17th Apr 2008 07:01
Harvey Nash Group PLC17 April 2008 HARVEY NASH GROUP PLC ("Harvey Nash" or "the Group") Harvey Nash, the international professional Recruitment and Outsourcing Servicesgroup, announces preliminary results for the year ended 31 January 2008. 2008 2007 ChangeRevenue £318.6m £251.7m 27%Net Fee Income * £58.5m £48.3m 21%Operating Profit £8.5m £6.7m 26%Profit Before Tax £7.6m £5.8m 31%Basic Earnings Per Share 7.54p 6.33p 19%Net Cash/(Debt) £4.2m (£2.6m) £6.8mCash Generated from Operating Activities £14.6m £4.7m 209% Source: Unaudited consolidated Financial Statements of Harvey Nash Group Plc *Net Fee Income = Gross Profit (and this will apply throughout the statement) Financial Highlights • Strong Revenue growth, up 27% • Excellent growth in Profit Before Tax, up 31% • Cash generation up 209% from operating activities, to £14.6m • Net cash at year end up £6.8m compared to the previous year • Total dividend of 1.80p (2007:1.0p). Proposed final dividend of 1.10p per share Operational Highlights • Record levels of demand for Offshore Services with increased capacity through the acquisition of a new outsourcing facility in Vietnam • Outstanding organic growth in UK Executive Search, net fee income up 43% • Another excellent performance in Europe with net fee income up 39% • Successful expansion of European geographic footprint into new growth markets of Sweden and Ireland • US profitable with acquisition in Atlanta performing ahead of budget • Unique portfolio of services further broadened by new services: Strategic Business Technology Consulting and Business Process Outsourcing Commenting on the results, the Chief Executive Officer, Albert Ellis, said: "The excellent results for the year reflect our strong market leading position.In addition to our successful organic-led growth strategy, we acquired a numberof earnings enhancing businesses and are delighted with their performance. "The current year has started well with robust trading in the first two months.Overall, our businesses in the US, UK and Europe are trading ahead of budget andthe previous year." 17th April 2008 ENQUIRIES: Harvey Nash Tel: 020 7333 2635Albert Ellis, Chief Executive OfficerRichard Ashcroft, Group Finance Director College Hill Tel: 020 7457 2020Mark Garraway Robert Pugsley A presentation for analysts will take place at 09:30 this morning at the officesof College Hill, The Registry, Royal Mint Court, London, EC3 CHAIRMAN'S STATEMENT I am delighted to report on the Group's excellent financial performance for theyear ended 31 January 2008. The strong trading results reflect excellent organicgrowth complemented by the strategic investment in new higher growth marketssuch as Sweden and Ireland, while the increasing demand for outsourcing andoffshoring services underpinned the Group's revenue growth. Cash generation wasstronger than expected, resulting in an overall positive net cash position atthe year end. Financial Results Revenue for the year ended 31 January 2008 increased by 27% to £318.6m (2007:£251.7m). Net fee income was £58.5m (2007: £48.3m) with profit before taxincreasing 31% to £7.6m (2007: £5.8m). Basic earnings per share increased 19% to7.54p (2007: 6.33p). The stronger than expected cash generated from operating activities of £14.6m(2007: £4.7m) resulted in a significantly strengthened balance sheet with a netcash position of £4.2m compared to net borrowings of £2.6m at the 31 January2007. Dividend With the strong growth in earnings and cash generation, the Board isrecommending an increase in the total dividend for the year to 1.80p (2007:1.0p). This comprises a proposed final dividend of 1.1p (2007: 1.0p) per shareand an interim dividend of 0.7p (2007: Nil) per share paid in November 2007. Strategy & acquisitions The Group's key strategic business development asset is its unique portfolio ofservices. This competitive advantage is a major factor in developing boardroomrelationships with our clients and in attracting suitable acquisitions into theGroup. A substantial portion of the increase in revenue has come fromsuccessfully cross-selling other services into our blue-chip client base. Forexample, in the UK, the cross-selling of other services represents over 20% oftotal revenue and many of the offshore software development opportunities arisethrough existing relationships. Targeted investment in the