We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Harvey Nash Grp | LSE:HVN | London | Ordinary Share | GB0006573546 | ORD 5P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 128.50 | 125.50 | 131.50 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
TIDMHVN
RNS Number : 1412L
Harvey Nash Group PLC
29 September 2016
HARVEY NASH GROUP PLC
("Harvey Nash" or "the Group")
Unaudited Half Year Results for the six months ended 31 July 2016
Harvey Nash, the technology recruitment and offshore services group, announces its half year results, which are in line with the Board's expectations and show strong cash flows, despite increasing revenues, with a 5% uplift in the Group's interim dividend.
Financial Results
31 July 2016 31 July 2015 Change -------------------------------- --------------- --------------- ---------- Continuing operations Revenue GBP377.7m GBP328.7m + 14.9% Gross profit GBP47.3m GBP44.4m + 6.5% Operating profit(1) GBP4.2m GBP5.2m - 19.0% Profit before tax(1) GBP3.8m GBP4.8m - 20.4% Earnings per share(1) 3.58p 4.82p - 25.7% -------------------------------- --------------- --------------- ---------- Total operations -------------------------------- --------------- --------------- ---------- Statutory profit before tax(1) GBP3.8m GBP4.0m - 6.5% Earnings per share(1) 3.58p 3.85p - 7.0% Interim dividend 1.565p 1.490p + 5.0% Net borrowings GBP6.8m GBP15.7m + GBP8.9m
H1 Highlights
-- Revenue increased by 14.9% (constant currency +8.0%) overall and gross profit by 6.5% (constant currency +0.8%)
-- Strong operating cash inflow of GBP15.2m with net borrowings reduced by GBP8.9m on prior year -- Interim dividend increased by 5.0% to 1.565p -- Operating profit in the UK & Ireland impacted by the EU referendum
-- Operating profit in Europe up by 6.6% (constant currency -4.3%) with strong performances in Sweden and the Benelux
-- Operating profit in the USA held back by 7.3% increase in fee-earners and record comparatives from the prior year
-- Strong results reported in Japan and Australia, offset by weakness in Hong Kong and currency headwinds in Vietnam
Albert Ellis, Chief Executive Officer, said:
"The six months under review have produced year-on-year growth in revenue and gross profit, as well as strong cash generation. An increased interim dividend, despite the challenges of the first half, reflects the Board's confidence in the resilience of the Group's business model and its strong balance sheet.
"Although mindful of macro-economic challenges, client demand for new hires continues to be driven by digital transformation, cybersecurity and data analytics and the Group's strategy remains the prudent expansion of fee-earning capability and growth in market share, coupled with tight control of costs and working capital."
ENQUIRIES:
Harvey Nash Albert Ellis (CEO) Tel: 020 7333 and Richard Ashcroft 2635 (CFO) Hudson Sandler Michael Sandler / Tel: 020 7796 Cat Valentine 4133
Chairman's statement
The Group has delivered revenue and gross profit growth in all principal geographic regions outside the UK & Ireland for the six months ended 31 July 2016. The UK & Ireland was slightly below the prior year's record results.
Growth in European contract managed services and a favourable Euro exchange rate lifted Group revenue during the period to GBP377.7m (2015: 328.7m(2) ), an increase of 14.9% compared to continuing operations in the prior year. The constant currency increase was 8.0%(3) .
Gross profit from continuing operations increased by 6.5% to GBP47.3m (2015: GBP44.4m(2) ), reflecting a change in the mix of revenue. On a constant currency basis the increase was 0.8%(3) .
Operating profit of GBP4.2m was 19.0%1(,2) lower than the prior year, mainly due to the impact of uncertainty in the UK caused by the EU referendum. This significantly affected higher margin permanent recruitment fees, the impact of which flowed directly to operating profits. This gave rise to the inclusion of a number of one-off costs, relating to the reduction of headcount in the UK. There were also some one-off costs in Germany relating to the disposal of Nash Technologies in December 2015, which also held back operating profit at the Group level.
The strategic review in 2015, which resulted in the disposal of Nash Technologies GmbH and the closure of the oil and gas practice, has de-risked the Group and the balance sheet has been strengthened. The focus on the core business combined with tight control of working capital resulted in stronger cash flows.
Statutory profit before tax of GBP3.8m (2015: GBP4.0m) was GBP0.2m lower than the prior period and earnings per share were 7.0% lower at 3.58p (2015: 3.85p). The tax charge for the year was GBP1.2m (2015: GBP1.2m(2) ), reflecting a slight increase in the effective tax rate to 31.3% (2015: 30.8%).
Balance sheet
The balance sheet at 31 July 2016 was strengthened by an increase in the value of non-sterling denominated assets to GBP57.5m compared to 31 January 2016 (GBP54.1m). Intangible fixed assets increased by 6.5% to GBP53.8m (2015: GBP50.5m) due to the appreciation of the Euro and the US Dollar against Sterling.
Successful management of working capital significantly improved the strength of the balance sheet, compared to the prior year, as net borrowings reduced by GBP8.9m to GBP6.8m (2015: GBP15.7m), despite the growth in revenue. Debtor days were 8.3% lower at 41.8 days, (2015: 45.6 days).
