Deferred tax assets                          113            180            112 
 Other financial assets              9        447            321            274 
-------------------------------  -----  ---------  -------------  ------------- 
 
                                           17,570         18,462         17,292 
-------------------------------  -----  ---------  -------------  ------------- 
 Current assets 
 Trade and other receivables         9     22,534         23,787         19,709 
 Current tax receivable                         -            187              - 
 Cash and cash equivalents                  3,425          3,112          5,227 
-------------------------------  -----  ---------  -------------  ------------- 
 
                                           25,959         27,086         24,936 
-------------------------------  -----  ---------  -------------  ------------- 
 
 Total assets                              43,529         45,548         42,228 
-------------------------------  -----  ---------  -------------  ------------- 
 Current liabilities 
 Trade and other payables           10   (15,847)       (17,093)       (14,779) 
 Current tax payable                        (263)              -            (2) 
 Borrowings                                     -        (1,809)          (293) 
 Lease liabilities                          (709)          (666)          (709) 
 Redemption liability               14      (300)           (69)          (615) 
 Provisions                         11          -          (279)              - 
-------------------------------  -----  ---------  -------------  ------------- 
 
                                         (17,119)       (19,916)       (16,398) 
-------------------------------  -----  ---------  -------------  ------------- 
 Non-current liabilities 
 Deferred tax                               (113)          (133)          (117) 
 Lease liabilities                        (3,360)        (4,096)        (3,387) 
 Redemption liability               14      (456)          (809)        (1,640) 
 Provisions                         11      (365)          (507)          (384) 
-------------------------------  -----  ---------  -------------  ------------- 
 
                                          (4,294)        (5,545)        (5,528) 
-------------------------------  -----  ---------  -------------  ------------- 
 
 Total liabilities                       (21,413)       (25,461)       (21,926) 
-------------------------------  -----  ---------  -------------  ------------- 
 
 Net assets                                22,116         20,087         20,302 
-------------------------------  -----  ---------  -------------  ------------- 
 Equity 
 Share capital                                343            334            341 
 Share premium                              3,520          3,520          3,520 
 Merger reserve                            19,240         19,240         19,240 
 Own shares held                          (1,546)        (1,338)        (1,546) 
 Share option reserve                       2,074          1,768          2,014 
 Translation reserve                        (324)          (525)          (386) 
 Forward purchase reserve                   (756)          (878)        (2,255) 
 Retained earnings                          (510)        (2,274)          (891) 
-------------------------------  -----  ---------  -------------  ------------- 
                                           22,041         19,847         20,037 
 Non-controlling interest                      75            240            265 
-------------------------------  -----  ---------  -------------  ------------- 
 
 Total equity                              22,116         20,087         20,302 
-------------------------------  -----  ---------  -------------  ------------- 
 

The notes to the accounts set out below form an integral part of this unaudited condensed consolidated interim report.

 
                               Share                 Own      Share                    Forward                   Attributable 
                     Share   premium    Merger    shares     option   Trans-lation    purchase   Retained           to owners     Total 
 
                   capital   account   reserve      held    reserve        reserve     reserve   earnings    Owners       NCI    equity 
                   GBP'000   GBP'000   GBP'000   GBP'000    GBP'000        GBP'000     GBP'000    GBP'000   GBP'000   GBP'000   GBP'000 
----------------  --------  --------  --------  --------  ---------  -------------  ----------  ---------  --------  --------  -------- 
 At 1 January 
  2018 (As 
  previously 
  reported)            334     3,520    19,240   (1,338)      1,735          (599)     (1,020)    (1,871)    20,001       212    20,213 
 
   Prior year 
   adjustment            -         -         -         -          -              -           -    (1,014)   (1,014)         -   (1,014) 
----------------  --------  --------  --------  --------  ---------  -------------  ----------  ---------  --------  --------  -------- 
 
   At 1 January 
   2018 (As 
   restated)           334     3,520    19,240   (1,338)      1,735          (599)     (1,020)    (2,885)    18,987       212    19,199 
 
