Harvey Nash Group plc Interim Report 2009 by ijk77032

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									Harvey Nash Group plc
Interim Report 2009
 / HARVEY NASH GROUP PLC INTERIM REPORT 2009




About Harvey Nash
Harvey Nash, a global Professional
Recruitment and Outsourcing consultancy, is
committed to delivering the very best talent
and business solutions to a broad base of
international clients.

With over 4,000 professionals worldwide,
the Group is a trusted adviser to many of the
world’s leading businesses, governments and
public organisations. We operate from 35
offices covering the USA, Europe and Asia.

Our talented people pursue the highest levels
of integrity and quality in providing Harvey
Nash’s unique portfolio of services.




Contents
 About Harvey Nash
3 Key Points
3 Our Global Offices
4 Our Services
5 Chairman‘s Statement
8 Consolidated Interim Income Statement
9 Consolidated Statement of Comprehensive Income
10 Consolidated Interim Balance Sheet
11 Unaudited Consolidated Interim Statement of Changes in Equity
12 Consolidated Interim Cash Flow Statement
13 Notes to the Unaudited Condensed Consolidated Interim
   Financial Statements
                                                                             HARVEY NASH GROUP PLC INTERIM REPORT 2009 / 3




Key Points
 • Revenue in line with previous year
 • Strong performance in outsourcing
 • Group remained profitable throughout the period
 • No long-term debt: positive net cash position of £0.7m
 • Interim dividend increased by 6% to 0.85p per share




Our Global Footprint
Harvey Nash continues to pursue opportunities for growth, in the last 12 months a presence has been established in Nuremberg,
Germany and Warsaw, Poland.




                                         UK &
                                         IRELAND
                                         Birmingham
                                         Edinburgh
                                         Leeds                                                          ASIA PACIFIC
                                         London                                                         Hanoi
                                         Dublin                         CONTINENTAL                     Ho Chi Minh City
                                                                        EUROPE
     USA                                                                Brussels
     Atlanta                                                            Copenhagen
     Boston                                                             Dusseldorf
     Chicago                                                            Frankfurt
     Denver                                                             Geneva
     New Jersey                                                         Gothenburg
     New York                                                           Groningen
     San Francisco                                                      Hamburg
     Seattle                                                            Luxembourg
                                                                        Malmö
                                                                        Munich
                                                                        Nuremberg
                                                                        Paris
                                                                        Stockholm
                                                                        Stuttgart
                                                                        Utrecht
                                                                        Warsaw
                                                                        Zurich
4 / HARVEY NASH GROUP PLC INTERIM REPORT 2009




Our Services
Executive Leadership Services                                     Professional Recruitment


Executive Search                                                  IT Recruitment
We support multinational organisations and smaller niche          Our market-leading IT recruitment business provides clients with
companies to attract, recruit and retain outstanding executives   highly skilled IT specialists for contract and permanent roles,
and senior management talent through a specialist search          and the very best executive talent for board level and senior IT
approach and strategic leadership consultancy services. The       appointments. By combining the power of the Harvey Nash brand
business has a broad-based capability in all key sectors.         with our industry and technical expertise, we provide clients with
                                                                  a high quality recruitment service.
Strategic Leadership Consulting
All of our Executive Consulting businesses support owners         Finance Recruitment
and company Boards with a full range of strategic leadership      We provide qualified, talented finance professionals on a flexible
services, including board evaluations, board recruitment,         and permanent basis. Our recruiters use their experience and the
incentive schemes for boards and executive management,            collective Harvey Nash industry knowledge to help find the very
generation change analyses and management audits.                 best candidates for our clients.

Interim Management
Through our market-leading Interim Management consultancy
‘Impact Executives’, we provide our clients with highly
experienced executives across a broad range of sectors and
functions.



Outsourcing


Offshore Software Services                                        Workforce Risk Management
We provide application development, third party software          Our risk management consultants provide expert legal, financial
maintenance and outsourced software services to our clients       and administrative consultancy in the area of flexible labour and
across the world. Through our software development centre in      professional skilled migrants.
Vietnam, we deliver a unique blend of high-value offshore and
                                                                  Managed Services
onshore services.
                                                                  We take responsibility for the full management of critical IT
IT Systems Management                                             infrastructure functions, such as data centre operations, help desk
Our competency centre provides professional management of         services and network administration.
mainframe platforms, including performance evaluation, data
                                                                  Telecoms software services
migration, system changes and support services.
                                                                  Operating through our Nash Technologies division and head
                                                                  quartered in Nuremberg, Germany, we develop, test and support
                                                                  software for the fast-growing global communication technology
                                                                  sector, including wireless and embedded software.



