Harvey Nash (HVN: LSE), the UK-based IT staffing firm, announced a trading update for the six months ended 31 July 2018. The company reported revenue of £527 million, up by 24.8% when compared to the same period last year (£422 million). Gross profit increased by 11.2% to £51.7 million. Overall, trading remains in line with the Board’s expectations for the full year.

The increase in revenue in the first six months compared with the six months ending 31 July 2017 is largely due to increases in contract recruitment, managed services and IT outsourcing as a result of both organic growth and acquisitions, while permanent recruitment has been broadly flat. This change in mix is reflected in the relatively smaller increase in gross profit in the period.

Harvey Nash said these higher activity levels resulted in a net working capital outflow, with net borrowings of £21.5 million as at 31 July 2018 (2017: £10.0 million). This year-on-year increase in net borrowings reflects the expansion in working capital required to finance the increased contract book and additional headcount recruited in Vietnam to support current demand, as well as the continuing costs of both the transformation programme and of the acquisitions made in the second half of the year to 31 January 2018 and first six months of the current year.

Tight control of working capital was maintained with debtor days of 41.3 days as at 31 July 2018 (2017: 41.4 days).

In May 2018, Harvey Nash, through its Belgian subsidiary Harvey Nash Belgium, announced that it acquired Belgian IT solutions firm eMenKa. The acquisition of eMenKa will require an initial cash consideration of €1 million and a further €1 million deferred cash consideration subject to three-year earnings before interest and tax average performance.

Earlier this month, Harvey Nash agreed to £98.7 million acquisition bid from the Power of Talent, an entity owned and controlled by investment funds managed by DBAY Advisors Limited. The Harvey Nash Offer Price values the entire issued and to be issued share capital of Harvey Nash at approximately £98.7 million. Harvey Nash said its directors will recommend unanimously that shareholders vote in favor of the offer at the general meeting.