Final Results

HARVEY NASH GROUP PLC

("Harvey Nash" or "the Group")

Results for the year ended 31 January 2011

Harvey Nash, the global professional services group, announces increased revenues and profits for the year ended 31 January 2011

Financial Results

* Adjusted for non recurring items

** 2011 Professional fees in relation to the acquisition in Norway and onerous property provision movements

2010 Restructuring costs

*** Net cash comprises cash less overdraft and invoice discounting facilities utilised

Highlights

·; Increased revenue reflecting recovery across all markets

·; Significant market share gains with multiple contract wins

·; Increased demand for flexible labour; freelance professionals up 33% year-on-year

·; Net fee income from permanent recruitment up over 37%

·; Adjusted operating profit up 45% to £6.5m (2010: £4.5m)

·; Profit before taxation up 387% to £6.3m (2010: £1.3m)

·; Operating cash inflow up 55% increasing net cash to £8.3m (2010: £5.1m)

·; Strong increases in revenues and profits across all three geographical segments

·; Increased recommended final dividend, up 10% to 1.48p per share (2010: 1.35p per share)

·; New financial period has started strongly

Commenting on the results, Albert Ellis, Chief Executive Officer, said:

"I am delighted with these results which reflect significant market share gains and build on the Group's remarkable resilience during the downturn.

The strength of the recovery in permanent recruitment particularly in the UK and the Nordic region lifted margins and generated strong cash flows. Increased demand for flexible labour in the US particularly in the second half resulted in revenues and profits exceeding expectations. In Europe, as elsewhere, the stronger trading in the final quarter has continued into the new financial period.

"The Board is pleased to recommend an increased final dividend reflecting the success achieved in the year ended 31 January 2011 and its confidence in making further progress during the current year."

ENQUIRIES:

A presentation of the results will take place at 09:30 this morning at the offices of College Hill, The Registry, Royal Mint Court, London, EC3N 4QN

CHAIRMAN'S STATEMENT

I am delighted to report on an excellent result for the period.

After a period of extremely challenging market conditions, during which the Group continued to demonstrate its resilience, remaining profitable and cash generative throughout the global recession, all geographical regions have returned to growth during the year.

The Group was able to substantially increase revenues, as demand for both permanent and flexible labour improved and new outsourcing contracts were secured, which resulted in higher than expected operating profit. The Group's acquisition of Bjerke & Luther AS in Norway is on track and many new offices across the world exceeded budget.

Strong trading cash flows resulted in a further strengthening of the Group's balance sheet with net cash increasing to £8.3m from £5.1m in the prior year.

Financial Results

Revenue for the year ended 31 January 2011 increased by 12% to £422.3m (2010: £376.2m). Gross profit was 13% higher at £68.5m (2010: £60.4m) with operating profit before non-recurring items up 45% at £6.5m (2010: £4.5m). Profit before tax of £6.3m was up 387% on the prior year result of £1.3m. Basic earnings per share were up 437% to 5.85p (2010: 1.09p).

Cash generated by operations was 55% higher at £9.0m (2010: £5.8m), resulting in a 61% increase in the net cash position to £8.3m (2010: £5.1m).

Although the Group has no long term debt, short term working capital funding of circa £40m is available on a rolling twelve month basis for its growing contracting and outsourcing services. The combined freelance and employed technology professionals working on Group client projects at 31 January 2011 was up 33%, compared to the previous year.

Dividend

The Board is recommending an increased final dividend of 1.48 pence per share, 10% up on the prior year (2010: 1.35p). If approved at the forthcoming Annual General Meeting, the final dividend, which would take total dividend payouts for the year to 2.42 pence per share (2010: 2.20 pence per share) will be paid on 15 July 2011 to shareholders on the register as at 24 June 2011.

Strategy

The Group's strategy of offering a broad portfolio of services continues to provide resilience even in the most extremely challenging market conditions. This competitive advantage, combined with the Group's focus on large contract wins enabled the Group to maintain profitability during the downturn and ensure significant market share gains were capitalised on as the recovery took hold.

The Group's key assets - its strong brands, leading market position and unique portfolio of services - have been crucial in maintaining and developing existing client relationships, winning additional mandates and retaining key employees. Our strong commitment to the Group's professional values, means placing clients at the centre of our strategy, and this has clearly had a positive impact over the last decade.

The Group's focus now is on continuing to grow its market share across all its disciplines and expanding its portfolio of services geographically. The Group will continue to explore opportunities for earnings enhancing bolt-on acquisitions as they arise, to augment its organic growth.