Technology Consulting

HARVEY NASH GROUP


TechDiscovery develops custom applications for world-
class software and technology-based services companies
– companies whose business depends on commercial-grade
software delivered on time and on budget.
                                                                              HARVEY NASH GROUP PLC INTERIM REPORT 2009 / 5




                                              We are confident that our long-term approach
                                              to client relationships will benefit the Group
                                              through increased market share gains




  Ian Kirkpatrick
  Chairman




Despite the severe global recession, the Group has performed         Gross profit was slightly below the previous year (-4.9%) at
extremely well during the six months ended 31 July 2009 and we       £31.7m (2008: £33.3m), owing mainly to the change in the
are particularly pleased with our market share gains with revenues   mix of services, with a greater proportion of gross profit being
increasing slightly on the previous year.                            derived from annuity revenue streams. In the half year to 31 July
                                                                     2009 gross profit was split by service line with 30% permanent
The Group remained profitable throughout the period,                 recruitment (H1 2008: 42%), 49% contract recruitment (H1 2008:
notwithstanding a significant decline in demand for permanent        50%) and 21% IT outsourcing (H1 2008: 8%).
recruitment services. Contract recruitment, contract services and
offshore outsourcing remained robust.                                Operating profit before non-recurring items relating to the cost
                                                                     reduction initiative, declined by 42% to £2.5m (2008: £4.3m)
Tight control of costs was maintained throughout the period.         and profit before tax decreased by 53% to £1.8m (2008: £3.9m).
Some limited restructuring was implemented which resulted            The tax charge for the period decreased by 53% to £0.5m (2008:
in a non-recurring charge of £0.5m. The full programme of            £1.1m) and the tax rate was 29.0% (2008: 28.5%).
cost reduction initiatives is expected to result in minimum
ongoing annualised cost savings of c. £3.8m. The Group remains       Adjusted earnings per share decreased by 43% to 2.06p (2008:
committed to retaining its revenue generating capability to take     3.59p), while basic earnings per share decreased by 56% to 1.59p
advantage of the upturn; however fee earner headcount was 13%        (2008: 3.59p). The movement in the weighted average number
lower on 31 July 2009 than twelve months previously.                 of shares in the period was not material with 72.9m at the end of
                                                                     the period compared to 72.4m last year.
Effective working capital management resulted in the Group
maintaining its positive cash position of £0.7m, compared            Balance Sheet
to 31 July 2008 (£1.6m) having settled all material deferred         The balance sheet continued to strengthen over the comparative
consideration on acquisitions from trading cash flow.                period with net assets increasing by 17% to £59.1m (2008:
                                                                     £50.4m). Tangible fixed assets increased by £1.5m during the
Financial Results                                                    period as a result of capital expenditure of £1.8m. Of this sum
The Group’s revenue for the six months ended 31 July 2009            £1.4m (78%) related to technology infrastructure in Nash
increased by 0.1% to £199.9m (2008: £199.8m), with revenue           Technologies, which is reimbursed by the client.
from contract services and outsourcing offsetting a decline in       In accordance with the rules dealing with the recognition of
permanent recruitment revenue.                                       acquired intangible assets separately from goodwill, intangible
 / HARVEY NASH GROUP PLC INTERIM REPORT 2009




assets include £1m which has been recognised in respect of the        through increased market share gains now, strongly positioning us
acquisition of the market leading Alumni brand in Sweden.             for the recovery.

Movements in the deferred income tax asset are mainly due to
deferred tax on share options, holiday accruals and interest. Trade   Operational Review
and other receivables were £80.4m (2008: £86.8m). The decrease        United Kingdom and Ireland
reflects lower turnover toward the end of the second quarter          Revenue in the UK and Ireland declined by 8% to £56.4m (2008:
and tight control of working capital, with debtor days reducing       £61.0m) and operating profit declined by 41% to £1.2m (2008:
to 43.9 (2008: 44.9), an excellent result in the current economic     £2.0m).
environment. The Group maintained a positive cash position of
£0.7m (2008: £1.6m), having settled the deferred consideration        As expected, demand fell for technology recruitment and
on acquisitions payable in cash from trading cash flow.               executive search services from the beginning of the year
                                                                      following the uncertainty in the financial markets in 2008. All
The Group benefits from substantial headroom in relation to its       markets were affected with the exception of the public sector.
overall banking facilities of circa £30.0m in the form of invoice     Contracting and interim services were more resilient as declines
discounting facilities in the UK (£12m) and the Netherlands           in contracting tend to lag the broader economic indicators. The
(€18m) plus an overdraft facility of £2m. These facilities were       Executive Search and permanent recruitment businesses were
renewed in March 2009 with the notice term of the invoice             most impacted, as was Ireland, geographically.
discounting arrangements extended from six months to one year.
                                                                      The costs of limited reductions in headcount are included in the
                                                                      overall non-recurring items charge.
Cash flow
The Group generated an operating cash inflow before                   The resilience of the UK business was underpinned by a number
movements in working capital of £2.8m. Investment in working          of key successes. In Ireland our outsourcing capability helped
capital absorbed £1.6m, resulting in a net cash inflow from           secure a successful renewal of our public sector technology
operating activities of £1.2m. Taxes paid in the period was £1.6m.    contract. In the UK, new business wins with the central
Capital expenditure of £1.8m included £1.4m in relation to the        government for multiple assignments, mainly in the permanent
outsourcing contract in Nash Technologies. Net interest paid          recruitment sector combined with increased productivity, lifted
reduced by 54% owing mainly to lower interest rates.                  contribution ahead of the previous year.