Group's market-leading brand has been maintainedthroughout the year. Our well known brand attracts new clients, qualitycandidates and is a key factor in recruiting and retaining talented fee-earners.Increasingly, the brand is becoming more visible through the Group's closeassociation with the Confederation of British Industry. All brand-relatedinvestment is tracked to ensure a suitable return on investment from both newand existing relationships. The Group's geographic coverage was increased in new markets through theacquisition of Alumni AB, Sweden's leading executive search consultancy, andRescon Limited, a leading IT recruitment and IT solutions business based inDublin, Ireland. The Group also expanded its Outsourcing and Offshore capacity, in line with theincreasing trend by our clients to outsource IT-related projects, particularlyin the software development arena. Such projects are longer-term in nature andconsequently enhance the Group's quality and visibility of earnings. During theyear, we acquired SilkRoad Systems Limited, a Vietnamese based IT outsourcingbusiness in Ho Chi Minh City. We also acquired a significant equity stake inTechDiscovery LLP, a strategic technology consultancy based in Atlanta, therebyexpanding and formalising the already successful existing strategic partnership. The Group's ongoing strategy will continue to be based on the successful formulaof combining a strong organic growth model with bolt-on and earnings enhancingacquisitions in new markets. Board and Employees On behalf of the Board, I would like to thank all of the Group's talentedemployees and associates who have, once again, shown outstanding professionalismand commitment to our clients and candidates throughout the year. Prospects and Outlook We are successfully capitalising on our strategic advantages and leveraging ourstrong, internationally recognised brand. The current year has started well with robust trading in the first two months.Our businesses in the US, UK and Europe are all trading ahead of budget. Ian KirkpatrickChairman OPERATIONAL REVIEW United Kingdom and Ireland Revenue increased by 15% to £105.8m (2007: £92.2m) and net fee income was up 18%to £29.2m (2007:£24.8m). The higher growth in net fee income was driven byincreased demand by clients for permanent headcount in the IT function combinedwith the expansion of our Executive Search business up 43% on the previous year.Offshore software development increased revenue by 70% reflecting the macrotrend for global sourcing and the drive to reduce technology costs. Operating profit increased by 33% to £4.7m (2007: £3.5m). The increase inoperating profit margin from 14.3% to 16.1% was achieved despite increasingfee-earners by 27% year on year and reflects higher gross margins and thebenefits of additional economies of scale. The Executive Search and Interim Management businesses continue to expand theirdelivery expertise into all major sectors. The Executive Search businessbenefited from strong demand in the technology and media sectors, ongoing demandfrom business services and the Public Sector practice continued to makeexcellent progress, increasing market share and expanding the businessprofitably. The Commerce and Industry practice also enjoyed robust growth asmanufacturing and industry in the UK benefited from a strong year. The newEdinburgh office is on track and further progress is expected this year. With the acquisition of SilkRoad in Vietnam, the software development andbusiness process outsourcing expertise has been increased and new clients won,while high retention rates were registered for existing relationships. Demand for IT technical specialists led to growth across the UK, particularly inthe regions with oil & gas, telecommunications, media and traditional bankingand insurance companies in particular continuing to recruit into the ITfunction. Candidate confidence reflects a high level of demand for specialist skills withgood quality applicants often receiving more than one offer. We agree with theGartner 1st Quarter Worldwide CIO Survey 2008 research that the scale ofcut-backs in technology spend, following the downturn in 2000 has left much lessexcess capacity today. In Ireland, demand was strong throughout the year with the newly acquiredsubsidiary comfortably on track to achieve its first year targets. We have along-term