TIDMHYDG
RNS Number : 2771Y
Hydrogen Group PLC
08 September 2020
Hydrogen Group Plc
UNAUDITED RESULTS FOR THE HALF YEARED 30 JUNE 2020
The Board of Hydrogen Group plc ("Hydrogen Group" or the
"Group") (AIM: HYDG) announces its unaudited results for the half
year ended 30 June 2020.
Highlights
-- Key priority remains the safety of our staff and other stakeholders
-- Trading during the period was significantly impacted by the Covid-19 pandemic
-- NFI decreased by 24% to GBP11.7m (H1 2019: GBP15.3m)
o Contract NFI fell by 20% to GBP4.9m (H1 2019: GBP6.1m)
o Permanent NFI fell 26% to GBP6.8m (H1 2019: GBP9.2m)
o Group contract margin however continued to increase to 12.6% (H1 2019: 11.2%)
-- Underlying* Profit Before Tax ("PBT") decreased by 79% to
GBP0.4m (H1 2019: GBP1.9m) and profit conversion of Net Fee
Income** ("NFI") decreased to 3.3% (H1 2019: 12.1%) reflecting the
operational leverage in the Group
-- Statutory PBT decreased by 93% to GBP0.1m (H1 2019: GBP1.4m)
-- Strong net cash of GBP6.5m at 30 June 2019 (31 December 2019:
GBP4.5m and 30 June 2019: GBP3.4m)
-- Underlying EPS*** in the period decreased by 3.8p, 81%, to 0.9p (H1 2019: 4.7p)
-- Reported EPS in the period decreased to 0.0p (H1 2019: 3.6p)
-- Cancellation of dividend (2019: 0.6p per share)
Post period end
-- The proposed cancellation of Hydrogen Group's listing on AIM
and accompanying tender offer for its shares announced today in a
circular to shareholders
* Adjusted for foreign exchange (gains)/losses, share based
payments, non-controlling loss/(interest), amortisation of acquired
intangibles and exceptional items.
** Net Fee Income is the equivalent of gross profit
*** Underlying PBT less tax divided by weighted average number
of shares
Commenting, Ian Temple, CEO of Hydrogen Group plc said:
"In common with most companies in our sector the first half of
2020 has been a challenging period for Hydrogen Group. As we have
navigated the business through the Covid-19 pandemic our priority
has been to do everything we can to ensure that our staff, clients
and candidates are as safe as possible, while also focusing on
maintaining the strength of our balance sheet by preserving
cash.
"I would like to take this opportunity to thank all our staff
for their exceptional 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
--------------
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 first half of 2020 was significantly impacted by the
COVID-19 pandemic. Client demand was adversely impacted in the APAC
region from January, this spread rapidly to our EMEA and US
business during the latter stages of the first quarter.
As stated in our final results for 2019, the Group's primary
objectives during the pandemic have been to do everything we can to
ensure that our staff and other stakeholders are as safe as
possible, and to focus on maintaining the strength of our balance
sheet by preserving cash.
We acted quickly to reduce costs. During April, all staff
globally accepted a temporary cut in basic pay, with the potential
for it to be retrospectively recovered in early 2021 from any
profit before tax generated for FY 2020. The pay cut reduced cash
spend by GBP0.5m during Q2 and we have accrued GBP0.3m of payroll
costs at 30 June, being the Board's current estimate of how much of
this saving will be recovered by staff. We also utilised the UK
Coronavirus Job Retention Scheme, and furthermore, we reduced costs
by restructuring parts of our management team and more proactively
performance managing several of our weaker performers. These
actions, coupled with government support in the form of payment
deferral schemes and job protection support programmes across the
multiple overseas territories in which the Group operates, have
enabled the Group to increase net cash during the period to GBP6.5m
(31 December 2019: GBP4.5m, and 30 June 2019: GBP3.4m).
Prior to the pandemic, we had already both invested in
technology throughout the Group to support remote working and
adopted flexible working practices in many of our offices, which
together, enabled our staff to seamlessly transition to
home-working as lockdowns were instigated. Consequently, activity
levels have been impacted by client demand rather than our
capability to transact work.
