UK recruitment firm Hydrogen Group (HYDG: AIM) reported revenue today for the full year ending 30 June 2017 of £56.8 million, a decrease of 7% in constant currency compared to £59.4 million during the same period last year.

Earlier this year Hydrogen Group announced it would acquire London-based recruitment firm Argyll Scott Limited for £3.3 million.

Hydrogen stated that while the acquisition has therefore made a limited financial contribution for the period, it has materially enhanced the business and its prospects moving forward. The acquisition increased group headcount by 133 to 350; creating critical mass in the Asia Pacific market where the enlarged group now has a combined headcount of 130. This has enable the company to diversify the business into generally higher growth markets. On a pro-forma basis, 53% of the enlarged group's net fee income in H1 was derived from outside the UK (H1 2016: 42%); client cross fertilisation opportunities, particularly in the contract market in Asia; enabling greater utilisation of the investment the group has made into its global platform and digital marketing; and exploiting significant overhead cost synergies throughout the enlarged group.

The group has also taken a minority interest in CBFG Limited, a start-up investment business that provides funding and advisory services to early stage recruitment businesses to help them scale and create value. Hydrogen stated that CBFG’s model complements both Hydrogen and Argyll Scott's entrepreneurial roots.

"In common with our peer group, trading conditions in a number of our UK markets have been challenging during the period,” Ian Temple, CEO of Hydrogen Group plc, said. “However, the organic growth since the start of the year in our UK contract book together with the opportunities for both revenue growth and cost synergies created by the acquisition of Argyll Scott places the group in a position to return to sustainable long term profit growth.”

Net Fee Income by recruitment classification was as follows:

According to the group, the principal driver of the NFI increase was the contribution by Argyll Scott which offset a small decline in organic UK revenue.

The split between contract and permanent NFI for H1 2017 was 54% Contract (H1 2016: 60%); 46% Permanent (H1 2016: 40%).  The swing towards permanent was driven by an increase in permanent revenue that principally reflects the impact of Argyll Scott, which is largely a permanent business. In the EMEA region NFI was flat at £7.4 million, while APAC NFI increased to £1.9 million, compared to £1.5 million last year.

Revenue by region was broken down as follow:

In the UK, revenue fell from £46.6m in H1 2016 to £42.8m during the H1 2017 period. In Rest of the World, revenue stood at £13.9m for H1 2017 compared to £12.7m last year.

The group has traded in line with the board's expectations since 30 June. “Looking ahead, we believe that the growth in our UK contract book since the start of the year, together with a full half year impact of Argyll Scott's trading, and the client cross fertilisation and cost synergies that the enlarged group is already benefitting from will drive a return to sustainable long-term profit growth,” the group said in a statement.

In trading today, Hydrogen Group traded at £30.15, down 10% on the day and 0.50% above its 52-week low of £30.00, set on 17 August 2017. Based on its current share price the company has a market value of £11.11 million.