Lower technology net fee income weighs on Gattaca shares

Specialist engineering and technology recruitment business Gattaca guided towards full-year underlying pre-tax profits to come in slightly ahead of market expectations but said that net fee income fell in the group's UK technology division, sending its shares south at the bell.

Gattaca expected net fee income for the year ended 31 July to be £71.4m, in line with its previous year, while its UK engineering unit was set to grow 5% year-on-year and its international operations were pegged to increase 3%.

However, Gattaca's UK technology wing saw a 19% decline in net fee income as the effects of its planned restructuring only began to feed through towards the end of the period, taking its toll on shares.

"As such, this business continued to contribute around £5m to profits and we expect operating contribution prior to overhead allocation only to be slightly down on [the] prior year. We expect this business to return to growth next year," said Gattaca.

Looking ahead to its fully-audited results, Gatacca said underlying pre-tax profits would be slightly above market expectations and noted that net debt would also be at a lower than expected level of roughly £25m.

Chief executive Kevin Freeguard said: "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.

"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."

As of 1100 BST, Gattaca shares had sunk 12.79% to 129.50p.