LONDON (ShareCast) - (ShareCast News) - Specialist engineering and technology recruitment business Gattaca watched its shares fall through the floor on Thursday, after it announced its interim results for the six months ended 31 January, with diluted earnings per share down 25%.
The AIM-traded firm's basic earnings per share fared almost as poorly, dropping 24% year-on-year, resulting in the board slashing the dividend by 50% to 3p per share.

Revenue was up 7% on a statutory basis to £323.3m, but it slipped 2% on an underlying basis, while net fee income surged a statutory 12% and an underlying 2% to £39.8m.

The company swung to a loss from operations on a statutory basis, falling to £11.5m from a profit of £5.5m in the same period last year, while its loss before tax was £12.7m, compared to a profit of £5.2m 12 months ago.

On an underlying level, Gattaca's profit from operations slid 13% to £7.7m, while its profit before tax was 17% lower at £6.9m.

On a divisional basis, UK engineering net fee income grew 3% on the prior year, with engineering technology contributing growth of 24% and automotive ahead 15%.

RSL was down 13%, on the other hand, with general engineering falling 11%.

UK technology net fee income declined 4% year-on-year, with IT rising 3% - including what the board called "strong performance" in development , which was ahead 50%, and cloud and leadership, which rose 28%.

That was offset by public sector and ERP, which slid 33%.

Telecoms also declined, by 19%.

International net fee income grew 5% on the prior year, which the board said was driven by strong performance in the Americas of 30% growth, offset by a fall in other international markets of 13%.

Underlying overheads were 6% higher for the period, which reportedly reflected an investment in UK sales, which were £1.3m higher than the prior year, and the US, where it was £0.7m higher.

The board said actions were in place to abate the rate of increase in the second half.

It added that the continued underperformance of technology had resulted in a non-cash impairment of £17.1m in the period, in respect of goodwill and other intangible assets capitalised with the Networkers acquisition.

The board explained that the interim dividend of 3p was in line with the resetting of dividend policy announced on 7 February.

It said the dividend policy targeted a pay-out of 50% of profit after tax through the cycle, subject to a sustained reduction in net debt from the 2019 financial year onwards.

"Gattaca delivered an improvement in net fee income in the first half, 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," said chairman Patrick Shanley.

"However, the continued underperformance in telecoms is disappointing and actions are being taken to address this."

Shanley said the board was focussed on ensuring the group could better execute its strategy, delivering sustainable and profitable growth in segments and markets which were 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."

As at 1342 BST, shares in Gattaca were down 21.24% at 152p.

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