Interim Results

30th Sep 2009 07:30



HARVEY NASH GROUP PLC

("Harvey Nash" or "the Group")

Unaudited Interim Results for the six months ended 31 July 2009

Harvey Nash, the global professional recruitment services and outsourcing group, which has over 4,000 staff and associates in 35 offices, announces resilient first half year performance in very challenging markets. 

Financial Results 

	2009 H1	2008 H1	Change
Revenue	£200m	£200m	0.1%
Gross Profit	£31.7m	£33.3m	4.9%
Adjusted operating profit*	£2.5m	£4.3m	42%
Operating profit	£2.0m	£4.3m	53%
Adjusted profit before tax*	£2.3m	£3.9m	41%
Profit before tax	£1.8m	£3.9m	53%
Profit after tax	£1.3m	£2.8m	54%
Earnings per share	1.59p	3.59p	56%
Adjusted earnings per share*	2.06p	3.59p	43%
Interim dividend	0.85p	0.80p	6%
Net cash	£0.7m	£1.6m	(£0.9m)

*Before non-recurring items in relation to the Group's cost reduction initiatives

Highlights 

Revenue broadly in line with the previous year, demonstrating increased market share

Gross profit slightly lower than last year, due to weak demand for recruitment  

Strong increase in outsourcing revenues has mitigated the decline in recruitment revenue

Group remained profitable throughout with adjusted operating profit of £2.5m 

No long term debt: positive net cash position £0.7m (2008: £1.6m)

Interim dividend increased by 6% to 0.85p per share (2008: 0.80p per share)

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

"The majority of our businesses across the Group have performed exceptionally well in very challenging markets and we are pleased to have maintained our revenues in line with the previous year, demonstrating tangible gains in all of our geographic segments. Our businesses are focused on remaining profitable as well as planning for growth when the upturn comes.

Demand for outsourcing, whilst highly competitive, continues to be buoyant, generating an encouraging volume of opportunities positioning the Group well to take advantage of the recovery." 

ENQUIRIES:

Harvey Nash	Tel: 020 7333 2635
Albert Ellis, Chief Executive
Richard Ashcroft, Group Finance Director
College Hill	Tel: 020 7457 2020
Mark Garraway

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

  CHAIRMAN'S STATEMENT

Despite the severe global recession, the Group has performed extremely well during the six months ended 31 July 2009 and we are particularly pleased with our market share gains with revenues increasing slightly on the previous year. 

The Group remained profitable throughout the period, notwithstanding a significant decline in demand for permanent recruitment services. Contract recruitment, contract services and offshore outsourcing remained robust. 

Tight control of costs was maintained throughout the period. Some limited restructuring was implemented which resulted in a non-recurring charge of £0.5m. The full programme of cost reduction initiatives is expected to result in minimum ongoing annualised cost savings of c. £3.8m. The Group remains committed to retaining its revenue generating capability to take advantage of the upturn; however fee earner headcount was 13% lower on 31 July 2009 than twelve months previously.

Effective working capital management resulted in the Group maintaining its positive cash position of £0.7m, compared to 31 July 2008 (£1.6m) having settled all material deferred consideration on acquisitions from trading cash flow.

Financial Results

The Group's revenue for the six months ended 31 July 2009 increased by 0.1% to £199.9m (2008: £199.8m), with revenue from contract services and outsourcing offsetting a decline in permanent recruitment revenue.

Gross profit was slightly below the previous year (-4.9%) at £31.7m (2008: £33.3m), owing mainly to the change in the mix of services, with a greater proportion of gross profit being derived from annuity revenue streams. In the half year to 31 July 2009 gross profit was split by service line as to 30% permanent recruitment (H1 2008: 42%), 49% contract recruitment (H1 2008: 50%) and 21% IT outsourcing (H1 2008: 8%).

