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The board of Harvey Nash Group Plc (HVN:LSE) has issued the first Interim Management Statement for the financial year ending 31 January 2011 covering the period from 1 February 2010 to 15 June 2010.
Results for the period under review are in line with expectations. The group's revenue was -4% below the first quarter last year with gross profit -6% below the same period. Nevertheless, profit before tax was broadly similar in the quarter ended 30 April 2010 compared to the same period in 2009 (excluding prior year non-recurring items) reflecting the benefits of cost saving initiatives in the previous year.
In common with the sector, quarterly gross profit declined steadily throughout 2009, stabilising in the final quarter. However, in the first quarter of the current financial year, gross profit increased by +6% on the final quarter of the year ended 31 January 2010. This improvement was driven by a +19% year-on-year increase in permanent recruitment mainly in the UK and the Nordic region.
Whilst demand for the group's portfolio of services improved, the strength of the recovery remains uncertain, particularly in the Eurozone, and the risks to economic growth remain.
The group's strategy of maintaining a broad portfolio of services including HR and IT outsourcing helped to underpin the group's resilient financial performance. The group continues to enjoy substantial headroom in relation to its overall banking arrangements (30 million Pounds) and the group has no term debt.
On 29 April 2010, the group acquired a 50.1% interest in Bjerke & Luther for an aggregate consideration of Norwegian Kroner 18.5m (2.1 million Pounds) and opened an office in Helsinki, Finland.
The acquisition in Norway and organic expansion in Finland significantly enhances Harvey Nash's Northern European footprint and further strengthens its business across the Nordic region. The acquisition is expected to be earnings enhancing in the year ended 31 January 2012 as the full year effect of earnings is felt. In the current year the impact will be broadly neutral after accounting for integration and acquisition costs, as well as the group's investment in Finland.
Harvey Nash says in a statement "as demand recovers we believe there will be increasing opportunities for organisations with strong brands and market leadership. Early indications are encouraging. The group's market share has increased during the downturn and as a result we are confident the business is well placed to continue to benefit from these gains."
As of last trade Harvey Nash traded at 43 Pence, -21.82% below its 52-week high of 55 Pence, set on 29 September 2009.