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Strong US growth at Harvey Nash

The recruitment group has made strong progress this year, despite enduring currency headaches
October 9, 2015

Interim results for recruiter Harvey Nash (HVN) read much the same as the latest full-year numbers: negative exchange movements in Europe checked revenue growth, but strong performance in the UK, Ireland and US helped to boost gross profit by 9 per cent on a constant-currency basis.

IC TIP: Hold at 98p

Chief executive Albert Ellis is confident the depreciation of European currencies seen in the first half of the year will subside between now and January. That's a big call to make, but at least Harvey Nash can rely on last year's investments in the US and Asia. Strong demand from major technology clients including Apple, Microsoft and Expedia helped to boost gross profit there by 35 per cent to £7.2m, while solid trading in Vietnam - where Google is a client - contributed to 50 per cent growth in gross profits to £2.5m in the Asia Pacific region.

In the meantime, shareholders have again been rewarded with a 10 per cent dividend hike, even if it was accompanied by an £11.4m year-on-year increase in net borrowings. The increase was largely due to the unfavourable timing of several contractor payrolls, and net debt should fall to just £1.3m by the year-end, according to Numis Securities.

The brokerage is forecasting pre-tax profits of £9.3m and EPS of 9.1p in the 12 months to January 2016 (FY2015: £9m and 9p, respectively).

HARVEY NASH (HVN)

ORD PRICE:98pMARKET VALUE:£71.7m
TOUCH:95-101p12-MONTH HIGH:107pLOW: 68p
DIVIDEND YIELD:3.8%PE RATIO:14
NET ASSET VALUE:85p*NET DEBT:25%

Half-year to 31 JulTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20143564.24.161.36
20153374.13.851.49
% change-5-4-7+10

Ex-div: 22 Oct

Payment: 20 Nov

*Includes intangible assets of £50.5m, or 69p a share