Operating profit before non-recurring items relating to the cost reduction initiative, declined by 42% to £2.5m (2008: £4.3m) and profit before tax decreased by 53% to £1.8m (2008: £3.9m). The tax charge for the period decreased by 53% to £0.5m (2008: £1.1m) and the tax rate was 29.0% (2008: 28.5%). 

Adjusted earnings per share decreased by 43% to 2.06p (2008: 3.59p), while basic earnings per share decreased by 56% to 1.59p (2008: 3.59p). The movement in the weighted average number of shares in the period was not material with 72.9m at the end of the period compared to 72.4m last year. 

Balance Sheet

The balance sheet continued to strengthen over the comparative period with net assets increasing by 17% to £59.1m (2008: £50.4m). Tangible fixed assets increased by £1.5m during the period as a result of capital expenditure of £1.8m. Of this sum £1.4m (78%) was in relation to technology infrastructure in Nash Technologies, which is reimbursed by the client. 

In accordance with the rules dealing with the recognition of acquired intangible assets separately from goodwill, intangible assets include £1m which has been recognised in respect of the acquisition of the market leading Alumni brand in Sweden.

Movements in the deferred income tax asset are mainly due to deferred tax on share options, holiday accruals and interest. Trade and other receivables were £80.4m (2008: £86.8m). The decrease reflects lower turnover toward the end of the second quarter and tight control of working capital, with debtor days reducing to 43.9 (2008: 44.9), an excellent result in the current economic environment. The Group maintained a positive cash position of £0.7m (2008: £1.6m), having settled the deferred consideration on acquisitions payable in cash from trading cash flow. 

The Group benefits from substantial headroom in relation to its overall banking facilities of circa £30.0m in the form of invoice discounting facilities in the UK (£12m) and the Netherlands (€18m) plus an overdraft facility of £2m. These facilities were renewed in March 2009 with the notice term of the invoice discounting arrangements extended from 6 months to 1 year.

  

Cash flow

The Group generated an operating cash inflow before movements in working capital of £2.8m. Investment in working capital absorbed £1.6m, resulting in a net cash inflow from operating activities of £1.2m. Taxes paid in the period was £1.6m. Capital expenditure of £1.8m included £1.4m in relation to the outsourcing contract in Nash Technologies. Net interest paid reduced by 54% owing mainly to lower interest rates.

Strategy 

The Group's key assets are its strong brand and unique portfolio of services which offer a competitive advantage in an economic downturn. With our offshore and outsourcing offering based in Vietnam, we are able to participate in our clients broader IT spend even as recruitment of technology professionals is reduced to a minimum. The gross profit attributable to IT contracting, offshore services and outsourcing comprises 70% (2008: 58%) of the total gross profit during the period. However, the Group has maintained a significant market leading executive recruitment capability across the US, the UK and Europe and expects to substantially benefit from a broad based global recovery in view of the high operational gearing of this service. 

The recession has now affected most sectors and no geographic market is immune. The Group's long term strategy to diversify the client base and sector exposure has sustained the Group's performance. More specifically, the market for leadership and management in the public sector has remained buoyant and technology recruitment in the pharmaceutical sector has also remained comparatively resilient.

Looking forward, the Group's strategy will continue to be based on the successful formula of a strong organic growth model combined with a broad portfolio of services, with bolt-on acquisitions. We are confident that our proven strategy and long-term approach to client relationships will benefit the Group through increased market share gains now, strongly positioning us for the recovery.

 

Operational Review

United Kingdom and Ireland

Revenue in the UK and Ireland declined by 8% to £56.4m (2008: £61.0m) and operating profit declined by 41% to £1.2m (2008: £2.0m). 

As expected, demand fell for technology recruitment and executive search services from the beginning of the year following the uncertainty in the financial markets in 2008. All markets were affected with the exception of the public sector. Contracting and interim services were more resilient as declines in contracting tend to lag the broader economic indicators. The Executive Search and permanent recruitment businesses were most impacted as was Ireland, geographically.

