Harvey Nash Group PLC Pre-close Trading Update (4703G)

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RNS Number : 4703G

Harvey Nash Group PLC

02 March 2018

2 March 2018

HARVEY NASH GROUP PLC

("Harvey Nash" or the "Group")

Pre-close Trading Update

An excellent result in the context of wider macro-economic uncertainty

Harvey Nash, the global technology recruitment and outsourcing group, is pleased to announce the following trading update in advance of the Group's final results for the year ended 31 January 2018 (the "Period") which are expected to be in line with market expectations. This would result in adjusted profit before taxation and non-recurring items being up c22% compared to the prior year. This is an excellent result in the context of wider macro-economic uncertainty, particularly in the UK.

UK & Ireland Gross Profit is up 6% year on year, with demand improving over the second half of the year for technology recruitment despite widely reported Brexit-related market volatility. This increase in demand was broadly spread across the UK with a number of financial services companies actively relocating operations outside of London.

Mainland Europe continues to be the key driver of organic growth in the Group, with Gross Profit up 5% overall year on year, led by strong demand for contract recruitment and managed services in the Benelux, which was up 20% year on year.

In the Rest of World, Gross Profit was 19% lower largely as a result of reduced contractor numbers in the USA and the impact of reductions in headcount. The transformation programme has put the Rest of World in a much better position going forward as we have focused the Group's geographic presence on its core markets and closed loss making offices. Our outsourcing business in Vietnam exceeded management expectations along with executive search in the USA, which reported record results.

During the year we completed two acquisitions which are expected to be enhancing to earnings per share and are already delivering benefits with further improvement expected in the current year. Our transformation programme is on track, which is focusing the business on its core markets, streamlining the operations and improving efficiency and we anticipate further savings to flow through in the current financial year.

Trading cash flow was strong. Net borrowings at the year-end stood at GBP6.7m (2017: cash GBP5.5m). This change mainly reflects the investment in working capital to finance higher levels of turnover in the second half combined with an increase in debtor days to 40 days (2017: 38 days) as a result of changing business mix, as well as the cost of the acquisitions and the transformation programme.

We look forward to providing a more detailed update in the announcement of our preliminary results on 27 April 2018.

Albert Ellis, Chief Executive Officer, said:

"I am very pleased to report that the outturn in the last financial year is expected to be in line with market expectations which were revised upwards on three occasions during the year. Last year was an important one for the Group, in which we initiated a transformation programme to streamline and refocus the business and completed two acquisitions. Our acquired businesses are already contributing to the Group's profitability alongside good levels of organic growth.

We enter 2018, which is the Group's 30(th) year since incorporation, with a strong balance sheet and well positioned to capitalise on the continued growth in demand for technology and digital skills."

 
                        Year ended 31 January 
                                 2018 
                   ------------------------------ 
                           Gross profit % 
-----------------  ------------------------------ 
 Geography          Actual   Constant currency(2) 
-----------------  -------  --------------------- 
 
 UK & Ireland        +6.2%                   5.6% 
-----------------  -------  --------------------- 
 Mainland Europe     +5.4%                   0.3% 
-----------------  -------  --------------------- 
 Rest of World      -18.9%                 -21.1% 
-----------------  -------  --------------------- 
 
 Total               +0.3%                  -2.5% 
-----------------  -------  --------------------- 
 

Enquiries

 
                              Albert Ellis (CEO)     020 7333 
 Harvey Nash                   Mark Garratt (CFO)     2635 
                              Ben Thorne 
 Panmure Gordon (Nominated     Erik Anderson         020 7886 
  Adviser & Broker)            Andrew Potts           2500 
 Hudson Sandler (Financial    Michael Sandler        020 7796 
  PR)                          Hattie O'Reilly        4133 
 

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) no 596/2014

Notes to editors

The Harvey Nash Group is a global technology recruitment and IT outsourcing business, with a focus on technology and digital recruitment. Our unique portfolio of services, executive search, professional recruitment and IT outsourcing, enables us to engage with clients at every stage of the business cycle. Our relationship-based model underpins the delivery of resilient financial returns and supports sustainable returns to shareholders.

This information is provided by RNS

The company news service from the London Stock Exchange

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March 02, 2018 02:00 ET (07:00 GMT)