Alongside this, we have remained focussed on the longer-term
development of the business through the continued advancement of
our operating model centred on its four core strategic pillars:
Proposition, Platform, People and Performance. To that end, during
the period we have:
-- implemented an enhanced staff appraisal and performance management programme;
-- restructured contractor payment terms to improve the Group's cash flow; and
-- contracted with an Indian BPO partner to outsource our global
compliance and pay & bill functions.
The Board of Hydrogen Group has today also announced the
proposed cancellation of its listing on AIM and an accompanying
tender offer for its shares as set out in the Circular to
shareholders dated 8 September 2020.
Financial Highlights
Primarily driven by the impact of Covid-19, but also in the UK
in Q1 by the impact of the then proposed changes to the IR35
legislation on clients' contract hiring plans , turnover fell by
29% in both actual and common currency terms to GBP45.4m (2019:
GBP64.1m) and Group NFI fell by 24% in both actual and constant
currency terms to GBP11.7m (H1 2019: GBP15.3m).
The improved geographic diversification of revenues experienced
in recent periods, achieved through a reduced reliance on the UK
market in relative terms, has been maintained as the percentage of
NFI denominated in currencies other than Sterling remained broadly
flat at 56% (H1 2019: 57%). Foreign currency income, in general, is
naturally hedged against foreign currency expenditure.
EMEA NFI fell 24% to GBP6.5m (H1 2019: GBP8.6m) on both a
reported and constant currency basis. The impact of IR35 continued
to depress demand for contract recruitment during the first quarter
in the UK, which was severely exacerbated by the impact of Covid-19
from March. Demand was impacted in all geographies and sectors
although the London based Legal practice and the Edinburgh office
both performed creditably.
In APAC, NFI fell by 29% to GBP3.5m (H1 2019: GBP4.9m) on both a
reported and constant currency basis. Activity levels in the region
were impacted by Covid-19 from late January, some two months ahead
of the US or EMEA, as a result NFI fell during the half year in all
our offices. Activity levels were most significantly impacted in
Hong Kong. Conversely, our Thai business performed robustly under
the circumstances.
USA NFI fell by 16% (17% in constant currency terms) to GBP1.6m
(H1 2019: GBP1.9m). Encouragingly contract NFI grew by 53% (54% in
constant currency terms), despite the pandemic, as a result of the
investment we made in our US contract capability during the second
half of 2019.
Group contract NFI fell by 20% and permanent NFI by 26% during
the half year, driving a small change in mix to 42% contract (H1
2019: 40%); 58% permanent (H1 2019: 60%). While in absolute terms
contract NFI has reduced due to both the pandemic and IR35, in
relative terms contract recruitment has been less impacted than
permanent by Covid-19 primarily because of its longer revenue
recognition profile, coupled with both the growth in our US
contract business and the impact, globally, of contractors on
average working longer hours during lockdown.
The trend of improving contract margins experienced in recent
periods has continued, with the Group achieving a contract margin
of 12.6% in H1 2019 (H1 2019: 11.2%) primarily as a result of a
reduction in volume at low margin major accounts in the UK.
Operating profit for the period decreased to GBP0.2m (H1 2019:
GBP1.4m), while profit before tax was GBP0.1m (H1 2019:
GBP1.4m).
Underlying PBT remains the Board's preferred measure of trading
performance of the business, as it excludes non-trading items and
non-repeatable gains and losses. This fell to GBP0.4m (H1 2019:
GBP1.9m).
Six months ended
2020 2019
GBP'000 GBP'000
-------------------------------------- --------------- ---------------
Profit Before Tax 79 1,448
Exceptional items (note 5) 279 283
Amortisation of acquired intangibles 45 45
Non-controlling loss 6 42
Share based payments 60 60
Foreign exchange gains (81) (26)
---------------------------------------- --------------- ---------------
Underlying PBT 388 1,852
---------------------------------------- --------------- ---------------
Underlying EPS is calculated as follows:
2020 2019
GBP'm GBP'm
----------------------------------- ------- ------
Underlying PBT 0.4 1.9
Tax expense (0.1) (0.3)
------------------------------------- ------- ------
Underlying PAT 0.3 1.6
------------------------------------- ------- ------
Weighted average number of shares
(million) 33.1 32.8
------------------------------------- ------- ------
Underlying EPS 0.9p 4.7p
------------------------------------- ------- ------
Cash flow and cash position
At 30 June 2020, the Group had net cash of GBP6.5m (31 December
2019: GBP4.5m and 30 June 2019: GBP3.4m). The increase in net cash
was primarily driven by an increase in net cash from operating
activities of GBP2.7m, which in turn predominantly resulted from a
decrease in working capital balances of GBP2.1m. The fall in
working capital was principally caused by both the utilisation of
Government, COVID-19 related, payment deferral schemes of GBP0.8m
and the impact of reduced contractor numbers.