The costs of limited reductions in headcount are included in the overall non recurring items charge.

The resilience of the UK business was underpinned by a number of key successes. In Ireland our outsourcing capability helped secure a successful renewal of our public sector technology contract. In the UK, new business wins with the central government for multiple assignments, mainly in the permanent recruitment sector combined with increased productivity, lifted contribution ahead of the previous year. 

Rest of Europe

Revenue in mainland Europe increased by 1% to £127.8m (2008: £126.5m), and operating profit decreased by 40% to £1.2m (2008: £1.9m). 

Demand for specialist professional recruitment has been weak in Europe and the impact of the financial crisis appears to have lagged the UK and the US by around six months. While HR outsourcing and contracting services have remained relatively robust, demand for permanent recruitment and new requirements for freelancers has fallen across all of mainland Europe. France and Poland were loss making during the period. The cost base in Europe has been reduced through a number of measures including a flexible approach to pay and bonuses and some limited consolidation of office accommodation. In Switzerland, margin reduction and consolidation of the supply chain continues to drive relationships in the Financial Services sector and demand in Geneva has been stable with good results.

New areas of investment such as contingency recruitment in Scandinavia and our new Copenhagen office has seen continued success with revenues more than doubling over the period and contribution up 40%. HR outsourcing and contract services in the Benelux has partially mitigated weak recruitment results and the business expects to secure more of these opportunities as more companies consider outsourcing their flexible workforce management. 

In Germany, the strategic outsourcing contract has delivered increased revenues, insulating the German business overall from weak demand in the manufacturing sector which has implemented a recruitment freeze and has dramatically reduced working hours.

Nash Technologies, incorporated in October 2008 providing wireless technology maintenance, research and development services, has had a strong first half delivering on key projects and managing the workload from increased usage of 3G networks in the USA. Additional revenues of £1.5m in the six months to July 2009 were generated from new projects and the workforce in Vietnam has increased to assist with capacity issues. 

United States

In the US, revenue increased by 28% to £15.7m (2008: £12.3m) and gross profit increased by 13% to £4.8m (2008: £4.3m). In constant currency terms revenue and gross profit declined by 1% and 12% respectively. US gross profit is 15% of the Group's gross profit. 

Although our US business has shown remarkable resilience delivering annual profits and cash throughout the US recession which began in 2008, results at the operating profit level have been mixed as higher margin IT consulting revenues and permanent assignments most affected by the downturn and the Executive Search business least affected. Our two key objectives, maintaining our platform and continuing to deliver profits have meant that an appropriate reduction in the levels of headcount and infrastructure was inevitable. However, notwithstanding the decline in operating profit for the period to £0.14m from £0.39m, the business has performed extremely well relative to its US comparator group.

Dividends

The Group will pay an interim dividend of 0.85p per share (2008: 0.80p) an increase of 6%, on 27 November 2009 to shareholders on the register at 30 October 2009. 

Principal risks facing the business

The principal risks facing the Group remain unchanged from those set out in the annual report of the Group's results for 2009. These are chiefly the continued risk of an economic downturn and dependence on key clients and key personnel. The Group's strategy for mitigating these risks is laid out in detail in the 2009 annual report.

Outlook

The Group continues to trade resiliently in the current difficult environment and visibility remains limited, particularly in recruitment. The short term outlook is dependent on increased activity in the second half and the upturn in sentiment, which we are already starting to see in the UK, resulting in increased volumes of permanent recruitment.

The majority of our businesses across the Group have performed well in very challenging markets and we are pleased to have maintained our revenues in line with the previous year, demonstrating tangible gains in all of our geographic segments. Demand for outsourcing continues to be buoyant, generating an encouraging volume of opportunities. 