contract with a key client in the public sector, where we provide asolutions-based service. Continental Europe Revenue in mainland Europe increased by 43% to £189.1m (2007: £132.6m), and netfee income was up 39% to £20.8m (2007:£15.1m). Increased demand for ExecutiveSearch, combined with higher levels of permanent IT placements in Germany,Belgium and Switzerland, were the key drivers in increasing gross margin. Operating profit increased by 31% to £3.0m (2007: £2.3m) as fee-earner headcountincreased by 67%, mainly in the strong Scandinavian region. Economic conditionswere favourable throughout the year, with business confidence rising and demandfor IT professionals outstripping supply. The trend across Europe towards hiring permanent staff increased during theyear. Organic growth in permanent revenue was 30% while the growth in ITcontractors in the year was 23%. Overall net fee income in the Netherlands grew by 30%. The Netherlands continuedto build on its workforce risk management outsourcing service which has beenintroduced in Belgium and Germany. In Belgium and Luxembourg overall revenue increased by 26%, with permanentrevenue up by 94%. Growth came from across a diverse client base but thetechnology and telecommunications sectors were the main drivers. The investment made in France resulted in net fee income growing by 42% comparedto the previous year. With positive expectations being set by the new Frenchgovernment over tackling labour flexibility and deregulation, the Group isconfident this investment will pay off in the medium term. In Germany and Switzerland net fee income increased slightly as margins andcontractor numbers growth was lower than in the rest of Europe. In Zurich, ITcontractor volumes from the financial services sector were slightly lower and inGermany, widely reported cost reduction programmes, (for example Siemens) havereduced margins and volume. The Group has therefore focused on market segmentssuch as Engineering in Germany and clients in Geneva not directly impacted bythe slow down in financial services. Our acquisition in Sweden, which offers executive search and leadershipconsultancy, has performed well with net fee income 18% ahead of the budget setat the time of acquisition in May 2007. Expansion into Denmark was achievedwith the opening of an office in Copenhagen in November 2007. United States Whilst market conditions in the US were uncertain during the majority of theyear, our net fee income on a constant currency basis was broadly similar to theprevious year with a fivefold growth in IT solutions underpinning the results.Executive Search was excellent with net fee income up over 70% to £1.2m (on aconstant currency basis) demonstrating the strength of the Group's portfolio ofservices. Operating profit, at £0.8m (2007: £0.9m), was only 9% lower than the previousyear and at constant currency rates broadly similar to the previous year. TheGroup's response to tightening market conditions has been a timely and prudenttrimming of our cost base, particularly in the IT recruitment division alongsidea continuing focus on higher margin activities. The performance of our new strategic IT consultancy, TechDiscovery, has beenahead of our expectations and cross-selling synergies have been identified andexploited, resulting in a positive start to the new financial year.TechDiscovery's business is less susceptible to cyclical market trends becausethe projects are tied to client's core corporate functions or strategicinitiatives and usually involve long term contracts. Summary The Group's key strategic advantages, its strong balance sheet and diverseportfolio of services continue to take the business higher up the value chain.Based on the excellent performances in the UK and Europe, the successfulacquisitions and the stability we achieved in the US despite the marketuncertainty, we were able to twice upgrade our expectations for full yearprofits during the year. We are pleased with the way the current year has started, in particular with allour key markets performing ahead of budget. I look forward to reporting on further progress throughout the year. Albert EllisChief Executive Officer FINANCIAL REVIEW Profit and Loss Revenue increased by 27% to £318.6m for the year ended 31 January 2008 (2007:£251.7m). Net fee income increased during the year by £10.2 million, while thecost base