Final Results

ATA Group PLC 15 April 2008 ATA Group plc ('ATA' or 'the Company') Preliminary Results for the year ended 31 December 2007 ATA Group plc is a support services group, which provides recruitment, training and conferencing services. HIGHLIGHTS Operating profit before exceptionals and discontinued operations at £747,000 (2006: loss of £116,000) Group profits after tax at £498,000 (2006: £439,000). Earnings per share from continued and discontinuing operations at 6.07p (2006: 5.35p). Dividends for the year at 4.0p per share (2006: 3.0p). Recruitment made excellent progress and achieved operating profits at £973,000 (2006: £414,000). Railway activities continued to recover from infrastructure maintenance being taken over by Network Rail and reduced operating losses to £226,000 (2006: £530,000). Taxation charges in 2007 at 33% (2006 34%), reflecting non-allowable expenses. Commenting on the results Bill Douie, Chairman, said: '2007 has been a good year. Market conditions have been benign and we have made good progress improving our profitability and consolidating our balance sheet. As a consequence we are favourably placed to continue to prosper in 2008, a year which is likely to be mired in uncertainties and threats on both a local and global scale. Although at this stage it is difficult to forecast the impact on trading as a consequence of the turmoil in the global financial sector and slowing world economies, we enter this period serving solid industries and the Group has a strong balance sheet and no borrowings. I have no doubt that we will acquit ourselves creditably this year.' 14th April 2008 ENQUIRIES: ATA Group plc Tel: 01332 263 122 Bill Douie, Executive Chairman. Andy Pendlebury, Chief Executive Officer. Andrew Bailey, Chief Operating Officer. Evolution Securities Limited Tel: 0207 071 4300 Jeremy Ellis / Chris Clarke CHAIRMAN'S STATEMENT Year ended 31 December 2007 FINANCIAL 2006 figures have been restated to reflect the adoption of International Financial Reporting Standards ('IFRS'). To make comparisons meaningful, there follows a table showing re-stated figures for 2006, figures for 2007 and changes on a like for like basis. 2007 2006 Change Change £'000 £'000 £'000 % Revenue 23,615 18,134 5,481 30% Cost of sales (18,379) (13,692) (4,687) ____________________________________ Gross Profit 5,236 4,442 794 18% Admin expenses (4,489) (4,558) 69 -2% ____________________________________ Operating profit before exceptional item 747 (116) 863 Exceptional item - 974 (974) ____________________________________ Operating profit after exceptional item 747 858 (111) Profit on disposal of fixed assets - 73 (73) Finance costs (1) (3) 2 ____________________________________ Profit before tax 746 928 (182) Income tax (248) (315) 67 ____________________________________ Profit for continuing operations 498 613 (115) Loss on discontinued operations - (174) 174 ____________________________________ Profit after tax 498 439 59 13% Segmental analysis: Operating profit before exceptional item Recruitment 973 414 559 135% Railway (226) (530) 304 57% ____________________________ Total 747 (116) 863 Exceptional item Consequent upon the untimely death of the then Group Chief Executive in 2006 the Group profit and loss account benefited from a net payout from the Keyman Insurance policy in place at the time of £974,000. TRADING Recruitment Division (ATA Selection) The Recruitment division turned in another excellent year and is now well on its way to surpassing previous best performance. This has been achieved, in a fast changing market place, by maintenance of a strong position in permanent recruitment and the addition of a sound and growing contract recruitment business. Railway Division (Catalis Rail Training, The Derby Conference Centre and Ganymede Manpower Services) The Catalis Rail Training business continues to recover steadily from the changes wrought by Network Rail. During the year the premises at Derby were completely re-furbished and re-launched, on the 'glorious first of June', to push into the conferencing business, both local and national, within a separate legal entity, The Derby Conference Centre Limited. A pleasing start has been made. Capital Investment During the year the opportunity was taken to refurbish the Group premises in Derby. GROUP PERFORMANCE INDICATORS Earnings Per Share from continuing and discontinued operations (EPS) is a key measure as it indicates the underlying profit of the business attributable to shareholders. It measures not only the trading performance, but also the impact of exceptional items, cash management and interest charges. EPS for the year of 6.07p compares with 5.35p in 2006. DIVIDENDS Group trading performance permits an increase in the final dividend per share of 0.5p to 2.5p making total dividends for the year of 4.0p per share. MANAGEMENT During 2007 we were fortunate to secure the services of Andy Pendlebury, firstly as a non-executive director and latterly, from 1 October, as our new Group Chief Executive. Andy comes with a wealth of relevant experience and a raft of refreshing new ideas. New blood was needed and he is proving to be a real shot in the arm. In 2007 further efficiency driven changes were made to second line management. There is more to do and top people to add as we continue to strive for a top flight team. OUTLOOK 2007 has been a good year. Market conditions have been benign and we have made good progress improving our profitability and consolidating