7:59 cut – GATC

Gattica – Full Year Results

Today’s heavily adjusted results are ahead of forecasts, putting the company on a nominal historic PE of 4 with debt fully covered by receivables net of other liabilities. The company is currently undergoing a significant transformation, freeing up working capital and concentrating on more strategic and profitable areas.

The “one-off” profit adjustments include £3.4m of costs in conjunction with a US DoJ investigation related to Huawei. Being outside their control they are unable to quantify the future liability in this respect.

[Edit: This paragraph reworked 08:08] Their net debt position has improved by a significant £16m, but this merely reflects a reduction in receivables due to the progressive closure of businesses and a one-off timing effect. They have not yet been able to reduce their core debt, only their low-cost invoice financing.

Future forecasts are highly dependent on market behaviours associated with the introduction of IR35 (affecting the contractor side) and Brexit.

It would be logical to see some bounce this morning, but beyond that the prospects look very uncertain.

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