was tightly controlled, resulting in an improvement in the conversionratio (operating profit margin as a percentage of net fee income) from 14% inthe previous year to 15%. Net interest payable was reduced by 5% to £0.9m inline with the strong cash generation and profit before tax rose by 31% to £7.6million. Taxation The tax charge for the year was £2.2m (2007: £1.7m), giving an overall effectiverate of tax of 29.2% (2007: 29.5%). This reflects the benefits of lower rates ofcorporation tax during the year in certain overseas countries. Minority interest The minority interest represents the minority share of profit after tax ofTechDiscovery LLP, acquired in November 2007. Earnings per Share Basic earnings per share rose by 19% to 7.54p (2007: 6.33p). Fully dilutedearnings per share rose by 19% to 7.33p (2007: 6.18p). Balance Sheet The net book value of tangible fixed assets rose during the year as a result ofacquisitions. Capital expenditure (£0.6m) continued to be tightly controlled andwas £0.2m lower than depreciation charged. The group had a positive net cash position at the year of £4.2 million, havingrepaid the remainder of the term loan earlier than expected (£2.0m), comparedwith net borrowings at the end of the previous year of £2.6m. The value of intangible assets rose during the year by £14.3m mainly as a resultof acquisitions during the year. Trade and other receivables increased by £18.8m due to the increased tradinglevels and acquisitions made during the year. The largest increase was in theNetherlands, where revenue rose in the year by 68%. The increase in trade andother payables was also the result of increased trading levels and acquiredbusinesses. Contingent consideration represents the amounts payable in cash for theacquisitions of Alumni AB and TechDiscovery LLP. Cash Flow There was a trading cash flow of £9.5m (2007: £7.5m) generated from operatingactivities before working capital movements. A further £7.4m was squeezed fromworking capital resulting in a total of £14.6 m being generated from operatingactivities. Tax paid in the year was £2.3m (2007: £0.6m). Initial and deferred consideration of £5.2m was payable on acquisitions duringthe year, net of cash acquired. Capital expenditure in the year was £0.6m (2007:£0.6m) and represents mainly office infrastructure and IT systems investment,facilitating the expansion of the Group's fee-earning base. During the year £0.1m (2007: £0.1m) was received from the issue of shares on theexercise of share options. Dividends paid were £1.2m and net interest payablewas £0.9m (2007:£0.9m). The balance of the term loan of £2.0m was repaid earlierthan expected on 31 January 2008. Banking Facilities The Group enjoys significant headroom in relation to its agreed bankingfacilities which total circa £27.4m. These comprise working capital facilitiesof £12.0m in the UK and £13.4m in the Netherlands, and a UK overdraft facilityof £2.0m. Acquisitions On 22 May 2007, the Group acquired 100% of the share capital of Alumni AB, anExecutive Search and Strategic Leadership Consultancy in Sweden. Theconsideration comprised cash consideration of £5.1m (of which £4.4m was raisedvia a vendor placing) and additional payments which will be payable in cashcurrently estimated at £1.4m over the two years ending 30 April 2011 subject tocertain profit targets being achieved. On 25 June 2007, the Group acquired 100% of the share capital of SilkRoadSystems Limited and its subsidiary, SilkRoad Systems (Vietnam) Limited, atechnology and software development company based in Ho Chi Minh City, Vietnam.The consideration comprised initial cash consideration of £0.7m, 226,646ordinary 5p shares in Harvey Nash Group plc and additional payments of up to£0.1m which will be payable in shares in Harvey Nash Group plc over the threeyears ending 30 June 2010 subject to certain profit targets being achieved. On 17 August 2007, the Group acquired 100% of the share capital of Rescon ITLimited, an IT recruitment and solutions business based in Dublin, Ireland. Theconsideration comprised an initial cash consideration of £3.4m, and additionalpayments currently estimated at £1.2m which will be payable in shares in HarveyNash Group plc in the year ended 30 June 2008 subject to certain profit targetsbeing achieved. On 5 November 2007, the Group acquired 56.6% of the share capital ofTechDiscovery