Employees

On behalf of the Board, I would like to thank all of the Group's employees and associates who have worked incredibly hard during the year and during the downturn, in some of the most challenging market conditions in recent times. These excellent results are down to their commitment, effort and teamwork.

Board

Ian Davies joined the Board as a non-executive Director on 30th September 2010 and was appointed Chairman of the Audit Committee. Ian is a former audit partner and has publicly listed Board experience. He is currently deputy Chairman of BMT Group Limited and a member of the Council of the Institute of Chartered Accountants.

Gus Moore will be retiring from the Board as a non executive Director at the Company's AGM on the 30 June 2011. Gus has served the company selflessly for several years, strongly supporting the Group's successful strategy and we wish him well for the future.

The development of the Group's talent and leadership will be crucial to its success in the future. I am therefore delighted to announce the appointment of Margot Katz to the Board with effect from the 1 May 2011, as the Group Director of Talent. Margot has previous Board experience and was head of professional development for a global HR consultancy and brings a wealth of talent management experience.

Prospects and Outlook

The result for 2010/11 was an excellent performance and builds on the Group's remarkable resilience during the recession, remaining profitable and generating strong cash flows. With a return to growth during the year across all the markets in which the business operates, and in particular during the second half, we are encouraged by a good start to the current year.

While the UK's growth rate may be affected by a more subdued economy and strong comparatives, we are confident that growth from the USA and European markets will continue to support another year of further progress.

The increased dividend proposed reflects the success achieved in the year ended 31 January 2011 and our confidence in making further progress during the current year. 

Ian Kirkpatrick

Chairman

28 April 2011

OPERATIONAL REVIEW

United Kingdom and Ireland

Revenue in the UK and Ireland increased 19% to £131.5m (2010: £110.3m) with gross profit up by 14% to £28.3m (2010: £24.9m). Included in these results are revenues of £6.1m (2010: £4.7m) attributable to clients based in Asia. Operating profit was up 41% at £2.7m compared to £1.9m the previous year.

Our market leading brand and significant market share gains resulted in an excellent financial performance. Continued investment in the brand, and increasing our client engagement activity during the recession enabled the UK business to capitalise on a stronger than expected recovery in the UK employment market last year.

The fastest growing segment in the technology market is the development of applications for mobile devices. The Group's Mortimer Spinks brand benefited from its focus on the new media and mobile sectors with a 44% rise in gross profit and virtually doubled its profit contribution compared to the previous year.

Further leveraging the recovery in the financial services sector, the UK technology recruitment business opened an additional location in the City of London. Strategically, the Group sees great opportunities in this sector, as financial institutions change the shape of their organisations, reducing overhead through offshoring and outsourcing whilst recruiting new talent to manage the transition. Risk management is also a key factor following tighter regulation of the sector which continues to drive increased hiring.

Group offices based in the regions of the UK all performed well particularly the Edinburgh operation which increased gross profit by 73%. Despite the economic uncertainty in Ireland, the Group increased revenues and generated a healthy profit from a small loss in the prior year.

Overall executive search and interim revenues were stable compared to the prior year. Significant improvement in demand from the technology sector was offset by the expected declines in the public sector although manufacturing, business services, retail and the corporate sector were up 30%. Interim management was affected mainly by the public sector's freeze on headcount and consultancy but has made a good recovery in the first quarter of the current year.

Offshoring and outsourcing increased by 44% in the UK, resulting in a record profit contribution to the UK business since the start of the business almost ten years ago.

Although the business faces challenges in the current year, including a slowing economy and strong comparatives, the UK and Irish business continues to go from strength to strength. The UK's key asset - its positive brand recognition and assurance of quality in the market - continues to attract new clients and new talent into the Group which continues to generate growth in a recruitment market which is widely reported to be challenging.

Mainland Europe

Revenue in Europe was up by 8% to £256.4m (2010: £236.7m) and gross profit increased by 14% to £31.1m (2010: £27.3m). Operating profit was 28% higher at £3.2m compared to £2.5m in the previous year.

Given the uncertainty and volatility in European markets and the delayed recovery in many countries, we are pleased with this strong performance. The key to this success is our strategy of focussing on the stronger Northern European region, including the Nordics, Benelux, Germany and Switzerland whilst driving growth through securing additional contracts in our wireless outsourcing centre in the Nuremberg and Stuttgart locations.