Net trade receivables were up 5.9% to GBP112.8m (2015: GBP106.6m), through a combination of the appreciation of non-sterling debtors by GBP15.8m, a reduction of GBP9.6m linked to improved cash collection and the disposal of Nash Technologies (2015: GBP3.7m). Trade and other payables increased to GBP131.3m (2015: GBP112.1m), due to the appreciation of non-sterling payables and the favourable timing of contractor payments. Contingent consideration reduced by GBP1.7m to GBP0.6m (2015: GBP2.3m), as the final tranche of consideration for the Group's acquisition in Belgium was settled.
Cash flow
Net cash generated from operating activities improved materially on the prior year to GBP1.5m (2015: outflow GBP13.6m), a positive reversal of GBP15.1m, mainly due to improvements in working capital but also reflecting a swing away from working capital absorbing services. This was reflected in the net cash outflow on working capital of GBP1.4m in the period, compared to the outflow of GBP16.3m in the prior year.
Cash absorbed by investing activities increased by GBP3.9m to GBP6.5m (2015: GBP2.6m), as deferred restructuring commitments arising out of the prior year of GBP4.0m were settled and a loan of GBP2.0m advanced in accordance with the agreement to dispose of Nash Technologies GmbH. This outflow was mitigated by a reduction of GBP0.7m in capital expenditure across the Group to GBP0.5m (2015: GBP1.2m), which mainly related to routine technology and software infrastructure. Tax paid was GBP1.9m, 25.7% lower than the prior year (2015: GBP2.6m), with reduced payments in the UK and parts of Europe.
The overall inflow of cash resulted in the Group's net borrowings reducing by GBP8.9m to GBP6.8m at 31 July 2016, compared to the same date in the prior year (2015: GBP15.7m).
Dividend
The Board proposes a 5.0% in the interim dividend to 1.565p per share (2015: 1.490p per share), which will be paid on 18 November to shareholders on the register on 21 October 2016.
Operational review
United Kingdom & Ireland
The results from the UK and Ireland were mixed with demand for permanent hiring subdued, compared to the strong demand experienced in the six months to 31 July 2015. The uncertainty arising from the EU Referendum began to have an impact on demand from the fourth quarter ended 31 January 2016. This resulted in a swing in UK operating profits from record levels in the first half to 31 July 2015 to lower levels of profit exiting the second half into 2016, reflected in the split of operating profit in the proportion 64:36 over the two halves of the year to 31 January 2016. This UK wide slowdown determined the lower run rates in permanent recruitment experienced in the UK & Ireland for the period leading up to the EU referendum vote.
Despite this, contractor numbers were steady and revenue increased by 7.3% to GBP125.2m (2015: GBP116.7m(2) ). Gross profit of GBP18.4m was lower (2015: GBP18.8m(2) ) due to the lower levels of permanent recruitment. Accordingly operating profit of GBP1.6m (2015: GBP2.1m(1,2) ) was also lower than the prior year. On a constant currency basis(3) , revenue increased 6.1%(2) , gross profit decreased by 3.2%(2) and operating profit was 26.9%(1,2) lower.
Uncertainty impacted demand for executive recruitment in areas closely aligned with the public sector and financial services. A number of one-off costs, relating to the reduction of headcount in the executive search business, were also included in the UK operating profit.
Growth came from offices outside London. Gross profit in the UK regions and Scotland grew by 6.5%, while London declined by 8.3% and Dublin was 11.6% lower. However, following the vote for Brexit, gross profit from permanent placements in London improved by 24.5% in July compared to the prior year, which is encouraging as the business enters the second half.
Mainland Europe
Results from Europe were lifted by growth in the Nordics and Benelux with generally favourable currency tailwinds. In constant currency, operating profit was held back by investment in fee-earning headcount and management, to achieve critical mass in subscale locations, which offer the prospect of future growth. There were also one-off costs relating to the realignment of the German recruitment business following the disposal of Nash Technologies GmbH in the prior year.
Revenue in Mainland Europe increased by 20.9% to GBP218.6m (2015: GBP180.8m(1) ), whilst gross profit increased by 12.1% to GBP17.8m (2015: GBP15.9m(2) ) and operating profit increased by 6.6% to GBP2.5m (2015: GBP2.3m(1,2) ). On a constant currency basis(3) , revenue increased by 10.5%(2) , gross profit increased by 3.1%(2) and operating profit declined by 4.3%(1,2) .
The Benelux countries enjoyed relatively favourable trading conditions with an improvement in the Netherlands in particular, which reported strong gross profit growth of 27.3% (15.8%(3) ). The majority of this growth was derived from new client wins in contract recruitment and managed services with a 57.9% increase in permanent recruitment.
In the Nordics, Sweden posted a 16.6% increase in gross profit (6.7%3), driven mainly by specialist technical recruitment while executive recruitment was subdued with a decline of 6.6%(3) . Growth also came from smaller offices in Denmark (+141.2%(3) ) and Norway (+19.5%(3) ), where the turnaround has been encouraging and the investment in management and fee-earners is beginning to pay off.
In Central Europe, revenue and operating profit were slightly lower than the prior year, despite the currency tailwinds. In Switzerland weak demand for permanent recruitment was linked to the strength of the currency, although tight control of costs resulted in a small improvement in the operating profit. In Germany, gross profit was 5.3%(2,3) lower than the same period last year, due to shorter than expected temporary contract durations. This has resulted in lower contractor numbers partly mitigated by a strong increase in permanent revenue. The disposal of Nash Technologies GmbH required some limited restructuring with management re-aligned and back office synergies identified.