 NCI purchase            -         -         -         -          -              -         142       (62)        80     (106)      (26) 
 Share option 
  charge                 -         -         -         -         33              -           -          -        33         -        33 
 Dividends               -         -         -         -          -              -           -      (257)     (257)         -     (257) 
                                                                                    ----------  ---------  --------  --------  -------- 
 Transactions 
  with owners            -         -         -         -         33              -         142      (319)     (144)     (106)     (250) 
 Profit for the 
  6 months to 
  30 June 2018           -         -         -         -          -              -           -        930       930       134     1,064 
 Other 
 comprehensive 
 income: 
 Exchange 
  differences 
  on 
  intercompany 
  loans                  -         -         -         -          -             65           -          -        65         -        65 
 Foreign 
  currency 
  translation            -         -         -         -          -              9           -          -         9         -         9 
                  --------  --------  --------  --------  ---------  -------------  ----------  ---------  --------  --------  -------- 
 Total 
  comprehensive 
  profit for the 
  period                 -         -         -         -          -             74           -          -        74         -        74 
----------------  --------  --------  --------  --------  ---------  -------------  ----------  ---------  --------  --------  -------- 
 At 30 June 2018       334     3,520    19,240   (1,338)      1,768          (525)       (878)    (2,274)    19,847       240    20,087 
----------------  --------  --------  --------  --------  ---------  -------------  ----------  ---------  --------  --------  -------- 
 
   New shares 
   issued                7         -         -         -        204              -           -          -       211         -       211 
 Movement in 
  redemption 
  liability              -         -         -         -          -              -     (1,377)          -   (1,377)         -   (1,377) 
 Share 
  repurchase             -         -         -     (208)          -              -           -          -     (208)         -     (208) 
 Dividends               -         -         -         -          -              -           -      (163)     (163)         -     (163) 
 Share option 
  charge                 -         -         -         -         42              -           -          -        42         -        42 
                                                                                    ----------  ---------  --------  --------  -------- 
 Transactions 
  with owners            7         -         -     (208)        246              -     (1,377)      (163)   (1,495)         -   (1,495) 
 Profit for the 
  6 months to 
  31 December 
  2018                   -         -         -         -          -              -           -      1,546     1,546        25     1,571 
 Other 
 comprehensive 
 income: 
 Exchange 
  differences 
  on 
  intercompany 
  loans                  -         -         -         -          -            142           -          -       142         -       142 
 Foreign 
  currency 
  translation            -         -         -         -          -            (3)           -          -       (3)         -       (3) 
                  --------  --------  --------  --------  ---------  -------------  ----------  ---------  --------  --------  -------- 
 Total 
  comprehensive 
  loss for the 
  period                 -         -         -         -          -            139           -          -       139         -       139 
----------------  --------  --------  --------  --------  ---------  -------------  ----------  ---------  --------  --------  -------- 
 
 At 31 December 
  2018                 341     3,520    19,240   (1,546)      2,014          (386)     (2,255)      (891)    20,037       265    20,302 
----------------  --------  --------  --------  --------  ---------  -------------  ----------  ---------  --------  --------  -------- 
 
 New shares 
  issued                 2         -         -         -          -              -           -          -         2         -         2 
 Movement in 
  redemption 
  liability              -         -         -         -          -              -         993          -       993         -       993 
 NCI purchase            -         -         -         -          -              -         506      (460)        46      (46)         - 
 Dividends               -         -         -         -          -              -           -      (329)     (329)     (102)     (431) 
 Share option 
  charge                 -         -         -         -         60              -           -          -        60         -        60 
 Transactions 
  with owners            2         -         -         -         60              -       1,499      (789)       772     (148)       624 
 Profit for the 
  6 months to 
  30 June 2019           -         -         -         -          -              -           -      1,170     1,170      (42)     1,128 
 Other 
 comprehensive 
 income: 
 Exchange 
  differences 
  on 
  intercompany 
  loans                  -         -         -         -          -             23           -          -        23         -        23 
 Foreign 
  currency 
  translation            -         -         -         -          -             39           -          -        39         -        39 
                  --------  --------  --------  --------  ---------  -------------  ----------  ---------  --------  --------  -------- 
 Total 
  comprehensive 
  loss for the 
  period                 -         -         -         -          -             62           -          -        62         -        62 
----------------  --------  --------  --------  --------  ---------  -------------  ----------  ---------  --------  --------  -------- 
 