Ian Kirkpatrick 

Chairman 

30 September 2009

  

Consolidated Interim Income Statement

	Notes	Unaudited 6 months ended  31 July 2009 £'000	Unaudited 6 months ended  31 July 2008 £'000	Audited 12 months ended 31 January 2009 £'000
Revenue	3	199,902	199,761	420,101
Cost of sales		(168,209)	(166,441)	(350,950)
Gross profit	3	31,693	33,320	69,151
Total administrative expenses		(29,693)	(29,024)	(58,794)
Operating profit before non-recurring items		2,480	4,296	10,357
Non-recurring items	7	(480)	-	-
Operating profit	3	2,000	4,296	10,357
Finance income		36	23	117
Finance costs		(240)	(465)	(943)
Profit before tax		1,796	3,854	9,531
Income tax expense	4	(521)	(1,099)	(2,621)
Profit for the period		1,275	2,755	6,910
Attributable to:
Equity holders of the Company		1,157	2,597	6,524
Minority Interest		118	158	386
		1,275	2,755	6,910
Basic earnings per share	5	1.59p	3.59p	9.00p
Diluted earnings per share	5	1.57p	3.41p	8.92p

Consolidated Statement of Comprehensive Income

	Unaudited 6 months ended  31 July 2009 £'000	Unaudited 6 months ended  31 July 2008 £'000	Audited 12 months ended 31 January 2009 £'000
Profit for the period	1,275	2,755	6,910
Foreign currency translation differences	(385)	529	6,811
Other comprehensive income for the period	(385)	529	6,811
Total comprehensive income for the period	890	3,284	13,721
Total comprehensive income attributable to:
Equity holders of the company	772	3,126	13,335
Minority interest	118	158	386
	890	3,284	13,721

   Consolidated Interim Balance Sheet

	Notes	Unaudited  31 July 2009 £'000	Unaudited  31 July 2008 £'000	Audited 31 January 2009 £'000
ASSETS
Non-current assets
Property, plant and equipment		3,099	1,629	2,256
Intangible assets		45,516	41,317	47,758
Deferred income tax assets		1,989	1,210	1,648
		50,604	44,156	51,662
Current assets
Cash		689	1,585	4,458
Trade and other receivables		80,361	86,790	103,987
Total assets	3	131,654	132,531	160,107
LIABILITIES
Non-current liabilities
Contingent consideration		(19)	-	(21)
Deferred income tax liabilities		(266)	(141)	(305)
		(285)	(141)	(326)
Current liabilities
Trade and other payables		(70,633)	(77,022)	(97,488)
Current income tax liabilities		(1,586)	(2,192)	(2,862)
Contingent consideration		-	(2,815)	(31)
Provisions for liabilities and charges		(90)	-	-
		(72,309)	(82,029)	(100,381)
Total liabilities		(72,594)	(82,170)	(100,707)
Net assets		59,060	50,361	59,400
Capital and reserves attributable to equity shareholders
Share capital		3,669	3,622	3,669
Share premium		8,422	8,208	8,412
Shares to be issued		86	1,318	86
Fair value and other reserves		15,079	15,079	15,079
Own shares held		(466)	(148)	(120)
Cumulative translation reserve		7,194	1,296	7,579
Retained earnings		24,465	20,746	24,107
		58,449	50,121	58,812
Minority interest in equity		611	240	588
Total equity		59,060	50,361	59,400

