Demand within skill-short STEM markets – those requiring candidates with a focus on science, technology, engineering and mathematics – has traditionally proved more resilient against market shocks than other sectors. Yet skewing its business towards these areas was not enough to offset Brexit-related market jitters for recruiter Gattaca’s (GATC) last year.
Year-on-year net fee income (NFI) for its core UK engineering and technology divisions was down 3 per cent and 6 per cent, respectively. The introduction of IR35 tax standards – which in many cases bumped up the tax charged to those contracting for the public sector – also weighed on the rail engineering business. However, management said this could lead to an uptick in permanent recruitment as contractors begin to see the relative appeal of a staff position.
Following its 2015 acquisition of Networkers, the UK technology business carried out a strategic review. That's meant shifting towards specialist hiring and away from generalist fields. However, its legacy operations lagged on performance. Management is also trying to diversify internationally. Yet despite growth in Asia and the Americas, tough conditions in South Africa, the Middle East and Africa led to a decline in international net fee income (NFI) of 4 per cent. International business still accounts for just 20 per cent of group NFI.
Analysts at Numis are forecasting adjusted pre tax profits of £17.4m for the year to July 2018, giving EPS of 34.9p (from £16.2m and 34.3p in 2017).
| GATTACA (GATC) | ||||
| ORD PRICE: | 306p | MARKET VALUE: | £95m | |
| TOUCH: | 303-315p | 12-MONTH HIGH: | 339p | LOW: 240p |
| DIVIDEND YIELD: | 7.5% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 264p* | NET DEBT: | 48% | |
| Year to 31 Jul | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2013 | 409 | 9.9 | 32 | 18 |
| 2014 | 452 | 11.9 | 37 | 20 |
| 2015 | 502 | 11.3 | 31 | 22 |
| 2016 | 618 | 15.1 | 32.1 | 23 |
| 2017 | 642 | 11.5 | 23.4 | 23 |
| % change | +4 | -24 | -27 | |
| Ex-div: | 22 Dec | |||
| Payment: | 19 Jan | |||
| *Includes intangible assets of £51.8m, or 166p a share | ||||