Bank facilities
Hydrogen has an existing invoice discounting facility of
GBP18.0m, with a commitment to January 2022. This facility shall
continue until ended by either party giving to the other not less
than three months' written notice.
During the period, the Group has further extended its facilities
by entering into new working capital agreements with HSBC in the
USA for USD1.5m, Australia for AUD2.0m and Singapore for
SGD1.7m.
Dividend
Due to the uncertainty created by the Covid-19 pandemic, in
common with many businesses, the Board announced the suspension of
the Group's final dividend in its 2019 annual report. In light of
this and given the proposed cancellation of Hydrogen's listing on
AIM and accompanying tender offer for its shares also announced
today, the Board does not believe it is appropriate to announce an
interim dividend (H1 2019: 0.6p).
Current Trading
Activity levels stabilised during the final weeks of the second
quarter having fallen significantly through April and May. Since
the period end client demand and, consequently, lead indicators
have begun to improve in most of the Group's markets. However, the
shape of this recovery is currently shallow, and it has yet to
translate to a meaningful improvement in reported monthly revenue
levels.
Forward visibility continues to be very poor, and the Board
remains mindful of the impact that a second wave of the pandemic
may have on demand levels. Indeed, a number of our markets,
including Los Angeles and Hong Kong, have returned to lockdown to
varying degrees in recent weeks. As a result, we will continue to
focus on cost control while ensuring that the Group maintains the
critical mass in all our key markets that is required to benefit
from a meaningful recovery in client demand levels when it
arises.
Hydrogen Group Plc
Unaudited Condensed Consolidated Interim Statement of
Comprehensive Income
For the six months ended 30 June 2019
Six months ended Year ended
30 June 30 June 31 December
------------------------------------
2020 2019 2019
------------------------------------
Note GBP'000 GBP'000 GBP'000
------------------------------------ ----- --------- --------- ------------
Revenue 4 45,410 64,071 121,277
Cost of sales (33,710) (48,724) (91,865)
------------------------------------ ----- --------- --------- ------------
Gross profit 11,700 15,347 29,412
Other administrative expenses (11,498) (13,879) (27,371)
Exceptional impairment on
loans - - (542)
Exceptional administrative
expenses 5 (279) (283) (333)
--------- --------- ------------
Administration expenses (11,777) (14,162) (28,246)
Other income 263 263 526
------------------------------------ ----- --------- --------- ------------
Operating profit 186 1,448 1,692
Share of (loss)/profit from
associate (64) 45 66
Finance costs (52) (64) (108)
Finance income 9 19 38
------------------------------------ ----- --------- --------- ------------
Profit before taxation 79 1,448 1,688
Taxation 6 (96) (320) (391)
------------------------------------ ----- --------- --------- ------------
(Loss)/profit for the period/year (17) 1,128 1,297
------------------------------------ ----- --------- --------- ------------
(Loss)/profit attributable
to:
Equity holders of the parent (11) 1,170 2,476
Non-controlling interest (6) (42) 159
------------------------------------ ----- --------- --------- ------------
Other comprehensive profit/(loss):
Exchange differences on translating
foreign operations (79) 23 86
Exchange differences on intercompany
loans 396 39 (222)
------------------------------------------- --------- ------------
Other comprehensive profit/(loss) 317 62 (136)
------------------------------------ ----- --------- --------- ------------
Total comprehensive profit for
the period/year 300 1,190 1,311
------------------------------------------- --------- --------- ------------
Total comprehensive profit
attributable to:
Equity holders of the parent 306 1,232 1,204
Non-controlling interest (6) (42) (43)
------------------------------------ ----- --------- --------- ------------
Earnings per share