Rest of the World
Revenue from the Rest of the World (USA and Asia Pacific) increased by 8.4% to GBP33.8m (2015: GBP31.2m), whilst gross profit increased by 13.7% to GBP11.1m (2015: GBP9.7m). Operating profit was lower at 0.1m (2015: GBP0.7m) held back by a bad debt write off in the USA, weakness in China and an adverse currency variance in Vietnam. On a constant currency basis(3) , revenue increased by 0.3%, gross profit increased by 5.0% and operating profit would have been GBP0.1m.
Strong market conditions in the USA favoured permanent technology recruitment and executive search. The swing from temporary to permanent recruitment was significant, as client demand for software development skills particularly on the West Coast, continued to grow. Gross profit increased by 18.3% on the prior year, despite a decline in overall contractor numbers. Operating profit was 19.3% lower than the prior year partly due to a 7.3% increase in fee earners and record comparative figures.
In Asia Pacific, strong growth in executive recruitment revenue in Japan (+147.2%(3) ) and in technology recruitment in Australia (112.4%(3) ) offset weakness in Hong Kong, where it was down by 30.4%. Recruitment profits in Asia were GBP0.1m better than in the prior year, despite steady investment in the new Singapore office. The majority of the decline in profits came from Vietnam, where costs were impacted by adverse currency movements.
Board changes
After eleven years with the Group, Richard Ashcroft has notified the company of his intention to step down from the Board during the course of 2017. The Board will commence the process of finding a successor and Richard will remain in post until a smooth and orderly transition has been successfully completed.
Outlook
We are satisfied with the overall first half performance, which was in line with our expectations despite the challenges faced throughout the period. As we begin the seasonally stronger second half of the year, UK conditions remain challenging but broadly stable while there are opportunities for growth in mainland Europe, the USA and Asia. Our focus is on productivity in territories where markets are not supportive, while maintaining and expanding capacity where we are confident good growth can be achieved.
With the balance sheet strengthened by the focus on the core business and strong cash generation, as well as an expectation that the UK market now appears more stable, the Board has increased the interim dividend and is confident that the Group is on track to achieve full year expectations.
Consolidated Income Statement
Notes Unaudited Unaudited Audited 6 months 6 months 12 months ended ended ended 31 July 31 July 31 January 2016 2015 2016 GBP'000 GBP'000 GBP'000 ------------------------- ------ ---------- ------------------------ ------------ Continuing operations Revenue 4 377,653 328,722 676,524 Cost of sales (330,369) (284,310) (586,236) ------------------------- ------ ---------- ------------------------ ------------ Gross profit 4 47,284 44,412 90,288 Total administrative expenses (43,110) (39,136) (80,136) ------------------------- ------ ---------- ------------------------ ------------ Operating profit before non-recurring items 4 4,174 5,276 10,152 Non-recurring items 12 - (120) (228) ------------------------- ------ ---------- ------------------------ ------------ Operating profit 4,174 5,156 9,924 Finance costs (390) (403) (849) ------------------------- ------ ---------- ------------------------ ------------ Profit before tax 4 3,784 4,753 9,075 Income tax expense 5 (1,184) (1,246) (2,240) ------------------------- ------ ---------- ------------------------ ------------ Profit attributable to the equity holders of the parent Company 2,600 3,507 6,835 ------------------------- ------ ---------- ------------------------ ------------ Discontinued operations Loss from discontinued operations 13 - (707) (14,439) Profit/(loss) for the year attributable to equity holders of the parent Company 2,600 2,800 (7,604) Earnings per share from continuing operations - Basic 6 3.58p 4.82p 9.42p - Diluted 6 3.58p 4.80p 9.38p Earnings/(loss) per share from continuing and discontinued operations - Basic 6 3.58p 3.85p (10.48)p - Diluted 6 3.58p 3.83p (10.44)p ------------------------- ------ ---------- ------------------------ ------------
Consolidated Statement of Comprehensive Income
Unaudited Unaudited Audited 6 months 6 months 12 months ended ended ended 31 July 31 July 31 January 2016 2015 2016 GBP'000 GBP'000 GBP'000 -------------------------------------- ---------- ---------- ------------ Profit/(loss) for the period 2,600 2,800 (7,604) Items which may be subsequently reclassified into income: -------------------------------------- ---------- ---------- ------------ Foreign currency translation differences 2,406 (3,070) (220) -------------------------------------- ---------- ---------- ------------ Other comprehensive expense for the period 2,406 (3,070) (220) Total comprehensive income/(expense) for the period attributable to the owners of the parent Company 5,006 (270) (7,824) -------------------------------------- ---------- ---------- ------------
Consolidated Balance Sheet
Notes Unaudited Unaudited Audited 31 July 31 July 31 January 2016 2015 2016 GBP'000 GBP'000 GBP'000 ----------------------------------- ------ ---------- --------------------- ------------ ASSETS Non-current assets Property, plant and equipment 9 3,334 4,057 3,583 Intangible assets 9 53,811 50,546 50,688 Investment 253 215 238 Deferred tax assets 2,503 2,758 2,343 Loan receivable 13 1,937 - 1,755 61,838 57,576 58,607 Current assets Cash and cash equivalents 7 10,935 9,787 18,506 Trade and other receivables 136,325 137,268 127,331