LLP, which specialises in business-focused IT solutions based inAtlanta, USA. The consideration comprised initial cash consideration of £0.8m,and additional payments currently estimated at £1.5m which will be payable cashor shares in Harvey Nash Group plc at Harvey Nash's option subject to certainprofit targets being achieved in the period to 30 September 2008. The final tranche of the deferred consideration for the acquisition of thebusiness and certain assets of Bluesuit Consulting Inc, the Group's Chicagobased business, of £0.3m was paid in February 2008 based on the results for theyear ending on 16 December 2007. Richard AshcroftGroup Finance Director Unaudited Consolidated Income Statementfor the year ended 31 January 2008 Notes 2008 2007 £ '000 £ '000 Revenue 3 318,637 251,742Cost of sales (260,153) (203,480) Gross profit 58,484 48,262Total administrative expenses (49,972) (41,530) Operating profit 8,512 6,732Finance income 893 299Finance costs (1,787) (1,235) Profit before tax 7,618 5,796Income tax expense 5 (2,231) (1,712) Profit for the year 5,387 4,084 Attributable to: Equity holders of the company 5,305 4,084 Minority interest 82 - 5,387 4,084 Basic earnings per share 4 7.54p 6.33p Diluted earnings per share 4 7.33p 6.18p Unaudited Consolidated Statement of Recognised Income and Expensefor the year ended 31 January 2008 2008 2007 £ '000 £ '000 Profit for the year 5,387 4,084 Foreign currency translation differences 1,652 (978) Total recognised income for the year 7,039 3,106 Attributable to: Equity holders of the company 6,952 3,106 Minority interest 87 - 7,039 3,106 The above results are derived from continuing activities. Unaudited Consolidated Balance Sheetas at 31 January 2008 Notes 2008 2007 £ '000 £ '000ASSETSNon-current assetsProperty, plant and equipment 1,662 1,450Intangible assets 41,825 27,516 Deferred income tax assets 1,269 1,304 44,756 30,270 Current assetsCash 6 4,184 -Trade and other receivables 70,551 51,747 Total assets 119,491 82,017 LIABILITIESNon-current liabilitiesFinancial liabilities - borrowings - (819)Contingent consideration (689)Deferred income tax liabilities (132) (175) (821) (994)Current liabilitiesTrade and other payables (66,492) (40,736)Current income tax liabilities (1,850) (1,388)Contingent consideration (2,112) -Financial liabilities - borrowings - (1,784)Provisions - (328) (70,454) (44,236) Total liabilities (71,275) (45,230) Net assets 48,216 36,787 EQUITYCapital and reserves attributable to equity shareholdersOrdinary shares 3,622 3,325Share premium 8,208 4,111Shares to be issued 1,643 595Fair value and other reserves 15,079 15,079Own shares held (148) (656)Cumulative translation reserve 767 (885)Retained earnings 7 18,963 15,218 10 48,134 36,787Minority interest in equity 82 - Total equity 48,216 36,787 Unaudited Consolidated Cash Flow Statementfor the year ended 31 January 2008 2008 2007 £ '000 £ '000 Profit before income taxation 7,618 5,796Adjustments for:- depreciation 751 789- loss on disposal of fixed assets - 33- finance income (893) (299)- finance costs 1,787 1,235- profit on sale of investment - (449)- share based employee settlement and share option charge 210 423 Operating cash flows before changes in working capital 9,473 7,528 Changes in working capital (excluding the effects of acquisition andexchange differences on consolidation)- increase in trade and other receivables (21,467) (7,639)- increase in trade and other payables 29,176 5,138- (decrease)/ increase in provisions for liabilities and charges (328) 314 Cash flows from operating activities 16,854 5,341 Income tax paid (2,275) (630) Net cash generated from operating activities 14,579 4,711 Cash flows from investing activitiesPurchases of property, plant and equipment (574) (565)Cash acquired with acquisitions 1,278 -Purchase of subsidiary undertakings (6,514) -Proceeds from sale of investment - 449Interest received 893 299 Net cash (absorbed)/ generated from investing activities (4,917) 183 Cash flows from financing activitiesRepayment of borrowings (1,982) (1,000)Proceeds from issue of ordinary shares 60 129Dividends paid to group shareholders (1,228) -Interest paid (1,787) (1,235) Net cash used in financing activities (4,937) (2,106) Increase in cash and cash equivalents 4,725 2,788Cash and cash equivalents at the beginning of the year (784) (3,371) Exchange gains /(losses) on cash and cash equivalents 243 (201) Cash and cash equivalents at the end of the year 4,184 (784) 1. General Information Harvey Nash Group plc ('the Company') and its subsidiaries (together 'theGroup') is a leading provider of specialist recruitment and outsourcingsolutions. The Group has offices in the UK, Europe, United States and Vietnam. The Company is a public listed company incorporated in the UK. Its registeredaddress is 13 Bruton Street, London W1J 6QA and its listing is on the LondonStock Exchange. 