Trading update

HARVEY NASH GROUP PLC 

('Harvey Nash' or the 'Group')

Trading Update

The Board is pleased to confirm that trading for the six months to 31 July 2010 has been in line with its expectations and the Group expects to report an increase in operating profit (adjusted for non recurring items) of at least 10% for the period compared to the same period last year.

Revenue and gross profit for the six month period to 31 July 2010 is expected to be broadly similar to the comparable period last year with the increase in profit before taxation (after non recurring items) likely to exceed 40% when compared to 2009. The Board is delighted with this performance given that the comparatives reflect the Group's resilience during the recession.

The strength of the portfolio of services is once again a key part of the Group's success. An increased proportion of higher margin permanent revenue, combined with actions taken to reduce the cost base last year, has ensured a strong first half performance. Demand for contract IT professionals has been robust in the US and UK, and a recovery in permanent recruitment has also started. Excellent results were reported from the Nordic region, mitigating the delayed recovery in the Eurozone.

Dividends

Following approval at the Annual General Meeting on 24 June 2010, the Group paid a final dividend on 16 July 2010 for the year ended 31 January 2010 of 1.35p per share, an increase of 13% (2009: 1.2p). The total dividend for the year was 2.2p per share (2009: 2.0p).

The Board anticipates confirming a 10% increase in the interim dividend for the current year, to be announced with its interim results on 30th September 2010.

Financial position

The Group has a sound balance sheet with no long-term debt and a favourable cash position at 31 July 2010 is anticipated.

As expected, working capital is increasing in line with demand for contract IT professionals. The cash impact has been tightly managed within the overall Group banking facilities of £30m and there remains adequate headroom. Good debtor days have been maintained despite increased demand and the initial consideration of £2.1m in relation to the Group's Norwegian acquisition was settled during the period from available cash resources.

Summary

The Group continues to trade well in the current environment but we remain appropriately cautious given the economic climate in which we operate. The Group however, continues to benefit from significant market share gains particularly in the UK and Europe and, with geographic exposure in the stronger US and Nordic economies, we look forward to making further progress in line with the Board's expectations.

Harvey Nash will announce its half year results on 30 September 2010.

11 August 2010

ENQUIRIES: