Base camp reached and business stable
Like its namesake movie - where the central character overcomes testing conditions – we think Gattaca will also emerge much fitter after its recent lean spell. Encouragingly the company has made a good start, albeit there is still plenty of climbing ahead.With regards to trading, the Board reported this morning that FY18 NFI grew 1% LFL to £78.8m (H1 +2%: H2 flat) with adjusted PBT “broadly in line with expectationsâ€. We interpret this as c.£12.6m (vs ED £13.0m, £16.2m FY17) – implying H2 PBT of £5.7m (vs H1 £6.9m), 18% FY18 NFI conversion (vs 23% FY17) and £1.4m of annualised cost savings.
Elsewhere, net debt closed July slightly lower than anticipated at £46m (ED £48m; FY19 £40.3m), despite a £3.5m final payment related to the Feb’17 RSL acquisition – leaving gearing at 3x EBITDA. The appointment of a new CEO is at an “advanced stageâ€, whilst the Strategic Review is “nearing completionâ€.
Here, we envisage further restructuring at UK Telco (FY18 NFI fell -24% LFL; -19% H1 and est. -29% H2), alongside self-help measures within Contract (-5% LFL to £56.7m), central resources and a few overseas territories.
Let’s not forget though, that Gattaca is a fundamentally sound business. It is enjoying profitable and expanding positions in UK Engineering (+1% LFL NFI to £47.4m eg Converged Technologies, Infrastructure), International (+7% £14.9m eg North America) and UK IT (+4% eg Cloud, cyber). It is also well balanced across permanent (+19% LFL to £22.1m) and contract (-5% £56.7m) placements to take advantage of the economic cycle. The improvement in ‘Perm’ is partly attributable to signing a number of ‘high quality, multi-year’ Recruitment Process Outsourcing (RPO) clients.
Gattaca is an engineering and technology recruitment solutions company. Co. operates in the STEM markets (science, technology, engineering and maths), all sectors with skills shortages. Co. has three reporting segments, Engineering, Technology and International. Co.'s brands are Matchtech, an engineering recruitment specialist; Networkers, a technology recruitment specialist; Cappo, Provanis, Barclay Meade, a professional services brand, recruiting finance, procurement, sales and HR professionals., and Alderwood, which is involved in placing trainers and assessors with training providers throughout the U.K. and the Middle East.
Harvey Nash Group is involved in recruitment business. Co.'s portfolio of services, ranged from executive search and professional recruitment to offshore solutions. Co.'s portfolio of services comprised of: leadership services, which include Executive Search, Interim Management, and Leadership Consulting; professional recruitment, which include Technology and Specialist Recruitment, and Recruitment Solutions; and IT outsourcing & offshore services, which include Projects and Software Development Services and Business Process Services. Co.'s segments are: U.K. & Ireland; Mainland Europe; and Rest of World, all of which provides permanent recruitment, contracting and outsourcing.
Harvey Norman Holdings is engaged in integrated retail, franchise, property and digital system. Co.'s business activities include: franchisor; sale of furniture, bedding, computers, communications and consumer electrical products in New Zealand, Singapore, Malaysia, Slovenia, Ireland, Northern Ireland and Croatia; property investment; lessor of premises to Harvey Norman®, Domayne® and Joyce Mayne® franchisees and other third parties; media placement; and provision of consumer finance and other commercial advances.
RTC Group is a holding company. Through its subsidiaries, Co. is a recruitment business that focuses on white and blue-collar recruitment, providing temporary, permanent and contingent staff to a range of industries and clients in both domestic and international markets. Co.'s principal trading subsidiaries include: ATA Recruitment Limited, which supplies recruitment solutions to the engineering and technical sectors; Ganymede Solutions Limited, which is a provider of blue and white-collar skilled and semi-skilled labor, safety critical personnel and technical staff on call-off and temporary term contracts; and ATA Global Staffing Solutions Limited, which is a staffing solutions provider.
Staffline Group is a holding company. Through its subsidiaries, Co. is engaged in the provision of recruitment and outsourced human resource services to industry and services in the welfare to work arena. Co. has two operating segments: Staffing Services and PeoplePlus. The Staffing Services segment provides labour solutions in agriculture, food processing, manufacturing, e-retail, driving and the logistics sectors in the U.K., Eire and Poland. The PeoplePlus segment is a provider to both Central and Local Government, providing a range of services to help and support in the Employability (Welfare to Work), Communities and Skills arenas.
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