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Brexit affecting companies’ employment decisions, says recruiter Gattaca as it swings to a loss

Gattaca said the uncertainty surrounding Britain’s exit from the European Union was affecting customers in “nearly all” of its markets
job candidate
New boss Kevin Freeguard joined last month

Specialist recruiter Gattaca PLC (LON:GATC) swung to a loss last year, leaving new boss Kevin Freeguard with something of a mountain to climb.

The AIM-quoted firm, which finds workers on behalf of engineering and technology companies, posted a loss before tax of £24.9mln in the year ended July 31, compared with a profit of £11.5mln in 2017.

READ: Gattaca restructures as it reins back international operations

Excluding a £33.3mln impairment charge related to write-downs of two acquisitions plus a couple of other one-offs, Gattaca posted an underlying pre-tax profit of £12.7mln, some 21% below the £16.1mln it reported last year.

Gattaca wrote down the value of Provanis, which it acquired in 2013, to zero, stating that the business has been fully integrated into its existing technology division.

There was a heftier write-down for its Networkers acquisition – bought back in 2015 – which, by the company’s own admission, hasn’t performed anywhere near as well as had been expected.

The drop-off came despite a 4% rise in revenue to £667.5mln (2017: £642.4mln). As the company had previously guided, there was no final dividend and the board doesn’t expect to reinstate it at the half-year.

Gattaca blamed its struggling telecoms recruitment businesses in Africa, Asia and Latin America, which it has offloaded since the end of the year.

It also warned that Brexit is still “clearly a concern” for customers in “nearly all” of its markets, with the uncertainty affecting employers’ recruitment decisions.

'Year of change'

“This was a year of change for Gattaca as we decided to reset the business - reorganising it to establish stable foundations for future growth,” said chairman Patrick Shanley.

“Since the half year, we have simplified our operations, removing less stable and non-core businesses which were not expected to contribute to ongoing profits.

CEO Freeguard, who has only been in the job for a month, added: “I am pleased to see the progress that has been made during the second half of 2018 in resetting the business and I am looking forward to developing the business further with the board and the rest of the Gattaca team.”

Shares were down 8.8% to 119.5p on Thursday afternoon.

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