   At 30 June 
   2019                343     3,520    19,240   (1,546)      2,074          (324)       (756)      (510)    22,041        75    22,116 
----------------  --------  --------  --------  --------  ---------  -------------  ----------  ---------  --------  --------  -------- 
 

The notes to the accounts set out below form an integral part of this unaudited condensed consolidated interim report.

 
                                                   Six months ended     Year ended 
                                                   30 June   30 June   31 December 
                                                      2019      2018          2018 
                                           Note    GBP'000   GBP'000       GBP'000 
----------------------------------------  -----  ---------  --------  ------------ 
 
 Cash (outflow)/inflow from operating 
  activities                                8        (334)     2,109         6,356 
 Income taxes paid                                    (30)         -          (25) 
 Net cash (outflow)/inflow from 
  operating activities                               (364)     2,109         6,331 
----------------------------------------  -----  ---------  --------  ------------ 
 
 Investing activities 
 Purchase of property, plant and 
  equipment                                          (302)     (364)         (269) 
 Purchase of software assets                             -         -         (102) 
                                                 ---------  -------- 
 Net cash used in investing activities               (302)     (364)         (371) 
----------------------------------------  -----  ---------  --------  ------------ 
 
 Financing activities 
 Finance costs                                        (20)      (62)         (113) 
 Finance costs related to IFRS 
  16                                                  (44)      (57)         (100) 
 Finance income                                         19        10            22 
 Decrease in borrowings                              (293)   (1,323)       (2,839) 
 Decrease in redemption liability 
  on NCI pay-out                                     (506)         -         (142) 
 Dividends paid to non-controlling                   (102)         -             - 
  interests 
 Purchase of treasury shares                             -         -         (208) 
 Equity dividends paid                               (329)         -         (420) 
----------------------------------------  -----  ---------  --------  ------------ 
 
 Net cash utilised from financing 
  activities                                       (1,275)   (1,432)       (3,800) 
----------------------------------------  -----  ---------  --------  ------------ 
 
 Net (decrease)/increase in cash 
  and cash equivalents                             (1,941)       313         2,160 
 
 Cash and cash equivalents at beginning 
  of period/year                                     5,227     2,770         2,770 
 Effect of foreign exchange rate 
  movements                                            139        29           297 
----------------------------------------  -----  ---------  --------  ------------ 
 
 Cash and cash equivalents at end 
  of period/year                                     3,425     3,112         5,227 
----------------------------------------  -----  ---------  --------  ------------ 
 
 
 

The notes to the accounts set out below form an integral part of this unaudited condensed consolidated interim report.

   1     General information 

The principal activity of Hydrogen Group plc ("the Company") and its subsidiaries' (together known as "the Group") is the provision of services for mid to senior level professional staff. The Group consists of three operating segments, EMEA, USA and APAC, offering both permanent and contract services for large and medium sized organisations. The Group offers services in Professional Support Services (including legal, finance, technology and business transformation) and in Technical and Scientific market sectors (Energy and Life Sciences). The Group operates across the world from a network of offices in Australia, Dubai, Hong Kong, Malaysia, Singapore, Thailand, UK and the USA, plus a number of internationally focused teams based in the UK.

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 AIM. Registered company number is 05563206.

The unaudited condensed consolidated interim report for the six months ended 30 June 2019 (including comparatives) is presented in GBP '000, and were approved and authorised for issue by the Board of directors on 3 September 2019.

Copies of these interim results are available at the Company's registered office and on the Company's website - www.hydrogengroup.com.

