Results round-up
By Alexander Bueso
Date: Thursday 19 Apr 2018
(WebFG News) - Specialist engineering and technology recruitment business Gattaca watched its shares fall through the floor on Thursday, after it announced its interim results for the six months ended 31 January, with diluted earnings per share down 25%.
The AIM-traded firm's basic earnings per share fared almost as poorly, dropping 24% year-on-year, resulting in the board slashing the dividend by 50% to 3p per share.
Revenue was up 7% on a statutory basis to £323.3m, but it slipped 2% on an underlying basis, while net fee income surged a statutory 12% and an underlying 2% to £39.8m.
The company swung to a loss from operations on a statutory basis, falling to £11.5m from a profit of £5.5m in the same period last year, while its loss before tax was £12.7m, compared to a profit of £5.2m 12 months ago.
On an underlying level, Gattaca's profit from operations slid 13% to £7.7m, while its profit before tax was 17% lower at £6.9m.
On a divisional basis, UK engineering net fee income grew 3% on the prior year, with engineering technology contributing growth of 24% and automotive ahead 15%.
RSL was down 13%, on the other hand, with general engineering falling 11%.
UK technology net fee income declined 4% year-on-year, with IT rising 3% - including what the board called "strong performance" in development, which was ahead 50%, and cloud and leadership, which rose 28%.
That was offset by public sector and ERP, which slid 33%.
Telecoms also declined, by 19%.
International net fee income grew 5% on the prior year, which the board said was driven by strong performance in the Americas of 30% growth, offset by a fall in other international markets of 13%.
Underlying overheads were 6% higher for the period, which reportedly reflected an investment in UK sales, which were £1.3m higher than the prior year, and the US, where it was £0.7m higher.
The board said actions were in place to abate the rate of increase in the second half.
It added that the continued underperformance of technology had resulted in a non-cash impairment of £17.1m in the period, in respect of goodwill and other intangible assets capitalised with the Networkers acquisition.
The board explained that the interim dividend of 3p was in line with the resetting of dividend policy announced on 7 February.
It said the dividend policy targeted a pay-out of 50% of profit after tax through the cycle, subject to a sustained reduction in net debt from the 2019 financial year onwards.
"Gattaca delivered an improvement in net fee income in the first half, and it is pleasing to see our core UK engineering and IT businesses delivering growth and our international operations in the Americas continuing to perform well," said chairman Patrick Shanley.
"However, the continued underperformance in telecoms is disappointing and actions are being taken to address this."
Shanley said the board was focussed on ensuring the group could better execute its strategy, delivering sustainable and profitable growth in segments and markets which were scalable.
"We have undertaken a number of actions to improve our underlying performance; albeit at a time when the UK recruitment market continues to be challenging.
"We will continue working hard to strengthen the group and build further on its solid foundations."
Telecom Plus, which trades as the Utility Warehouse, said on Thursday that full-year adjusted pre-tax profits from continuing operations are expected to have risen, as customer numbers increased.
For the year to the end of March 2018, pre-tax profits are seen coming in at around £54m from £53.3m the year before, in line with previous guidance.
Meanwhile, customer and service numbers grew over the course of the year to 610,739 from 607,802 and to 2,340,719 from 2,288,918, respectively, helped by the group's low energy churn.
The company plans to pay a total dividend per share for the year just ended of 50p versus 48p the year before and said it expects adjusted pre-tax profits for FY2019 to come in between £55m and £60m.
Telecom Plus also announced the recent acquisition of a 75% shareholding in Glow Green, a supplier and installer of domestic gas boilers and warranty/care plans for £2m in cash.
Chief executive officer Andrew Linsday said: "Following a successful sales conference a few weeks ago, our focus over the coming months will be to build on the renewed confidence and engagement amongst the partner network.
"I am excited about the longer-term prospects for Glow Green, our recent acquisition. Although currently only a small business, the market for replacement boilers and their associated servicing needs are substantial; this gives us an exciting opportunity to leverage the strong relationship and brand loyalty we have established with our members, to provide them with these additional services in steadily increasing volumes over the coming years."
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