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Harvey Nash Group plc: THE INVESTMENT CASE

Harvey Nash hits three year high as tech staff demand soars

Financial services have been especially strong and driven by fears over cybersecurity ...
Demand for tech staff is strong

Software developers are in demand in the UK and Northern Europe, where there are acute skills shortages in niche sectors, according to tech recruiter Harvey Nash PLC (LON:HVN).

Albert Ellis, Nash’s chief executive, highlighted strong trading at the start of the current financial year when the group posted record revenues.

In June, he repeated business was buoyant with gross profit 7% higher.

Within that, the UK & Ireland saw a 20% uplift as financial services have been especially busy, driven by fears over cybersecurity, regulations, MIFID and a shift to online banking.

Companies unprepared for cyber attacks

Harvey Nash and KPMG’s latest survey of chief information officers (CIOs) found that managing operational risk and compliance have become significantly increased priorities at board level.

READ: Barely more than one-in-five companies are well-prepared for a cyber attack, information technology survey indicates

Boards have been ramping up investment in data security and privacy in the rush to become compliant with general data protection regulations (GDPR) that came into effect in the European Union on 25 May.

The survey also found that the number of respondents that are prioritising improvements in cyber-security had risen 23% from a year ago as cyber-crime threats reach an all-time high.

More consolidation likely

Brexit has also had a major impact on the sector and Ellis sees Harvey Nash as a consolidator as he believes one of the long-term consequences will be a shift towards larger companies.

“Brexit has really made companies look at their supply chain and procurement needs.”

Clout and size in markets are what large companies want and boutiques and small company owners are worried they will be sidelined by this migration to larger companies.

Belgium deal

After last year’s two acquisitions, the company recently bought Microsoft staff specialist eMenka in Belgium as part of a strategy to strengthen its presence in Northern Europe.

Based near Antwerp, eMenka focuses on placing Microsoft specialists both in full-time employee and independent contractor roles and generated sales of €3.89mln, gross profits of €820,000 and generated pre-tax profits of €210,000 in 2017.

The consideration for eMenka was €1mln, with €1mln deferred.

Aim dividend payer

Harvey Nash is also one of the junior market’s dividend payers having moved from the main market to AIM in 2017.

Shares yield 3.8% currently following a 5% rise in the payout with the full year numbers.

In the year to January, underlying profits rose 24% to £10.8mln on revenues of £889mln (£784mln).

At 113p, the shares stand at a three-year high and the group is valued at £83mln.

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Harvey Nash Group plc Timeline

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