This unaudited condensed consolidated interim report does not constitute statutory accounts of the Group within the meaning of section 434 of the Companies Act 2006. The financial information for the year ended 31 December 2018 has been extracted from the statutory accounts for that year, which have been filed with the Registrar of Companies. The auditor's report on those accounts was unmodified and did not contain a statement under section 498 of the Companies Act 2006.

   2     Basis of preparation 

The unaudited condensed consolidated interim report for the six months ended 30 June 2019 has been prepared using accounting policies consistent with International Financial Reporting Standards ("IFRSs") as adopted by the European Union. The unaudited condensed consolidated interim report should be read in conjunction with the annual financial statements for the year ended 31 December 2018, which were prepared in accordance with IFRSs as adopted by the European Union.

These financial statements have been prepared under the historical cost convention.

The Group has an invoice discounting facility of GBP18.0m with HSBC with a commitment to January 2021. After this date the facility shall continue until terminated by either party giving to the other not less than three months' written notice.

This unaudited condensed consolidated interim report has been prepared in accordance with the accounting policies adopted in the last annual financial statements for the year ended 31 December 2018 other than in respect of changes in policy to new standards as set out in note 3 below.

The accounting policies have been applied consistently throughout the Group for the purposes of preparation of the condensed consolidated interim report.

   3     Significant accounting policies 

New standards impacting the Group that will be adopted in the annual financial statements for the year ended 31 December 2019, and which have given rise to changes in the Group's accounting policies are:

   --      IFRS 16 Leases; 

Details of the impact of this standard are given below and in note 15. Other new and amended standards and Interpretations issued by the IASB that will apply for the first time in the next annual financial statements are not expected to impact the Group as they are either not relevant to the Group's activities or require accounting which is consistent with the Group's current accounting policies.

The Group has elected to apply the full retrospective transition approach with the cumulative effect of initially applying this standard as an adjustment to the opening balance of retained earnings as at 1 January 2018.

On adoption of IFRS 16, the Group recognised lease liabilities in relation to leases which had previously been classified as 'operating leases' under the principles of IAS 17 Leases. These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee's incremental borrowing rate as of 1 January 2018. The weighted average lessee's incremental borrowing rate applied to the lease liabilities on 1 January 2018 was 2.3%. The lease liabilities are not included within the Group's net cash/(debt) calculations.

The remeasurements to the lease liabilities were recognised as adjustments to the related right of use assets immediately after the date of initial application.

The associated right-of-use assets for property leases were measured on a retrospective basis as if the new rules had always been applied. Right of use assets are measured at the amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognised in the balance sheet as at 1 January 2018.

The Group has also elected to apply the following practical expedients:

Short-term leases (leases of less than 12 months, cancellable within 12 months and or have less than 12 months remaining) as at the date of adoption of the new standard will not be within the scope of IFRS 16.

Leases for which the asset is of low value, for example IT equipment, will not be within the scope of IFRS 16.

        4     Segment reporting 

(a) Revenue, gross profit and operating profit/(loss) by discipline

For management purposes, the Group is organised into three operating segments, EMEA, USA and Asia Pacific (APAC), based on the discipline of the candidate being placed. All operating segments have similar economic characteristics and share a majority of the aggregation criteria set out in IFRS 8.12.

 
                                            30 June 2019                                      30 June 2018                                      31 December 2018 
                      EMEA       USA      APAC     Group      Total       EMEA       USA      APAC     Group      Total       EMEA       USA      APAC     Group      Total 
                                                    cost                                                cost                                                cost 
                   GBP'000   GBP'000   GBP'000   GBP'000    GBP'000    GBP'000   GBP'000   GBP'000   GBP'000    GBP'000    GBP'000   GBP'000   GBP'000   GBP'000    GBP'000 
                  --------  --------  --------  --------  ---------  ---------  --------  --------  --------  ---------  ---------  --------  --------  --------  --------- 
 
