'Minimal' exposure to Carillion
Gattaca is the UK’s #1 specialist engineering and #5 technology recruitment agency, providing contract, temporary and permanent staff (Source: Recruitment International). It derives 21% of NFI overseas (excluding international placements supplied from the UK), and circa 75% from temporary contractors (9,500 on assignment), with the remaining 25% coming from permanents.Carillion’s high profile bankruptcy on Monday has certainly hit the headlines. Politicians on both sides of the aisle have been throwing stones at one another. An official investigation into the fiasco has been announced. But perhaps worst of all, the future of 10,000s of hard-working employees, pensioners and businesses (eg Balfour Beatty, Speedy Hire, Galliford Try, etc) have been affected.
However, contrary to yesterday’s 10%+ plunge in the stockprice, Gattaca said this morning that its net balance sheet exposure to Carillion was “less than £100,000†– with existing contracts contributing Net Fee Income of around £0.5m pa.
To us, given Gattaca is forecast to deliver FY18 NFI of £79.3m (£74.7m LY), then this is not material. Sure, it’s something to watch, but management have been carefully monitoring the situation for some time, and accordingly arranged credit insurance to cover any bad debts. Moreover they have been “actively engaging with the relevant Carillion counterparties to ascertain how to support the related underlying projects†in order to ensure continuity of service.
Consequently, we make no change to our numbers or 380p/share valuation, and in fact have been impressed by the Board’s risk management strategies and prompt actions. Indeed we look forward to the H1’18 pre-close trading statement on 8th February, where we expect to hear news of a gradually improving demand picture – led by continued strength in International and UK Engineering, alongside further recovery in UK Technology.
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.
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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.