Strategy                                                              Rest of Europe
The Group’s key assets are its strong brand and unique portfolio      Revenue in mainland Europe increased by 1% to £127.8m (2008:
of services which offer a competitive advantage in an economic        £126.5m), and operating profit decreased by 40% to £1.2m (2008:
downturn. With our offshore and outsourcing offering based            £1.9m).
in Vietnam, we are able to participate in our clients’ broader IT
spend even as recruitment of technology professionals is reduced      Demand for specialist professional recruitment has been weak
to a minimum. The gross profit attributable to IT contracting,        in Europe and the impact of the financial crisis appears to
offshore services and outsourcing comprises 70% (2008: 58%) of        have lagged behind the UK and the US by around six months.
the total gross profit during the period. However, the Group has      While HR outsourcing and contracting services have remained
maintained a significant market leading executive recruitment         relatively robust, demand for permanent recruitment and new
capability across the US, the UK and Europe and expects to            requirements for freelancers has fallen across all of mainland
substantially benefit from a broad based global recovery in view      Europe. France and Poland were loss making during the period.
of the high operational gearing of this service.                      The cost base in Europe has been reduced through a number
                                                                      of measures, including a flexible approach to pay and bonuses
The recession has now affected most sectors and no geographic         and some limited consolidation of office accommodation. In
market is immune. The Group’s long term strategy to diversify         Switzerland, margin reduction and consolidation of the supply
the client base and sector exposure has sustained the Group’s         chain continues to drive relationships in the Financial Services
performance. More specifically, the market for leadership and         sector and demand in Geneva has been stable with good results.
management in the public sector has remained buoyant and
technology recruitment in the pharmaceutical sector has also          New areas of investment, such as contingency recruitment in
remained comparatively resilient.                                     Scandinavia and our new Copenhagen office has seen continued
                                                                      success with revenues more than doubling over the period and
Looking forward, the Group’s strategy will continue to be based       contribution up 40%. HR outsourcing and contract services in
on the successful formula of a strong organic growth model            the Benelux has partially mitigated weak recruitment results and
combined with a broad portfolio of services, with bolt-on             the business expects to secure more of these opportunities as
acquisitions. We are confident that our proven strategy and           more companies consider outsourcing their flexible workforce
long-term approach to client relationships will benefit the Group     management.
                                                                                 HARVEY NASH GROUP PLC INTERIM REPORT 2009 / 




In Germany, the strategic outsourcing contract has delivered            The majority of our businesses across the Group have performed
increased revenues, insulating the German business overall              well in very challenging markets and we are pleased to have
from weak demand in the manufacturing sector which has                  maintained our revenues in line with the previous year,
implemented a recruitment freeze and has dramatically reduced           demonstrating tangible gains in all of our geographic segments.
working hours.                                                          Demand for outsourcing continues to be buoyant, generating an
                                                                        encouraging volume of opportunities.
Nash Technologies, incorporated in October 2008, and providing
wireless technology maintenance, research and development               Ian Kirkpatrick
services, has had a strong first half delivering on key projects and    Chairman
managing the workload from increased usage of 3G networks in            29 September 2009
the USA. Additional revenues of £1.5m in the six months to July
2009 were generated from new projects and the workforce in
Vietnam has increased to assist with capacity issues.


United States
In the US, revenue increased by 28% to £15.7m (2008: £12.3m)
and gross profit increased by 13% to £4.8m (2008: £4.3m). In
constant currency terms revenue and gross profit declined by 1%
and 12% respectively. US gross profit is 15% of the Group’s gross
profit.

Although our US business has shown remarkable resilience,
delivering annual profits and cash throughout the US recession
which began in 2008, results at the operating profit level have
been mixed, with higher margin IT consulting revenues and
permanent assignments most affected by the downturn, and the
Executive Search business least affected. Our two key objectives,
maintaining our platform and continuing to deliver profits have
meant that an appropriate reduction in the levels of headcount
and infrastructure was inevitable. However, notwithstanding the
decline in operating profit for the period to £0.14m from £0.39m,
the business has performed extremely well relative to its US
comparator group.


Dividends
The Group will pay an interim dividend of 0.85p per share (2008:
0.80p) an increase of 6%, on 27 November 2009 to shareholders
on the register at 30 October 2009.


Principal risks facing the business
The principal risks facing the Group remain unchanged from
those set out in the annual report of the Group’s results for 2009.
These are chiefly the continued risk of an economic downturn
and dependence on key clients and key personnel. The Group’s
strategy for mitigating these risks is laid out in detail in the 2009
annual report.

Outlook
The Group continues to trade resiliently in the current difficult
environment and visibility remains limited, particularly in
recruitment. The short term outlook is dependent on increased
activity in the second half and the upturn in sentiment, which
we are already starting to see in the UK, resulting in increased
volumes of permanent recruitment.
 / HARVEY NASH GROUP PLC INTERIM REPORT 2009



 Consolidated Interim Income Statement

                                                           Unaudited          Unaudited             Audited
                                                       months ended     6 months ended    12 months ended
                                                         31 July 009       31 July 2008    31 January 2009
                                              Notes              £’000             £’000              £’000
Revenue                                       3               199,90           199,761            420,101
Cost of sales                                               (1,09)          (166,441)          (350,950)
Gross profit                                  3                31,93            33,320             69,151
Total administrative expenses                                 (9,93)          (29,024)           (58,794)