our balance sheet. As a consequence we are favourably placed to continue to prosper in 2008, a year which is likely to be enmired in uncertainties and threats on both a local and global scale. Although at this stage it is difficult to forecast the impact on trading as a consequence of the turmoil in the global financial sector and slowing world economies, we enter this period serving solid industries and the Group has a strong balance sheet and no borrowings. I have no doubt that we will acquit ourselves creditably this year. STAFF There can be no more appropriate time for me to thank all our staff for their efforts and successes in 2007 and to acknowledge the universal strength and determination they have displayed. W.J.C. Douie, Chairman 14 April 2008 CHIEF EXECUTIVE'S REPORT Year ended 31 December 2007 Having joined ATA Group Plc as a non-executive Director in June 2007 I was delighted to accept the Board's offer to take up the post of Chief Executive Officer on 1 October 2007. My immediate priority was to begin a wide ranging strategic review of each of the Group's businesses to provide me with a thorough understanding of our core activities and relative position in each of our respective markets. The review, which has already proved extremely encouraging in terms of outlining the depth of our capabilities, has identified some initial findings which have resulted in a number of changes to our management structure and the way we compete in our markets. I believe management is already more focused on growing revenues and net fee income and the benefits will feed through during the next financial year. Further changes to the way we operate will emerge during 2008 as we drive forward our plan to establish each of our revenue streams as independent business units. In doing this it is the clear intention of the Board to begin the process of appointing strong leadership to head each of our businesses once the full scope and opportunity for each business has been adequately identified and understood. These appointments will be open to both internal and external candidates. Once we have implemented these changes we will have a well defined and broad business services group with four autonomous businesses - ATA Selection, Catalis Rail Training, The Derby Conference Centre and Ganymede Manpower Services - all branded independently. However, given their complimentary nature I believe we have significant opportunity to provide a unique multi-service solution to many of our clients enabling them to accelerate essential cost saving programmes through consolidated purchasing. I am confident that our newly appointed Head of Group Sales will identify and capture extensive opportunities to take advantage of our reach across the diversity of sectors we support and engaging the full scope of our capabilities. Initial feedback from clients targeted is promising with discussions progressing on a variety of initiatives. Our key focus for 2008 is sales growth as all our businesses now have well established infrastructures with significant room for increased throughput. In terms of ATA Selection, which already has a well proven sales methodology, the challenge centres around increasing annual consultant billing and various steps are being taken to increase this through additional training and development, better consultant retention and a variety of measures to attract new experienced consultants with greater billing capabilities. In terms of our other businesses we have now installed separate sales teams and early indications show that this focus and concentration on business development is beginning to pay off. Finally during the short time that I have been Chief Executive Officer a substantial amount of work has already been accomplished and I have been extremely encouraged by the dedication, commitment and attitude of everybody employed across all our businesses and it is my intention to build on this by implementing a range of in-house and external training programmes and by bringing in new employees with additional experience to broaden and extend the overall capabilities of the Group. Andy Pendlebury, Group Chief Executive 14 April 2008 CHIEF OPERATING OFFICER'S REPORT Year Ended 31 December 2007 GROUP TRADING SUMMARY 2007 Group revenue from continuing operations has increased by 30% compared with 2006. Reduction in Railway Division revenues were offset by increases in Recruitment. Whilst the change in sales mix, reflecting the continued growth in lower margin contract recruitment, has impacted overall gross margin, the operating profit for the year, before exceptional items, at £747,000 compares with a loss of £116,000 in 2006. Turnover Operating Profit/(Loss) 2007 2006 2007 2006 £'000 £'000 £'000 £'000 Recruitment Division 17,617 11,584 973 414 Railway Division 5,998 6,550 (226) (530) ______________ ______________ Group Total 23,615 18,134 747 (116) RECRUITMENT Recruitment Net Fee Income, representing total fees earned from all recruitment activities, net of contractor wages, grew by 19% in 2007 to £6.8m (2006: £5.7m). Permanent recruitment services focused on the provision of staff to technical engineering and manufacturing roles through our network of regional offices and to national technical sales, rail and construction sectors from our East Midlands locations. Whilst the number of permanent placements remained broadly comparable with last year, overall permanent revenues grew by 22% mainly as a result of an increase