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NFI up 6% YoY for Gattaca

Gattaca plc has released its preliminary results for the year ended 31st July 2018.

Revenue of £667.5m (2017: £642.4m) generated NFI of £78.9m (2017: £74.7m). Gattaca achieved contract NFI of £56.8m (2017: £56.4m) at a margin of 9% (2017: 9%), and permanent recruitment fees were £22.1m (2017: £18.3m). Gross margins grew slightly to 11.8% (2017: 11.6%) driven by the higher mix of permanent income compared to last year (2018: 28:72, 2017: 24:76). Whilst the company has seen a slight increase in the permanent income mix in engineering, the change is driven principally by a shift to permanent recruitment in its UK IT business (primarily caused by IR35 in the public sector), in China where Gattaca has been building the business beyond the acquired client base, and in the US where most of its FY18 growth has come from permanent income where again it has been expanding its customer base.

Loss from operations of £23.4m (2017: £12.7m profit) has been impacted by non-cash charges of £36.0m in respect of amortisation and impairment of acquired intangibles (2017: £3.1m). This includes a £33.3m (2017 £nil) impairment charge related to the acquisition of Networkers PLC, recognising that this transaction has turned out not to be value accretive. As mentioned in the CEO report, since the half year Gattaca has taken significant actions to simplify the business and to eliminate elements which have been diluting our performance.

Statutory loss after tax was £27.1m (2017: £7.3m profit).

Patrick Shanley, chairman of the Group, said, “This was a year of change for Gattaca as we decided to reset the business – reorganising it to establish stable foundations for future growth. Since the half year, we have simplified our operations, removing less stable and non-core businesses which were not expected to contribute to ongoing profits. With Kevin now in place as CEO, we look forward to building on our core resilient businesses – in particular UK Engineering, UK IT and our North American operations through our Matchtech, Networkers and Gattaca Solutions brands.”

Kevin Freeguard, CEO, commented, “I am pleased to see the progress that has been made during the second half of 2018 in resetting the business and I am looking forward to developing the business further with the Board and the rest of the Gattaca team.”

UK engineering, Matchtech showed 1% underlying growth in NFI with a headcount of 276 which, reflecting its increased focus on productivity, was 25 lower than at the end of 2017. Aerospace declined 15% year on year due to the loss of two accounts and a drop in both recruitment spending and contractor requirements, along with margin pressures. Gattaca’s infrastructure business, which represents around 40% of UK engineering, was 1% lower than the previous year, though performance was mixed within the business unit.

Gattaca’s UK technology NFI was 3% lower than in the previous year, with the vast majority of the shortfall being due to its telecoms infrastructure business. The telecoms business declined by 20%.

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