Hydrogen Group maintains profit expectations amid trading headwinds

Specialist recruitment company Hydrogen Group updated the market on its trading for the year ended 31 December on Thursday, reiterating that trading conditions were adversely impacted in the UK by both political uncertainty and the impact of the proposed changes to the IR35 legislation on clients' contract hiring plans.

The AIM-traded firm said conditions were also affected by the public disorder and demonstrations in Hong Kong, with those headwinds continuing throughout the fourth quarter.

It said that in the US, year-on-year growth levels were strong, although it experienced some reduction in quarter-on-quarter growth rates, as recent investment in both new staff and physical infrastructure was onboarded and bedded in.

Overall, the board said it believed that the market provided “significant and sustainable” growth opportunities moving forward.

As a result, net fee income for the year totalled around £29.4m, down from £30.5m year-on-year.

“Notwithstanding these challenges, the group's underlying profit before tax for the year will be broadly in line with current management expectations,” the board said in its statement.

The group said its balance sheet remained “strong”, with net cash as at 31 December totalling £4.5m, down from £4.9m year-on-year, net of payments during the year of about £1.3m in respect of dividends, share buybacks, and earn-out payments in relation to the acquisition of Argyll Scott.

At 0921 GMT, shares in Hydrogen Group were down 4.11% at 45.55p.