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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 | 00:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
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
IR SSASMDFUSEDU
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September 03, 2019 02:44 ET (06:44 GMT)
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