Gattaca plc (LON:GATC), the specialist staffing business, has provided the following unaudited trading update for the financial year ended 31 July 2023.
FY 23 Highlights
· Group continuing Net Fee Income1 (“NFI”) expected to be £43.6m (FY22: £44.1m), a decrease of 1% year-on-year (“YoY”), with the mix split between Contract 72% and Permanent 28% (FY22: 71%:29%)
· The Group expects to report continuing underlying PBT of £2.5m for FY23, ahead of expectations as a result of the Group’s cost rebalancing programme and exit from low margin contracts
· Contract NFI was broadly flat YoY driven by the Group exiting some low margin contracts, as it continued its focus on quality of earnings and margin. The greatest impact was in permanent recruitment, which was down c.4% YoY, driven by industry-wide client and candidate challenges, particularly in the second half
· Ongoing commitments in defence spending provided sector growth of 15% YoY. Managed Service Provider (MSP) wins in the first half of 2023 helped Mobility to grow 13% YoY. Strong growth in Gattaca Projects of 56% YoY as our growing capability took advantage of increasing demand for Statement of Work (SOW) contracts, delivering to agreed milestones
· Continued demonstration of improvements in business trajectory and culture shown via both staff engagement score, staff retention being ahead of stated FY23 targets and high customer NPS score (now built into our operating systems)
· Strong balance sheet with statutory net cash as at 31 July 2023 of £21m (31 July 2022: £12m)
· Completion of share buy-back in May 2023 returning £0.5m to shareholders
Outlook
In light of the ongoing macroeconomic headwinds, particularly the uncertainty over the timing of any recovery in the wider economy and the Group’s focus on sustainable contract growth, the Board currently expects profit before tax for FY24 to show marginal growth on FY23.
Return of Capital
The Board intends to recommend a full year dividend in line with its policy of 2.5p per share, accompanied by a one-off special dividend of 2.5p per share, both of which are expected to be paid in January 2024. Further details on the proposed dividend timetable will be provided at the time of the Group’s final results.
Furthermore, the Board intends to launch a new share buyback programme with the intention of returning up to £0.5m to shareholders. A further announcement will follow in due course.
FY23 Results
The Company expects to release its results for FY23 on 24 October 2023.
Commenting, Matthew Wragg, Gattaca Chief Executive Officer said:
“The continued improvements in culture, staff retention and productivity are good signs that we are becoming a stronger business. Our progress has been impacted by the decline in the wider market, and although that is frustrating, I am pleased that we were able to continue to simplify and improve the business throughout the year and manage our cost base so as to report an improvement in profitability in the second half of the year.”
“We continue to remain mindful of the macro-economic headwinds, which have impacted demand and candidate sentiment across the recruitment sector and slowed our speed of recovery. We expect permanent recruitment to remain subdued in the short term and are increasing our focus on contractor growth, which takes longer to reflect in NFI. The markets that we operate in and STEM skillsets that we provide have the right long-term fundamentals and we enter FY24 as a leaner, more efficient and productive business, well positioned to take advantage of expected recovery in the market.”
1NFI is calculated as revenue less contractor payroll costs
