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UK — Harvey Nash shares tumble following interim management statement

26 November 2009

Harvey Nash Group Plc. (HVN:LSE), the recruitment and outsourcing group, yesterday published an interim management statement for the period from 1 August 2009 to 24 November 2009, which sent their shares down by -17.98% to 36.50 Pence.

The group said "in our interim results issued on the 30th September, we noted that the short term outlook was dependent on increased activity in the second half and the upturn in sentiment, which was then being seen in the UK, feeding through to increased volumes of permanent recruitment. Although we continue to see increased demand for our IT outsourcing services, it has now become clear that positive sentiment is not yet resulting in increased demand for permanent recruitment."

"Accordingly, we expect that this will materially impact the Group's fourth quarter trading and therefore the result for the full year. Third quarter trading, whilst stable as compared to the second quarter, was significantly lower against a particularly strong comparative last year with a 23% decrease in revenues and a 72% decrease in adjusted profit before taxation."

"As always, the last four months of the year are critical to the outcome for the year as a whole. Crucially, the typically strong trading month of October was impacted with permanent revenues down 4% sequentially on September at a time when an uplift in activity would ordinarily have been expected."

"Therefore, based on third quarter trading and with limited visibility for the final quarter, the Board now expects the second half to be broadly in line with the first half. It should be noted however, that a proportion of the shortfall for the current financial year arises from IT software projects subject to delay and deferred into 2010."

Brokers Panmure Gordon told City A.M. that the update was "significantly worse than expected and should send a reality check to those expecting cyclical recovery from recruitment markets. We expect recruitment shares elsewhere to wake up and smell the coffee as a result."



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