Harvey Nash Group Acquisition & Statement
Harvey Nash Group Acquisition & Statement
Harvey Nash, the global professional services group, is issuing its first Interim Management Statement for the financial year ending 31 January 2013, covering the period from 1 February 2012 to date. There have been no material events or transactions in the period other than those detailed in this statement.
The Board is pleased to report that the Group performed ahead of budget during the first quarter ended 30 April 2012. Revenue rose 18% and gross profit was up 6% compared with the same period last year. The increase in revenue is being driven by a greater proportion of flexible labour services in our business mix.
Operating profit, stated before non recurring items and the investment made in two new offices, is 10% ahead of last year.
In our preliminary results statement on 30 April 2012, we announced that approximately £0.8m would be invested this year in two new office openings in Hong Kong and Sydney with effect from 1st February 2012. The Group is also relocating its London office achieving approximately £0.8m of annualised like for like savings, at a one-off cost of circa £0.6m. A sizeable amount of the investment in Asia and all of the relocation costs are budgeted for in the first half of the current financial year.
Trading in our US markets remains encouraging with good growth seen in the first quarter. As expected and in line with our view expressed in the preliminary results statement, UK and European trading is more modest. Outsourcing continues to perform well.
We are pleased to announce today the acquisition of the entire issued share capital of Talent-IT BVBA ("Talent-IT"), a Belgium based IT project and recruitment company, for an initial cash consideration of &euro1.7m. Talent-IT is headquartered in Antwerp and specialises in providing clients with flexible-working, highly skilled IT professionals for their permanent or project based vacancies.
This acquisition marks another important step in the ongoing development of Harvey Nash's portfolio of services across its most profitable geographic regions. The acquisition will result in Harvey Nash's Benelux business becoming the market leader in the region. It will increase the total contribution of that business to 30% of the Group’s mainland Europe revenue.
In the year ended 31 December 2011, Talent-IT and its wholly owned subsidiary Team4Talent BVBA reported a combined profit before taxation of approximately &euro0.7m, turnover of approximately &euro11.3m and as at 31 December 2011 had gross assets of &euro4.4m and net assets of &euro0.5m.
Harvey Nash has acquired 100% of the shares (the "Shares") in Talent-IT from Jeroen Fries, Christophe Orens, Dirk Vangrunderbeek and Jasna Pozna (the "Sellers") for an initial consideration of &euro1.7m payable on completion.
In addition, Talent-IT has agreed to acquire the 50% of the shares of Team4Talent BBVA ("Team4Talent") not currently held by Talent-IT from Stefan Moelants for an initial consideration of &euro100,000.
The Sellers and Stefan Moelants are to remain with Talent-IT and Team4Talent. Subject to certain earn-out thresholds of Talent-IT and Team4Talent being met, the Sellers and Stefan Moelants will receive, in aggregate, up to a maximum of &euro2.8million in deferred consideration over the next 3 years.
The initial consideration, and any deferred consideration which becomes payable, is to be funded out of Harvey Nash's existing cash resources.
The Group has no term debt and continues to enjoy overall banking facilities of circa £40m.
Subject to approval at the Annual General Meeting on 28 June 2012, and as previously announced, the Group proposes to pay on 13 July 2012 a final dividend for the year ended 31 January 2012 of 1.635p per share to shareholders on the register as at 22 June 2012.
This marks an increase of 10% on the dividend for the same period in 2011 of 1.48p. The total dividend of 2.66p per share for the year represents an increase of 10% on 2010/11 (2.42p).
Summary and Outlook
Results for the year ended 31 January 2012 exceeded expectations as the Group benefited from its broad portfolio of services, strong geographic footprint and significant market share gains.
In our trading update of 17 February 2012, expectations for the current year ending 31 January 2013 were revised when we said that the ongoing economic uncertainty in the Eurozone meant that our clients continue to exercise caution in relation to hiring permanent staff and that this had impacted demand for executive recruitment in the UK, the Nordics and mainland Europe. There has been no change to our outlook for the Eurozone at this time but, given recent market volatility, we are seeing unique opportunities, such as the acquisition of Talent-IT. In these situations we will be able to drive growth and create new market leaders in key geographies, when the market conditions improve.
The outlook for freelance contracting remains encouraging with little evidence of a slowdown. As a result, the Board is pleased to report that underlying organic first quarter trading is on track and the acquisition of Talent-IT is expected to contribute an additional 5% increase to Group PBT (before non-recurring items) this year and a 10% increase next year.
Albert Ellis, Chief Executive of Harvey Nash, said:
“We are delighted with the first quarter financial results given the economic uncertainty right now. We are also very pleased with the acquisition of Talent-IT which when merged with our existing successful Harvey Nash business, the merged entity will be the clear market leader in Technology recruitment in the profitable Benelux region.”