 Revenue            49,890     4,084    10,082        15     64,071     55,550     2,705    10,320         -     68,575    108,060     6,895    20,672        30    135,637 
 
 Gross profit        8,556     1,920     4,856        15     15,347      8,723       540     5,544         -     14,807     17,617     1,921    10,958        30     30,526 
 
 Depreciation 
  and 
  amortisation       (457)       (5)     (378)      (45)      (885)      (474)         -     (328)      (45)      (847)      (919)       (2)     (670)      (89)    (1,680) 
 
 Other income          263         -         -         -        263        264         -         -         -        264        529         -         -         -        529 
 
 Operating 
  profit/(loss) 
  before 
  exceptional 
  items              2,551       271     (317)     (774)      1,731      1,468     (128)       784     (780)      1,344      3,090       148     1,355   (1,478)      3,115 
 
 Exceptional 
  items                  -         -         -     (283)      (283)          -         -         -         -          -        (1)         -         -         -        (1) 
 
 Operating 
  profit /(loss)     2,551       271     (317)   (1,057)      1,448      1,468     (128)       784     (780)      1,344      3,089       148     1,355   (1,478)      3,114 
                  --------  --------  --------  --------  ---------  ---------  --------  --------  --------  ---------  ---------  --------  --------  --------  --------- 
 
 Finance costs                                                 (64)                                               (119)                                               (213) 
 Finance income                                                  19                                                  10                                                  22 
 Profit/(loss) 
  from associate                                                 45                                                (23)                                                  70 
                                                          ---------                                           ---------                                           --------- 
 Profit before 
  tax                                                         1,448                                               1,212                                               2,993 
                                                          ---------                                           ---------                                           --------- 
 
 Total Assets       14,387     2,487     6,868    19,787     43,529     21,906     1,342     7,636    14,664     45,548     15,683     1,661     6,436    18,448     42,228 
 
 Total 
  Liabilities      (9,461)     (764)   (3,148)   (8,040)   (21,413)   (20,444)     (555)   (2,950)   (1,512)   (25,461)   (11,390)     (775)   (2,708)   (7,053)   (21,926) 
 
 
   4     Segment reporting (continued) 

(a) Revenue, gross profit and operating profit/(loss) by discipline (continued)

Revenue reported above represents revenue generated from external customers. There were no sales between segments in the six months to 30 June 2019 (30 June 2018: Nil, 31 December 2018: Nil).

The accounting policies of the reportable 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.

The information reviewed by the chief operating decision maker, or otherwise regularly provided to the chief operating decision maker, does not include information on net assets. The cost to develop this information would be excessive in comparison to the value that would be derived.

There is one external customer that represented more than 9% of the entity's revenues with revenue of GBP5.5m, and approximately 3% of the Group's NFI, included in the EMEA segment (30 June 2018: one customer, revenue GBP15.5m, EMEA segment; 31 December 2018: one customer, revenue GBP29.1m, EMEA segment).

(b) Revenue and gross profit by geography

 
 
                            Revenue                              Gross profit 
----------  --------------------------------------  -------------------------------------- 
                   Six months           Year ended         Six months           Year ended 
                      ended                                   ended 
----------  -----------------------  -------------  -----------------------  ------------- 
             30 June        30 June         31 Dec   30 June        30 June         31 Dec 
---------- 
                2019           2018           2018      2019           2018           2018 
                        As restated    As restated              As restated    As restated 
---------- 
             GBP'000        GBP'000        GBP'000   GBP'000        GBP'000        GBP'000 
----------  --------  -------------  -------------  --------  -------------  ------------- 
 
 UK (GBP)     44,688         51,007         98,822     6,617          6,963         13,903 
 
 Rest of 
  World       19,383         17,568         36,815     8,730          7,844         16,623 
----------  --------  -------------  -------------  --------  -------------  ------------- 
 
              64,071         68,575        135,637    15,347         14,807         30,526 
----------  --------  -------------  -------------  --------  -------------  ------------- 
 
 

