UK employers are scrambling to backfill 1.1m positions displaced by the pandemic, amidst a tightening resource pool. Exacerbated by low unemployment, rising salaries, greater staff churn & many people simply opting for a career change. Indeed there are now on average just 1.5 unemployed people per job vacancy.
These acute labour shortages are not only prevalent in healthcare, leisure (eg waiters) & transport (HGV drivers). But also software, digitisation, renewables (eg off-shore wind & hydrogen), electrification, defence (cyber & marine), engineering and infrastructure. All are core competencies of STEM recruiter Gattaca, who today posted ‘in line’ FY21 results.
Despite headline FY’21 PBT falling -41% to £3.2m on NFI down -20% to £42.1m, adjusted H2’21 NFI climbed 5% sequentially to £21.6m vs H1, due to favourable permanent placement, technology, solutions (29% NFI) & RPO activity. Boosting H2 PBT to £2.8m (vs £0.4m H1) on the back of tight cost control, improving conditions, economies of scale and an estimated £3.3m of annualised savings (net) derived from the ‘Improvement Plan’.
Gattaca generated approx. £1.5m of incremental cash and repaid its RCF in full (£15m in Oct’20). Meaning the group is now entirely covenant free, sporting ample liquidity to pay a 1.5p dividend (£484k) from net funds (pre IFRS16) of £19.9m - excluding £5.6m of deferred VAT (to be settled by Feb’22) and £14.2m of non-recourse finance.
At 210p, GATC trades on undemanding FY22 multiples of 10.4x EV/EBIT and 14.5x PER vs 11.4x & 16.8x for peers; yet we err on the side of caution for now and retain our Fair Value at 285p/share.