----------------------------------- ------ ---------- --------------------- ------------ 147,260 147,055 145,837 ----------------------------------- ------ ---------- --------------------- ------------ Total assets 209,098 204,631 204,444 ----------------------------------- ------ ---------- --------------------- ------------ LIABILITIES Current liabilities Trade and other payables (131,333) (112,078) (129,728) Current income tax liabilities (1,614) (1,646) (1,486) Borrowings 7 (17,754) (25,463) (18,336) Deferred consideration - (1,855) - Provisions for liabilities and charges (115) (145) (145) (150,816) (141,187) (149,695) ----------------------------------- ------ ---------- --------------------- ------------ Net current (liabilities) / assets (3,556) 5,868 (3,858) ----------------------------------- ------ ---------- --------------------- ------------ Non-current liabilities Deferred consideration (596) (419) (472) Deferred tax liabilities (159) (271) (159) (755) (690) (631) Total liabilities (151,571) (141,877) (150,326) ----------------------------------- ------ ---------- --------------------- ------------ Net assets 57,527 62,754 54,118 ----------------------------------- ------ ---------- --------------------- ------------ Capital and reserves attributable to equity shareholders Share capital 3,673 3,673 3,673 Share premium 8,425 8,425 8,425 Fair value and other reserves 15,079 15,079 15,079 Own shares held (914) (1,032) (1,032) Cumulative translation reserve 4,377 (879) 1,971 Retained earnings 26,887 37,488 26,002 ----------------------------------- ------ ---------- --------------------- ------------ Shareholders' funds and total equity 57,527 62,754 54,118 ----------------------------------- ------ ---------- --------------------- ------------
Consolidated Statement of Changes in Equity
Share Share Fair Own Cumulative Retained Total capital premium value shares translation earnings and held reserve other reserves GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 ------------------ ---------- ---------- ----------- --------- -------------- ----------- -------- 1 February 2015 3,673 8,425 15,079 (1,032) 2,191 36,262 64,598 ------------------ ---------- ---------- ----------- --------- -------------- ----------- -------- Profit for the period - - - - - 2,800 2,800 Currency translation adjustments - - - - (3,070) - (3,070) ------------------ ---------- ---------- ----------- --------- -------------- ----------- -------- Total recognised income and (expense) for the period - - - - (3,070) 2,800 (270) Dividends paid - - - - - (1,574) (1,574) 31 July 2015 3,673 8,425 15,079 (1,032) (879) 37,488 62,754 ------------------ ---------- ---------- ----------- --------- -------------- ----------- -------- 1 August 2015 3,673 8,425 15,079 (1,032) (879) 37,488 62,754 ------------------ ------ ------ ------- -------- ------ --------- --------- Profit for the period - - - - - (10,404) (10,404) Currency translation adjustments - - - - 2,850 - 2,850 ------------------ ------ ------ ------- -------- ------ --------- --------- Total recognised income and (expense) for the period - - - - 2,850 (10,404) (7,554) Dividends paid - - - - - (1,082) (1,082) 31 January 2016 3,673 8,425 15,079 (1,032) 1,971 26,002 54,118 ------------------ ------ ------ ------- -------- ------ --------- --------- 1 February 2016 3,673 8,425 15,079 (1,032) 1,971 26,002 54,118 ------------------ ------ ------ ------- -------- ------ -------- -------- Profit for the period - - - - - 2,600 2,600 Currency translation adjustments - - - - 2,406 - 2,406 ------------------ ------ ------ ------- -------- ------ -------- -------- Total recognised income for the period - - - - 2,406 2,600 5,006 Employee share option and bonus plan - - - 118 - - 118 Dividends paid - - - - - (1,715) (1,715) 31 July 2016 3,673 8,425 15,079 (914) 4,377 26,887 57,527 ------------------ ------ ------ ------- -------- ------ -------- --------
Consolidated Cash Flow Statement
Notes Unaudited Unaudited Audited 6 months 6 months 12 months ended ended ended 31 July 31 July 31 January 2016 2015 2016 GBP'000 GBP'000 GBP'000 ------------------------------------------------------------- ------ ---------- ---------- ------------ Profit before taxation (before non-recurring items) 3,784 4,500 9,303 Adjustments for: * Discontinued operations trading losses - - (838) * Depreciation 622 739 1,459 * Amortisation 35 37 75 * Loss on disposal of fixed assets - - 26 * Finance costs 392 403 849 * Non-recurring items 12 - (435) (69) Operating cash flows before changes in working capital 4,833 5,244 10,805 ------------------------------------------------------------- ------ ---------- ---------- ------------ Changes in working capital (excluding the effects of acquisition and exchange differences on consolidation) * Decrease/(increase) in trade and other receivables 173 (24,347) (7,016) * (Decrease)/increase in trade and other payables (1,542) 8,299 12,823 * (Decrease) in provisions for liabilities and charges (30) (269) (262) Cash inflow/(outflow) from operating activities 3,434 (11,073) 16,350 Income tax paid (1,906) (2,566) (3,348) ------------------------------------------------------------- ------ ---------- ---------- ------------ Net cash generated from/(absorbed by) operating activities 1,528 (13,639) 13,002 --------------------------------------------------------------------- ---------- ---------- ------------ Cash flows from investing activities Purchases of property, plant and equipment 9 (462) (1,191) (1,972) Capitalised software development costs 9 - (1,383) (2,108) Disposal of subsidiary undertakings 13 (5,991) - (2,690) Settlement of deferred consideration - - (2,070) Net cash used in investing
activities (6,453) (2,574) (8,840) ------------------------------------------------------------- ------ ---------- ---------- ------------ Cash flows from financing activities Proceeds from employee share 60 - - options exercise Dividends paid to group shareholders 8 (1,715) (1,574) (2,656) Interest paid (392) (403) (849) (Decrease)/increase in borrowings (1,450) 9,373 (898) Net cash generated from/(used in) financing activities (3,497) 7,396 (4,403) ------------------------------------------------------------- ------ ---------- ---------- ------------ (Decrease)/increase in cash and cash equivalents (8,422) (8,817) (241) Cash and cash equivalents at the beginning of the period 18,506 18,996 18,996 Exchange gain/(loss) on cash and cash equivalents 851 (392) (249) ------------------------------------------------------------- ------ ---------- ---------- ------------ Cash and cash equivalents at the end of the period 10,935 9,787 18,506 ------------------------------------------------------------- ------ ---------- ---------- ------------
Notes to the Unaudited Condensed Consolidated Interim Financial Statements
1. Corporate information
Harvey Nash Group plc ("the Company") and its subsidiaries (together "the Group") is a leading provider of specialist recruitment and outsourcing solutions. The Group has offices in the United Kingdom, Europe, United States, Hong Kong, Australia, Japan, Singapore and Vietnam.