   Unaudited Consolidated Interim Statement of Changes in Equity

	Share capital	Share premium	Shares to be issued	Fair value and other reserves	Own shares held	Cumulative translation reserve	Retained earnings	Total equity
	£ '000	£ '000	£ '000	£ '000	£ '000	£ '000	£ '000	£ '000
Balance at 1 February 2008	3,622	8,208	1,643	15,079	(148)	767	18,963	48,134
Profit for the period	-	-	-	-	-	-	2,597	2,597
Currency translation adjustments	-	-	-	-	-	529	-	529
Total recognised income and expense for the period	-	-	-	-	-	529	2,597	3,126
Employee share option and bonus plan	-	-	-	-	-	-	86	86
IFRS 2 Deferred Tax to equity	-	-	-	-	-	-	(109)	(109)
Acquisitions in the period	-	-	(325)	-	-	-	-	(325)
Dividend paid	-	-	-	-	-	-	(791)	(791)
Balance at 31 July 2008	3,622	8,208	1,318	15,079	(148)	1,296	20,746	50,121
Profit for the period	-	-	-	-	-	-	3,927	3,927
Currency translation adjustments	-	-	-	-	-	6,282	-	6,282
Total recognised income and expense for the period	-	-	-	-	-	6,282	3,927	10,209
Currency translation adjustments on acquisitions in the period	-	-	188	-	-	-	-	188
Employee share option and bonus plan	-	-	-	-	28	1	50	79
IFRS 2 Deferred Tax to equity	-	-	-	-	-	-	(38)	(38)
Acquisitions in the period	47	204	(1,420)	-	-	-	-	(1,169)
Dividends paid	-	-	-	-	-	-	(578)	(578)
Balance at 31 January 2009	3,669	8,412	86	15,079	(120)	7,579	24,107	58,812
Profit for the period	-	-	-	-	-	-	1,157	1,157
Currency translation adjustments	-	-	-	-		(385)	-	(385)
Total recognised income and expense for the period	-	-	-	-	-	(385)	1,157	772
Employee share option and bonus plan	-	10	-	-	1	-	64	75
IFRS 2 Deferred Tax to equity	-	-	-	-	-	-	6	6
Dividends paid	-	-	-	-	-	-	(869)	(869)
Own shares purchased	-	-	-	-	(347)	-	-	(347)
Balance at 31 July 2009	3,669	8,422	86	15,079	(466)	7,194	24,465	58,449

   Consolidated Interim Cash Flow Statement

 

	Notes	Unaudited 6 months ended 31 July 2009 £’000	Unaudited 6 months ended 31 July 2008 £’000	Audited 12 months ended 31 January 2009 £’000
Profit before taxation		1,796	3,854	9,531
Adjustments for:
- Depreciation		680	352	791
- Amortisation		37	55	79
- finance income		(36)	(23)	(117)
- finance costs		240	465	943
- share based employee settlement and share option charge		64	86	173
Operating cash flows before changes in working capital		2,781	4,789	11,400
Changes in working capital (excluding the effects of acquisition and exchange differences on consolidation)
- Decrease/(increase) in trade and other receivables		22,237	(13,344)	(19,919)
- (Decrease)/increase in trade and other payables		(23,931)	8,243	18,007
- Increase in provisions for liabilities and charges		90	-	-
Cash inflows/ (outflows) from operating activities		1,177	(312)	9,488
Income tax paid		(1,600)	(729)	(2,207)
Net cash (absorbed by)/ generated from operating activities		(423)	(1,041)	7,281
Cash flows from investing activities
Purchases of property, plant and equipment	9	(403)	(242)	(445)
Purchases of property, plant and equipment rechargeable to clients	9	(1,423)	-	-
Cash acquired with acquisitions		-	-	11
Purchase of subsidiary undertakings		(33)	(325)	(4,923)
Interest received		36	23	117
Net cash (absorbed) from investing activities		(1,823)	(544)	(5,240)
Cash flows from financing activities
Purchase of own shares	11	(347)	-	-
Proceeds from issue of ordinary shares		11	-	-
Dividends paid to group shareholders		(869)	(791)	(1,369)
Interest paid		(240)	(465)	(943)
Net cash used in financing activities		(1,445)	(1,256)	(2,312)
(Decrease) in cash and cash equivalents		(3,691)	(2,841)	(271)
Cash and cash equivalents at the beginning of the period		4,458	4,184	4,184
Exchange (loss)/gain on cash and cash equivalents		(78)	242	545
Cash and cash equivalents at the end of the period		689	1,585	4,458

  

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

1. Corporate Information

Harvey Nash Group plc (the Company) and its subsidiaries (together "the Group") is a leading provider of specialist recruitment and outsourcing solutions. The Group has offices in the UK, Europe, the United States and Vietnam.

