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RNS
Hydrogen Group PLC   -  HYDG   

Interim Results

Released 07:43 03-Sep-2019

RNS Number : 0234L
Hydrogen Group PLC
03 September 2019
 

Hydrogen Group Plc

UNAUDITED RESULTS FOR THE HALF YEAR ENDED 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 £1.9m (H1 2018 as restated^: £1.2m) and profit conversion of Net Fee Income* ("NFI") increased to 12.1% (H1 2018 as restated: 8.3%)

·    Reported PBT increased by 19% to £1.4m (H1 2018 as restated: £1.2m)

·    NFI increased by 4% to £15.3m (H1 2018: £14.8m)

o    Permanent NFI grew 8% to £9.2m (H1 2018: £8.5m)

o    Contract NFI decreased by 2% to £6.1m (H1 2018: £6.3m)

o    Group contract margin increased to 11.2% (H1 2018: 10.4%)

·    Net cash of £3.4m at 30 June 2019 (31 December 2018: £4.9m and 30 June 2018: £1.3m)

·    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 £1.0m decrease in net assets as at 1 January 2018 and an increase of £0.1m 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 £64.1m (H1 2018: £68.6m).

Group NFI increased by 4% (fell by 2% in constant currency terms) to £15.3m (H1 2018: £14.8m) 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 £8.6m (H1 2018: £8.7m) 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 £4.9m (H1 2018: £5.5m). 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 £1.9m (H1 2018: £0.5m). 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 £9.2m (H1 2018: £8.5m) and a marginal fall in contract NFI of 2% to £6.1m (H1 2018: £6.3m). 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 £1.4m. (H1 2018 as restated: £1.3m), while profit before tax was £1.4m (H1 2018 as restated:  £1.2m).

Underlying PBT remains the Board's preferred measure of trading performance of the business and has increased by £0.7m to £1.9m (H1 2018 as restated: £1.2m).   

 

 

 

              Six months ended

 

 

 

2019

 

£'000

2018

As restated

£'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 £3.4m (31 December 2018: £4.9m and 30 June 2018: £1.3m). Net cash was impacted by a, largely seasonal, increase in working capital (increase in receivables less increase in payables) of £3.0m, and by non-trading payments in respect of the acquisition of the remaining minority interest in Argyll Scott Asia (£0.6m), and Group dividends (£0.3m). 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 £2.1m.

Bank facilities

Hydrogen has an existing facility of £18.0m, 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

As restated

2018

As restated

Note

£'000

£'000

£'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

As restated

 

2018

As restated

Note

£'000

 

£'000

 

£'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

Share premium

Merger

Own shares

Share option

Trans-lation

Forward purchase

Retained

Attributable

to owners

Total

 

capital

account

reserve

held

 reserve

reserve

 

reserve

earnings

Owners

NCI

equity

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'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

£'000

£'000

£'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 interests

 

(102)

-

-

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 £18.0m 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 cost

Total

 

EMEA

USA

APAC

Group cost

Total

 

EMEA

USA

APAC

Group cost

Total

 

£'000

£'000

£'000

£'000

£'000

 

£'000

£'000

£'000

£'000

£'000

 

£'000

£'000

£'000

£'000

£'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 £5.5m, and approximately 3% of the Group's NFI, included in the EMEA segment (30 June 2018: one customer, revenue £15.5m, EMEA segment; 31 December 2018: one customer, revenue £29.1m, EMEA segment).


(b) Revenue and gross profit by geography
 

 

 

Revenue

 

Gross profit

 

 

 

 

Six months ended

Year ended

 

Six months ended

Year ended

 

30 June

30 June

31 Dec

30 June

30 June

31 Dec

2019

 

 

2018

As restated

2018

As restated

2019

 

 

2018

As restated

2018

As restated

£'000

£'000

£'000

£'000

£'000

£'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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                 


* 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

£'000

£'000

£'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 £0.32m (30 June 2018: £0.15m, 31 December 2018: £0.36m).

 

 

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

As restated

2018

As restated

£'000

£'000

£'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 2019

30 June 2018

31 December 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 2019

 

30 June 2018

As restated

31 December 2018

As restated

 

£'000

£'000

£'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

As restated

2018

As restated

£'000

£'000

£'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

As restated

2018

As restated

£'000

£'000

£'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

 

 

 

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

 

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:

 

 

£'000

As at 1 January 2019

120

Share of associate's profit

47

 

 

As at 30 June 2019

167

 

 

Principle associate

Investment held by

Principal activity

Country of incorporation

Equity interest

Tempting Ventures Limited

Hydrogen Group Plc

Advisory services

UK

49%

 

 

13   Dividends

     

 

 

Six months ended

Year ended

 

 

30 June

30 June

31 December

2019

 

 

2018

As restated

2018

As restated

£'000

£'000

£'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

As restated

2018

As restated

£'000

£'000

£'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 policy

Adjustments

Restated under the new accounting policy

 

Y/E  2018

£'000

H1   2018

£'000

Y/E  2017

£'000

Y/E  2018

£'000

H1   2018

£'000

Y/E  2017

£'000

Y/E  2018

£'000

H1   2018

£'000

Y/E  2017

£'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.


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