SINGAPORE (Aug 14): HRnetGroup announced earnings of $7.3 million for the 2Q ended June, down 10.3% from the $8.2 million reported a year ago.
This comes even as the recruitment firm achieved a record quarter of revenue, which grew 6.4% to $97.4 million in 2Q from $91.6 million a year ago on the increase in flexible staffing in Singapore, which substantially offset a reduction in revenue from professional recruitment.
As such, there was a shift towards higher gross profit contribution from flexible staffing which has a recurring nature, says the group in its regulatory filing on Monday.
The lower topline mainly resulted from initial public offering (IPO) expenses of $2.7 million which was incurred over the quarter, which caused net profit after tax (NPAT) to subsequently decline 7.4% to $8.9 million from $9.6 million in the previous year, where no IPO expenses were incurred.
Excluding the effect of IPO expenses and government subsidies, net of tax, the group’s NPAT would have grown by 22%, or by $2 million.
In line with the higher flexible staffing revenue in Singapore, subcontractor expenses grew by 10% to $63.5 million compared to a year ago.
The latest quarter’s results brings HRnetGroup’s earnings for the half year to $18.5 million, down 17% from $22.3 million in the previous year as a result of the IPO expenses incurred over the six-month period.
In line with the group’s expectations on the announced reduction in co-funding of the Wage Credit Scheme in Singapore, the amount of government subsidies declined by 46.4% $5.4 million in 1H17, compared to $10 million in the same period in 1H16.
As at end June, the group’s cash and cash equivalents stood at $279.2 million compared to $121.8 million at end-2Q16.
HRnetGroup says it expects the need for recruitment services to continue to increase in 2H17, and that it will continue to drive productive headcount and deepening of specialisations through its co-ownership structure.
The group says its expansion plan through M&A is “gaining good traction” through stronger brand visibility since its IPO, adding that it has been receiving enquiries and approaches on potential acquisition and collaboration opportunities.
Shares in HRnetGroup closed 0.6% lower at 82 cents on Monday.