Operating profit before non-recurring items                     ,40             4,296             10,357


Non-recurring items                           7                 (40)                  -                  -


Operating profit                              3                 ,000             4,296             10,357
Finance income                                                     3                23                117
Finance costs                                                   (40)              (465)              (943)
Profit before tax                                               1,9             3,854              9,531
Income tax expense                            4                 (51)            (1,099)            (2,621)
Profit for the period                                           1,5             2,755              6,910


Attributable to:
Equity holders of the company                                   1,15             2,597              6,524
Minority interest                                                 11               158                386
                                                                1,5             2,755              6,910


Basic earnings per share                      5                 1.59p             3.59p              9.00p
Diluted earnings per share                    5                 1.5p             3.41p              8.92p
                                                                              HARVEY NASH GROUP PLC INTERIM REPORT 2009 / 9




Consolidated Statement of Comprehensive Income

                                                                         Unaudited              Unaudited                  Audited
                                                                     months ended         6 months ended         12 months ended
                                                                       31 July 009           31 July 2008         31 January 2009
                                                                               £’000                 £’000                   £’000
Profit for the period                                                           1,5                 2,755                 6,910


Foreign currency translation differences                                         (35)                  529                 6,811
Other comprehensive income for the period                                        (35)                  529                 6,811


Total comprehensive income for the period                                         90                 3,284                13,721


Total comprehensive income attributable to:
Equity holders of the company                                                                      3,126                13,335
Minority interest                                                                 11                   158                   386
                                                                                  90                 3,284                13,721

The notes on pages 13 to 16 form an integral part of this condensed consolidated interim financial information.
10 / HARVEY NASH GROUP PLC INTERIM REPORT 2009



Consolidated Interim Balance Sheet


                                                                                  Unaudited            Unaudited          Audited
                                                                                31 July 009         31 July 2008 31 January 2009
                                                                 Notes                  £’000               £’000           £’000
ASSETS
Non-current assets
Property, plant and equipment                                                           3,099               1,629          2,256
Intangible assets                                                                      45,51              41,317         47,758
Deferred income tax assets                                                              1,99               1,210          1,648
                                                                                       50,04              44,156         51,662
Current assets
Cash                                                                                      9               1,585          4,458
Trade and other receivables                                                            0,31              86,790        103,987


Total assets                                                     3                   131,54              132,531        160,107


LIABILITIES
Non-current liabilities
Contingent consideration                                                                  (19)                    -          (21)
Deferred income tax liabilities                                                          ()              (141)           (305)
                                                                                         (5)              (141)           (326)


Current liabilities
Trade and other payables                                                             (0,33)            (77,022)        (97,488)
Current income tax liabilities                                                         (1,5)             (2,192)        (2,862)
Contingent consideration                                                                      -            (2,815)           (31)
Provisions for liabilities and charges                                                    (90)                    -             -
                                                                                     (,309)            (82,029)       (100,381)
Total liabilities                                                                    (,594)            (82,170)       (100,707)
Net assets                                                                             59,00              50,361         59,400


Capital and reserves attributable to equity shareholders
Share capital                                                                           3,9               3,622          3,669
Share premium                                                                           ,4               8,208          8,412
Shares to be issued                                                                                       1,318             86
Fair value and other reserves                                                          15,09              15,079         15,079
Own shares held                                                                          (4)              (148)           (120)
Cumulative translation reserve                                                          ,194               1,296          7,579
Retained earnings                                                                      4,45              20,746         24,107
                                                                                       5,449              50,121         58,812
Minority interest in equity                                                               11                 240            588
Total equity                                                                           59,00              50,361         59,400

The notes on pages 13 to 16 form an integral part of this condensed consolidated interim financial information.
                                                                             HARVEY NASH GROUP PLC INTERIM REPORT 2009 / 11




Unaudited Consolidated Interim Statement of Changes in Equity


                                                               Shares Fair value         Own Cumulative
                                        Share     Share         to be and other        shares translation         Retained    Total
                                       capital premium         issued reserves           held     reserve         earnings   equity
                                        £ ’000      £ ’000     £ ’000        £ ’000    £ ’000         £ ’000        £ ’000   £ ’000
Balance at 1 February 2008               3,622        8,208      1,643       15,079      (148)           767        18,963   48,134
Profit for the period                         -           -          -             -         -              -        2,597    2,597
Currency translation adjustments              -           -          -             -         -           529             -      529
Total recognised income and
expense for the period                        -           -          -             -         -           529         2,597    3,126
Employee share option and bonus
plan                                          -           -          -             -         -              -           86       86
IFRS 2 Deferred Tax to equity                 -           -          -             -         -              -        (109)    (109)
Acquisitions in the period                    -           -      (325)             -         -              -            -    (325)
Dividend paid                                 -           -          -             -         -              -        (791)    (791)
Balance at 31 July 2008                  3,622        8,208      1,318       15,079      (148)          1,296       20,746   50,121
Profit for the period                         -           -          -             -         -              -        3,927    3,927
Currency translation adjustments              -           -          -             -         -          6,282            -    6,282
Total recognised income and
expense for the period                        -           -          -             -         -          6,282        3,927   10,209
Currency translation adjustments
on acquisitions in the period                 -           -       188              -         -              -            -      188
Employee share option and bonus
plan                                          -           -          -             -       28               1           50       79
IFRS 2 Deferred Tax to equity                 -           -          -             -         -              -         (38)      (38)
Acquisitions in the period                  47         204     (1,420)             -         -              -            -   (1,169)
Dividends paid                                -           -          -             -         -              -        (578)    (578)
Balance at 31 January 2009               3,669        8,412         86       15,079      (120)          7,579       24,107   58,812
Profit for the period                         -           -          -             -         -              -        1,157    1,157
Currency translation adjustments              -           -          -             -                    (385)            -    (385)
Total recognised income and
expense for the period                        -           -          -             -         -          (385)        1,157      772
Employee share option and bonus
plan                                          -          10          -             -         1              -           64       75
IFRS 2 Deferred Tax to equity                 -           -          -             -         -              -            6        6
Dividends paid                                -           -          -             -         -              -        (869)    (869)
Own shares purchased                          -           -          -             -     (347)              -            -    (347)