The Company is a public listed company incorporated in the United Kingdom. Its registered address is 110 Bishopsgate, London, EC2N 4AY and its primary listing is on the London Stock Exchange.
The condensed consolidated interim financial information for the six months ended 31 July 2016 was approved for issue on
30 September 2016.
2. Risk management
The Board reviews the key risks facing the business regularly. Outlined below are the main risks that could potentially impact the Group's operating and financial performance, which remain the same as those reported on pages 16-17 of the consolidated financial statements of the Group for the year ended 31 January 2016:
Risk Description Mitigation Change in risk level Risk level after in HY16 mitigation -------------------- ---------------------- ---------------------- ----------------------- ----------------------- Brand damage The Group's The Group protects - - reputation could be its reputation for significantly professionalism and impacted by a service quality through its failing or individual staff recruitment action with viral and development social media practices. The Group exposure. Adverse utilises high quality exposure may impact external professional sales. advice to reduce risk in this area. Robust internal controls ensure high levels of compliance in relation to legal and contractual risks and obligations. -------------------- ---------------------- ---------------------- ----------------------- ----------------------- Client retention The Group is not The Group's client - - overly reliant on any centric strategy one client, however places great emphasis there is a risk that on the client and the business performance retention may be impacted if a of the relationship. number of clients A diversified were lost. geographical footprint and sector focus also reduces the risk of key client losses affecting the overall Group due to adverse country or sector specific conditions. -------------------- ---------------------- ---------------------- ----------------------- ----------------------- Cyber risk The Group operates The Group has cyber - - with a number of and data protection complex systems which and security policies maintain confidential in place and data. The regularly reviews risk is perceived to the effectiveness of have increased due to these policies. In the higher number of the current year we cyber-attacks in the have focused on UK. achieving ISO 27001 compliance throughout the Group whilst working on other recognised cyber and data security enhancements to combat this. -------------------- ---------------------- ---------------------- ----------------------- ----------------------- Economic The performance of The Group developed a - environment the Group is impacted broad portfolio of by the economic services appropriate cycles of the markets to different stages of the countries of the economic in which it operates. cycle and a continued The volatility of the focus on annuity markets in China and revenue streams the UK referendum providing enhanced increased visibility and the uncertainty in improving the markets in which client retention we operate. rates during downturns. The risk presented by the economic environment has increased in the period due to the announcement of the UK's departure from the EU. -------------------- ---------------------- ---------------------- ----------------------- ----------------------- Risk Description Mitigation Change in risk level Risk level after in HY16 mitigation ---------------------- ---------------------- ---------------------- ----------------------- --------------------- Foreign exchange The global nature of The majority of the - the Group's operations Group's costs are naturally gives rise to aligned with revenues exposure to a basket of in single currencies. currency movements, Exposure both in actual cash on equity investments gains / losses and in overseas translation subsidiaries is differences. In the managed by holding current period year, foreign currency the Group's results borrowings. have been impacted by Cash gains or losses the weakening of GBP are limited through against active management of the Euro and Dollar. working capital and
appropriate accounting policies and financial controls. Variances on translation arise as part of the strategy of increasing international exposure and are not actively hedged. Significant fluctuations occurred in exchange rates following the EU referendum but have not materially impacted the Group as mitigating actions were taken. -------------------- ------------------------ ---------------------- ----------------------- --------------------- Margin pressure Increased pressure The Group goes to - - particularly on great lengths to temporary recruitment differentiate itself margins in maturing and deliver a high markets facilitated quality service by digital dynamics and to clients. The use of social media. Group's balance of permanent and contracting revenues creates a sustainable mix of one-off higher profitability income alongside annuity revenues which builds sustainable profits in competitive markets. -------------------- ------------------------ ---------------------- ----------------------- --------------------- Regulatory The recruitment The Group utilises - - environment industry is governed high quality external by an increasing professional advice level of compliance, to reduce risk in which varies from this area. country to country Robust internal and market to market. controls ensure high In the current year, levels of compliance regulatory changes in in relation to legal the UK and contractual and Netherlands have risks and increased the risk. obligations. ---------------------- ---------------------- ---------------------- ----------------------- --------------------- Retention and Delivery of the The Group's Head of - - succession Group's growth Talent continually strategy is reliant evolves the on the recruitment, recruitment and development and retention plans of retention the of high quality Group. As set out in managers and the Remuneration consultants. Failure Report, an element of to attract and retain the Executive high calibre Directors individuals remuneration with