The Company is a public listed company incorporated in the UK. Its registered address is 13 Bruton Street, London, W1J 6QA and its primary listing is on the London Stock Exchange.

The condensed consolidated interim financial information for the six months ended 31 July 2009 was approved for issue on 29 September 2009.

2. Accounting Policies

Basis of preparation

This condensed consolidated interim financial information for the six months ended 31 July 2009 has been prepared in accordance with IAS 34, 'Interim financial reporting' and the disclosure and transparency directives of the FSA.

It does not include all the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 January 2009. 

Nature of financial information

The interim financial information does not constitute statutory financial statements as defined under Section 434 of the Companies Act 2006. The financial information for the year ended 31 January 2009 has been extracted from the statutory accounts for that year which have been delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified and did not contain a statement under Section 237 (2) or (3) of the Companies Act 1985.

Significant accounting policies

In preparing these interim financial statements the same accounting policies, methods of computation and presentation have been applied as those set out in the Harvey Nash Group plc annual report for the year ended 31 January 2009. The accounting policies are drawn up in accordance with International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) as endorsed by the European Union. 

The accounting policies adopted in the preparation of the interim consolidated financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 January 2009. In the current financial year, the Group has adopted IAS 1 'Presentation of Financial Statements' (revised 2007) and IFRS 8 'Operating Segments'. The implementation of IAS 1 (revised 2007) resulted in changes to disclosure with the inclusion of a Condensed Consolidated Statement of Comprehensive Income.

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. 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 following new standards, amendments to standards and interpretations have been issued, but are not effective for the financial year beginning 1 February 2009 and have not been early adopted: IFRS 3 (revised), 'Business combinations' and consequential amendments to IAS 27, 'Consolidated and separate financial statements', IAS 28, 'Investments in associates' and IAS 31, 'Interests in joint ventures', effective prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 July 2009. Management is assessing the impact of the new requirements regarding acquisition accounting, consolidation and associates on the group. The group does not have any joint ventures.

3. Segment Information

Revenue

	Unaudited 6 months ended 31 July 2009 £'000	Unaudited 6 months ended 31 July 2008 £'000	Audited 12 months ended 31 January 2009 £'000
United Kingdom & Ireland	56,395	61,009	118,347
Rest Of Europe	127,761	126,455	273,171
United States	15,746	12,297	28,583
Total	199,902	199,761	420,101

Revenues from one customer in the Rest of Europe segment represent approximately £21.8m of the Group's total revenues (2008: £40.4m).

Gross Profit

	Unaudited 6 months ended 31 July 2009 £'000	Unaudited 6 months ended 31 July 2008 £'000	Audited 12 months ended 31 January 2009 £'000
United Kingdom & Ireland	12,683	16,078	30,556
Rest Of Europe	14,201	12,992	29,187
United States	4,809	4,250	9,408
Total	31,693	33,320	69,151

Operating Profit/(loss)

	Unaudited 6 months ended 31 July 2009 £'000	Unaudited 6 months ended 31 July 2008 £'000	Audited 12 months ended 31 January 2009 £'000
United Kingdom & Ireland	1,186	1,999	4,825
Rest Of Europe	1,151	1,906	4,251
United States	143	391	1,281
Operating profit before non-recurring items	2,480	4,296	10,357
Non- recurring items	(480)	-	-
Total	2,000	4,296	10,357

  

Total Assets

	Unaudited 6 months ended 31 July 2009 £'000	Unaudited 6 months ended 31 July 2008 £'000	Audited 12 months ended 31 January 2009 £'000
United Kingdom & Ireland	37,183	41,331	38,865
Rest Of Europe	75,391	75,731	101,091
United States	17,091	14,259	18,503
Deferred Tax Asset	1,989	1,210	1,648
Total	131,654	132,531	160,107

