Robust foundations in place
The implementation of the ‘four pillars’ of Gattaca’s new strategy resulted in adj. EBIT rising significantly, as did conversion rates too (up to 5.4% vs 0.2%). Impressively, this was achieved despite the Group’s markets turning more challenging during H2. NFI fell by 8.5% yoy, down by 1.8% in FY23, with a targeted exiting of lower margin contracts a factor.Progress has been driven by self-help: on cost control, marketing, an improved culture, exiting low margin contracts and improved productivity levels. We think there is more to come as the new hires bear fruit and additional cost savings emerge (particularly in property).
Looking ahead there should be some recovery visible in recruitment markets over the next 12 months and at Gattaca we expect further improvement in the conversion rate. The £23.4m net cash at year-end also opens up many opportunities for the Group.
Based on a discounted cash flow model we raise our Fair Value to 175p per share.
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.
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