Gattaca PLC – PRELIMINARY RESULTS

Gattaca PLC – PRELIMINARY RESULTS

Gattaca plc, the specialist Engineering and Technology (IT & Telecoms) recruitment solutions business, today announces its Preliminary Results for the year ended 31 July 2018.

Operational Performance and other developments*

  • NFI growth driven by Engineering (+1%) and IT (+4%)
  • Offset by weak Telecoms performance (-20%)
  • Overall positive performance in International, with 5% growth
    –  Americas +28%
    –  China +6%
    –  Underperforming regional offices in Dubai, Qatar and Malaysia closed post year end
    –  Zero margin business in Telecom Infrastructure in Africa, Asia and Latin America also exited post year end
    –  New office opened in Atlanta, USA
  • During H2, rationalisation of operations to focus on the strong core and improve margin
    –  Cost reduction programme eliminated £3m of costs
    –  Bromley office closed at end of October
  • New CEO, Kevin Freeguard, appointed 1st October 2018

Financial

  • Underlying operating profit of £14.3m (2017: £17.3m) in line with the Board’s expectations communicated to the market in August
  • Decline in margin driven by higher cost base that has not delivered requisite improvement in revenue
    –  Cost reduction programme well underway to reverse this trend and restore the Group’s market-leading NFI conversion margin
  • Underlying PBT of £12.7m (2017: £16.1m), in line with market expectations
  • Significant one-off impairment charge in relation to write-down of Networkers acquisition goodwill and intangibles, totalling £33.3m (2017: £nil). No cash impact
  • Year end net debt broadly flat on prior year at £40.9m (2017: £40.3m)
  • No final dividend declared, in line with revised policy communicated at interim results

Outlook

  • Brexit uncertainty continues to be a headwind for Gattaca’s end user markets and the UK staffing sector in general
  • Trading in the first quarter of the year is in line with prior year
  • Overseas office closures and exit of Telecom Infrastructure will reduce NFI, operating profit and PBT, however this will be broadly neutral at PAT level due to the benefit of reduced withholding tax
  • Further one-off restructuring costs will be incurred in 2019 but will be offset by the positive impact of the working capital unwind of the operations being exited
  • Full year NFI and PAT outlook in-line with market expectations
  • Net debt not expected to increase in 2019 after further investment in systems
  • The Board will review any dividend in respect of 2019 against our policy. We are assuming no interim dividend in 2019.

Commenting on the results, Patrick Shanley Chairman of the Group said: “This was a year of change for Gattaca as we decided to reset the business – reorganising it to establish stable foundations for future growth.  Since the half year, we have simplified our operations, removing less stable and non-core businesses which were not expected to contribute to ongoing profits.  With Kevin now in place as CEO, we look forward to building on our core resilient businesses – in particular UK Engineering, UK IT and our North American operations through our Matchtech, Networkers and Gattaca Solutions brands.”

Kevin Freeguard, CEO commented: “I am pleased to see the progress that has been made during the second half of 2018 in resetting the business and I am looking forward to developing the business further with the Board and the rest of the Gattaca team.”

* NFI commentary is on an underlying like for like basis

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