Balance at 31 July 009                 3,9        ,4                15,09      (4)          ,194       4,45    5,449

The notes on pages 13 to 16 form an integral part of this condensed consolidated interim financial information.
1 / HARVEY NASH GROUP PLC INTERIM REPORT 2009



Consolidated Interim Cash Flow Statement


                                                                            Unaudited                Unaudited                 Audited
                                                                        months ended           6 months ended        12 months ended
                                                                          31 July 009             31 July 2008        31 January 2009
                                                                 Notes            £’000                   £’000                  £’000
Profit before taxation                                                                1,9                3,854                9,531
Adjustments for:
- depreciation                                                                          0                 352                   791
- amortisation                                                                           3                   55                   79
- finance income                                                                        (3)                (23)                 (117)
- finance costs                                                                         40                 465                   943
- share based employee settlement and share option charge                                4                   86                  173
Operating cash flows before changes in working capital                                ,1                4,789               11,400
Changes in working capital (excluding the effects of
acquisition and exchange differences on consolidation)
- Decrease/(increase) in trade and other receivables                                ,3              (13,344)              (19,919)
- (Decrease)/increase in trade and other payables                                  (3,931)                8,243               18,007
- Increase in provisions for liabilities and charges                                     90                       -                  -
Cash inflows/ (outflows) from operating activities                                    1,1                (312)                9,488
Income tax paid                                                                     (1,00)                (729)               (2,207)
Net cash (absorbed by)/generated from operating activities                            (43)              (1,041)                7,281


Cash flows from investing activities
Purchases of property, plant and equipment                            9               (403)                (242)                 (445)
Purchases of property, plant and equipment rechargeable to
clients                                                               9             (1,43)                       -                  -
Cash acquired with acquisitions                                                            -                      -                11
Purchase of subsidiary undertakings                                                     (33)               (325)               (4,923)
Interest received                                                                        3                   23                  117
Net cash (absorbed) from investing activities                                       (1,3)                (544)               (5,240)


Cash flows from financing activities
Purchase of own shares                                               11               (34)                       -                  -
Proceeds from issue of ordinary shares                                                   11                       -                  -
Dividends paid to group shareholders                                                  (9)                (791)               (1,369)
Interest paid                                                                         (40)                (465)                 (943)
Net cash used in financing activities                                               (1,445)              (1,256)               (2,312)


(Decrease) in cash and cash equivalents                                             (3,91)              (2,841)                 (271)
Cash and cash equivalents at the beginning of the period                              4,45                4,184                4,184
Exchange (loss)/gain on cash and cash equivalents                                       ()                242                   545
Cash and cash equivalents at the end of the period                                      9                1,585                4,458

The notes on pages 13 to 16 form an integral part of this condensed consolidated interim financial information.
                                                                               HARVEY NASH GROUP PLC INTERIM REPORT 2009 / 13




Notes to the Unaudited Condensed Consolidated Interim Financial Statements

1. Corporate Information
Harvey Nash Group plc (“the Company”) and its subsidiaries (together “the Group”) is a leading provider of specialist recruitment and
outsourcing solutions. The Group has offices in the UK, Europe, the United States and Vietnam.

The Company is a public listed company incorporated in the UK. Its registered address is 13 Bruton Street, London W1J 6QA and its
primary listing is on the London Stock Exchange.

The condensed consolidated interim financial information for the six months ended 31 July 2009 was approved for issue on 29
September 2009.

2. Accounting Policies

Basis of preparation
This condensed consolidated interim financial information for the six months ended 31 July 2009 has been prepared in accordance
with IAS 34, ‘Interim financial reporting’ and the disclosure and transparency directives of the FSA.
It does not include all the information required for full annual financial statements, and should be read in conjunction with the
consolidated financial statements of the Group for the year ended 31 January 2009.

Nature of financial information
The interim financial information does not constitute statutory financial statements as defined under Section 434 of the Companies
Act 2006. The financial information for the year ended 31 January 2009 has been extracted from the statutory accounts for that year
which have been delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified and did not
contain a statement under Section 237 (2) or (3) of the Companies Act 1985.

Significant accounting policies
In preparing these interim financial statements the same accounting policies, methods of computation and presentation have been
applied as those set out in the Harvey Nash Group plc annual report for the year ended 31 January 2009. The accounting policies
are drawn up in accordance with International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) as
endorsed by the European Union.

