UK-based specialist engineering and professional services staffing firm Gattaca announced group net fee income for the six-month period ending 31 January 2024 is expected to be £18.9 million, a decrease of 16% year-on-year.

In its trading update, Gattaca said its performance is in line with expectations.

The group also said net fee income shows an anticipated shift towards contract (76%) while permanent is expected to make up 24% of net fee income. This compares to a split of 68%/32% in the year prior and reflects an increased focus on contract market and maintaining contractor volumes.

For the H1 period permanent net fee income is down 38% over the year as a result of market weakness, with placements continuing to show weakness since the turn of the year, and the exit of a large permanent Recruitment Process Outsourcing client in prior year.

The group said it saw significant progress in business development, with two large client extensions and two more Managed Service Provider wins. Furthermore, Gattaca said defence continues to be the group's strongest performing sector with 9% year-on-year growth excluding the RPO account exit.

Gattaca also saw a marginal reduction in sales headcount during H1 2024 to 312 from 315 at the year-end and focused UK headcount investment in specific sectors showing growth opportunities, these being energy, defence and Gattaca Projects.

Matthew Wragg, Chief Executive Officer said, “Despite the tough market conditions, I am pleased to report the group is trading in line with current market expectations. I am also pleased to see our strategy to invest in business development is starting to bear fruit, with two large client extensions and two more Managed Service Provider (MSP) wins for the group in H1 and a growing pipeline.”

“We continue to see high engagement, staff attrition below long-term targets and productivity levels beginning to improve. In H1 we have continued to focus the business more on specific markets and geographies. We have reduced our workforce in North America,” Wragg added.

“However, the economic conditions have led to a challenging market in H1 and we have not been immune to this,” Wragg continued. “Permanent fee income is down 38% due to much lower than anticipated volumes at the back end of 2023 and compounded by reduced NFI from the exiting of a major programme last year. We anticipate that Permanent fees will pick up gradually as we go through 2024. Contract income has remained stable, and we are starting to see growth from our investment and focus into this area.”

“Recognising that trading conditions are expected to remain challenging, we plan to keep tight control on operating costs including headcount during H2, whilst we are mindful to ensure we are well placed to build market share in our chosen sectors as the economy recovers,” Wragg said.

Earlier this month, Gattaca announced that Chief Sales Officer Grahame Carter passed away.

Gattaca shares last traded at £109.00, down 12.80% on the day and 45.33% above the 52-week low of £75.00 set on 28 March 2023. The company has a market cap of £34.98 million.