6th Aug 2019 11:53
(Alliance News) - Gattaca PLC on Tuesday said it has outperformed market expectations for financial 2019 profit has seen a sharp decline in UK Technology business income due to restructuring.
Shares in the technology and engineering recruiter were down 7.4% at 137.50 pence in late morning trade.
Gattaca predicts its underlying pretax profit for year to July 31 to now be "slightly above market expectations" with net debt also below what had been expected.
Group net fee income, which is calculated as revenue minus contractor payroll cost, was GBP71.4 million - flat year-on-year. In the UK alone, net fee income dipped to GBP61.8 million from GBP62.0 million.
Within that UK net fee income figure, technology income was down 19% at GBP11.8 million versus GBP14.5 million previously.
"UK Technology declined 19% over the period, with an H2 decline of 24%, as the effects of our planned H1 restructuring began to feed through and as we focused on improving the quality of income. As such, this business continued to contribute around GBP5 million to profits and we expect operating contribution prior to overhead allocation only to be slightly down on prior year. We expect this business to return to growth next year," said Gattaca.
This weaker UK Technology performance was largely offset by a rise in UK Engineering fee income to GBP50.0 million from GBP47.5 million.
"UK Engineering, our largest business, continued to grow with H2 up 7% on the prior year. This is an acceleration of the trend seen in H1 and brings full year growth to 5%. This was driven largely by our Solutions business, Engineering Technology and Infrastructure. The significant improvement was largely in permanent recruitment," Gattaca said.
International net fee income was up at GBP9.6 million from GBP9.4 million.
As at July 31, Gattaca's net debt stood at approximately GBP25 million, down sharply from GBP40.8 million the year before as the year ended "at the most opportune day for working capital receipts and payments". Even allowing for this, net debt still came in beneath expectations.
Non-underlying costs estimates for the year sit at GBP8.7 million, which excludes amortisation or impairment of intangibles in the profit and loss account.
Gattaca is expecting to post is annual result on November 6.
Chief Executive Kevin Freeguard said: "The group delivered [net finance income] growth both in UK Engineering and our International businesses, partially offset by UK Technology where we are refocusing on profitable business. These improvements will flow through to profit before tax. In addition net debt has come in comfortably below expectations, despite the exceptional restructuring and other costs incurred in the year."
"We are making good progress improving the business and I am confident that the actions we are taking will continue to position us well for the future."
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