Report

Strong cashflow coupled with solid top line growth

The UK recruitment industry is being buffeted by a number of macro crosswinds, but for the right skills, there is still robust demand. Particularly across Gattaca’s core verticals (65% of NFI) of Infrastructure (eg Lower Thames Barrier, HS2, etc), Defence, Energy (off shore wind & nuclear) and Mobility (aero, auto & marine).

Indeed, the company reiterated today that it was well on track to achieve its medium & long term goals after posting solid H1’23 LFL NFI growth of 5.1% to £22.7m (£21.6m LY). And encouragingly cashflow was strong too with statutory net funds climbing £8.7m to £21.0m (65p/share) as at the end of Jan’23 vs £12.3m in Jul’22 - reflecting lower debtor days and tight working capital management.

Consequently, we think the turn-around plan is making real headway, despite being slightly slower out of the blocks than we’d previously modelled due to the tougher macro environment.

Given the ‘blustery’ economic conditions, we’ve prudently trimmed our FY’23 and FY’24 PBT forecasts to £1.8m (£256k LY) and £4.25m respectively on NFI up 5.3% & 8.9%, alongside adjusting the valuation to 130p/share vs 160p before
Underlying
Gattaca

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.

Provider
Equity Development
Equity Development

​Equity Development enables companies to become better understood and supported by investors. Since our launch in 1996 we have consistently focused on helping our clients improve their communication and relationships with both existing and potential shareholders. Our clients have come from a wide variety of sectors and domiciles, are both private and quoted and range in size from micro-cap to $multi-billions. We offer free access to company research notes written by experienced analysts. These notes include detailed forecasts, financial models and a fair value. We host regular Private Investor Forums at which investors have the opportunity to hear company directors present, and to ask questions. These are free to attend. We broadcast live Webinars with company management that include active Q&A. We also make the recordings available online. We arrange face to face meetings between private investors and company management. We are active users of Twitter, commenting daily on company news, share price moves, Directors’ Dealings, Equity Development Research Notes & Events.

Analysts
Paul Hill

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