the appropriate is linked to skill set could retention of key adversely affect the employees. Senior Group's performance. management have deferred bonus arrangements and are often rewarded in equity. The senior management team that comprised 82 key business managers, lead consultants and executive team meet annually to discuss strategy. The Group also has an established talent academy and global leadership programme. ---------------------- ---------------------- ---------------------- ----------------------- --------------------- Technological The risk of The Group has - - development and disruption to the invested time both at digital innovation recruitment sector Board level and in through digital the operational innovation is mainly context to design considered suitable to be the growing use strategies to capture of social media to the benefits of the source candidates. current disruption and mitigate potential erosion of the Group's market share. The Group has also invested significantly in developing its in-house expertise in utilising social media to accelerate sourcing and recruiting and updated its CRM for 50% of the business. ---------------------- ---------------------- ---------------------- ----------------------- ---------------------
3. Accounting policies
Basis of preparation
This condensed consolidated interim financial information for the six months ended 31 July 2016 has been prepared in accordance with IAS 34 'Interim financial reporting' and the disclosure and transparency directives of the FCA. It does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006 as it does not include all the information required for full statutory accounts. The interim financial statements should be read in conjunction with the statutory accounts for the year ended 31 January 2016, which were prepared in accordance with IFRS as adopted by the European Union and were approved by the Board of Directors on 27 April 2016 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006. This condensed consolidated interim financial information has not been reviewed or audited by the Group's auditors Deloitte LLP.
Significant accounting policies
Except as noted below, the same accounting policies, methods of computation and presentation have been applied as those set out in the Harvey Nash Group plc Annual Report for the year ended 31 January 2016. The accounting policies are drawn up in accordance with International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) as endorsed by the European Union.
New and amended standards adopted by the Group
There are no new standards or IFRIC interpretations that were effective during the period that significantly affect this interim financial information.
Critical accounting judgements and key sources of estimation uncertainty
The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.
In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 January 2016 with the exception of those related to the discontinued operations. As a result the capitalisation of software development costs and accounting for the disposal of subsidiaries are not significant judgements in the current period.
Going concern basis
The Group meets its day-to-day working capital requirements through its bank facilities. The current economic conditions continue to create uncertainty particularly over (a) the level of demand for the Group's services; and (b) the availability of bank finance for the foreseeable future. The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group should be able to operate within the level of its current facilities. After making enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. The Group therefore continues to adopt the going concern basis in preparing its consolidated interim financial statements.
4. Segment information
Decisions about analysis of segment information are approved by the main Board. There have been no changes since the year ended 31 January 2016 in the way the Group Board analyses segmental information. Services provided by each reportable segment are permanent recruitment, contracting and outsourcing. The Group Board analyses segmental information as follows:
Revenue
Unaudited Unaudited Audited 6 months ended 31 July 2016 6 months ended 31 July 2015 12 months ended GBP'000 GBP'000 31 January 2016 Continuing operations GBP'000 --------------------------------- ----------------------------- ----------------------------- ----------------- United Kingdom & Ireland 125,197 116,732 233,404 Mainland Europe 218,640 180,805 377,985 Benelux 182,103 144,700 305,095 Nordics 9,101 7,594 16,365 Central Europe 27,436 28,511 56,525 -------------------------------- ----------------------------- ----------------------------- ----------------- Rest of World 33,816 31,185 65,135 United States 28,609 26,914 54,578 Asia Pacific 5,207 4,271 10,557 -------------------------------- ----------------------------- ----------------------------- ----------------- Revenue from continuing operations 377,653 328,722 676,524 --------------------------------- ----------------------------- ----------------------------- -----------------
Discontinued operations
United Kingdom & Ireland - 197 106 Mainland Europe (Central Europe) - 8,113 12,990 Total Revenue 377,653 337,032 689,620 ----------------------------------- -------- -------- --------
Gross profit
Unaudited Unaudited Audited 6 months ended 6 months ended 12 months ended 31 July 2016 31 July 2015 31 January 2016 Continuing operations GBP'000 GBP'000 GBP'000 ------------------------------------------- ---------------- ---------------- ----------------- United Kingdom & Ireland 18,420 18,801 37,048 Mainland Europe 17,807 15,886 32,614 Benelux 6,996 5,942 12,232 Nordics 6,360 5,482 11,403 Central Europe 4,451 4,462 8,979 ------------------------------------------ ---------------- ---------------- ----------------- Rest of World 11,057 9,725 20,626 United States 8,526 7,204 14,774 Asia Pacific 2,531 2,521 5,852 ------------------------------------------ ---------------- ---------------- ----------------- Gross Profit from continuing operations 47,284 44,412 90,288 ------------------------------------------- ---------------- ---------------- -----------------
Discontinued operations
