Harvey Nash pleased with performance ahead of full results

Technology recruitment and outsourcing group Harvey Nash updated the market on its trading on Friday, in advance of its final results for the year ended 31 January, which the board said were expected to be in line with market expectations.

The AIM-traded company said that would result in adjusted profit before tax and non-recurring items being up around 22% compared to the prior year.

It described that as an “excellent result” in the context of wider macro-economic uncertainty, particularly in the UK.

The firm said UK and Ireland gross profit was up 6% year on year, with demand improving over the second half for technology recruitment, despite widely-reported Brexit-related market volatility.

That increase in demand was broadly spread across the UK, the board claimed, with a number of financial services companies actively relocating operations outside of London.

Mainland Europe continued to be the key driver of organic growth in the group, Harvey Nash reported, with gross profit up 5% overall year-on-year, led by strong demand for contract recruitment and managed services in the Benelux region, which was up 20%.

In the rest of the world, gross profit fell 19%, which the board put down to reduced contractor numbers in the US and the impact of reductions in headcount.

The transformation programme had put the rest of world market in a much better position going forward, the board said, as it focussed the group's geographic presence on its core markets, and closed loss making offices.

Its outsourcing business in Vietnam exceeded management expectations, along with executive search in the US, which reported record results.

During the year, Harvey Nash completed two acquisitions, which were expected to be enhancing to earnings-per-share, and were already delivering benefits with further improvement expected in the current year.

The board said the company’s transformation programme was on track, which was focussing the business on its core markets, streamlining its operations and improving efficiency, and it anticipated further savings to flow through in the current financial year.

Trading cash flow was said to be “strong”, with net borrowings at the year-end standing at £6.7m, compared to net cash of £5.5m at the start of the year.

The board said that change mainly reflected the investment in working capital to finance higher levels of turnover in the second half, combined with an increase in debtor days to 40 days from 38 days as a result of the changing business mix, as well as the cost of the acquisitions and the transformation programme.

“I am very pleased to report that the outturn in the last financial year is expected to be in line with market expectations which were revised upwards on three occasions during the year,” said chief executive Albert Ellis.

“Last year was an important one for the group, in which we initiated a transformation programme to streamline and refocus the business and completed two acquisitions.”

Ellis highlighted that the acquired businesses were already contributing to the group's profitability, alongside good levels of organic growth.

“We enter 2018 - which is the group's 30th year since incorporation - with a strong balance sheet and well positioned to capitalise on the continued growth in demand for technology and digital skills.”

Harvey Nash was set to announce its preliminary results on 27 April.