Harvey Nash publishes preliminary year-end results
New offices opened in the UK, Ireland and Japan
Investment in organic growth - new offices in Hong Kong and Sydney beginning to show returns
Total number of fee earners increased in response to growing demand
Strategic partnership in Vietnam concluded with quoted Japanese group, Mitsui & Co
Adjusted operating profit*
Adjusted profit before tax*
Profit before tax
Adjusted earnings per share*
Earnings per share
Cash generated from operating activities*
* Before non-recurring costs
** FY14 costs related to restructuring of European operations. FY13 costs related to the relocation of the Group's London headquarters and acquisition costs.
Albert Ellis, Chief Executive Officer of Harvey Nash, said:
"This is a strong set of financial results, which reflect the significant market share gains we have made during the year. Momentum gathered pace in demand for permanent recruitment in the final quarter, particularly in the USA, UK and Nordics, whilst a number of contract management wins during the year boosted revenue. Our investment in Asia is also beginning to show tangible results.
"The significant upturn in trading which the Group enjoyed in the final quarter has continued into the new financial year and I am confident that Harvey Nash is well positioned to capitalise further on the improving market conditions."
Albert Ellis (CEO) and Richard Ashcroft (CFO)
Tel: 020 7333 2635
Catriona Valentine and Keeley Clarke
Tel: 020 7920 3150
The Group has delivered another strong set of results with revenue of £697.3m (2013: £594.7m) and profit before tax and non-recurring items ahead of the previous year at £9.0m (2013: £8.7m).
Revenue and gross profit increased during the year as a result of further market share gains in the recruitment business and improving market conditions lifted demand for permanent recruitment mainly in the UK and USA. Contract recruitment in mainland Europe was robust but the market remained relatively subdued for executive recruitment. Whilst economic conditions remained challenging in Australia, our business in Hong Kong experienced a stronger finish to the year than expected.
Notwithstanding a 2.8% increase in overall adjusted operating profit for the year, growth was held back by a reduction in demand for projects in Germany, due to a general slowdown in investment in the mobile telecoms market and delays to the rollout of 4G. As a consequence, a non-recurring charge of £2.2m out of a total £2.6m was incurred during the year.
Adjusted basic earnings per share, which excludes the effect of non-recurring costs, rose by 5.2% to 8.76p (2013: 8.33p). Basic earnings per share, after non-recurring costs, fell by 30.0% to 5.24p (2013: 7.49p).
The Board is recommending a 10% increase in the final dividend to 1.974 pence per share (2013: 1.795p), giving a total dividend for the year of 3.21 pence per share (2013: 2.92p), also up 10%. If this is approved at the forthcoming Annual General Meeting, the final dividend will be paid on 11 July 2014 to shareholders on the register as at 20 June 2014.
The Group's strategy is to continue to grow the business, increasing revenues, profits and dividends through a balanced portfolio of services. This portfolio delivers competitive advantages and a cash generative business model, which enables the Group to grow organically through investment in new services, geographic locations and increasing headcount, as well as though earnings enhancing bolt on acquisitions.
The core of the Group's business model is its unique portfolio of services, which enables client engagement at each stage of the business cycle. This relationship model underpins the delivery of resilient financial results, demonstrated during the last downturn, and supports returns to shareholders.
A balance of permanent recruitment, contract recruitment, managed solutions and offshore services, combined with our market leading position in technology and executive recruitment, provides Harvey Nash with a competitive advantage and has ensured significant market share gains. Going forward, the Group will continue to invest in its offshore recruitment services in Vietnam, providing candidate placement services to the business in the USA, UK and parts of Europe.
During the year under review, the Group continued to invest in additional headcount in Asia, mainly in Hong Kong and Sydney, while opening a new location in Tokyo towards the end of the year. The option to acquire the remaining 49.9% of our business in Norway was exercised in April 2013, resulting in full ownership and consolidating our market leading position in the Nordic region.
Recovery in the global economy provides opportunities to grow the business further in line with the Group's strategy, not only in Asia but also in the USA and Europe as markets begin a return to growth.
Governance and Board
Harvey Nash's robust corporate governance framework underpins its performance. On my appointment as Chairman, I set out three clear priorities for the Board on which we remain firmly focused.
First, to debate the strategy for increasing shareholder value, holding the executive team accountable for its delivery. Second, to ensure we have the most talented team to execute our strategy and that we plan effectively for succession. Third, to ensure that the right corporate values are in place, supported by the appropriate governance structures and their effective implementation.
During the past year, Tom Crawford announced his decision to retire at the forthcoming AGM, and I would like to thank him for his contribution to the success of Harvey Nash over so many years. Margot Katz has completed her three-year term as agreed and will not be standing for re-election at the AGM. I am delighted that she will continue her work with us on the next phase of our talent strategy, which is so vital to our continuing growth.
David Bezem was appointed to the Board in June 2013 and we have recently announced that Kevin Thomas will also be joining us in May 2014. David spent over 25 years as an investment banker, providing corporate finance advice to UK quoted companies, and has considerable knowledge of our sector. Kevin is a main board Director of FTSE 100 listed business, Babcock International. He has valuable experience of growing businesses of substantial scale both organically and through acquisition. These appointments bring significant additional experience to the Board and will help us support the Group's plans for growth.
The demand for recruitment services is improving in all our key markets. Permanent recruitment has strengthened in the USA, UK & Ireland, with signs of improvement in the Nordics and Asia Pacific. The pipeline of opportunities for offshore services is stable and demand for contract recruitment remains robust particularly in mainland Europe.
The momentum generated in the second half of the year under review has continued into the new financial year. The Board is encouraged by the improving market conditions and is, therefore, confident that the Group is in a strong position to make further progress in the year ending 31 January 2015.