United Kingdom & Ireland - 183 92 Mainland Europe (Central Europe) - 1,690 2,997 ----------------------------------- ------- ------- ------- Total Gross Profit 47,284 46,285 93,377 ----------------------------------- ------- ------- -------
4. Segment information (continued)
Operating profit and profit before tax
Unaudited Unaudited Audited 6 months ended 31 July 2016 6 months ended 31 July 2015 12 months ended GBP'000 GBP'000 31 January 2016 Continuing operations GBP'000 --------------------------------- ----------------------------- ----------------------------- ----------------- United Kingdom & Ireland 1,620 2,134 3,461 Mainland Europe 2,487 2,334 4,956 Benelux 1,893 1,798 3,608 Nordics 187 107 385 Central Europe 407 429 963 -------------------------------- ----------------------------- ----------------------------- ----------------- Rest of World 67 688 1,507 United States 609 756 1,386 Asia Pacific (542) (68) 121 -------------------------------- ----------------------------- ----------------------------- ----------------- Operating profit from continuing operations 4,174 5,156 9,924 --------------------------------- ----------------------------- ----------------------------- ----------------- Finance income - Finance cost (390) (403) (849) --------------------------------- ----------------------------- ----------------------------- ----------------- Profit before tax 3,784 4,753 9,075 --------------------------------- ----------------------------- ----------------------------- -----------------
Discontinued operations
United Kingdom & Ireland - (131) (418) Mainland Europe (Central Europe) - (557) (14,021) ----------------------------------- ------ ------ --------- Total Operating Profit before tax 3,784 4,065 5,364 ----------------------------------- ------ ------ ---------
Depreciation
Unaudited Unaudited Audited 6 months 6 months 12 months ended 31 ended 31 ended July 2016 July 2015 31 January GBP'000 GBP'000 2016 Continuing operations GBP'000 ---------------------------- ----------- ----------- ------------ United Kingdom & Ireland 301 313 374 Mainland Europe 116 95 199 Benelux 61 57 114 Nordics 31 21 46 Central Europe 24 17 39 --------------------------- ----------- ----------- ------------ Rest of World 205 186 637
United States 111 97 49 Asia Pacific 94 89 588 --------------------------- ----------- ----------- ------------ Total depreciation 622 594 1,210 ---------------------------- ----------- ----------- ------------
Discontinued operations
United Kingdom & Ireland - - - Mainland Europe (Central Europe) - 145 249 ---------------------------------- ---- ---- ------ Total Operating Profit 622 739 1,459 ---------------------------------- ---- ---- ------
5. Taxation
Taxation for the six-month period is charged at 31.3% (2015: 31.1%), representing the best estimate of the average annual effective tax rate expected for the full year, applied to the pre-tax income of the six-month period.
6. Earnings per share
Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the year, excluding those held in the employee share trust, which are treated as cancelled.
For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. The Group's potential ordinary shares are comprised of share options granted to employees where the exercise price is less than the average price of the Company's ordinary shares during the period.
From continuing operations
Unaudited Unaudited Audited 6 months 6 months 12 months ended ended ended 31 July 31 July 31 January 2016 2015 2016 Profit for the period GBP'000 2,600 3,507 6,835 Weighted average number of shares 72,588,365 72,754,076 72,552,809 --------------------------- ----------- ----------- ------------ Basic earnings per share 3.58p 4.82p 9.42p --------------------------- ----------- ----------- ------------ Unaudited Unaudited Audited 6 months 6 months 12 months ended ended ended 31 July 31 July 31 January 2016 2015 2016 ------------------------------- ----------- ----------- ------------ Profit for the period GBP'000 2,600 3,507 6,835 Weighted average number of shares 72,588,365 72,754,076 72,552,809 Effect of dilutive securities 9,481 357,275 285,596 Adjusted weighted average number of shares 72,597,846 73,111,351 72,838,405 -------------------------------- ----------- ----------- ------------ Diluted earnings per share 3.58p 4.80p 9.38p -------------------------------- ----------- ----------- ------------
From continuing and discontinued operations
Unaudited Unaudited Audited 6 months 6 months 12 months ended ended ended 31 July 31 July 31 January 2016 2015 2016 Profit/(loss) for the period GBP'000 2,600 2,800 (7,604) Weighted average number of shares 72,588,365 72,754,076 72,552,809 -------------------------- ----------- ----------- ------------ Basic earnings/(loss) per share 3.58p 3.85p (10.48)p -------------------------- ----------- ----------- ------------
6. Earnings per share (continued)
Unaudited Unaudited Audited 6 months 6 months 12 months ended ended ended 31 July 31 July 31 January 2016 2015 2016 ------------------------------- ----------- ----------- ------------ Profit/(loss) for the period GBP'000 2,600 2,800 (7,604) Weighted average number of shares 72,588,365 72,754,076 72,552,809 Effect of dilutive securities 9,481 357,275 285,596 Adjusted weighted average number of shares 72,597,846 73,111,351 72,838,405 -------------------------------- ----------- ----------- ------------ Diluted earnings/(loss) per share 3.58p 3.83p (10.44)p -------------------------------- ----------- ----------- ------------
7. Analysis of changes in net funds
1 February Unaudited Unaudited Unaudited 2016 cash flow foreign 31 July GBP'000 GBP'000 exchange 2016 movements GBP'000 GBP'000 --------------------------- ----------- ----------- ----------- ---------- Cash and cash equivalents 18,506 (8,422) 851 10,935 --------------------------- ----------- ----------- ----------- ---------- Borrowings (18,336) (1,450) 2,032 (17,754) --------------------------- ----------- ----------- ----------- ---------- Net funds/(debt) 170 (9,872) 2,883 (6,819) --------------------------- ----------- ----------- ----------- ----------
Net funds comprise cash and cash equivalents less invoice discounting and overdrafts utilised.
