Specialist engineering and professional services staffing firm Gattaca (GATC:LSE) reported interim results for the six months ended 31 January 2018 with underlying revenue of £323.2 million, down 2% compared to the previous year. Underlying net fee income was up 2% over last year.

Underlying results for the year were as follows.

During the period, the group reported a statutory loss of £12.7 million, down from a pre-tax profit of £5.2 million in the year-earlier period. The company said that it booked a £17.1 million impairment charge due to the continued underperformance of its technology division. The company declared an interim dividend of 3 pence per share, down from 6 pence per share in the same period last year.

Gattaca also announced during its trading update earlier this year that CEO Brian Wilkinson had stepped down from his role. Following the resignation of Wilkinson as CEO in February, interim leadership was entrusted to COO Keith Lewis and CFO Salar Farzad. The company added that a full search to identify a CEO has commenced and it will consider both internal and external candidates

Turning to Gattaca’s interim results for the half year, the group reported that net fee income in UK Engineering grew by 3% over the previous year with an increase in both Contract and Permanent.

Within UK Engineering operations, Engineering Technology was up 24% and Automotive increased 15%, however Resourcing Solutions Limited, which the group acquired in March 2017, saw net fee income fall 13%. This was due to the bidding, award and uncertainty of a project. Meanwhile, General Engineering was also down 11% on the year.

In the group’s UK Technology operations, net fee income declined 4% on the prior year due to a 9% reduction in Telecoms, which was offset by a 3% improvement in IT. Permanent placement fees for the Technology division were up however, Contract net fee income reported a decrease.

Since the period end, the group stated that is has changed the leadership structure for the UK Technology business with a new hire as head of Telecoms who has already restructured the team. The group is also changing the focus of the Telco business to reduce its dependency on vendor business, which Gattaca said was the primary driver of the decline in the business unit. 

International net fee income grew 5% on the prior year, driven by the Americas which saw growth of 30%, however this was offset by a fall in the ‘Other International’ division of 13%. Other International’s decrease was due to Asia's net fee income decrease of 14%, which was impacted by the closure of the group’s Singapore office. South Africa's Net Fee Income was down 25% following pricing changes at the very end of the 2017 financial year from a key customer and the loss of staff during 2017.

Overall, Gattaca reported that there has been a noticeable shift towards Permanent Fees. For the first half of 2018 Permanent fees were 28%, compared to 24%, of total fees.

“Our business is going through a period of significant change, in particular in UK Technology and in some International operations outside of the Americas, where we do not have critical mass. To counteract this we have instigated a program to reduce the cost base of the business within the current financial year and beyond,” the group stated.

“In February and March the business broadly traded in line with the Board's expectations. However, the changes being implemented in the Technology division in the coming months, alongside the economic challenges facing some of our sectors and territories make the backdrop to our full year expectations, which have a final quarter weighting, more challenging than at the time of the trading update of 7 February 2018, with the consequence that the Board now expects underlying profit before tax for the full year to be approximately 15% below its previous expectations,” Gattaca stated.

Patrick Shanley, Chairman of the Group, 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. We will continue working hard to strengthen the group and build further on its solid foundations," Shanley said.

Gattaca set a new 52-week low during today's trading session when it reached £140.00. Over this period, the share price is down -47.65%. As of last trade, the company traded at £145, down 24.87% on the day. Based on its current share price the company has a market value of £61.38 million.