The key takeaway from the trading update for H1 ’25 was a solid trading performance, despite a challenging market environment. We remain encouraged by the static guidance at the adj. PBT level of £3m for FY25, highlighting an improvement in operational efficiency, combined with higher average fee rates.
Contract NFI declined 1% yoy, with increased summer holidays and a late return to work in January modestly offsetting the growth in contractor numbers and higher salaries. Although permanent NFI declined 10% yoy during the period, this demonstrates outperformance relative to its professional service focused peers and GATC delivered growth of 3% on a sequential half-yearly basis.
We have modestly reduced FY25 estimates for NFI (-5% to £39.2m) and, following the reduction in trade creditors (DSOs broadly static), lower our net cash estimate to £16m (previously £20.7m). However, guidance for adj. PBT is unchanged at £3m and we have introduced estimates for FY26 indicating strong growth in profitability and dividends.
In view of unchanged estimates of adj. PBT and the high level of net cash on the balance sheet, we have chosen to retain our fair value / share at 140p. Net cash accounts for c. 73% of the market capitalisation. Stripping out the cash places the group on a FY25 PER of just 4.1x