(c) Revenue and gross profit by recruitment classification

 
 
                              Revenue                              Gross profit 
------------  --------------------------------------  -------------------------------------- 
                     Six months           Year ended         Six months           Year ended 
                        ended                                   ended 
------------  -----------------------  -------------  -----------------------  ------------- 
               30 June        30 June         31 Dec   30 June        30 June         31 Dec 
------------ 
                  2019           2018           2018      2019           2018           2018 
                          As restated    As restated              As restated    As restated 
------------ 
               GBP'000        GBP'000        GBP'000   GBP'000        GBP'000        GBP'000 
------------  --------  -------------  -------------  --------  -------------  ------------- 
 
 Permanent*      9,246          8,560         17,828     9,229          8,541         17,802 
 
 Contract       54,825         60,015        117,809     6,118          6,266         12,724 
------------  --------  -------------  -------------  --------  -------------  ------------- 
 
                64,071         68,575        135,637    15,347         14,807         30,526 
------------  --------  -------------  -------------  --------  -------------  ------------- 
 
 

* includes Fixed Term Contracts (FTC's)

   5     Exceptional items 

Exceptional items are costs that are separately disclosed due to their material and non-recurring nature.

 
                                       Six months ended     Year ended 
                                       30 June   30 June   31 December 
 ---------------------------------- 
                                          2019      2018          2018 
 ---------------------------------- 
                                       GBP'000   GBP'000       GBP'000 
 ----------------------------------  ---------  --------  ------------ 
 Restructuring costs                         -         -            66 
 Rates rebate                                -         -         (520) 
 Impairment of right of use asset            -         -           455 
 Professional fees                         283         -             - 
 
   Total                                   283         -             1 
-----------------------------------  ---------  --------  ------------ 
 

Professional fees relate to non-trading M&A costs.

   6     Taxation 

The charge for taxation on profits for the six months amounted to GBP0.32m (30 June 2018: GBP0.15m, 31 December 2018: GBP0.36m).

   7     Earnings per share 

Earnings per share is calculated by dividing the profit or loss attributable to equity holders of the Group by the weighted average number of ordinary shares in issue.

Fully diluted earnings 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.

 
                                                  Six months ended           Year ended 
                                                  30 June        30 June    31 December 
----------------------------------------- 
                                                     2019           2018           2018 
                                                             As restated    As restated 
----------------------------------------- 
                                                  GBP'000        GBP'000        GBP'000 
-----------------------------------------   -------------  -------------  ------------- 
 Earnings 
 
 Profit for the period/year attributable 
  to equity holders of the parent                   1,170            930          2,476 
------------------------------------------ 
 
 Adjusted earnings 
 Profit for the period                              1,170            930          2,476 
 Add back: exceptional costs                          283              -              1 
------------------------------------------  -------------  -------------  ------------- 
                                                    1,453            930          2,477 
 -----------------------------------------  -------------  -------------  ------------- 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
        7 Earnings per share (continued) 
                                                  Six months ended           Year ended 
                                                  30 June        30 June    31 December 
                                                     2019           2018           2018 
 Number of shares                                  Number         Number         Number 
 Weighted average number of shares 
  used for earnings per share                  32,804,742     32,067,205     32,608,110 
 Dilutive effect of share plans                 2,987,062      3,485,613      3,211,955 
------------------------------------------  -------------  -------------  ------------- 
 Diluted weighted average number of 
  shares used to calculate fully diluted 
  earnings per share                           35,791,804     35,552,818     35,820,065 
------------------------------------------  -------------  -------------  ------------- 
 
 Basic profit per share                             3.57p          2.90p          7.59p 
 Fully diluted profit per share                     3.27p          2.62p          6.91p 
 Adjusted basic earnings per share                  4.43p          2.90p          7.60p 
 Adjusted diluted earnings per share                4.06p          2.62p          6.91p 
 Underlying* earnings per share                     4.67p          3.36p          8.52p 
 