The accounting policies adopted in the preparation of the interim consolidated financial statements are consistent with those
followed in the preparation of the Group’s annual financial statements for the year ended 31 January 2009. In the current financial
year, the Group has adopted IAS 1 ‘Presentation of Financial Statements’ (revised 2007) and IFRS 8 ‘Operating Segments’. The
implementation of IAS 1 (revised 2007) resulted in changes to disclosure with the inclusion of a Condensed Consolidated Statement
of Comprehensive Income.

IFRS 8 requires disclosure of information about the Group’s operating segments and replaces the requirement to determine primary
(business) and secondary (geographical) reporting segments of the Group. It requires a management approach under which segment
information is presented on the same basis as that used for internal reporting purposes. This has resulted in three reportable segments:
UK and Ireland, Rest of Europe and United States. Asia Pacific is included in the UK and Ireland segment in line with the way the results
are analysed by the Group Board.

The following new standards, amendments to standards and interpretations have been issued, but are not effective for the financial
year beginning 1 February 2009 and have not been early adopted:

IFRS 3 (revised), ‘Business combinations’ and consequential amendments to IAS 27, ‘Consolidated and separate financial statements’,
IAS 28, ‘Investments in associates’ and IAS 31, ‘Interests in joint ventures’, effective prospectively to business combinations for which
the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 July 2009. Management is
assessing the impact of the new requirements regarding acquisition accounting, consolidation and associates on the group. The group
does not have any joint ventures.
14 / HARVEY NASH GROUP PLC INTERIM REPORT 2009




3. Segment Information

Revenue

                                                                         Unaudited              Unaudited          Audited
                                                                     months ended         6 months ended 12 months ended
                                                                       31 July 009           31 July 2008 31 January 2009
                                                                               £’000                 £’000           £’000
United Kingdom & Ireland                                                       5,395               61,009            118,347
Rest of Europe                                                               1,1               126,455            273,171
United States                                                                  15,4               12,297              28,583
Total                                                                        199,90               199,761            420,101

Revenues from one customer in the Rest of Europe segment represent approximately £21.8m of the Group’s total revenues (2008:
£40.4m).

Gross profit

                                                                         Unaudited              Unaudited          Audited
                                                                     months ended         6 months ended 12 months ended
                                                                       31 July 009           31 July 2008 31 January 2009
                                                                               £’000                 £’000           £’000
United Kingdom & Ireland                                                       1,3               16,078              30,556
Rest of Europe                                                                 14,01               12,992              29,187
United States                                                                   4,09                 4,250              9,408
Total                                                                          31,93               33,320              69,151


Operating Profit/(loss)

                                                                         Unaudited              Unaudited          Audited
                                                                     months ended         6 months ended 12 months ended
                                                                       31 July 009           31 July 2008 31 January 2009
                                                                               £’000                 £’000           £’000
United Kingdom & Ireland                                                        1,1                 1,999              4,825
Rest of Europe                                                                  1,151                 1,906              4,251
United States                                                                     143                  391               1,281
Operating profit before non-recurring items                                     ,40                 4,296             10,357


Non- recurring items                                                             (40)                    -                    -
Total                                                                           ,000                 4,296             10,357
                                                                              HARVEY NASH GROUP PLC INTERIM REPORT 2009 / 15




Total Assets

                                                                             Unaudited                Unaudited          Audited
                                                                         months ended           6 months ended 12 months ended
                                                                           31 July 009             31 July 2008 31 January 2009
                                                                                   £’000                   £’000           £’000
United Kingdom & Ireland                                                            3,13                41,331               38,865
Rest of Europe                                                                      5,391                75,731             101,091
United States                                                                       1,091                14,259               18,503


Deferred tax asset                                                                   1,99                  1,210               1,648
Total                                                                             131,54                132,531             160,107


4. Taxation

                                                                             Unaudited               Unaudited               Audited
                                                                         months ended          6 months ended      12 months ended
                                                                           31 July 009            31 July 2008      31 January 2009
                                                                                   £’000                  £’000                £’000
Current tax:
Tax on profit in the period                                                            94                 1,140                 2,854
Adjustments in respect of prior periods                                                   -                     -                 119
Total current tax                                                                      94                 1,140                 2,973


Deferred tax:
Origination and reversal of timing differences                                       (30)                    68                    67
Adjustments in respect of prior years                                                     -                     -                (272)
Deferred tax to equity                                                                                    (109)                 (147)
Total deferred tax charge                                                            (33)                  (41)                 (352)


Total tax charge (continuing operations)                                               51                 1,099                 2,621


5. Earnings Per Share

                                                                             Unaudited               Unaudited               Audited
                                                                         months ended          6 months ended      12 months ended
                                                                           31 July 009            31 July 2008      31 January 2009

Profit for the period £’000                                                          1,15                 2,597                 6,524
Weighted average number of shares                                             ,0,193             72,387,387            72,471,450
Basic earnings per share                                                             1.59p                 3.59p                 9.00p

Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of
ordinary shares in issue during the year, excluding those held in the employee share trust, which are treated as cancelled.