Basic profit per share (pence) 7 (0.0)p 3.6p 4.0p
Diluted profit per share
(pence) 7 (0.0)p 3.3p 3.7p
Hydrogen Group Plc
Unaudited Condensed Consolidated Interim Statement of Financial
Position
For the six months ended 30 June 2020
30 June 30 June 31 December
-------------------------------
2020 2019 2019
As restated
-------------------------------
Note GBP'000 GBP'000 GBP'000
------------------------------- ----- --------- ------------- ------------
Non-current assets
Goodwill 12,198 12,198 12,198
Investment in associate 12 122 167 186
Other intangible assets 735 748 739
Property, plant and equipment 734 964 857
Right of use assets 2,120 2,933 1,915
Deferred tax assets 296 282 296
Other financial assets 9 324 447 417
------------------------------- ----- --------- ------------- ------------
16,529 17,739 16,608
------------------------------- ----- --------- ------------- ------------
Current assets
Trade and other receivables 9 14,000 22,534 17,133
Current tax receivable 146 - -
Cash and cash equivalents 6,883 3,425 4,620
------------------------------- ----- --------- ------------- ------------
21,029 25,959 21,753
------------------------------- ----- --------- ------------- ------------
Total assets 37,558 43,698 38,361
------------------------------- ----- --------- ------------- ------------
Current liabilities
Trade and other payables 10 (10,086) (14,794) (11,313)
Current tax payable - (65) (156)
Borrowings (389) - (154)
Lease liabilities (570) (709) (512)
Redemption liability 14 - (300) -
(11,045) (15,868) (12,135)
------------------------------- ----- --------- ------------- ------------
Non-current liabilities
Deferred tax (80) (113) (96)
Lease liabilities (1,980) (3,360) (2,052)
Redemption liability 14 - (456) (236)
Provisions 11 (341) (365) (326)
------------------------------- ----- --------- ------------- ------------
(2,401) (4,294) (2,710)
------------------------------- ----- --------- ------------- ------------
Total liabilities (13,446) (20,162) (14,845)
------------------------------- ----- --------- ------------- ------------
Net assets 24,112 23,536 23,516
------------------------------- ----- --------- ------------- ------------
Equity
Share capital 343 343 341
Share premium 3,607 3,520 3,607
Merger reserve 19,240 19,240 19,240
Own shares held (1,171) (1,546) (1,171)
Share option reserve 1,687 2,074 1,627
Translation reserve (205) (324) (522)
Forward purchase reserve - (756) (236)
Retained earnings 581 910 554
------------------------------- ----- --------- ------------- ------------
24,082 23,461 23,442
Non-controlling interest 30 75 74
------------------------------- ----- --------- ------------- ------------
Total equity 24,112 23,536 23,516
------------------------------- ----- --------- ------------- ------------
The notes to the accounts set out below form an integral part of
this unaudited condensed consolidated interim report
Hydrogen Group Plc
Unaudited Condensed Consolidated Interim Statement of Changes in
Equity
For the six months ended 30 June 2020
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 31 December
2018 (as
previously
reported) 341 3,520 19,240 (1,546) 2,014 (386) (2,255) (61) 20,867 265 21,132
Prior year
adjustment
(note 15) - - - - - - - 590 590 - 590
At 31 December
2018 (as
restated) 341 3,520 19,240 (1,546) 2,014 (386) (2,255) 529 21,457 265 21,722
---------------- -------- -------- -------- -------- --------- ------------- --------- --------- -------- -------- --------
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
(as restated) 343 3,520 19,240 (1,546) 2,074 (324) (756) 910 23,461 75 23,536
---------------- -------- -------- -------- -------- --------- ------------- --------- --------- -------- -------- --------
EBT share
transfer - - - 170 - - - (440) (270) - (270)
Movement in
redemption
liability - - - - - - 520 - 520 - 520
MI scheme
pay-out - 87 - 205 - - - 106 398 - 398
Share
contribution - - - - (507) - - - (507) - (507)
Dividends - - - - - - - (192) (192) - (192)
Share option
charge - - - - 60 - - - 60 - 60
--------- --------- -------- -------- --------
Transactions
