FINANCIALS: Gattaca posts small increase in revenue but NFI decline

Specialist recruitment group Gattaca has seen a 1% increase in year-on-year revenue but a 4% decline in net fee income (NFI), according to interim results for the six months ended 31 January 2017.

The results, published this morning, while revealing revenue rose 1% in constant currency from £297.1m to £304.2m year on year, show NFI actually fell 4% in constant currency from £35.4m to £35.9m over the same period.

While the group’s combined engineering technology and aerospace business saw an NFI increase, the group’s engineering, infrastructure, maritime, automotive and energy divisions reported lower NFI from the previous year. The firm’s UK business saw tougher trading conditions following the country’s vote to leave the European Union.

But speaking to Recruiter this morning, Gattaca CEO Brian Wilkinson says he expects group NFI to return to growth in the second half of the year and beyond. “We have had some outstanding success with engineering technology and aerospace,” he said.

“Some of the other areas – infrastructure has been pretty slow since Brexit. A lot of the big ticket projects that the government has signed off, like Hinckley and Heathrow, while they have been agreed, they haven’t actually released any work yet. That will come and that’s a division that will look after itself in the fullness of time.

“In automotive, we’ve actually got more contractors out than ever before but that’s on the back of some very large contract wins where we’ve migrated contractors across to our books at a very low margin. So the margin hasn’t grown on contract and has been offset by some contingent business. Every new order coming through on that contract is at commercial rates, so as that becomes a bigger part of the mix on the contract, that NFI decline will reverse.

“With the innovation and technology for hybrid vehicles, I would expect automotive to turn the corner.”

Wilkinson added that the growing of the firm’s renewables business will feed through into renewed growth for its energy division, while greater client demand will boost its maritime business.

“In energy, we’re still being impacted by the low price of oil but we’re growing our renewables business, so again as that becomes a bigger part of the business I’d expect that to improve.

“And then maritime is the brightest growth prospect for us in the next 12 months in that one of our biggest defence clients has given us a requirement for lots of contractors in our new financial year.

“We are expecting an improvement in overall NFI into Q4 and the new financial year.”

Looking ahead, Wilkinson also echoed the views of other recruiters earlier this week that the expected strengthening of Prime Minister Theresa May’s hand in Brexit negotiations followings June’s snap election will provide greater certainty for business including the agency’s clients.

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FINANCIALS: Gattaca reveals overall decline in group profits

Gattaca has attributed a 4% annual decline in group net fee income to deteriorating client confidence caused by Brexit negotiations, IR35 tax changes and this year’s UK general election.

Financials 3 August 2017
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