For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive
potential ordinary shares. The Group has two categories of potential ordinary shares: those share options granted to employees where
the exercise price is less than the average price of the Company’s ordinary shares during the year, and deferred consideration shares to
be issued.
1 / HARVEY NASH GROUP PLC INTERIM REPORT 2009




Adjusted earnings per share is calculated as above but uses the earnings attributable to ordinary shareholders excluding non recurring
items (£0.48m) and the related tax credit (£0.14m); net impact £0.34m.

                                                                              Unaudited              Unaudited                Audited
                                                                          months ended         6 months ended       12 months ended
                                                                            31 July 009           31 July 2008       31 January 2009

Profit for the half year £’000                                                       1,15                  2,597                 6,524
Weighted average number of shares                                              ,0,193             72,387,387            72,471,450
Effect of dilutive securities                                                     ,1              3,795,836               646,657
Adjusted weighted average number of shares                                     3,549,04             76,183,223            73,118,107
Diluted earnings per share                                                           1.5p                  3.41p                 8.92p


6. Analysis of Changes in Net Funds

                                                                                                      Unaudited            Unaudited
                                                                                 Unaudited     Foreign exchange               31 July
                                                      1 February 2009            Cash flow           movements                  009
                                                                £’000                £’000                 £’000               £’000
Cash and cash equivalents                                        4,458               (3,691)                 (78)                  9
                                                                 4,458               (3,691)                 (78)                  9

7. Non-recurring Items

Non- recurring items relate to restructuring costs incurred in the 6 months to 31 July 2009.

8. Dividends

The Group paid a final dividend of 1.2p per share on 17 July 2009 to shareholders on the register as at 3 July 2009 (2008: final dividend
of 1.1p per share was paid on 8 July 2008).

9. Purchases of Property, Plant and Equipment

The Group purchased property, plant and equipment of £1.8m in the period. £1.4m of this is rechargeable to Alcatel Lucent.

10. Capital Commitments

The Group had capital commitments of £0.72m at 31 July 2009 for which no provision has been made in the accounts. These relate to
the acquisition of property, plant and equipment. £0.68m is rechargeable to Alcatel Lucent.

11. Share Purchase

On 1 May 2009 the Harvey Nash Group Employee Benefit Trust purchased 911,909 shares of the Group at 38p per share.
These had a total nominal value of £0.05m.

12. Distribution of Interim Financial Statements

Copies of this statement are being dispatched to shareholders who voted to receive a paper copy, and are available to members of the
public on the Group’s website at www.harveynash.com or from the registered office at 13 Bruton Street, London W1J 6QA.
                                                                               HARVEY NASH GROUP PLC INTERIM REPORT 2009 / 1




Statement of Directors’ Responsibilities

The directors confirm that this condensed set of financial statements has been prepared in accordance with IAS 34 as adopted by the
European Union, and that the interim management report herein includes a fair review of the information required by DTR 4.2.7 and
DTR 4.2.8, namely:

•   an indication of important events that have occurred during the first six months and their impact on the condensed set of
    financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year;
    and

•   material related party transactions in the first six months and any material changes in the related party transactions described in
    the last annual report.

The directors of Harvey Nash Group plc are listed in the Harvey Nash Group plc Annual Report for 31 January 2009.

The directors are also responsible for the maintenance and integrity of the Company website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.


By order of the Board

Albert Ellis
Chief Executive Officer
29 September 2009

Richard Ashcroft
Group Finance Director
29 September 2009
1 / HARVEY NASH GROUP PLC INTERIM REPORT 2009
                                                                                            HARVEY NASH GROUP PLC INTERIM REPORT 2009 / 19