* Underlying PBT less tax divided by weighted average number of shares

   8     Cash flow from operating activities 
 
                                                  Six months ended                    Year ended 
                                                           30 June        30 June    31 December 
                                                              2019           2018           2018 
                                                                      As restated    As restated 
 
                                                           GBP'000        GBP'000        GBP'000 
------------------------------------------   ---------------------  -------------  ------------- 
 
 Profit before taxation                                      1,448          1,212          2,993 
 (Profit)/loss from associate                                 (45)             23           (70) 
 Add back exceptional items                                    283              -              1 
 
 Profit before taxation and exceptional 
  items                                                      1,686          1,235          2,924 
 
 Adjusted for: 
 Depreciation and amortisation                                 885            847          1,680 
 (Decrease)/increase in non-exceptional 
  provisions                                                  (19)           (42)             11 
 FX unrealised (losses)/gains                                 (20)             32             67 
 Share based payments                                           60             33             75 
 FX realised gains                                              22             10             34 
 
 
 Operating cash flows before movements 
  in working capital                                         2,614          2,115          4,791 
 
 (Increase)/decrease in receivables                        (2,998)           (31)          3,937 
 Increase/(decrease) in payables                               187            284        (2,503) 
 
 
 Net cash (outflow)/inflow from operating 
  activities before exceptional items                        (197)          2,368          6,225 
 
 Cash flows arising from exceptional 
  items                                                      (137)          (259)            131 
 
 Net cash (outflow)/inflow from operating 
  activities                                                 (334)          2,109          6,356 
-------------------------------------------  ---------------------  -------------  ------------- 
 
 
   9     Trade and other receivables 
 
                                           Six months ended      Year ended 
                                      30 June        30 June    31 December 
--------------------------------- 
                                         2019           2018           2018 
                                                 As restated    As restated 
--------------------------------- 
                                      GBP'000        GBP'000        GBP'000 
---------------------------------   ---------  -------------  ------------- 
 
 Trade receivables                     13,064         12,729         10,780 
 Expected credit losses                 (153)          (130)          (279) 
 Accrued income                         7,758          9,700          7,414 
 Prepayments                              815            800            749 
 Other receivables 
 - due within 12 months                 1,050            688          1,045 
 - due after more than 12 months          447            321            274 
---------------------------------- 
 
                                       22,981         24,108         19,983 
 
Current                                22,534         23,787         19,709 
Non-current                               447            321            274 
 
   10   Trade and other payables 
 
                                          Six months ended     Year ended 
                                     30 June        30 June   31 December 
                                        2019           2018          2018 
                                                As restated   As restated 
                                     GBP'000        GBP'000       GBP'000 
 
Trade payables                         1,224          2,158         1,516 
Other taxes and social security 
costs                                  1,670          1,234         1,279 
Other payables                         1,042          1,487         1,784 
Accruals                              11,911         12,214        10,200 
 
                                      15,847         17,093        14,779 
 
 
   11   Provisions 
 
                                  Leasehold  Onerous       System    Onerous 
                              dilapidations    lease  Integration  contracts    Total 
                                    GBP'000  GBP'000      GBP'000    GBP'000  GBP'000 
 
At 1 January 2018                       447      379          217         62    1,105 
New provision                             4        -            -          -        4 
Utilised                                  -     (78)        (193)       (52)    (323) 
 
At 30 June 2018                         451      301           24         10      786 
New provision                             7        -            -          -        7 
Utilised                               (74)    (301)         (24)       (10)    (409) 
 
Restated as at 31 December 
 2018                                   384        -            -          -      384 
Utilised                               (19)        -            -          -     (19) 
 
At 30 June 2019                         365        -            -          -      365 
 
Current                                   -        -            -          -        - 
Non-current                             365        -            -          -      365 
 
   12   Investment in associate 

The following table provides summarised information of the Group's investment in the associated undertaking:

 
                              GBP'000 
As at 1 January 2019              120 
Share of associate's profit        47 
 
