29th Sep 2016 08:17
LONDON (Alliance News) - Technology recruitment specialist Harvey Nash Group PLC on Thursday reported a decline in pretax profit for the first half of 2016, driven by a slowdown in activity in the UK & Ireland around the time of the UK's Brexit referendum.
Harvey Nash said its pretax profit for the half-year to the end of July was GBP3.8 million, down 6.5% from GBP4.0 million a year earlier. Gross profit for the group was up to GBP47.3 million from GBP44.4 million, but operating profit sunk 19% to GBP4.2 million from GBP5.2 million.
The decline in operating profit was driven by uncertainty in the UK & Ireland division ahead of the Brexit vote. This had a significant impact on higher-margin permanent recruitment fees and resulted in one-off costs which also hit the bottom line, focused on redundancies the company had to make.
This offset growth for the group in Europe, with strong performance in Sweden and the Benelux region. US operating profit was softer against a tough year-earlier comparative and due to costs related to hiring new staff. In Asia-Pacific, Japan and Australia proved strong but business in Hong Kong and Vietnam was weak.
Harvey Nash declared an interim dividend of 1.565 pence per share, up 5.0% from 1.49p a year prior.
"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," said Chief Executive Albert Ellis.
"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," he added.
Shares in Harvey Nash were down 9.3% at 59.96p on Thursday morning.
By Sam Unsted; [email protected]; @SamUAtAlliance
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