EUROPE                                                                                                     USA
London                                              Hamburg                                                New Jersey
13 Bruton Street, London, W1J 6QA, UK               Hamburg Fleethof, Stadthausbrücke 1                    U.S. Corporate Headquarters,
Tel: +44 (0)20 7333 0033                            D-20355 Hamburg, Germany                               1680 Route 23 North, Suite 300, Wayne,
Fax: +44 (0)20 7333 0032                            Tel: +49 (0)40 376 44 546                              NJ 07470, USA
                                                    Fax: +49 (0)40 376 44 642                              Tel: +1 (973) 646 2100
Birmingham                                                                                                 Fax: +1 (973) 696 3985
4302 Waterside Centre, Birmingham Business Park,    Nürnberg
West Midlands, B37 7YN, UK                          Thurn-und-Taxis-Str.10                                 California
Tel: +44 (0)121 717 1919/1900                       D-90411 Nürnberg                                       225 Bush Street, Suite 1840
Fax: +44 (0)121 717 1918/1901                       Tel: +49 (0)911 30874 4168                             San Francisco, CA 94104, USA
                                                    Fax: +49 (0)911 30874 3856                             Tel: +1 (415) 901 0910
Leeds                                                                                                      Fax: +1 (415) 901 0920
Fourth Floor, 49A St Pauls Street, Leeds, LS1 2TE   Utrecht
Tel: +44 (0)113 202 8900                            Kantorenpark Corner Plaza,                             Illinois
Fax: +44 (0)113 245 3255                            Gebouw B, Planetenbaan 25,                             415 N. Lasalle
                                                    3606 AK Maarssen, The Netherlands                      Chicago, IL 60610, USA
Edinburgh                                           Tel: +31 (0)346 581 070                                Tel: +1 (312) 543 7314
22 Young Street, Edinburgh, EH2 4JB, UK             Fax: +31 (0)346 581 080                                Fax: +1 (773) 525 1871
Tel: +44 (0)131 220 3700
Fax: +44 (0)131 220 3717                            Groningen                                              Colorado
                                                    Zuiderpark 16                                          Trinity Place, 1801 Broadway, Suite 1000, Denver,
Dublin                                              9724 AG Groningen, The Netherlands                     CO 80202, USA
Unit 2, 51 Sir John Rogerson's Quay,                Tel: +31 (0) 507 600 017                               Tel: +1 (303) 299 9090
Dublin 2, Ireland                                   Fax: +31 (0) 346 581 080                               Fax: +1 (303) 296 8855
Tel: +353 (0)1 6741400
Fax: +353 (0)1 6770921                              Zürich                                                 New York
                                                    Badenerstrasse 15, Postfach, CH-8021,                  60 E 42nd Street, Suite 2206, New York
Brussels                                            Zürich, Switzerland                                    NY 10165, USA
Westpoint Park, ‘t Hofveld 6c,                      Tel.: +41 (0) 44 296 88 44                             Tel: +1 (212) 481 1317
B-1702, Groot-Bijgaarden, Belgium                   Fax: +41 (0) 44 296 88 55                              Fax: +1 (212) 481 1319
Tel: +32 (0)2 463 1430
Fax: +32 (0)2 463 3277                              Geneva                                                 Washington
                                                    Rue du Prince 9 – 11, 1204                             2101 Fourth Avenue, Suite 720, Seattle
Paris                                               Geneva, Switzerland                                    WA 98121, USA
8 Avenue Kleber, F-75116,                           Tel: +41 (0) 22 319 35 55                              Tel: +1 (206) 956 9200
Paris, France                                       Fax: +41 (0) 22 319 35 50                              Fax: +1 (206) 956 0474
Tel: +33 (0)1406 76600
Fax: +33 (0)1406 76619                              Luxembourg                                             Massachusetts
                                                    67 rue Ermesinde                                       34 Hayden Rowe Street, Suite 110, Hopkinton
4 Rue de l’Abreuvoir 92415,                         L-1469 Luxembourg                                      MA 01748, USA
Courbevoie Cedex, France                            Tel: +35 (0) 226 30 651                                Tel: +1 (508) 544 9888
Tel: +33 (0)1 40 67 66 00                                                                                  Fax: +1 (508) 435 5632
Fax: +33 (0)1 40 67 66 19                           Stockholm
                                                    WorldTradeCenter, Kungsbron 1, Box 843,                Georgia
Düsseldorf                                          101 36 Stockholm, Sweden                               5 Concourse Parkway Suite 2250
Graf-Adolf-Platz 15, D-40213                        Tel: +46 (0) 8 796 17 00                               Atlanta, GA 30328, USA
Düsseldorf, Germany                                 Fax: +46 (0) 8 796 17 99                               Tel: +1 (678) 990 3640
Tel: +49 (0)211 17 93 92 0                                                                                 Fax: +1 (678) 990 3654
Fax: +49 (0)211 17 93 92 20                         Gothenburg
                                                    Södra Larmgatan 20,                                    ASIA PACIFIC
Stuttgart                                           411 16 Göteborg, Sweden                                Vietnam
Büchsenstrasse 10, D-70173                          Tel: +46 (0) 31 60 42 90                               Hanoi, Unit 702, 7th Floor, HITC Building,
Stuttgart, Germany                                  Fax: +46 (0) 31 60 42 99                               239 Xuan Thuy Road, Cau Giay District,
Tel: +49 (0)711 207050                                                                                     Hanoi, Vietnam
Fax: +49 (0)711 207020                              Malmö                                                  Tel: +84 (0)4 834 2050
                                                    Kärleksgatan 2A,                                       Fax: +84 (0)4 833 3834
Frankfurt                                           211 45 Malmö, Sweden
Herriotstrasse , D-60528                            Tel: +46 (0) 40 35 48 70                               Ho Chi Minh City, e.town, 364 Cong Hoa Street,
Frankfurt, Germany                                  Fax: +46 (0) 40 611 29 80                              Tan Binh District, Ho Chi Minh City, Vietnam
Tel: +49 (0)69 677 33 69                                                                                   Tel: +84 (0)8 810 6200
Fax: +49 (0)69 677 33 319                           Copenhagen                                             Fax: +84 (0)8 810 6201
                                                    Business Center, Havnegade 39
Munich                                              1058 Copenhagen K, Denmark
Leonrodstrasse 52                                   Tel: +45 77 99 32 60
D-80636 München, Germany
Tel: +49 (0)89 839306 0                             Warsaw
Fax: +49 (0)89 839306 49                            Al. Jerozolimskie 56 C,
                                                    00-803 Warszawa, Poland
                                                    Tel: +48 22 428 47 28
      Harvey Nash Group plc
13 Bruton Street, London W1J 6QA
 Telephone: +44 (0)20 7333 0033
      www.harveynash.com

								
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