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
(END) Dow Jones Newswires
September 03, 2019 02:44 ET (06:44 GMT)
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