Recruitment firm Hydrogen Group increased net fee income by 9% in 2011.
Net fee income was approximately £30m last year and profit will be at the top end of expectations – suggesting a profit of £3.7m. The new pharmaceuticals business continued to build its income, while oil and gas income rose from £3.9m to £6.4m. These two operations account for 29% of net fee income having generated nothing in 2007. In the UK there were a greater number of contract placements as contract hiring fell back.
Hydrogen realised that it needed to diversify internationally even before the latest downturn in the recruitment cycle. International net fee income was 6% of the total in 2007 and it has risen to 36% in 2011. A Hong Kong office opened during 2011. The target is 50% of net fee income from international business.
This international expansion helped Hydrogen to remain profitable throughout the cycle and to grow even faster even though the UK business recovered strongly.
Net debt was £2.2m at the end of 2010 and it was slightly lower at the end of 2011. The dividend is likely to be maintained at 4.1p a share for the fourth year in a row.
At 84.5p a share, up 7p, Hydrogen is valued at £19.9m. The shares are trading on eight times 2011 earnings. Shore Capital has maintained its 2012 profit forecast at £4.2m despite the uncertain UK economy.
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