with owners - 87 - 375 (447) - 520 (526) 9 - 9
Profit for the
6 months to
31 December
2019 - - - - - - - 170 170 (1) 169
Other
comprehensive
income:
Exchange
differences
on
intercompany
loans - - - - - (245) - - (245) - (245)
Foreign
currency
translation - - - - - 47 - - 47 - 47
-------- -------- -------- -------- --------- ------------- --------- --------- -------- -------- --------
Total
comprehensive
loss for the
period - - - - - (198) - - (198) - (198)
---------------- -------- -------- -------- -------- --------- ------------- --------- --------- -------- -------- --------
At 31 December
2019 343 3,607 19,240 (1,171) 1,627 (522) (236) 554 23,442 74 23,516
---------------- -------- -------- -------- -------- --------- ------------- --------- --------- -------- -------- --------
Movement in
redemption
liability - - - - - - 236 - 236 - 236
NCI purchase - - - - - - - 38 38 (38) -
Share option
charge - - - - 60 - - - 60 - 60
Transactions
with owners - - - - 60 - 236 38 334 (38) 296
Profit for the
6 months to
30 June 2020 - - - - - - - (11) (11) (6) (17)
Other
comprehensive
income:
Exchange
differences
on
intercompany
loans - - - - - 396 - - 396 - 396
Foreign
currency
translation - - - - - (79) - - (79) - (79)
-------- -------- -------- -------- --------- ------------- --------- --------- -------- -------- --------
Total
comprehensive
loss for the
period - - - - - 317 - (11) 306 (6) 300
---------------- -------- -------- -------- -------- --------- ------------- --------- --------- -------- -------- --------
At 30 June
2020 343 3,607 19,240 (1,171) 1,687 (205) - 581 24,082 30 24,112
---------------- -------- -------- -------- -------- --------- ------------- --------- --------- -------- -------- --------
The notes to the accounts set out below form an integral part of
this unaudited condensed consolidated interim report.
Hydrogen Group Plc
Unaudited Condensed Consolidated Interim Statement of Cash
Flows
For the six months ended 30 June 2020
Six months ended Year ended
30 June 30 June 31 December
2020 2019 2019
Note GBP'000 GBP'000 GBP'000
---------------------------------------- ----- --------- -------- ------------
Cash inflow from operating activities 8 2,957 423 3,623
Income taxes paid (305) (30) (183)
Net cash inflow from operating
activities 2,652 393 3,440
---------------------------------------- ----- --------- -------- ------------
Investing activities
Purchase of property, plant and
equipment (139) (302) (134)
Purchase of software assets - - (208)
--------- --------
Net cash used in investing activities (139) (302) (342)
---------------------------------------- ----- --------- -------- ------------
Financing activities
Finance costs (22) (20) (37)
Finance income 9 19 38
Principal paid on lease liabilities (598) (801) (1,418)
Increase/(decrease) in borrowings 389 (293) (139)
Decrease in redemption liability
on NCI pay-out - (506) (506)
Dividends paid to non-controlling
interests - (102) (102)
Purchase of treasury shares - - (240)
Equity dividends paid - (329) (521)
---------------------------------------- ----- --------- -------- ------------
Net cash utilised from financing
activities (222) (2,032) (2,925)
---------------------------------------- ----- --------- -------- ------------
Net increase/(decrease) in cash
and cash equivalents 2,291 (1,941) 173
Cash and cash equivalents at beginning
of period/year 4,620 5,227 5,227
Effect of foreign exchange rate
movements (28) 139 (780)
---------------------------------------- ----- --------- -------- ------------
Cash and cash equivalents at end
of period/year 6,883 3,425 4,620
---------------------------------------- ----- --------- -------- ------------
The notes to the accounts set out below form an integral part of
this unaudited condensed consolidated interim report.
Hydrogen Group Plc
Notes to the Unaudited Condensed Consolidated Interim Report
For the six months ended 30 June 2020
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 2020 (including comparatives) is presented in
GBP '000, and were approved and authorised for issue by the Board
of directors on 8 September 2020.
