4th Mar 2015 10:51
LONDON (Alliance News) - Shares in recruitment firm Hydrogen Group PLC dropped Wednesday after it announced its Chief Executive Officer Tim Smeaton and Finance Director John Glover have both stepped down with immediate effect, as the company reported only a small profit for 2014, hit by a fall in revenue, and restructuring costs associated with its turnaround plan.
In a statement, the company said Ian Temple, co-founder of Hydrogen has now moved from the role of chairman to full time CEO, while a search has begun to replace Glover. Stephen Puckett, previously senior independent director, has been appointed as non-executive chairman.
"The changes to the board which result from these resignations are intended to ensure that the board delivers on its key objectives of improving profitability, increasing cash generation and growing the group's revenue," said Puckett in the statement.
The news comes, as the company, which provides recruitment services for mid to senior level professional staff, posted a pretax profit of GBP385,000 in 2014, compared with a GBP2.4 million profit the year before, as revenue fell by 6.7% to GBP169.4 million, from GBP181.6 million and it booked GBP2.0 million in restructuring costs, largely from redundancy payouts. Net fee income for the full year was 11.8% lower at GBP28.2 million.
Excluding exceptional costs, its pretax profit was flat year-on-year at GBP2.4 million.
The company left its dividend unchanged for 2014 at 4.6 pence, in line with last year's payout.
"Hydrogen has been through a difficult period of restructuring and cost reductions and is now firmly focused on its core opportunities. The benefit of the cost reductions is apparent in the improved underlying profitability in the second half of 2014. Hydrogen's plan for 2015 is to concentrate on sustainable, profitable business," said Puckett.
Hydrogen shares were down 8.0% mid-morning Wednesday, trading at 65.75 pence.
During 2014, Hydrogen took action to streamline the business and reduce operating costs, a move which it said helped improve profitability in the second half of the year. The restructuring process included senior management changes, a review of sales and operational performance, alongside a review of where to further invest, scale back or close underperforming businesses.
Hydrogen said that in the second half of the year, there were some positive and encouraging indicators - experiencing growth in its Legal practice, more than doubling its net fee income from its US operations and continuing development of its presence in Malaysia by entering into an agreement with a local investor.
Puckett said the drop in oil prices has already hit hiring activity in the oil and gas sector. He said it's not yet clear whether skill sets developed in the oil and gas sector will be transferable to other technical projects, stating that the "full impact" in 2015 is therefore unknown.
"However, the board sees opportunities for development and will continue to invest in areas where growth can be delivered at acceptable levels of profitability," said Puckett.
"Despite general economic uncertainties and sector-specific disruption resulting from the fall in oil prices, the board sees opportunities for development and will continue to invest in areas where growth can be delivered at acceptable levels of profitability," he added.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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