IT staffing and services provider Harvey Nash (HVN: LSE) today announced its unaudited results for the six months ending 31 July 2016, reporting revenue of £377.7 million, an increase of 8.0% (at constant currency) compared with £328.7 million in the same period last year.

Revenue from continuing operations:

 “The six months under review have produced year-on-year growth in revenue and gross profit, as well as strong cash generation,” Albert Ellis, Chief Executive Officer of Harvey Nash, said. "Although mindful of macro-economic challenges, client demand for new hires continues to be driven by digital transformation, cybersecurity and data analytics and the group’s strategy remains the prudent expansion of fee-earning capability and growth in market share, coupled with tight control of costs and working capital.”

The Group has delivered revenue and gross profit growth in all principal geographic regions outside the UK & Ireland for the six months ended 31 July 2016.

Growth in its European contract managed services and a favourable Euro exchange rate lifted group revenue during the period to £377.7 million. Gross profit from continuing operations increased to £47.3 million, reflecting a change in the mix of revenue. Operating profit was lower than the prior year, mainly due to the impact of uncertainty in the UK caused by the EU referendum. This affected higher margin permanent recruitment fees, the impact of which flowed directly to operating profits and as a result, a number of one-off costs were incurred relating to the reduction of headcount in the UK. There were also some one-off costs in Germany relating to the disposal of Nash Technologies in December 2015, which also held back operating profit at the group level. The strategic review in 2015, which resulted in the disposal of Nash Technologies GmbH and the closure of the oil and gas practice, has de-risked the group and the balance sheet has been strengthened.

The company revenue by its geographic regions is:

The results from the UK and Ireland were mixed with demand for permanent hiring subdued, compared to the strong demand experienced in the six months to 31 July 2015. The uncertainty arising from the EU Referendum began to have an impact on demand from the fourth quarter ended 31 January 2016. This resulted in a swing in UK operating profits from record levels in the first half to 31 July 2015 to lower levels of profit exiting the second half into 2016, reflected in the split of operating profit in the proportion 64:36 over the two halves of the year to 31 January 2016. This UK wide slowdown determined the lower run rates in permanent recruitment experienced in the UK & Ireland for the period leading up to the EU referendum vote.

Results from Europe were lifted by growth in the Nordics and Benelux with generally favourable currency tailwinds. There were also one-off costs relating to the realignment of the German recruitment business following the disposal of Nash Technologies GmbH in the prior year.

Revenue from the Rest of the World (USA and Asia Pacific) increased while gross profit increased also increased. Operating profit was held back by a bad debt write off in the USA, weakness in China and an adverse currency variance in Vietnam.

After eleven years with the Group, Richard Ashcroft has notified the company of his intention to step down from the Board during the course of 2017. The Board will commence the process of finding a successor and Richard will remain in post until a smooth and orderly transition has been successfully completed.

“We are satisfied with the overall first half performance, which was in line with our expectations despite the challenges faced throughout the period,” Ellis said. “As we begin the seasonally stronger second half of the year, UK conditions remain challenging but broadly stable while there are opportunities for growth in mainland Europe, the USA and Asia.”

 “Our focus is on productivity in territories where markets are not supportive, while maintaining and expanding capacity where we are confident good growth can be achieved. With the balance sheet strengthened by the focus on the core business and strong cash generation, as well as an expectation that the UK market now appears more stable, the Board has increased the interim dividend and is confident that the group is on track to achieve full year expectation,” Ellis said.

As of last trade, Harvey Nash Group PLC (HVN:LSE) traded at £59.96, down 9.32% on the day and 19.11% above the 52 week low of 50.34 set on 27 June 2016. Based on its current share price the company has a market value of £48.57 million.