8. Dividends
The Group paid a final dividend of 2.360p per share on 8 July 2016 to shareholders on the register as at 17 June 2016 (2015: final dividend of 2.171p per share was paid on 10 July 2015).
9. Non-Current Assets
The Group made cash purchases of property, plant and equipment of GBP0.5m (2015: GBP1.2m) in the period.
Intangibles increased GBP3.3m on the prior year due to the devaluation of sterling after the disposal of capitalised software costs related to discontinued operations, the value of which was GBP1.4m at 31 July 2015.
10. Capital commitments
The Group had no capital commitments at 31 July 2016 (2015: GBPnil).
11. Related party transactions
In the six month period to 31 July 2016, there have been no related party transactions or changes in the related party transactions as described in the January 2016 Annual Report.
12. Non-recurring items
There were no non-recurring items in the half year ended 31 July 2016. In the year ended 31 January 2016, non-recurring costs amounted to GBP0.2m, which predominantly related to the settlement of deferred consideration for the Talent-IT acquisition.
12. Non-recurring items (continued)
Deferred consideration of GBP0.2m had been recognised as at 31 January 2015 in respect of the estimated consideration due on completion of the earn-out period, which commenced on acquisition of Talent-IT. The non-recurring element represents the excess consideration payable over the previously recognised deferred consideration.
13. Discontinued operations
Nash Technologies
On 6 December 2015, the Group entered into a sale agreement to dispose of the German telecommunications outsourcing business Nash Technologies GmbH ("NT") and its two fully owned subsidiaries, Nash Technologies Stuttgart GmbH ("NTS") and Nash Innovations GmbH ("NI"), "NT Group". On the disposal date, full control passed to the acquirer.
There are no results from discontinued operations in the six months ended 31 July 2016. Cash outflows in the period relating to the disposal of Nash Technologies were GBP6.0m, of which GBP1.9m (EUR2.3m) related to payment of a loan receivable from Nash Technologies included within non-current assets.
Further detail in relation to the disposal can be found in the 2016 Annual Report.
14. Post balance sheet events
There were no post balance sheet events requiring disclosure.
Statement of Directors' Responsibilities
The directors confirm that, to the best of their knowledge, these condensed consolidated interim financial statements have been prepared in accordance with IAS 34 as adopted by the European Union. The interim management report includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R, namely:
-- an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and -- material related-party transactions in the first six months of the financial year and any material changes in the related party transactions described in the last Annual Report.
The directors of Harvey Nash Group plc are listed in the Harvey Nash Group plc Annual Report for 31 January 2016. A list of current directors is maintained on the Harvey Nash Group plc website: www.harveynash.com
The directors are also responsible for the maintenance and integrity of the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
By order of the Board.
Richard Ashcroft
Group Company Secretary
29 September 2016
Cautionary statement
This Half Year Report (the "Report") has been prepared in accordance with the Disclosure Rules and Transparency Rules of the UK Financial Conduct Authority and is not audited. No representation or warranty, express or implied, is or will be made in relation to the accuracy, fairness or completeness of the information or opinions contained in this Report. Statements in this Report reflect the knowledge and information available at the time of its preparation. Certain statements included or incorporated by reference within this Report may constitute "forward-looking statements" in respect of the Group's operations, performance, prospects and/or financial condition. By their nature, forward-looking statements involve a number of risks, uncertainties and assumptions and actual results or events may differ materially from those expressed or implied by those statements. Accordingly, no assurance can be given that any particular expectation will be met and reliance shall not be placed on any forward-looking statement. Additionally, forward-looking statements regarding past trends or activities shall not be taken as a representation that such trends or activities will continue in the future. The information contained in this Report is subject to change without notice and no responsibility or obligation is accepted to update or revise any forward-looking statement resulting from new information, future events or otherwise. Nothing in this Report shall be construed as a profit forecast. This Report does not constitute or form part of any offer or invitation to sell, or any solicitation of any offer to purchase or subscribe for any shares in the Company, nor shall it or any part of it or the fact of its distribution form the basis of, or be relied on in connection with, any contract or commitment or investment decisions relating thereto, nor does it constitute a recommendation regarding the shares of the Company or any invitation or inducement to engage in investment activity under section 21 of the Financial Services and Markets Act 2000. Past performance cannot be relied upon as a guide to future performance.
(1) Results for 31 July 2015 include the impact of non-recurring items.
2 Results for 31 July 2015 are stated for continuing operations.
3 2016 results reported on a constant currency basis at 2015 rates.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LLFEDAVITFIR
(END) Dow Jones Newswires
September 29, 2016 02:00 ET (06:00 GMT)
1 Year Harvey Nash Grp Chart |
1 Month Harvey Nash Grp Chart |
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions