HYDG.L Regulatory News (HYDG)

29 Sep 2006 07:03

Hydrogen Group PLC29 September 2006 29 SEPTEMBER 2006 HYDROGEN GROUP (the "Company" or "Hydrogen") ADMISSION OF THE COMPANY'S ORDINARY SHARES TO TRADING ON AIM Placing of 1,724,138 Ordinary Shares, of 1p each, at 232 pence per share Market capitalisation of £52.28m Hydrogen Group, one of the UK's fastest growing specialist recruitmentconsultancies, today announces the issue price for its initial public offeringto institutional investors and the publication of its Admission Document inconnection with the admission to trading of its Ordinary Shares to AIM. OrielSecurities is the nominated adviser and corporate broker to the Company. O Oriel have agreed to procure persons to subscribe for 1,724,138 PlacingShares at the Placing Price of 232 pence per share, on behalf of the Company, toraise approximately £4.0 million (gross), and purchase 1,050,370 Sale Shares onbehalf of the Selling Shareholders to realise approximately £2.4 million(gross). O Hydrogen intends to use the net proceeds of the Placing, amounting toapproximately £3.3 million, to repay loans and to strengthen the balance sheetto fund future growth. O The Directors believe that the net proceeds of the Placing and Admissionwill allow the Group to continue its organic growth; access a wide range ofinvestors and raise the Group's general profile and status with clients,potential candidates and employees. Ian Temple, Executive Chairman, commented: "We are delighted to welcome new investors into Hydrogen, through our successfulIPO. Hydrogen is a fast growing, highly profitable company with a successful andlong standing management team in place. Our consultancies have a proven trackrecord of exploiting market opportunities within their niche markets and throughour multi brand strategy we believe we are well positioned to take advantage offuture growth opportunities in the recruitment market. Looking to the future, we believe we can continue to significantly outperformthe market through organic and acquisitive growth." KEY INFORMATION Introduction Hydrogen is a specialist recruitment consultancy, focused on mid to seniorprofessional talent hires to the financial services, commerce and industry andpublic sector markets. The Company has eight niche consultancies being ProjectPartners, Commerce Partners, Target Partners, Finance Professionals, AuditProfessionals, Law Professionals, HR Professionals specialising in recruitmentwithin their disciplines and Reflect, a human resources outsourcing consultancy. The Group services a wide range of blue chip and smaller corporate clients,including UBS, the BBC, BNP Paribas and Carphone Warehouse. Summary Financial Information The Group and its consultancies have achieved consistent growth, recording forthe year ended 31 December 2005 pro forma consolidated turnover of £59.5 million(2004: £36.4 million), net fee income of £19.9 million (2004: £14.9 million) andEBITA of £4.6 million (2004: £2.5 million). The audited accounts for the sixmonths to 30 June 2006 show that the Group performed ahead of budget with EBITAof £3.2 million and net fee income of £13.9 million, partly due to the number ofclients serviced jointly by PRO & Partners having increased from 8 per cent. ofthe total to 14 per cent. as part of the Group's cross selling strategy. Market opportunities Market surveys estimate the total value of the UK recruitment industry atbetween £20 billion and £23 billion. All the divisions of the Group work with either professionally qualified ortechnically strong mid to senior talent. The Directors believe this area of therecruitment market is more resilient and higher growth than traditionalrecruitment sectors enabling the Group to achieve above market growth. Hydrogen operates specialist recruitment consultancies principally focused onbusiness technologists and finance and accounting personnel. The Directorsbelieve the Group's consultancies are well placed to exploit the marketopportunity within these niche markets. O Business Technologists. The Directors believe the market opportunity forbusiness technologists is significant, given the buoyant demand across thepublic and private sectors and skill shortages caused by a reduced number ofgraduates and a reduced supply of experienced IT staff. O Accounting. Sources show demand for accounting specialists has beenrobust in recent years, driven by the restricted flow of newly qualifiedaccountants. Furthermore the growth in the UK banking sector has led toincreased employment opportunities in the financial services sector withincreased headcount numbers, wage inflation and increased employee turnover. O Legal Recruitment. The Directors believe that the law recruitment marketis currently extremely active due to the lack of newly qualified solicitors incertain key disciplines, a buoyant legal market and the aggressive expansion ofUS firms in the UK. Hydrogen has demonstrated an ability to establish new consultancies across arange of disciplines to achieve growth and establish new revenue sources. Key Strengths The Directors consider that the following are the Group's key strengths: O a proven business model providing talent and technical specialists; O a wide range of blue chip clients reducing any dependence on any singleclient and allowing for significant cross selling opportunity; O a focus on growing recruitment markets such as finance and accounting andhigh-end skilled IT placements; O it operates in markets which are structurally supply constrained anddriven by the confidence of white collar professionals rather than macroeconomic growth; O its employees' productivity rates are in line with the best in theindustry; O a strong operational and financial track record; O an experienced management team focused on delivering above market growth;and O a clear, well defined business strategy based on growing nicheconsultancies within a Group infrastructure. The Directors consider that the combination of these strengths differentiatesthe Group from its competitors and will enable it to maximise its opportunities. Reasons for Admission and use of proceeds The Directors believe that the net proceeds of the Placing and Admission will: O allow the Group to continue its organic growth; O enable the Group to continue to found new recruitment consultancies infast growing markets; O assist in recruiting, retaining and incentivising skilled employees; O enable the Group to access a wide range of investors; O raise the Group's general profile and status with clients, potentialcandidates and employees; and O facilitate the Group's strategy of expansion by acquisition should asuitable target be identified. History Hydrogen was formed in November 2005 when PRO (established 1997) and PartnersGroup (established 2000) were acquired and formally brought together by theexisting management teams, to give greater critical mass and a platform tomaximise the opportunities in the recruitment market place. Both businesses havewon numerous awards, individually being listed in the Sunday Times VirginAtlantic Fast Track 100 in 2005 and 2006. Enquiries: Hydrogen Group 020 7240 2500 Ian Temple, Executive Chairman Janet Fricker, Chief Financial Officer Hudson Sandler 020 7796 4133 Andrew Hayes Kate Hough This information is provided by RNS The company news service from the London Stock Exchange