2. Accounting Policies The financial information set out in this preliminary announcement has beenprepared on the basis of the principal accounting policies set out in theaudited financial statements for the year ended 31 January 2007, published on 18May 2007 and available on our website. The financial information does notconstitute statutory accounts within the meaning of section 240 of the CompaniesAct 1985. The 2007 accounts were delivered to the Registrar of Companies andthe audit opinion was unqualified and did not contain a statement under eithersection 237(2) or section 237(3) of the Companies Act 1985. Statutory accountsfor the year ended 31 January 2008 will be dispatched to shareholders duringJune 2008 for approval at the Annual General Meeting to be held on 3 July 2008. 3. Segment Information The consolidated entity operates in one business segment being that ofrecruitment and outsourcing services. As a result, no additional businesssegment information is required to be provided. The Group's secondary segmentis geography. The segment results by geography are shown below includingrevenue by origin. The directors do not consider revenue by origin to bematerially different from revenue by destination. Revenue Segment assets Capital expenditure 2008 2007 2008 2007 2008 2007 £ '000 £ '000 £ '000 £ '000 £ '000 £ '000 United Kingdom & Ireland 105,816 92,220 41,666 26,798 380 352Netherlands 125,184 74,668 38,132 24,567 16 6Rest of Europe 63,893 57,895 25,525 23,281 28 42United States 23,744 26,959 12,440 10,631 48 165Asia Pacific - - 459 37 102 - Total 318,637 251,742 118,222 85,314 574 565 4. Earnings Per Share 2008 2007 Profit attributable to shareholders £'000 5,305 4,084Weighted average number of shares 70,339,958 64,542,753Basic earnings per share 7.54p 6.33p Basic earnings per share is calculated by dividing the earnings attributable toordinary shareholders by the weighted average number of ordinary shares in issueduring the year, excluding those held in the employee share trust, which aretreated as cancelled. For diluted earnings per share, the weighted average number of ordinary sharesin issue is adjusted to assume conversion of all dilutive potential ordinaryshares. The Group has two categories of potential ordinary shares: those shareoptions granted to employees where the exercise price is less than the averageprice of the Company's ordinary shares during the year, and deferredconsideration shares to be issued. 2008 2007 Profit attributable to shareholders £'000 5,305 4,084Weighted average number of shares 70,339,958 64,542,753Effect of dilutive securities 2,064,640 1,533,120Adjusted weighted average number of shares 72,404,598 66,075,873Diluted earnings per share 7.33p 6.18p 5. Income tax expense 2008 2007 £ '000 £ '000 Corporation tax on profits in the year - UK 530 84Corporation tax on profits in the year - overseas 1,932 1,458Adjustments in respect of prior years (9) 65 Total current tax 2,453 1,607 Deferred tax (222) 105 Total tax charge 2,231 1,712 6. Analysis of Changes in Net Debt 1 February 2007 Cash flow Non cash Foreign 31 January movements exchange 2008 movements £'000 £'000 £'000 £'000 £'000 Cash and cash equivalents (784) 4,725 - 243 4,184 (784) 4,725 - 243 4,184Debt due within one year (1,000) 1,982 (819) (163) -Debt due after one year (819) - 819 - - (1,819) 1,982 - (163) - Total (2,603) 6,707 - 80 4,184 The non-cash movements reflect changes in the maturity of the debt following adebt restructuring in the year. 7. Retained Earnings 2008 2007 £ '000 £ '000 At 1 February 15,218 (4,210)Employee share options and bonus plan (117) 160IFRS 2 Deferred Tax charge to equity (215) 277Capital Restructuring - 15,063Goodwill adjustment - (156)Profit for the year 5,305 4,084Dividends paid (1,228) - At 31 January 18,963 15,218 8. Dividends The dividends paid in year end January 2008 were £1.2m (2007: nil). The proposed final dividend of £0.8m (1.1p per share) is subject to approval byshareholders at the Annual General Meeting on 3 July 2008 (2007: 1.0p per shareamounting to £0.7m) and has not been included as a liability at 31 January 2008. 