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Gattaca – half-year results, General Election the next ‘uncertainty’?

By Steve Moore | Thursday 20 April 2017

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Having recently gone from “the board has confidence that profit for the full year will be in line with its previous expectations” to “believes that profits for the year will be approximately 10-15% below its prior expectations” in 10 weeks, Gattaca (GATC) has now announced results for its half year ended 31st January 2017…

These show an adjusted pre-tax profit of £7.42 million on net fee income of £35.4 million, generating earnings per share of 16.5p. These though all represent declines on the corresponding prior year period – with the earnings per share -25%.

Additionally, after £1.1 million of “non-recurring costs”, £2.9 million of income taxes, £5.3 million of dividends paid and a net £1.2 million working capital outflow, net debt actually increased by more than £3 million to £27.9 million. The current assets over total liabilities position was slightly lower – to £31.1 million.

I previously noted the company seeking to emphasise that the medium-term outlook in its sectors remained positive and some signs of a return of confidence in recent weeks.

It continues to consider “the continuing shortage of Engineering and Technology skills will lead to increased demand from our clients as their projects move through the delivery cycle”, but now also notes “we await to see whether the announcement of a UK General Election in June will have any impact on confidence or delay investment decisions”.

Hmmm. More uncertainty then here – and, as previously concluded, although the valuation will continue to look attractive (including with a maintained 6p per share interim dividend), I’ll be looking for some consistent delivery before considering the shares for better than the watchlist.

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