19th Apr 2018 12:02
LONDON (Alliance News) - Recruitment firm Gattaca PLC on Thursday said it swung to a loss in its first six months of its financial year, despite revenue rising, as it downgraded profit expectations for the rest of its year.
The stock was down 23% at 148.26 pence.
In the six months to January, Gattaca, which focuses on engineering and technology markets, posted revenue of GBP323.3 million on a statutory basis, up 7% year-on-year.
On an underlying basis, which includes results from a firm it acquired February 2017 as if it had been fully-owned for its comparable period last year, revenue actually fell 2%.
Gattaca reported a GBP12.7 million loss for its first half, compared to a profit of GBP5.2 million a year before. This is mainly due to a non-cash impairment of GBP17.1 million on the poor performance of its Technology business.
Net fee income rose 12% on a statutory basis, and 2% underlying, to GBP39.8 million. Engineering net fee income was up 3% year-on-year, International rose 5%, but Technology fell 4%.
To counteract the declining performance in Technology and in some International business outside of the Americas, Gattaca is to look to reduce its cost base going forward.
As a result of this, as well as economic challenges in some geographies, Gattaca expects underlying pretax profit for its full year to come in 15% below previous expectations.
In early February, the firm issued a similar warning, saying the figure would be 15% lower than expectations. At the same time, former chief executive Brian Wilkinson left the firm.
Gattaca is paying an interim dividend of 3.00 pence, halved from 6.00p a year before, in line with its new policy as it looks to reduce debt.
Chairman Patrick Shanley commented: "Gattaca delivered an improvement in net fee income in H1, and it is pleasing to see our core UK Engineering and IT businesses delivering growth and our International operations in the Americas continuing to perform well. However, the continued underperformance in Telecoms is disappointing and actions are being taken to address this.
"The board is focussed on ensuring the group can better execute its strategy, delivering sustainable and profitable growth in segments and markets which are scalable. We have undertaken a number of actions to improve our underlying performance; albeit at a time when the UK recruitment market continues to be challenging."
Gattaca also on Thursday said it has appointed David Lawther as a non-executive director effective from the start of June. Lawther was previous finance head, then boss, of Interior Services Group PLC.
Senior Independent Director Ric Piper will be retiring at the end of July, as will Non-Executive Director Roger Goodman.
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