The significant improvement in gross margin is mainly due to a change of mix in favour of outsourcing and executive recruitment. Permanent recruitment was strong throughout the Nordic region combined with an additional outsourcing contract in Germany secured in the telecommunications sector.

During the year demand declined in three markets, the Netherlands, France and Switzerland. Action to re-shape the Group's businesses in France and Switzerland was taken to prepare them for a return to growth in 2011. The recession and lack of recovery experienced in the Netherlands has featured prominently in reports across the industry. Our business in that country also reflected this trend until the first signs of a return to growth have been identified. Nevertheless the Netherlands contributed just under 20% to European profits despite a decline in revenues and challenging trading conditions, demonstrating its resilience, the quality of its client relationships and the strength of its portfolio of services.

Belgium and Luxembourg capitalised on a strong recovery particularly in permanent recruitment, and demand for freelance professionals also improved. One of the key success factors is the focus on Fortune 500 companies headquartered in and around the capital of the European Union in the telecommunications, automotive and pharmaceutical sectors. The business successfully retained existing clients as well as securing significant new projects during the year.

In the Nordics, recovery was the strongest in Europe with Sweden leading the organic growth and the acquisition of Bjerke & Luther AS in Norway adding to the 96% rise in GBP revenues. The satellite offices in Copenhagen and Warsaw reported modest top line growth and a reduced loss for the year. Whilst the market leading Alumni executive search business enjoyed a healthy increase in profits, the successful expansion into new markets such as Finland and Norway provided additional growth in revenues and operating profits. The new permanent contingent recruitment service marketed under the Harvey Nash brand also enjoyed strong growth with total gross profit rising 49% compared to the prior year.

The Nordic region's business performance was excellent, benefiting from increasing headcount over the recession, leveraging the market leading position in Sweden across the entire region and opening up a new market in Finland which is already profitable. The acquisition in Norway is on track and the Group is actively seeking further opportunities in the strong Nordic market.

In Switzerland a significant contract win in the financial services sector enhanced the market leading position of the Group's operations in both Zurich and Geneva. Whilst the costs of implementation were incurred during the year with an impact on overall profitability, the market was also relatively subdued compared to Germany and the Nordic region. However, the benefits of the contract are beginning to come through in the current year and the market for permanent recruitment appears to be recovering as well.

The German economy was widely reported to be one of the strongest in Europe in 2010. The Group's operations in Germany have grown significantly over the last three years and in the year ending 31 January 2011, Germany represented just over 40% of European profit contribution. Recruitment growth was concentrated in the south, where manufacturing and exports have driven growth in the Stuttgart and Munich offices. Some labour overcapacity continues in the employment market, particularly in technology and engineering and this resulted in continued shorter working hours affecting contractors and a slower pick up in permanent recruitment.

In the Group's outsourcing location in Nuremberg revenues and profitability were lower than the previous year as expected and in line with Group expectations. However on 30 April 2010 an additional contract was secured by Nash Technologies worth €43m over a number of years and a new development centre was added in Stuttgart during the year. In relation to the extension of the Group's existing strategic partnership in Nuremberg, a new framework contract was successfully concluded in December 2010 which includes a guaranteed level of project work throughout 2011. Both the Nuremburg and Stuttgart locations are on budget for the current year to date.

We are pleased with our performance in Europe. With critical mass and scale building in Northern Europe's most economically significant markets and with a leading market position in those countries, we are confident that these advantages will provide further growth for the Group in the future.

United States

Revenue in the USA was up by 17% at £34.4m (2010: £29.3m) and gross profit up 11% to £9.1m (2010: £8.2m). Operating profit was £0.6m compared to broadly break even in the prior year.

The Group's US business has operated in a highly challenging market over the last two years and therefore took action to reduce its cost base whilst continuing to develop its portfolio of services, in particular offshoring. The result was that despite the severe recession and notwithstanding the losses incurred by the industry as a whole, the US business remained profitable on an annual basis throughout the global financial crisis.

Although demand for higher margin strategic consultancy and major project work continued to decline impacting the Atlanta operation in particular, the outsourcing service grew strongly, increasing revenues by 19% year on year which was a major factor contributing to the resilience of the US business.

The technology recruitment market began to improve toward the end of the first half of the year. Increased demand resulted in an additional 19% of freelancers at 31 January 2011 on client projects compared to the year before. Demand was concentrated in the flexible labour market and it was not until early 2011 that the business began to see significant improvements in the market for permanent technology professionals. This follows the classic recovery pattern with flexible and temporary labour demand leading the market for permanent technology appointments.