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 2019 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
unqualified, however includes a material uncertainty paragraph
relating to Going Concern.
2 Basis of preparation
The unaudited condensed consolidated interim report for the six
months ended 30 June 2020 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
2019, which were prepared in accordance with IFRSs as adopted by
the European Union.
These financial statements have been prepared under the
historical cost convention. 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 2019 other than in respect of changes in
policy to new standards as set out in note 3 below.
Hydrogen has an existing invoice discounting facility of
GBP18.0m, with a commitment to January 2022. This facility shall
continue until ended by either party giving to the other not less
than three months' written notice. During the year, the Group has
further extended its facilities by entering into new working
capital agreements with HSBC in the USA for USD1.5m, Australia for
AUD2.0m and Singapore for SGD1.7m.
The uncertainty as to the future impact of the COVID-19 pandemic
has been considered as part of the Group's adoption of the going
concern basis. Forecast stress testing scenarios, in light of
COVID-19, has demonstrated that the Group could withstand both a
material and prolonged decrease in revenue without breaching its
banking facilities. On this basis, the Directors have a reasonable
expectation that the Group will have sufficient cash flow and
available resources to continue operating for at least 12 months
from the approval date of these unaudited interim results.
3 Significant accounting policies
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 accounting policies have been applied consistently
throughout the Group for the purposes of preparation of the
condensed consolidated interim report. New items impacting the
Group where existing IAS20 requirements will be applied in the
annual financial statements for the year ended 31 December 2020
are:
Government grants
Government grants are transfers of resources to an entity by
Government in return for past or future compliance with certain
conditions relating to the operating activities of the entity.
Government assistance is action by Government designed to provide
an economic benefit that is specific to an entity or range of
entities qualifying under certain criteria. The Group recognises
Government grants only when there is reasonable assurance that the
entity will comply with the conditions attached to them and the
grants will be received. Government grants are recognised in profit
or loss over the periods in which the grants are intended to
compensate. Any grants received in advance will be recognised as an
asset on the Company Statement of Financial position.
4 Segment reporting
(a) Revenue, gross profit and operating profit/(loss) by
discipline
For management purposes, the Group is organised into the
following three operating segments based on the geography of the
business unit: EMEA (covering Europe, Middle East and Africa); USA;
and APAC (covering Asia and Australia). The operating segments
noted reflect the information that is regularly reviewed by the
Group's Chief Operating Decision Maker which is the Board of
Hydrogen Group plc. All operating segments have similar economic
characteristics and share a majority of the aggregation criteria
set out in IFRS 8:12.
30 June 2020 30 June 2019 31 December 2019
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 32,548 4,375 8,473 15 45,410 49,890 4,084 10,082 15 64,071 93,160 7,733 20,354 30 121,277
Gross profit 6,533 1,621 3,531 15 11,700 8,556 1,920 4,856 15 15,347 16,146 3,496 9,740 30 29,412
Depreciation
and
amortisation (398) (12) (232) (45) (687) (457) (5) (378) (45) (885) (640) (16) (652) (89) (1,397)
Other income 263 - - - 263 263 - - - 263 526 - - - 526
Operating
profit/(loss)
before
exceptional
items 900 (78) 87 (444) 465 2,551 271 (317) (774) 1,731 4,652 9 (132) (1,962) 2,567
Exceptional
items (4) - (30) (245) (279) - - - (283) (283) (12) - (28) (835) (875)
Operating
profit /(loss) 896 (78) 57 (689) 186 2,551 271 (317) (1,057) 1,448 4,640 9 (160) (2,797) 1,692
-------- -------- -------- -------- --------- -------- -------- -------- -------- --------- -------- -------- -------- -------- ---------
Finance costs (52) (64) ( 108)
Finance income 9 19 38
Profit/(loss)
from associate (64) 45 66
--------- --------- ---------
Profit before
tax 79 1,448 1,688
