Specialist engineering and professional services staffing firm Gattaca provided a trading update for the 12 months ended 31 July 2019.

The company expects underlying profit before tax to be slightly above market expectations and net debt also lower than expected levels. Group net fee income is expected to be £71.4 million, in line with prior year on an underlying basis (continuing operations).

Overall, net fee income was flat year on year with UK Engineering having performed strongly in H2, partially offset by UK Technology and particularly Telecoms.

Net fee income by contract and permanent is as follows.

Net fee income by segment

“Benefits of the planned restructuring we undertook in H1 began to feed through towards the end of the period,” the company stated. “The group's International operations also grew over the period, although the strong performance in H1, particularly in the USA, was offset by a softer period of trading in H2. The core UK Engineering business, including our Solutions offering, continues to perform very strongly.”

UK Engineering, the group’s 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 the Solutions business, Engineering Technology and Infrastructure. The significant improvement was largely in permanent recruitment.

UK Technology declined 19% over the period, with an H2 decline of 24%, as the effects of the group’s planned H1 restructuring began to feed through and as it focused on improving the quality of income. The group expects this business to return to growth next year.

International net fee income grew 3% over the year as a whole, with a strong performance in H1 offset by a softer period of trading in H2, as the group focused on establishing its contract business and there was a rebalancing of customers following reduced demand at key customers. The company expects continued growth in FY 2020 as they work to scale and broaden the business.

During the year, the group announced that it intends to withdraw from a number of international markets in order to focus on more profitable territories. Its discontinued business includes Contract Telecoms Infrastructure markets in Africa, Asia and Latin America (some of which was UK sourced) as well as its operations in Dubai, Kuala Lumpur and Qatar.

Gattaca also incurred £3.6 million in legal fees related to a US Department of Justice inquiry into Networkers International, which the company acquired in 2015. These costs are reflected in the company’s discontinued operations.

During the year Gattaca appointed Kevin Freeguard as CEO and member of the Board of Directors with effect from 1 October 2018.

Freeguard, commented on the results, "The group delivered NFI 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,” Freeguard said.

The group expects to announce its full year results for the 12 months to 31 July 2019 on Wednesday 6 November 2019.

As of last trade, Gattaca traded at £129.50, down 12.59% on the day and 40.00% above the 52 week low of £92.50 set on 27 February 2019. Based on its current share price the company has a market value of £47.73 million.