Executive Search also began to see much more activity as confidence returned to the financial services sector which began to expand once again. This lifted executive search revenues for the year by 22% overall with much of the improvement coming in the second half. The revival of business activity on the East Coast also impacted the New Jersey office significantly which reported a 73% rise in revenues. Demand continued to remain subdued in Chicago and recovery in Denver lagged behind the rest of the country. The West Coast was less affected by the recession and the San Francisco and Seattle offices continued to benefit from buoyant market conditions and tight labour markets particularly in the technology sector. With strong comparatives revenue increased 17% on the prior year.

The Group's financial performance in the US over the last two years has been remarkably resilient given the depth of the recession, the impact on unemployment and the labour market, and the industry-wide losses incurred. The US continues to lead the world in new technologies which leverage the internet, wireless mobile and online social media to create new business models. The Group has, through its presence in the US, developed key relationships with some of these fast growing organisations and driven innovation and new business opportunities across the rest of the Group.

Demand continues to be robust and we are confident of further improved performance in the current year.

Summary

We are delighted with an excellent performance, increasing revenue, gross profit and operating profit in each of the three main geographies in which we operate.

This is due to our focussed strategy and having a unique portfolio of services which have been crucial in maintaining and growing existing client relationships.

The current year has got off to a positive start across all of our geographies and all of our business segments. We are leveraging our competitive advantages - notably strong market leading positions, leading brands and a comprehensive portfolio of services delivered by outstanding professionals - and we believe that we are excellently placed to make further progress during the current year as economic conditions improve.

Albert Ellis

Chief Executive Officer

28 April 2011

FINANCIAL REVIEW

Profit & Loss

Revenue grew by 12% to £422.3m (2010: £376.2m), while gross profit rose by 13% to £68.5m (2010: £60.4m). The recovery was broad-based, with increases in the UK and Ireland, the rest of Europe and the United States. Permanent revenue grew strongly, up by 37% on the previous year.

Tight control of costs and improved productivity resulted in a 45% increase in operating profit before non-recurring items to £6.5m (2010: £4.5m). Non-recurring items in the year relate to professional fees of £0.1m for an acquisition and movements in property lease provisions relating to the current and previous year. Net interest payable fell by 46% to £0.2m (2010: £0.4m) as a result of strong cash generation during the year. Profit before tax rose by £5.0m to £6.3m (2010: £1.3m).

Taxation

The tax charge for the year was £1.9m (2010: £0.4m) giving an overall effective rate of tax of 30.5% (2010: 32.3%). This included an adjustment in respect of prior years of £0.1m (2010: £0.3m) and a deferred tax charge in respect of timing difference of £0.4m (2010: £1.2m credit). The overall effective rate of tax is a function of the mix of profits between the various countries in which the Group operates.

Minority Interest

The minority interest in the year represents the minority share of profit after tax of Bjerke & Luther AS and TechDiscovery LLC.

Earnings per Share

Basic earnings per share rose by 437% to 5.85p (2010: 1.09p), while diluted earnings per share rose also rose by 437% to 5.80p (2010: 1.08p)

Balance Sheet

Net assets rose in the year by 8% to £61.3m (2010: £56.8m), while net tangible assets rose by 19% to £12.6m (2010: £10.6m). The net book value of tangible fixed assets at 31 January 2011 was £4.0m (2010: £3.2m). Additions during the year of £2.6m included expenditure of £1.9m on hardware and software incurred by Nash Technologies in Germany, rechargeable to clients. Other than the client-paid capital expenditure in Nash Technologies, expenditure was £0.7m, of which £0.4m was on computer equipment, £0.2m was on leasehold improvements, office equipment, furniture and fixtures and £0.1m was on furniture, fixtures and equipment with an acquisition.

The carrying value of intangible assets at 31 January 2011 was £48.7m (2010: £46.2m) of which £1.1m related to the Alumni brand, £0.5m related to the Bjerke & Luther brand acquired during the year and the balance was goodwill.

Net trade receivables rose to £69.5m (£61.7m) as a result of higher revenue. Debtor days fell to 44.6 days (2010: 45.8 days). Trade payables rose to £44.4m (2010: £38.3m) as a result of increased trading.

Contingent consideration of £0.02m in non-current liabilities represents amounts payable in cash for the acquisition in December 2008 of Fila & Myszel Associates in Poland.