--------- --------- ---------
Total Assets 6,537 2,924 5,386 22,711 37,558 14,387 2,487 6,868 19,787 43,529 7,275 2,233 5,328 23,525 38,361
Total
Liabilities (5,731) (678) (1,702) (5,335) (13,446) (9,461) (764) (3,148) (8,040) (21,413) (6,617) (480) (2,015) (5,733) (14,845)
Revenue reported above represents revenue generated from
external customers. There were no sales between segments in the six
months to 30 June 2020 (30 June 2019: Nil, 31 December 2019:
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 11% of
the entity's revenues with revenue of GBP5.4m, and approximately 2%
of the Group's NFI, included in the EMEA segment (30 June 2019: one
customer, revenue GBP10.2m, EMEA segment; 31 December 2019: one
customer, revenue GBP17.3m, 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
----------
2020 2019 2019 2020 2019 2019
----------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------- -------- -------- ----------- -------- -------- -----------
UK (GBP) 28,926 44,688 83,651 5,122 6,617 12,566
Rest of
World 16,484 19,383 37,626 6,578 8,730 16,846
---------- -------- -------- ----------- -------- -------- -----------
45,410 64,071 121,277 11,700 15,347 29,412
---------- -------- -------- ----------- -------- -------- -----------
(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
------------
2020 2019 2019 2020 2019 2019
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------ -------- -------- ----------- -------- -------- -----------
Permanent* 6,824 9,246 17,648 6,820 9,229 17,645
Contract 38,586 54,825 103,629 4,880 6,118 11,767
------------ -------- -------- ----------- -------- -------- -----------
45,410 64,071 121,277 11,700 15,347 29,412
------------ -------- -------- ----------- -------- -------- -----------
* 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
----------------------------------
2020 2019 2019
----------------------------------
GBP'000 GBP'000 GBP'000
---------------------------------- --------- -------- ------------
Restructuring costs 156 - 40
Impairment of loans - - 542
Right of use impairment reversal (122) - -
Professional fees 245 283 293
Total 279 283 875
----------------------------------- --------- -------- ------------
Restructuring costs relate primarily to the cost of
restructuring parts of our senior management team in the UK. In
line with prevailing practices, COVID-19 related Government Job
Retention scheme grants are not treated as exceptional items and
have been netted off the relevant employment costs. Impairment
reversal relates to change in value in use of previously impaired
lease. Professional fees relate to non-trading advisory costs. All
exceptional items are included within administrative expenses in
the Consolidated Statement of Comprehensive Income.
6 Taxation
The charge for taxation on profits for the six months amounted
to GBP0.10m (30 June 2019: GBP0.32m, 31 December 2019:
GBP0.39m).
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
------------------------------------------------
2020 2019 2019
------------------------------------------------
GBP'000 GBP'000 GBP'000
------------------------------------------------ ------------- ------------- -------------
Earnings
Profit/(loss) for the period/year attributable
to equity holders of the parent (11) 1,170 1,340
-------------------------------------------------
Adjusted earnings
Profit/(loss) for the period (11) 1,170 1,340
Add back: exceptional costs 279 283 875
------------------------------------------------- ------------- ------------- -------------
268 1,453 2,215
------------------------------------------------ ------------- ------------- -------------
Six months ended Year ended
30 June 30 June 31 December
2020 2019 2019
Number of shares Number Number Number
Weighted average number of shares
used for earnings per share 33,148,731 32,804,742 33,491,503
Dilutive effect of share plans 2,127,175 2,987,062 2,338,521
------------------------------------------------- ------------- ------------- -------------
Diluted weighted average number of
shares used to calculate fully diluted
earnings per share 35,275,906 35,791,804 35,830,024
------------------------------------------------- ------------- ------------- -------------
Basic profit/(loss) per share (0.03)p 3.57p 4.00p
Fully diluted profit/(loss) per share (0.03)p 3.27p 3.74p
Adjusted basic earnings per share 0.81p 4.43p 6.61p
Adjusted diluted earnings per share 0.76p 4.06p 6.18p
8 Cash flow from operating activities
Six months ended Year ended
