TIDMGATC
RNS Number : 9453M
Gattaca PLC
03 August 2017
3 August 2017
Gattaca plc
("Gattaca" or, "the Group")
Trading Update for 12 months ended 31 July 2017
Gattaca plc (LSE-AIM: GATC), the UK's leading specialist
Engineering and Technology recruitment business, today provides the
following pre-close trading update for the 12 months ended 31 July
2017.
The Board expects profits to be broadly in-line with market
expectations.
Highlights
Net Fee Income (NFI) performance can be summarised as
follows:
FY FY 2016 Change Constant
2017 Currency
GBPm GBPm % %
Contract
NFI 55.9 53.9 +4% +1%
Permanent
NFI 18.9 19.1 -1% -5%
----------- ------ ------- ------ ---------
Total
NFI 74.8 73.0 +2% -
----------- ------ ------- ------ ---------
Like for H1 H2 FY
Like(1)
2017 2016 Change 2017 2016 Change 2017 2016 Change
H1 H1 H2 H2
GBPm GBPm % GBPm GBPm % GBPm GBPm %
Contract
NFI 29.2 30.3 -4% 30.0 31.2 -4% 59.2 61.5 -4%
Permanent
NFI 9.5 10.3 -8% 9.9 10.0 -1% 19.4 20.3 -4%
------------- ----- ---- ------ ---- ----- ------ ---- ---- ------
Total
NFI 38.7 40.6 -5% 39.9 41.2 -3% 78.6 81.8 -4%
------------- ----- ---- ------ ---- ----- ------ ---- ---- ------
2017 2016 Change 2017 2016 Change 2017 2016 Change
H1 H1 H2 H2
GBPm GBPm % GBPm GBPm% GBPm GBPm %
Engineering 24.5 25.5 -4% 25.4 25.8 -1% 49.9 51.2 -3%
Technology 14.2 15.1 -6% 14.5 15.4 -6% 28.7 30.6 -6%
------------- ----- ---- ------ ---- ----- ------ ---- ---- ------
Total
NFI 38.7 40.6 -5% 39.9 41.2 -3% 78.6 81.8 -4%
------------- ----- ---- ------ ---- ----- ------ ---- ---- ------
(1) Like for Like (i) assumes RSL had been owned for the entire
prior period, (ii) excludes NFI from the Networkers Search business
divested in January 2016 and (iii) is calculated on a constant
currency basis
Brian Wilkinson, Chief Executive Officer, said:
"The UK continues to be our biggest market by some margin and,
while we have seen some recovery following the initial uncertainty
caused by the outcome of the EU referendum, continuing political
uncertainty and its impact on business confidence is unlikely to
lead to an increase in customer demand and candidate availability
in the near and medium term.
"That said, Gattaca's exposure to skill-short STEM (Science,
Technology, Engineering and Mathematics) markets should mitigate to
an extent the effects of the business uncertainty that we are
seeing in the UK economy relative to less specialist players. As
government sponsored infrastructure and defence programmes roll out
we expect to see a positive impact on our business which should
offset any weakness in the overall economy. This strong position in
Engineering and Technology markets, particularly where they
converge, allied to our rapidly growing international business puts
us in a robust position for the future."
Group Performance
Overall NFI declined in the year by 4% as the ongoing Brexit
negotiations, IR35 tax changes and the UK General Election all
eroded confidence. Whilst Q1 to Q3 NFI was down between 4% and 5%,
the rate of decline improved with Q4 being 2.4% lower than last
year. H2 and Q4 in particular benefited from an improvement in our
International businesses especially our USA operation, as further
analysed below. Whilst we continue to pursue a targeted
International strategy which is clearly bringing benefits, we do
remain highly dependent on the UK.
Engineering NFI declined 3% against the prior year, with H1 down
4% and H2 improving, down 1% on the prior year period. We
experienced double digit percentage growth in Aerospace and
Engineering Technology, however these were offset by more
challenging markets in Infrastructure, Maritime, Energy and
Automotive as well as in our professional staffing brand, Barclay
Meade. The acquisition of Resourcing Solutions Limited (RSL) has
strengthened our position in Rail and is delivering the benefits we
expected at the time of acquisition.
Technology NFI declined 6% against the prior year, with both H1
and H2 down 6% on the prior year period. This was solely the result
of a decline in Telco, down 10%, as demand for our network
infrastructure market declined and gains from our strategic
segmentation could only partially offset this. Encouragingly, in IT
we saw H2 grow 1% against the prior year period as the segmentation
we introduced in 2016 started to show results, particularly in
Strategic Accounts, Leadership, Security and Cloud.
The investments made in our International infrastructure and
headcount are beginning to bear fruit. We are particularly pleased
with the growth of our USA business, which was up 52% in H2 and 21%
for the full year. Year on year, NFI for the Americas region as a
whole was up 29% and 9% in H2 and for the full year respectively.
Asia's FY NFI is up 2% YoY while MEA was down 17% due to contract
reductions in South Africa and weak demand in Oil and Gas in the
Middle East.
Total International NFI performance for the year was -3%.
However, we improved from -7% in H1 to +0.3% in H2, and are seeing
a positive trend as we exit 2017.
Due to the size and strategic importance of our International
operations we intend to split this out as a third reporting segment
within our 2017 Annual Report and thereafter. We will therefore
report UK Engineering, UK Technology and International
segments.
People
We continue to improve the ratio of fee earners to non-fee
earners, now at 73:27 compared to 71:29 in July 2016 and moving
closer to our target of 75:25 by July 2018.
We have continued to develop our sales headcount in line with
the market opportunity we see and as a result our UK salesforce
reduced by 3% from 385 to 373 over the course of the year. However,
our International sales headcount increased by 18% from 131 to 154,
driving much of the growth we are now experiencing.
Net Debt
Net debt at 31 July 2017 was GBP41m, up from GBP28m on 31
January 2017 (31 July 2016: GBP25.0m).
The major driver of the increase of GBP13m in the six months to
31 July 2017 was the acquisition of RSL in February 2017 for
GBP11.5m (comprising GBP6.9m to acquire 70% of RSL's issued share
capital initially and the assumption of RSL's existing working
capital finance facilities of GBP4.6m).
Working capital was also a factor with debtor days being in the
order of 54 compared to 52 at the half year and 50 last year end.
Actions were implemented in May to improve performance in this area
and are having a positive effect. Collections are a key focus for
management and we expect an improvement in working capital over the
course of the year.
We also expect some recovery from on-account corporation tax
payments made during the year.
GBP7.2m of dividends were paid in cash during the year.
Preliminary Results
The Group expects to announce its full year results for the 12
months to 31 July 2017 on Thursday 9 November 2017.
- ENDS -
For further information please contact:
Gattaca plc +44 (0) 1489 898989
Brian Wilkinson, Chief
Executive Officer
Salar Farzad, Chief Financial
Officer
Citigate Dewe Rogerson
- Financial PR +44 (0) 20 7638 9571
Louise Mason-Rutherford
/ Nick Hayns
Numis Securities Limited +44 (0) 20 7260 1000
Michael Meade / Tom Ballard
About Gattaca
Gattaca plc (LSE-AIM: GATC), is the UK's leading specialist
Engineering and Technology, (IT & Telecoms) recruitment agency,
providing contract, temporary and permanent staff. Established in
1984 and AIM-listed in 2006, the Group is one of the fastest
growing staffing organisations listed in the UK, with a
well-balanced business model; approximately 75% contract and 25%
permanent.
Recruiting in over 100 countries across the world from 14
offices in 11 countries, the Group has over 500 sales staff, with
over 9,500 contractors on assignment and places 4,000 candidates
into permanent positions each year.
The combined group is well-placed to take advantage of the
convergence between Engineering, Technology and Telecoms skill sets
and is now a specialist recruiter, of scale, in the UK and
internationally.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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