4. Taxation 

	Unaudited 6 months ended  31 July 2009 £'000	Unaudited 6 months ended  31 July 2008 £'000	Audited  12 months ended 31 January 2009 £'000
Current tax:
Tax on profit in the period	894	1,140	2,854
Adjustments in respect of prior periods	-	-	119
Total current tax	894	1,140	2,973
Deferred tax:
Origination and reversal of timing differences	(380)	68	67
Adjustments in respect of prior years	-	-	(272)
Deferred tax to equity	7	(109)	(147)
Total deferred tax charge	(373)	(41)	(352)
Total tax charge (continuing operations)	521	1,099	2,621

  

5. Earnings per Share

	Unaudited 6 months ended  31 July 2009	Unaudited 6 months ended  31 July 2008	Audited  12 months ended 31 January 2009
Profit for the period £'000	1,157	2,597	6,524
Weighted average number of shares	72,860,193	72,387,387	72,471,450
Basic earnings per share	1.59p	3.59p	9.00p

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.

Adjusted earnings per share is calculated as above but uses the earnings attributable to ordinary shareholders excluding non recurring items (£0.48m) and the related tax credit (£0.14m); net impact £0.34m.

	Unaudited 6 months ended  31 July 2009	Unaudited 6 months ended  31 July 2008	Audited  12 months ended 31 January 2009
Profit for the half year £'000	1,157	2,597	6,524
Weighted average number of shares	72,860,193	72,387,387	72,471,450
Effect of dilutive securities	688,871	3,795,836	646,657
Adjusted weighted average number of shares	73,549,064	76,183,223	73,118,107
Diluted earnings per share	1.57p	3.41p	8.92p

  

6. Analysis of Changes in Net Funds

	1 February 2009  £'000	Unaudited Cash flow  £'000	Unaudited Foreign exchange movements £'000	Unaudited 31 July  2009  £'000
Cash and cash equivalents	4,458	(3,691)	(78)	689
	4,458	(3,691)	(78)	689

7. Non-recurring Items

Non- recurring items relate to restructuring costs incurred in the 6 months to 31 July 2009.

8. Dividends

The Group paid a final dividend of 1.2p per share on 17 July 2009 to shareholders on the register as at 3 July 2009 (2008: final dividend of 1.1p per share was paid on 8 July 2008).

9. Purchases of property, plant and equipment

The Group purchased property, plant and equipment of £1.8m in the period. £1.4m of this is rechargeable to Alcatel Lucent.

10. Capital Commitments

The Group had capital commitments of £0.72m at 31 July 2009 for which no provision has been made in the accounts. These relate to the acquisition of property, plant and equipment. £0.68m is rechargeable to Alcatel Lucent. 

11. Share Purchase

On 1 May 2009 the Harvey Nash Group Employee Benefit Trust purchased 911,909 shares of the Group at 38p per share.

These had a total nominal value of £0.05m.

12. Distribution of Interim Financial statements

Copies of this statement are being dispatched to shareholders who voted to receive a paper copy, and are available to members of the public on the Group's website at www.harveynash.com or from the registered office at 13 Bruton Street, London, W1J 6QA.

Statement of Directors' Responsibilities

The directors' confirm that this condensed set of financial statements has been prepared in accordance with IAS 34 as adopted by the European Union, and that the interim management report herein includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:

An indication of important events that have occurred during the first six months and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

Material related party transactions in the first six months and any material changes in the related party transactions described in the last annual report.

The directors of Harvey Nash Group plc are listed in the Harvey Nash Group plc Annual Report for 31 January 2009.

The directors are also responsible for the maintenance and integrity of the Company website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

By order of the Board

Albert EllisChief Executive Officer

Richard AshcroftGroup Finance Director

ENDIR CKKKBABKKDCN

---

Related Shares:

Harvey Nash Group