LONDON (Alliance News) - Recruitment company Hydrogen Group PLC posted a wider pretax loss for the first half as it felt the effect of the downturn in the oil and gas industry on its net fee income, prompting it to scrap its dividend.
Hydrogen said its net fee income for the six months to the end of June fell 31% to GBP10.1 million, almost entirely driven by a 62% fell in oil and gas net fee income to GBP1.7 million and by a 22% decline in net fee income from its largest customer.
Due to the lower levels of net fee income, the group has been stripping out costs to mitigate the impact and has booked a GBP1.8 million exceptional charge related to this restructuring in the first half, up from GBP1.5 million a year earlier.
Still, despite its administrative costs being brought down 28% by the restructuring activities, its pretax loss in the half widened to GBP1.9 million from GBP1.1 million, as total revenue fell to GBP65.9 million from GBP87.3 million. It expects the cost savings to flow through in the second half.
Due to the issues, the group has scrapped its interim dividend, having paid out 1.5 pence a year earlier.
"With 30% our first half 2014 net fee income in upstream oil and gas the sustained and material drop in the price of oil was bound to have a substantial impact. We have managed to cope with the challenge with our strong and diversified business model producing a break-even underlying performance in difficult circumstances," said Chief Executive Ian Temple.
Shares in Hydrogen plunged on the news, down 19% to 43.05 pence to be the worst performer in the AIM All-Share in early trade.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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