As at 30 June 2019                167 
 
 
Principle associate   Investment held   Principal activity     Country of        Equity 
                       by                                     incorporation    interest 
Tempting Ventures     Hydrogen Group 
 Limited               Plc              Advisory services          UK               49% 
 
   13   Dividends 
 
                                         Six months ended       Year ended 
                                       30 June       30 June   31 December 
                                          2019          2018          2018 
                                                 As restated   As restated 
                                       GBP'000       GBP'000       GBP'000 
Amounts recognised to shareholders 
 in the period 
Final dividend for the year ended 
31 December 2018 of 1.0p per share 
(2017: 0.8 per share)                      329           257           257 
Interim dividend for the year ended 
31 December 2019 of 0.6p per share 
(2018: 0.5p per share)                       -             -           163 
 
  Total                                    329           257           420 
 

The final dividend of 1.0p per share for the year ended 31 December 2018 was approved by the Board on 23 May 2019, paid on 31 May 2019 and therefore included as at 30 June 2019. The interim dividend of 0.5p per share for the year ended 31 December 2018 was approved by the Board on 18 September 2018 and paid on 19 October 2018. An interim dividend of 0.6p for 2019 was approved on 3 September 2019 to be paid on 11 October 2019 to shareholders on the register at the close of business on 13 September 2019.

   14   Redemption Liability 

A financial liability is recognised in respect of the forward purchase at fair value. Movements in the year are as follows:

 
                               Six months ended         Year ended 
                             30 June       30 June     31 December 
                                2019          2018            2018 
                                       As restated     As restated 
                             GBP'000       GBP'000         GBP'000 
 
As at 1 January                2,255         1,020           1,020 
NCI pay-out                    (506)         (142)           (142) 
Fair value adjustment          (993)             -           1,377 
Total                            756           878           2,255 
 
Current                          300            69           615 
Non-current                      456           809         1,640 
 
 
   14   Redemption Liability (continued) 

The redemption liability relates to future consideration due in respect of the acquisition of Argyll Scott. The fair value adjustment reflects a revision of the Board's estimate of Argyll Scott's future NCI pay-outs.

   15   Adjustments recognised on adoption of IFRS 16 

The Group has adopted IFRS 16 with respect to the recognition and measurement of leases retrospectively from 1 January 2018.

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 under previous            Adjustments                Restated under the 
                                   policy                                                new accounting policy 
                        Y/E 2018    H1 2018  Y/E 2017  Y/E 2018   H1 2018  Y/E 2017  Y/E 2018   H1 2018  Y/E 2017 
                         GBP'000    GBP'000   GBP'000   GBP'000   GBP'000   GBP'000   GBP'000   GBP'000   GBP'000 
Consolidated Statement of Comprehensive Income 
Gross profit              30,526     14,807                   -         -              30,526    14,807 
Other administrative 
 expenses               (28,237)   (13,875)                 297       148            (27,940)  (13,727) 
Finance 
 costs                     (100)       (62)               (113)      (57)               (213)     (119) 
Profit for 
 the period/year           2,451        972                 184        91               2,635     1,063 
Consolidated Statement of Financial Position 
Right of 
 use asset                     -          -         -     2,885     3,914     4,632     2,885     3,914     4,632 
Total Assets              39,343     41,634    41,253     2,885     3,914     4,632    42,228    45,548    45,885 
Lease Liability                -          -         -   (4,096)   (4,762)   (5,498)   (4,096)   (4,762)   (5,498) 
Trade and 
 other payables         (14,705)   (17,019)  (15,647)      (74)      (74)      (74)  (14,779)  (17,093)  (15,721) 
Provisions                 (839)      (786)   (1,105)       455         -         -     (384)     (786)   (1,105) 
Total Liabilities       (18,211)   (20,625)  (21,040)   (3,715)   (4,836)   (5,646)  (21,926)  (25,461)  (26,686) 
Total Equity              21,132     21,009    20,213     (830)     (922)   (1,014)    20,302    20,087    19,199 
 
 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU) 596/2014.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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