HARVEY NASH GROUP PLCTrading Update
HARVEY NASH GROUP PLCTrading Update
Harvey Nash, the global professional services group, announces that its results for the full year ended 31 January 2012 are expected to be ahead of expectations and that it intends to recommend an increase in its final dividend of circa 10%.
The Board is pleased to confirm that unaudited results for the full year ended 31 January 2012 are expected to be ahead of expectations with total revenue of circa £532 million, gross profit of circa £78.0m and profit before tax of circa £8.2 million, up 31% on the previous year.
Skills shortages in niche markets, and the fast growing digital and mobile markets in particular, continued to drive demand for technology professionals. However, the general decline in business confidence in Europe and the UK has impacted the executive appointment market. Whilst a general softening of demand for permanent recruitment was evident across the world, technology outsourcing and freelance contracting continued to be robust in the second half and increases in the productivity of consultants working on client projects, particularly in December and January, exceeded our expectations.
Harvey Nash will announce on the 30 April 2012 preliminary results for the year ended 31 January 2012.
Despite the increase in turnover and higher demand for contract recruitment, the Group's net cash position at the year end was strong, being circa £5.0m. The Group has no long term debt and bank facilities are available to fund working capital as required
The Board is pleased to confirm that it intends to recommend an increased final dividend of 1.635p per share (2011: 1.48p), resulting in a total dividend up 10% to 2.66p per share (2011: 2.42p). The dividend timetable will be announced with the preliminary results.
Summary and Outlook
The strong financial results for the year ended 31 January 2012 , market share gains and client wins have been driven by the Group’s market leading brand positioning and its broad portfolio of services. Tight cost control and management of working capital have facilitated growth without negatively impacting cash flow.
As our clients begin to focus increasingly on the Asia Pacific region, we will invest £0.75m in new offices in 2012 in Asia Pacific to meet growing demand in the region and to supplement our existing offices in Vietnam. This year we also intend to relocate our London office to achieve significant economies of scale and take advantage of a subdued rental market. The relocation will result in a circa £0.8m exceptional item in the first half with savings flowing through into the final quarter of the year and savings over a ten year period expected to be in the region of £1.0m per annum. Capital expenditure, expected to be approximately £1.5m, will be fully funded through financial incentives which have been secured in the lease agreement.
Ongoing economic uncertainty about the Eurozone means that our clients continue to be cautious although the outlook for freelance contracting remains encouraging with little evidence of a slowing of temporary recruitment. However, should executive recruitment globally continue the trend seen in the fourth quarter of calendar year 2011 then this is likely to result in profits being lower than the previous year, excluding the effect of the relocation and fresh investment in Asia.
With the benefit of an experienced management team, continuing strong trading cash flow and a healthy balance sheet the Group is confident of making further progress as markets stabilise and business confidence begins to rise again.