Provisions for liabilities and charges of £0.3m relate to three onerous property leases which run to December 2011, September 2013 and September 2014.

Cash Flow

There was a strong operating cash inflow in the year of £10.0m. Income tax paid was £1.0m, capital expenditure was £2.5m (of which £1.9m was client-paid), the net cash outflow on an acquisition during the year was £1.5m, net interest paid was £0.2m and dividend payments totalled £1.9m. This resulted, after a foreign exchange gain of £0.2m, in an increase in net cash during the year of £3.1m to £8.3m (2010: £5.1m). To aid transparency, net cash has been split into gross cash of £15.6m (2010:£12.2m) and gross borrowings of £7.3m (2010: 7.0m) on the face of the balance sheet.

Banking Facilities

The Group continues to enjoy substantial headroom in relation to its banking facilities. At the balance sheet date these comprised invoice discounting and overdraft facilities for working capital in the UK of £22.0m and invoice discounting facilities in Europe of €18m. After the year end, additional invoice discounting facilities of $6.0m have been arranged in the United States. The invoice discounting facilities are available on a rolling annual basis. The Group has no term debt.

Acquisitions

On 29 April 2010 the Group acquired a 50.1% stake in Bjerke & Luther AS an executive search and selection company in Norway. The consideration comprised cash of Norwegian Kroner 18.5m (approximately £2.0m). In addition Harvey Nash has been granted a call option to acquire the additional 49.9% of the shares in Bjerke & Luther from the sellers which may be exercised between 1 February 2013 and 2 April 2013. The consideration for the acquisition of the additional shares shall be calculated on the same basis as the consideration for the initial shares, subject to a minimum aggregate consideration of NOK 11.5m (approximately £1.3 million) and a maximum of NOK 30.5m (approximately £3.4 million).

The value of the call option has been considered and at the balance sheet date, based on valuations in the Norwegian market, is deemed to reflect the fair value of the final consideration due should the remaining 49.9% be acquired and as such no asset has been recognised in respect of the option.

Richard Ashcroft

Group Finance Director

28 April 2011

Consolidated Income Statement

for the year ended 31 January

Consolidated Statement of Comprehensive Income

for the year ended 31 January

The above results are derived from continuing activities.

Consolidated Balance Sheet

as at 31 January 2011

Shareholders' Funds and Changes in Shareholders' Equity

for the year ended 31 January

* This relates to deferred consideration for the acquisition of Silkroad Systems from June 2007 being settled in the year.

Consolidated Cash Flow Statement

for the year ended 31 January 2011

Notes

1. Basis of preparation

The Listing Rules of the UK Listing Authority (LR 9.7A.1) require that preliminary unaudited statements of annual results must be agreed with the listed company's auditors prior to publication, even though an audit opinion has not yet been issued. In addition, the Listing Rules require such statements to give details of the nature of any likely modification that may be contained in the auditors' report to be included with the annual report and accounts. Harvey Nash Group plc confirms that it has agreed this preliminary statement of annual results with PricewaterhouseCoopers LLP and that the Board of Directors has not been made aware of any likely modification to the auditors' report required to be included with the annual report and accounts for the year ended 31 January 2011.

The information in this announcement, which was approved by the Board of Directors on 27 April 2011, does not comprise statutory accounts for the years ended 31 January 2011 or 31 January 2010, within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 January 2010, which contained an unqualified audit report under Section 235 of the Companies Act 1985 and which did not make any statements under Section 237 of the Companies Act 1985, have been delivered to the Registrar of Companies in accordance with Section 242 of the Companies Act 1985.

Statutory accounts for the year ending 31 January 2011 will be made available to shareholders at the end

of May 2011 and delivered to Companies House in due course. The preliminary announcement for the full year ended 31 January 2011 has been prepared in accordance with the accounting policies as disclosed in Harvey Nash Group Plc's 2010 Annual Report, as updated to take effect of any new accounting standards applicable for 2010 as set out in Harvey Nash Group Plc's 2010 Half Year Report.

2. Segment Information

IFRS 8 requires disclosure of information about the Group's operating segments and replaces the requirement to determine primary (business) and secondary (geographical) reporting segments of the Group. It requires a management approach under which segment information is presented on the same basis as that used for internal reporting purposes. The chief operating decision maker has been identified as the Group Board.

This has resulted in three reportable segments, UK and Ireland, Rest of Europe and United States. Asia Pacific is included in the UK and Ireland segment in line with the way the results are analysed by the Group Board.

