Kevin Freeguard, Chief Executive Officer, said:
“The first half of FY19 was a period of progress for the Group, as the restructuring we undertook in Q1 began to bear fruit. The Group has performed in line with expectations, with UK Engineering delivering solid growth and our international operations which continuing to grow strongly. UK Technology, particularly Telecoms, was impacted by the Q1 restructuring, however we are encouraged by the initial performance following steps taken to reposition the business during the half.
“The progress made on net debt is positive and our full year outlook remains in line with the Board’s expectations. I look forward to updating the market further in April.”
Gattaca plc (LON:GATC), the specialist Engineering and Technology (IT & Telecoms) recruitment solutions business, today provides the following pre-close Trading Update for the six months to 31 January 2019.
Overview
The Group delivered a 2% improvement in NFI over the period. UK Engineering continued to perform positively in H1, partially offset by UK Technology, particularly Telecoms, which was impacted by planned restructuring within the business unit in Q1. The Group’s International operations continue to grow strongly, driven in particular by the Americas.
|
£’m |
2019 H1 |
2018 H1 |
Change |
|
Net Fee Income1 |
36.6 |
36.0 |
+2% |
|
|
|
|
|
|
Engineering |
24.9 |
24.2 |
+3% |
|
Technology |
6.6 |
7.4 |
-10% |
|
UK |
31.5 |
31.6 |
0% |
|
International |
5.1 |
4.4 |
+15% |
|
Total (Continuing) |
36.6 |
36.0 |
+2% |
|
|
|
|
|
|
Contract |
25.8 |
26.0 |
-1% |
|
Perm |
10.8 |
10.0 |
+8% |
|
Total (Continuing) |
36.6 |
36.0 |
+2% |
|
Discontinued2 |
1.9 |
3.8 |
-50% |
|
Total Group |
38.5 |
39.8 |
-3% |
1 Net Fee Income (“NFI”) is calculated as revenue less contractor payroll costs
2 Discontinued business (as part of previously announced Q1 2019 restructuring) includes Contract Telecoms Infrastructure markets in Africa, Asia and Latin America (some of which was UK sourced) plus our operations in Dubai, Kuala Lumpur and Qatar
3 On a continuing basis there is no material impact from constant currency adjustment
Performance
·Group continuing NFI in H1 2019 +2% year-on-year at £36.6m. Total Group NFI was lower (-3%) due to the discontinuation of operations in Telecom Infrastructure contractor work in Africa, Asia and Latin America as well as the closure of offices in Dubai, Malaysia and Qatar, as previously announced as part of the Group’s review of its international footprint in Q1 2019
·UK Engineering NFI continued to show consistent growth, up 3% year-on-year with strong performances from Infrastructure, Maritime and Engineering Technology
·UK Technology NFI declined by -10% year-on-year, driven by UK IT (down -5%) and UK Telecoms (down -35%)
Ø UK IT was impacted by the planned closure of our Technology Sales business unit in Bromley and a temporarily reduced headcount as we sought to rebalance our consultant workforce
Ø UK Telecoms underwent a substantial restructuring during the period and is being repositioned to address the higher growth and value-added parts of the sector
Ø Both businesses have increased their operating contribution on prior year as a result of this repositioning
·International NFI continued to grow strongly (+15%), driven the Americas and China
·Our permanent revenue mix has increased to 30% in the first half, partly driven by the growth of this business in China and Mexico and the Telecom Infrastructure exit
·Group full year outlook continues to be in line with the Board’s expectations
Net debt
The net debt position at the end of January 2019 is estimated at £29m (31 January 2018: £36m, 31 July 2018: £41m). This positive cash flow performance reflects our focus on reducing net debt, albeit the seasonality of our business typically results in cash flow being stronger in the first half and therefore a more favourable net debt position at half year compared to year end. This half year benefited from the relative timing of receipts and contractor payrolls.
Interim Results
The Group will announce its interim results for the 6 months to 31 January 2019 on Wednesday 3 April 2019.
