Pre-close trading update

HARVEY NASH GROUP PLC

Trading Update

Harvey Nash, the global professional recruitment and outsourcing group, announces that its results for the full year ended 31 January 2013 are expected to be slightly ahead of expectations, which were upgraded in November 2012, and that it intends to recommend an increase in its final dividend of 10%.

Trading

The Board is pleased to confirm that unaudited results for the full year ended 31 January 2013 are expected to be slightly ahead of recently upgraded expectations.

Total revenue of circa £590 million (2012: £533 million), gross profit of circa £80 million (2012: £78.5 million) and profit before tax of circa £8.6 million (2012: £8.5 million), before non-recurring exceptional items of £0.9 million relating to property and acquisition costs, is an excellent result given the widely reported challenging market conditions.

Market

Demand for highly skilled technology professionals has created skills shortages in the mobile and digital segments of the technology market. Clients, particularly in Europe, have continued to favour flexible contract and temporary hiring over permanent and executive recruitment. However, there has been continued demand for outsourcing and offshoring. With its broad portfolio of services and leading market positions, the Group has been very well placed to capitalise on these trends during the year.

The Group has also benefitted from significantly increased market share in the UK and Ireland, temporary and contract recruitment in the Benelux and Germany, and a steadily improving result from Asia, where investment in two additional offices in Hong Kong and Sydney was made during the course of 2012. The integration of the Talent IT business in Belgium, acquired on 31 May 2012, has gone well and results for the year have met expectations.

Net positive cash position

The Board is pleased to announce that the Group returned to a positive net cash position at 31 January 2013 of circa £4.0 million following the net borrowing position reported at 31 July 2012 of £14.1 million. In response to the macro uncertainty, particularly in Europe during 2012, large global clients sought to extend settlement terms, adversely affecting the Group's debtor days. This impact has been mitigated through continued strong trading cash generation throughout the second half, success in reducing overall debtor days and the effect of seasonally lower working capital requirements over the December holiday period.

In addition, the Group has successfully completed an agreement with The Royal Bank of Scotland to raise the total amount of facilities and headroom to circa £52 million (previously circa £40 million) with immediate effect to fund working capital as required when recruitment markets recover.

Dividend

The Board intends to recommend an increased final dividend of 1.795p per share (2012: 1.635p), resulting in an increase of 10% in the total dividend per share for the year (2012: 2.66p). 

Full year results

Harvey Nash will announce its full year results for the year ended 31 January 2013 on 30 April 2013, when it will update on the first quarter trading and outlook for the current year and provide the detailed dividend timetable.

13 February 2013

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