The directors do not consider revenue by origin to be materially different from revenue by destination. Also all revenue is external and not inter-segment.

Services provided by each reportable segment are permanent recruitment, contracting and outsourcing.

The Group Board analyses segmental information as follows:

Revenue

Gross Profit

Operating Profit

Depreciation and amortisation charge

Within the Rest of Europe segment there is an amortisation charge of £70k (2010: £49k)

3. Income tax expense

4. Earnings Per Share

Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the year, excluding those held in the employee share trust, which are treated as cancelled.

For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. The Group has two categories of potential ordinary shares: those share options granted to employees where the exercise price is less than the average price of the Company's ordinary shares during the year, and deferred consideration shares to be issued.

5. Non recurring items

Non-recurring items have been disclosed separately to give a clearer presentation of the Group's results. 

They relate to professional fees in relation to the acquisition of Bjerke & Luther AS, in Norway of £130k and onerous property provision movements relating to the current and prior year. In the year ending January 2010 the non-recurring items related to restructuring and included the costs of redundancy and onerous property leases.

6. Provisions

Provisions relate to three onerous property leases which run to December 2011, September 2013 and September 2014 respectively.

£135k will fall due within one year and £193k will be payable after more than one year.

7. Business Combinations

On 29 April 2010, the Group acquired 50.1% of the share capital of Bjerke & Luther AS, an Executive search and selection firm in Norway, for a consideration of £2.0m.

Harvey Nash has been granted a call option to acquire the additional 49.9 % of the shares in Bjerke & Luther AS from the sellers which may be exercised at the option of Harvey Nash between 1 February 2013 and 2 April 2013, based upon a multiple of the average profit before tax of Bjerke & Luther AS over a 3 year period until 31 January 2013. The value of the call option has been considered and at the balance sheet date, based on valuations in the Norwegian market, is deemed to reflect the fair value of the final consideration due should the remaining 49.9% be acquired and as such no asset has been recognised in respect of the option.

If Harvey Nash does not exercise the call option the sellers will have an option to acquire the initial shares from Harvey Nash for a consideration equal to the consideration paid by Harvey Nash plus outstanding dividends.

The acquired business contributed revenues of £2.0m and operating profit of £0.4m to the Group for the period from acquisition to 31 January 2011. If the acquisition had occurred on 1 February 2010, consolidated revenue and consolidated profit for the year ended 31 January 2011 would have been £422.9m and £6.6m respectively.

Details of the net assets acquired and the intangible asset are as follows:

The assets and liabilities arising from the acquisition are as follows:

Outflow of cash to acquire business, net of cash acquired:

The Group has reviewed the acquisition of Bjerke & Luther for intangibles arising within the 12 month window as allowed under IFRS 3. Following this review by management, an intangible has been recognised in respect of the Bjerke & Luther brand, this intangible has a net value of £0.55m, leaving goodwill from the acquisition of £1.30m.

The goodwill is attributable to Bjerke & Luther's workforce and the synergies expected to arise from being part of the Harvey Nash Group.

8. Risk Management

The Board reviews the key risks facing the business regularly. Outlined below are the main risks that

could potentially impact the Group's operating and financial performance:

·; Economic Environment

The performance of the Group is aligned to the underlying growth of the economies of the countries in which it operates. The group has a number of policies in place to mitigate macro economic risks. These include a unique portfolio of services which caters for all stages of the economic cycle and a focus on annuity revenue streams which provide greater visibility of revenue.

·; Key Clients

The risk of loss of a key client is lessened by the Group not being overly reliant on any one client. The Group also ensures that there are regular reviews of relationships with all clients.

·; Talent

The loss of senior management or key personnel could adversely affect the Group's results. This is mitigated by an ongoing talent management programme, sponsored by the Group's Executive Council.

·; Technology

The Group relies on technology systems to provide services to clients and candidates. These systems are dependent on a number of suppliers that provide the technology infrastructure and disaster recovery solutions. The Group mitigates technology risks by conducting regular reviews of technology both externally with third party providers of IT services and internally.

·; Regulatory Environment

The recruitment industry is governed by an increasing level of compliance, which varies from country to country and market to market. The Group mitigates this risk by taking external professional advice where appropriate and maintaining robust internal controls and processes to ensure compliance with respect to legal and contractual obligations.

·; Foreign Exchange

The Group has significant operations outside the UK and is therefore exposed to movements in exchange rates. There is no active management of foreign exchange risk although the Group continues to monitor its strategy in this area.