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NFI decreases 12% in H1 2016 for Hydrogen Group

Hydrogen Group has announced its unaudited results for the half year ended 30th June 2016.

Group revenue for the period declined by 9% (11% in constant currency) to £59.4m (H1 2015: £65.9m). Group NFI declined by 12% (12% in constant currency) to £8.9m (H1 2015: £10.1m). The Group has moved back into growth with a 6% NFI increase on the second half 2015 NFI of £8.5m.

44% of the Group's NFI for this period was denominated in currencies other than Sterling (H1 2015: 38%), with the Euro, Singapore Dollars, United States Dollars, Australian Dollars and Malaysian Ringgit being the most significant. Foreign currency income, where applicable is naturally hedged against foreign currency expenditure. The Euro is the most significant currency and any excess over expenditure is hedged by drawing down on the Group's invoice finance facility and converting into sterling on the same day.

The split between contract and permanent NFI for H1 2016 was 60% contract; 40% permanent (H1 2015: 55% contract, 45% permanent).

During 2015 the Group reduced operating costs to bring practices back into profit. Energy remained profitable as a result, even though the NFI in EMEA energy was down 25% to £0.6m (H2 2015: £0.8m). Administration costs, which are predominantly based in GBP, for the six-month period were £8.7m (H1 2015: £10.2m), 15% down on the comparative period and 6% down on the second half of 2015 (H2 2015: £9.0m). With the EU Referendum in favour of an exit from the EU, the currency swing, particularly the Euro has generated a foreign exchange gain for the six-month period of £0.14m (H1 2015: £(0.1)m).

With NFI back into growth and a lower cost base post restructure, the Group operating profit for the period was £0.3m (H1 2015: loss before exceptional items, £0.1m). Exceptional costs were nil for the six-month period (H1 2015: £1.8m). Profit before tax was £0.3m (H1 2015: £1.9m) loss after exceptional items).  Basic earnings per share was 0.09p (H1 2015: (8.18)p). Fully diluted earnings per share was 0.08p (H1 2015: (8.12)p).

In EMEA the life sciences practice showed 31% growth to £1.7m (H2 2015 £1.3m). The contract business was the main driver with improved deal flow from its client base plus new client wins. Business Transformation showed respectable growth of 8% to £2.6m (H2 2015: £2.4m) driven by growth with existing and new clients in both our London and Edinburgh offices. Legal practice permanent activity was soft in the lead up to the EU Referendum as clients held back on making decisions on placements until after the outcome. NFI was down 12.5% to £1.4m when compared to a typically stronger H2 2015 of £1.6m but was flat compared to H1 2015 of £1.4m. The technology practice has just started to move into growth as we have refocussed its business proposition but NFI was broadly similar to H2 2015 at £0.6m. In the US we started a Life Science contract business in 2015 and this has really gained traction offsetting the decline in Energy revenues. NFI has increased 100% to £0.2m (H2 2015: £0.1m)

Asia has shown growth in the first half of 2016 compared to H2 in 2015. NFI increased 18% to £1.3m (H2 2015: £1.1m). Main contributors to growth were the energy practice, and the business transformation practice where the contractor book, started in 2015, is building momentum. NFI for Australia is down 25% to £0.3m (H2 2015: £0.4m). Action was taken to reduce the cost base which has helped the operation to move into profit in 2016.

Ian Temple, CEO of Hydrogen Group plc, said, "The first half of 2016 has seen a stabilisation of the business and a move back into NFI growth compared to H2 2015.  We have started hiring in the areas where we have identified sustainable growth opportunities.

“We are implementing a new vision for the business focussing resource on building market leading niche businesses. The roll out will continue into Q3 but is already generating results." 

Picture courtesy of Pixabay

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