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UK – Hydrogen revenue up as contract recruitment grows

09 September 2013

UK recruitment firm Hydrogen Group PLC (HYDG: LSE) reported revenue of £90.98 million for the six months to 30 June 2013, up +11% from £82 million for the same period last year. Gross profit for the period was slightly higher, year-on-year, reaching £15.85 million up from £15.63 million a year ago.

Net fee income for the period was £15.9 million, up +2% compared with £15.6 million for the same period last year. Operating profit, however, was £1.43 million, down -26.7% from £1.95 million last year.

Ian Temple, chairman of Hydrogen Group, commented: “Hydrogen has increased its net fee income during a period of mixed global market conditions. We have continued to invest in our business during the period, taking the opportunity to advance a number of senior hires and opening two new office, in Houston, USA, and Stavanger, in Norway. Whilst the cost of these investments has reduced profitability in the short term, the investments have significantly increased the Group’s future operational capacity and enhanced its potential for growth.”

Contract recruitment represents the highest proportion of total revenue, accounting for £83.6 million of revenue compared with £7.4 million for permanent recruitment. Year-on-year comparisons reflected a decrease in permanent recruitment by -2.7%, from £7.6 million during H1 2012. Contract recruitment grew +12.4% from £74.4 million last year. Net fee income was split 53% to 47% for contract and permanent recruitment, respectively, compared with 51% and 49%, respectively, last year.

Revenue for the Group’s Professional support services for the first six months of the year was £65.1 million, up +4.2% from £62.5 million last year. Revenue for the Technical and Scientific segment increased +32% to £25.8 million from £19.5 million, year-on-year. Consisting of the Oil & Gas, Life Sciences, Power & Mining sectors, the Technical and Scientific sector represents 44% of Group net fee income, up from 37% a year ago. The new offices in Houston and Stavanger will focus initially on the Oil & Gas sector. 

Revenue from operations within the UK and the Rest of the World increased during H1 2013, compared with a year ago. UK revenue for the period was £68.7 million, up +10% from 62.4 million during H1 2012. Rest of the World revenue was up +14.4% from £19.5 million last year to £22.3 million this year.

Hydrogen Group reported a +11% increase in net fee income from outside the UK, against a backdrop of mixed global conditions. Performance from Asian operations during the period was particularly strong, contrasting with the position in Australia, where the slowdown in the natural resources sector has been well documented.

Looking forward, the focus for the Group is to maximise the return from the investments made in the last few years. In line with this, the priority for the second half of 2013 is to deploy heads into those markets that demonstrate the required characteristics for net fee income growth, while maintaining current levels of productivity.

With global market conditions and activity relatively unchanged from that experienced in the first half, trading for the second half of the year has started satisfactorily and the Group is on target to meet its expectations for the year.

In trading today, the company’s share price fell 0.5% to £0.98, an increase of +5% compared with a year ago. Based on its current share price, the company has a market value of £23.5 million.

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