2008 £ '000 Final dividend for year end January 2007 of 1.0p per share 722Interim dividend for year end January 2008 of 0.7p per share 506 1,228 Proposed final dividend for year end January 2008 of 1.1p per share 795 9. Business Combinations The Group made four acquisitions in the period. As allowed under IFRS 3, theGroup is using the 12 months after acquiring the businesses to consider whetherthere are intangible assets that should be recognised separately from goodwill. The directors do not expect the intangible assets to be material as the majorityof the value relates to the workforce but consideration will be given to areassuch as brand and customer relationships. In all cases, the provisional fair value of the net assets acquired isapproximately equal to the acquiree's carrying amount. Alumni AB On 22 May 2007, the Group acquired 100% of the share capital of Alumni AB, anExecutive Search and Strategic Leadership Consultancy in Sweden. The consideration comprised initial cash consideration of £4.6m and additionalpayments which will be payable in cash currently estimated at £1.8m over thefour years ending 30 April 2011 subject to certain profit targets beingachieved. The acquired business contributed revenues of £3.6m and operating profit of£0.9m to the Group for the period from acquisition to 31 January 2008. If theacquisition had occurred on 1 February 2007, consolidated revenue andconsolidated profit for the year ended 31 January 2008 would have been £319.7mand £8.6m respectively. Details of provisional net assets acquired and intangible assets are as follows: £'000 Initial cash paid - net proceeds of share issue 4,136Initial cash paid - directly by the Group 451Contingent Consideration - paid 516Contingent Consideration - current 637Contingent Consideration - non-current 689Direct costs relating to the acquisition - paid 243Total purchase consideration 6,672Fair value of net identifiable assets acquired (549)Intangible Asset 6,123 The intangible asset is attributable not only to Alumni AB's workforce but alsoits strong position and profitability in its market and the synergies expectedto arise after its acquisition by the Group. The assets and liabilities arising from the acquisition are as follows: £'000Fixed Assets 76Cash 297Receivables 737Payables (561)Net identifiable assets acquired 549 Outflow of cash to acquire business, net of cash acquired: £'000Cash Consideration 4,587Cash and Cash equivalents in subsidiary acquired (297)Cash outflow on acquisition 4,290 Harvey Nash raised £4.4m gross (£4.14m net) to fund the acquisition by placingan additional 5,512,500 shares at 80p. SilkRoad Systems Limited On 25 June 2007, the Group acquired 100% of the share capital of SilkRoadSystems Limited and its subsidiary, SilkRoad Systems (Vietnam) Limited, atechnology and software development company based in Ho Chi Minh City, Vietnam. The consideration comprised initial cash consideration of £0.7m, 226,646ordinary 5p shares in Harvey Nash Group plc and additional payments of up to£0.1m which will be payable in shares in Harvey Nash Group plc over the threeyears ending 30 June 2010 subject to certain profit targets being achieved. The acquired business contributed revenues of £0.5m and operating profit of£0.1m to the Group for the period from acquisition to 31 January 2008. If theacquisition had occurred on 1 February 2007, consolidated revenue andconsolidated profit for the year ended 31 January 2008 would have been £318.6mand £8.5m respectively. Details of net assets acquired and intangible assets are as follows: £'000Initial cash paid 707226,646 ordinary 5p shares in Harvey Nash Group plc 197Contingent consideration 116Direct costs relating to the acquisition - accrued 92Total purchase consideration 1,112Fair value of net identifiable assets acquired (90)Intangible Asset 1,022 The intangible asset is attributable to SilkRoad Systems (Vietnam) Limited'sstrategic fit with the Group's Outsourcing and Offshoring capabilities. The assets and liabilities arising from the acquisition are as follows: £'000Fixed Assets 60Cash 18Receivables 