30 June 30 June 31 December
2020 2019 2019
GBP'000 GBP'000 GBP'000
------------------------------------------- --------------------- -------- ------------
Profit before taxation 79 1,448 1,688
(Profit)/loss from associate 64 (45) (66)
Add back exceptional items 279 283 875
Profit before taxation and exceptional
items 61 1,686 2,497
Adjusted for:
Depreciation and amortisation 687 885 1,466
(Decrease)/increase in non-exceptional
provisions 15 (19) (58)
Interest paid on lease liabilities (30) (44) (71)
FX unrealised losses/(gains) (27) (20) 26
Share based payments 60 60 120
FX realised (gains)/losses (23) 22 49
Operating cash flows before movements
in working capital 1,104 2,570 4,029
(Increase)/decrease in receivables 3,226 (2,998) 2,433
Increase/(decrease) in payables (1,228) 988 (2,435)
Net cash inflow from operating activities
before exceptional items 3,102 560 4,027
Cash flows arising from exceptional
items (145) (137) (404)
Net cash inflow from operating activities 2,957 423 3,623
-------------------------------------------- --------------------- -------- ------------
9 Trade and other receivables
Six months ended Year ended
30 June 30 June 31 December
---------------------------------
2020 2019 2019
---------------------------------
GBP'000 GBP'000 GBP'000
--------------------------------- ----------- ----------- ------------
Trade receivables 10,325 13,064 11,151
Expected credit losses (300) (153) (123)
Contract assets 2,411 7,758 4,921
Prepayments 848 815 645
Other taxes and social security
costs - - 109
Other receivables
- due within 12 months 716 1,050 430
- due after more than 12 months 324 447 417
----------------------------------
14,324 22,981 17,550
--------------------------------- ----------- ----------- ------------
Current 14,000 22,534 17,133
Non-current 324 447 417
10 Trade and other payables
Six months ended Year ended
30 June 30 June 31 December
2020 2019 2019
As restated
GBP'000 GBP'000 GBP'000
Trade payables 1,534 1,224 1,216
Other taxes and social security
costs 1,172 1,670 998
Other payables 1,224 1,042 1,081
Accruals 6,156 10,858 8,018
10,086 14,794 11,313
11 Provisions
Leasehold
dilapidations Total
GBP'000 GBP'000
At 1 January 2019 384 384
New provision - -
Utilised (19) (19)
At 30 June 2019 365 365
New provision - -
Utilised (39) (39)
Restated as at 31 December 2019 326 326
New provision 15 15
At 30 June 2020 341 341
Current - -
Non-current 341 341
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 2020 186
Share of associate's loss (64)
As at 30 June 2020 122
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
2020 2019 2019
GBP'000 GBP'000 GBP'000
Amounts recognised to shareholders
in the period
Final dividend for the year ended
31 December 2019 of 0.0p per share
(2018: 1.0p per share) - 329 329
Interim dividend for the year ended
31 December 2020 of 0.0p per share
(2019: 0.6p per share) - - 192
Total - 329 521
Final dividend for 2018 of 1.0p per share recognised within the
year ended 2019 as this was declared post year end. No dividend has
currently been proposed for the year ended 31 December 2020.
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
2020 2019 2019
GBP'000 GBP'000 GBP'000
As at 1 January 236 2,255 2,255
Non-controlling interest pay-out - (506) (506)
Fair value adjustment (236) (993) (1,513)
Total - 756 236
Current - 300 -
Non-current - 456 236
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 non-controlling interest pay-outs.
15 Adjustments recognised on adoption of IFRS 16
During the year ended 31 December 2019, the Group adopted IFRS
16 with respect to the recognition and measurement of leases on a
fully retrospective basis.
The impact of this change in accounting policy on the
comparative figures is illustrated below:
2018 2017
GBP'000 GBP'000
Increase to Total Assets 2,468 3,893
Increase to Total Liabilities (1,878) (3,563)
Increase to Retained Earnings 590 330
Full details can be found in the audited financial statements
for the year ended 31 December 2019.
The impact on H1 2019 comparatives resulting from adjustments to
both tax and rent-free accruals are disclosed below:
Reported Restated
H1 2019 Adjustment H1 2019
GBP'000 GBP'000
Deferred tax asset 113 169 282
Current tax payable (263) 198 (65)
Trade and other payables (15,847) 1,053 (14,794)
Retained Earnings (510) 1,420 910
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IR SSDFWWESSEIU
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September 08, 2020 02:00 ET (06:00 GMT)
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