UPDATE: Hydrogen Group 1H Helped By Return Of Financial Hiring

(Adds executive comments, share price) By Rachael Gormley Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Professional recruitment business Hydrogen Group PLC (HYDG.LN) said Thursday first-half trading was ahead of its own expectations, boosted by its growing overseas business and the resurgence of hiring in the financial services sector. "There's definitely been a pick up in permanent recruitment, especially in financial services," Executive Chairman Ian Temple told Dow Jones Newswires. "We're back to 2008 levels of activity," he added. Temple said that fees from interim contractors currently make up around 45% of the business, down slightly from last year, because of the increased permanent hiring. However Temple added that with competition still tough and clients continuing to keep a sharp eye on their finances, margins remain "pretty slack." "People are still being very careful with money and we haven't yet seen a big uplift [in margins] at the moment," he said. "That will be later in the cycle towards next year," he added. The recruiter didn't give details of its own expectations but analysts forecast 2010 pretax profit of GBP1.6 million on revenue of GBP75.6 million, according to a FactSet poll of two analysts. In a trading update on the first half, Hydrogen said group net fee income was "significantly ahead" of the GBP7.9 million posted in the same period a year earlier, although Temple added that after such a tough period in 2009, the comparative figures are flattering. The company said net fee income, or gross profit, from its international operations now makes up around 35% of the group total compared with 19% last year, boosted by the new Singapore office that has performed ahead of expectations. Hydrogen said it expects to be broadly cash neutral at the end of the first half, compared with a net cash position of GBP3.1 million at the end of December, as a result of its increased workload and increased debtor book. At 1214 GMT, shares were up 7.5 pence, or 6%, at 132 pence, while the wider AIM index was down 1.4%. -By Rachael Gormley, Dow Jones Newswires; 44-20-7842-9308; rachael.gormley@dowjones.com (END) Dow Jones Newswires July 01, 2010 08:21 ET (12:21 GMT)