165Payables (153)Net identifiable assets acquired 90 Outflow of cash to acquire business, net of cash acquired: £'000Cash Consideration 707Cash and Cash equivalents in subsidiary acquired (18)Cash outflow on acquisition 689 Rescon IT Limited On 17 August 2007, the Group acquired 100% of the share capital of Rescon ITLimited, an IT recruitment and solutions business based in Dublin, Ireland. Theconsideration comprised initial cash consideration of £3.4m, and additionalpayments currently estimated at £1.2m which will be payable in shares in HarveyNash Group plc over the three years ending 30 June 2010 subject to certainprofit targets being achieved. The acquired business contributed revenues of £3.6m and operating profit of£0.5m to the Group for the period from acquisition to 31 January 2008. If theacquisition had occurred on 1 February 2007, consolidated revenue andconsolidated profit for the year ended 31 January 2008 would have been £321.6mand £8.8m respectively. Details of net assets acquired and intangible assets are as follows: £'000Initial cash paid 3,416Contingent consideration 1,201Direct costs relating to the acquisition 168Total purchase consideration 4,785 Fair value of net identifiable assets acquired (1,664)Intangible Asset 3,121 The intangible asset is attributable to Rescon IT Limited's strong workforce aswell as its strong position and profitability in its geographical location andthe synergies expected to arise after its acquisition by the Group. The assets and liabilities arising from the acquisition are as follows: £'000Fixed Assets 129Cash 750Receivables 1,360Payables (575)Net identifiable assets acquired 1,664 Outflow of cash to acquire business, net of cash acquired: £'000Cash Consideration 3,416Cash and Cash equivalents in subsidiary acquired (750)Cash outflow on acquisition 2,666 TechDiscovery LLP On 5 November 2007, the Group acquired 56.6% of the share capital ofTechDiscovery LLP, which specialises in business-focused IT solutions based inAtlanta, USA. The consideration comprised initial cash consideration of £0.8m,and additional payments currently estimated at £1.5m which will be payable incash or shares in Harvey Nash Group plc at Harvey Nash's discretion subject tocertain profit targets being achieved in the period to 30 September 2008 The Group's share of the acquired business' revenues was £0.6m and share ofoperating profit was £0.2m for the period from acquisition to 31 January 2008.If the acquisition had occurred on 1 February 2007, consolidated revenue andconsolidated profit for the year ended 31 January 2008 would have been £320.1mand £8.4m respectively. Details of net assets acquired and intangible assets are as follows: £'000Initial cash paid 787Contingent consideration 1,498Direct costs relating to the acquisition 67 Total purchase consideration 2,352 Fair value of net identifiable liabilities acquired 26Intangible Asset 2,378 The intangible asset is attributable to TechDiscovery LLP's workforce as well asits strong position and profitability in its market and the synergies expectedto arise after its acquisition by the Group. The assets and liabilities arising from the acquisition are as follows: £'000Fixed Assets 27Cash 213Receivables 192Payables (478)Total liabilities acquired (46)Minority interest 20Net identifiable liabilities acquired (26) Outflow of cash to acquire business, net of cash acquired: £'000Cash Consideration 787Cash and Cash equivalents in subsidiary acquired (213)Cash outflow on acquisition 574 10. Shareholders' Funds and Changes in Shareholders' Equity Share Share Shares to be Fair value Own Cumulative Retained Total capital premium issued and other shares translation earnings equity reserves held reserve £ '000 £ '000 £ '000 £ '000 £ '000 £ '000 £ '000 £ '000Balance at1 February 2007 3,325 4,111 595 15,079 (656) (885) 15,218 36,787 Employee share option andbonus plan 10 50 (263) - 508 - (117) 188 IFRS 2 Deferred Taxcharge toequity - - - - - - (215) (215) Acquisitions in the period 287 4,320 1,318 - - - - 5,925 Costs - (273) - - - - - (273)associatedwith raisingequity Profit for the year - - - - - - 5,305 5,305 Dividends paid - - - - - - (1,228) (1,228) Currency translationadjustments - - (7) - - 1,652 - 1,645 31 January 2008 3,622 8,208 1,643 15,079 (148) 767 18,963 48,134 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Harvey Nash Group