Gattaca plc (LON:GATC) Chief Executive Officer Matthew Wragg caught up with DirectorsTalk to discuss financial performance, sector growth, strategic priorities, operational improvements, and future opportunities.
Q1: Matthew, could you just talk us through the highlights of the year?
A1: It’s been a really solid year, which is pleasing. We’ve returned to NFI growth, which is great, we’ve seen 11% growth on our NFI line, up to £43.3 million.
Within that, our biggest service line is contracting. That’s grown 16% last year, which is fantastic and that has resulted in an 85% increase in PBT to just over £6 million. So, well above our original balance for the year.
We continue to have a great balance sheet, over £15 million in cash in the bank, which is great, and doubled our dividend this year to 6p per share. So, some nice results.
On top of that, it always makes me happy that staff engagement is still really strong, which is fantastic. We also got voted one of The Sunday Times’ top 10 big businesses to work for. We’ve also completed the acquisition and integration of InfoSec People, a cybersecurity specialist business based out of Cheltenham.
So, some really good highlights this year.
Q2: Net fee income, as you say, grew 11.4% and underlying profit before tax was up 85% and as you mentioned, the full-year dividend has now doubled. So, what is it that’s driven performance?
A2: We’ve made probably thousands of decisions over the last four years, which are compounding into building some positive momentum.
I think this year, or last financial year, we saw pretty much every service line or sector line growing, which is the first time in many, many years, as we’ve really narrowed our focus and obsessed about those markets.
We’ve grown our contractor base by over 10%, which is really good, growing nearly every single month during the year, which really helps.
We’ve also been obsessing around how do we help everyone in the business be even more successful and that has been resulting, along with good cost control, in really good improvement around operating profit as well.
So, NFI per sales head is up 20% in the year, which, combined with that cost control, means that £4 million or £5 million NFI has flowed through to a really decent increase in profits as well.
So, lots and lots of things over the years building up, but good focus and just obsessing about being the best we can be.
Q3: Which sectors then would you say performed the best and why would that be?
A3: It’s a nice question to have when nearly everything has been growing. But there have been some standout ones.
The defence sector actually is a market which, despite some of the kind of global macro challenges out there, hasn’t necessarily been going gangbusters yet, but the team have performed really well, and we’ve grown 17% in the year in defence, which is great.
Similarly, actually, the market in digital tech still isn’t very good. It’s been quite subdued globally, but they’ve grown over 10% as well.
Our single biggest sector of infrastructure has grown by 5%. And that clearly, major programmes around both water, highways and also in the real world and energy is up 4%.
So, they’re all pretty good. We’ve obviously really increased our cyber capability with the acquisition and integration of InfoSec People as well. So, on the whole, all really positive.
Our only one negative is our Statement of Work service line, which continued to have some challenging times. It’s a smaller business unit and hopefully exposed to a smaller number of customers, which are on a little bit of a go-slow at the moment, but we’ve managed that well.
So, on the whole, good momentum.
Q4: Now, you’ve continued to focus on your four strategic priorities. Could you just remind us about what they are and how they drive growth?
A4: I think they’ve served us really well over the last four years in the turnaround of the business but equally give us the right platform to continue to build really positive momentum.
Our number one is external focus. That’s been obsessing about fewer jobs, fewer markets, but really knowing all of the customers in there, all the economic cycles and where that demand is going to be. I think that’s really helping us make sure we prioritise and helps direct our sales teams in the right direction.
We’ve also, during this financial year, consolidated most of our staffing brands into Matchtech. The aim of that is to make it easier for our colleagues and easier for our customers to understand what we do and to navigate that and to access all of the experts we’ve got in the organisation. So, that’s gone pretty well.
This new financial year as well, we’ve hired our first Chief Commercial Officer, aimed at, again, further intensifying the amount of activity we’re doing out in the market.
I’m really pleased to see the progress we’ve been making on that over the years, but especially last year. So, that’s number one.
We will always obsess about culture. We’re a people business that helps people to work with people, and culture is critical. Our staff engagement is still absolutely wicked and continues to grow. It surprises me, only every quarter it continues to go up, which is fantastic to see.
Really importantly this year, the accolade of being voted in The Sunday Times’ top 10 big businesses to work for is a really good sign that what we’re doing is recognised and appreciated. So, that’s great, culture is number two.
Number three is operational efficiency and just helping everybody to be more successful. We’ve made some significant steps forward in our processes and our systems to enable people to be more successful or to improve their customer journey. Again, something we continue to obsess about.
Then really cost optimisation, just making sure we’re being really conscious of where we’re investing, how we’re investing and continuing to improve that profit conversion, which is up to 14% now, which I’m guessing it should be probably one of the best of the listed staffing businesses out there.
So, those four, external focus, culture, operational efficiency, and cost are our four pillars and will serve us well for the years ahead.
Q5: Finally, how do you see the outlook for FY27? Why should investors choose Gattaca over other listed companies or recruiters?
A5: I think we’ve got great momentum at the moment. I think the industry is really tough. I think we have shown ourselves over the last four years. Pretty much every time I’ve done one of these with you, it’s been a week after some kind of major budget announcement or presidential election or something else happening.
Despite all of that volatility, we’ve managed to grow and overdeliver on our promises each year. This should be the first time, actually, it’s not the week after some massive changes. So, I think we have good momentum.
I think the skills we focus on in engineering, construction, manufacturing, technology and professional, they are all skills that are in high demand and major programmes and committed budgets for major projects to be delivered. I think with contracting being such a big part of our business, we’ve got really good visibility; 78% of our business we can see. That means that we are able to plan ahead and make the right investments.
We think there’s loads more potential. We’ve absolutely turned around the business in the last four years, but we’ve by no means peaked. There’s a long way that we can continue to go. So, I just think we’ve got great momentum to take that on.
Equally, we’ve got a great balance sheet. It gives us an opportunity to continue to grow the contract book and be able to fund that properly, but also to be looking at possible bolt-on acquisitions, which we’ve been taking in our stride at the moment.
Ultimately, I think we’ve proven ourselves a really good, resilient business and we’ve got great momentum right now, whilst the market is in quite a difficult place, which gives us a unique opportunity to make sure we go and grab market share.
