# Harvey Nash Group plc Q&A with Zeus Capital (LON:HVN)

- Link: https://www.directorstalkinterviews.com/harvey-nash-group-plc-qa-zeus-capital-lonhvn-3/412750377
- Published: 2018-05-01T12:15:59+01:00
- Author: Amilia Stone

**Harvey Nash Group plc** (LON:HVN) is the topic of conversation when Zeus Capital’s
Head of Research Mike Allen caught up with DirectorsTalk for an exclusive interview

 

**Q1: Harvey Nash Group, they released their preliminary results for year-end 31st
January, can you talk us through the highlights?**

**A1**: The company delivered a very good set of results. They were slightly ahead
of our expectations at the PBT level, so they came in at 10.8 million against our
10.6 million. Earnings were about 7% ahead of our forecast due to a lower tax rate
and we’ve seen lower tax guidance going forward as well. They continued their impressive
dividend growth track record as well, growing that 5% which is in line with our 
expectations. Headline growth was very good so PBT growth was well in excess of 
20% and that’s despite some mixed market conditions in some of their markets but
shows that their strategy is working well.

 

**Q2: What can you tell us about the market that Harvey Nash is in?**

**A2**: I think regionally the UK business saw a good uplift in gross profits and
that was against a challenging backdrop of Brexit-related uncertainty, but they 
certainly appear to be in the right areas there, very focussed.

Europe continues to go well for them as well, we saw very strong performance in 
the Benelux and the Rest of the World was fairly mixed which has already been well
flagged and they’ve undertaken some restructuring in Asia-Pacific and in the US 
as well, so we think those measures will benefit future years.

 

**Q3: With this in mind then, have the results affected your forecasts in any way?**

**A3**: The second half from run rate was very strong and I think that gave rise
for a confident outlook for the coming year, there are still some uncertainties 
there, but they’ve certainly started the new year well. We trigged up our forecast
really just due to the lower improved effective tax rate that we’ve seen so there
was a small upgrade to forecast but really tax driven.

 

**Q4: In terms of Harvey Nash Group’s valuation, what are the key things we should
be looking at?**

**A4**: I think the first thing I’d probably say is that this company has delivered
on its strategy, the strategy of delivering growth in its markets. Also, the transformation
programme of making it a more efficient business is working well and the acquisitions
that they’ve done have also embedded well into the business.

So, we think the share price, the PE of just 8 times I think doesn’t reflect all
of the progress they’ve made on those fronts and also, I think the dividend yield
of 5% also of note as well so I think on those valuation metrics, given the progress
delivered, there’s still a lot of value in the shares in our view.

Share on: