Gattaca PLC Update on international operations (6382Z)
04 September 2018 - 4:00PM
UK Regulatory
TIDMGATC
RNS Number : 6382Z
Gattaca PLC
04 September 2018
Gattaca plc
Update on international operations
Gattaca plc ("Gattaca", the "Company" or the "Group"), the
specialist Engineering and Technology (IT & Telecoms)
recruitment solutions business, announces an update on the review
of its international footprint.
As stated in our trading update on 2nd August 2018, the Company
has been reviewing our international footprint with a view to
focussing on those markets where we believe we can make
significant, scalable and sustainable profits in the short to
medium term and reduce our exposure to businesses and territories
which are characterised as lacking critical mass, declining market
share, low profitability or with a high administrative burden
(including unattractive payment terms).
As a result of this review, the Company is now putting in place
a number of steps to withdraw from these territories and markets,
including the Contract Telecoms Infrastructure markets in Africa,
Asia and Latin America (some of which is UK sourced) as well as our
operations in Dubai, Kuala Lumpur and Qatar. As part of this
process, we are also consolidating our London and Bromley offices
to a single location at our London Cotton Centre premises.
We are currently notifying all staff and customers that will be
affected by this process.
Gattaca remains fully committed to growing our international
footprint in those areas and territories which offer the
opportunity to achieve significant, sustainable and scalable
profits. The Americas, where we have been experiencing excellent
growth, is a clear example of this. We are pleased therefore to
announce today the opening of a new hub in the USA, based in
Atlanta, Georgia; this will operate alongside our existing hub in
Dallas, Texas. In China we aim to replicate the success of our
America model as we see a shift towards Engineering & IT
permanent recruitment and a reduction in the legacy Telco
market.
We also remain fully committed to Technology and will continue
to invest in our Networkers brand, including in the subsectors
within Telecoms which meet our strategic criteria.
The business impacted represents approximately GBP7m of FY18
NFI, the significant majority of our non-recoverable Withholding
Tax and made a small contribution to our FY18 underlying profit
after tax. This business has been in decline and we had not
forecast it delivering a significant contribution towards our FY19
underlying profit after tax. As a result our forward expectations
remaining broadly unchanged.
The cessation of the activities detailed above will allow a
significant release of working capital (in the order of GBP7m
before exit costs) and result in a reduction in Net Debt, which at
the end of July 2018 was GBP41m (being better than our previous
estimate of GBP46m). One-time restructuring costs to be incurred
during FY19 are expected to be of the order of GBP3m.
We will update the market further at the time of our Full Year
results announcement on 8th November.
Patrick Shanley, Chairman said:
"The steps we are announcing today will place Gattaca on a firm
footing for future growth. The withdrawal from these territories
and Telco Infrastructure operations remove some very low margin
business, which was tying up significant working capital and
diluting the strength of our core operations. Following this
review, Gattaca can now focus on our strong core and growing
businesses, in particular within UK Engineering, UK IT, and North
America as well China and our recently acquired RSL Rail
business."
For further information please contact:
Gattaca plc +44 (0) 1489 898989
Patrick Shanley, Chairman
Salar Farzad, Chief Financial Officer
Citigate Dewe Rogerson +44 (0) 20 7638 9571
Louise Mason-Rutherford / Nick Hayns
Numis Securities Limited +44 (0) 20 7260 1000
Michael Meade / Tom Ballard
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END
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