in average fees. The number of permanent placements made is a key measure of performance of the business and is measured on the basis of the vacancies filled per individual consultant. In 2007 the average placements per permanent consultant were 8% ahead of 2006 reflecting a reduction in consultant numbers in line with a change in our internal recruitment policy. Contract recruitment in the Group's core markets of technical manufacturing, engineering and rail continued to grow on the solid base established in previous years. The new market sector of construction made a pleasing contribution resulting in an overall increase in revenues of 59% compared with 2006. Contractor heads out per contract consultant, as a key measure of performance, delivered a 28% increase on 2006. The continued expansion and diversification of contract recruitment activity remains a key aim of the Group. Towards the end of 2007 the decision was made to cease recruitment activities from our Croydon location and to consolidate activities into the Slough and Enfield branches. The full cost of closure is reflected in the trading results for 2007. RAILWAY Services delivered within the Railway Division include the delivery of training and competency assessment through Catalis, blue collar labour supply through Ganymede and the provision of conferencing through The Derby Conference Centre. Training activity grew positively across all major areas of delivery resulting in an increase in revenues of 10% to £4.1m compared with 2006. The increased level of trading reflects positive improvements in trainer utilisation and course take up which are key indicators applied to measure the performance of the business. The growth of the training business remains a key objective of the Group. The blue collar labour supply business operated by Ganymede was impacted by a reduction in demand from its underground contract and fall in the third party labour supply needs of Network Rail, both of which contributed to a fall in the key performance measure of man hours worked. Overall revenue reduced to £985,000 compared with 2006. The conference activity, previously reported within the training business, was concentrated in the leasehold company, The Derby Conference Centre, at the start of 2007. The aim being to refurbish, re-brand and re-launch the Derby site as a commercial conferencing venue. Stage one of the refurbishment programme was completed in May and the site re-launched on 1 June. The key performance measure of room utilisation, improved following the re-launch resulting in a 17% increase in external revenue to £950,000. HEAD OFFICE AND CENTRAL FUNCTIONS Advantage was taken of a break option in the lease of the Group head office premises in Yate, South Gloucester, to terminate the lease and relocate all of the central finance and administration functions to the Group site in Derby. The move will deliver central overhead savings and operational efficiencies. The relocation was completed by late summer 2007. STAFF DEVELOPMENT The Group continues to believe that the key to future success is strongly linked to people development. We therefore operate a number of internal and external initiatives, designed to develop individuals in sales, operational, management and leadership skills. Staff retention is a key performance indicator of the business and is monitored closely. ENVIRONMENTAL POLICY The Group monitors its activities to minimise its impact on the environment and has undertaken various initiatives in order to reduce waste. INFORMATION TECHNOLOGY AND THE INTERNET The Group's investment, in Information Technology to support business activities, through both a real time wide area network and front and back office systems to support the growth in volume activities, is complete. Expenditure during the year was therefore restricted to maintenance and upgrades to those systems. Future expenditure will be aimed at gaining operational efficiency through evolution into the latest technologies and leveraging business benefits through increased and varied profile and presence on the internet. The internet attracts many of our candidate applications to the recruitment business. The web based capability built to take advantage of this market dynamic has continued to gain profile in our vertical market sectors. Expenditure to attract candidates in 2007 has however increased over 2006 and we believe will continue to grow in the current candidate driven climate. To mitigate the future impact of the increased cost of candidate recruitment, the recruitment business continues to enhance its web presence and embrace mobile technologies to further improve candidate efficiencies and communication. Third party job boards will, however, continue to play an integral role in candidate recruitment. To maximise the return on third party spend, we have invested in systems which enable us to measure the response rates from advertisements, on individual sites in terms of both volume and quality. We will continue to investigate and adopt technology which delivers increased efficiencies and reduced cost of operation within all of our businesses. SHARE OPTIONS The Government EMI scheme was adopted in 2001. Further options have been granted in 2007. The management team and key staff will continue to be the focus of such initiatives. Andrew Bailey, Group Chief Operating Officer 14 April 2008 Group Income Statement Year ended 31 December 2007 2007 2006 £'000 £'000 £'000 £'000 Revenue 23,615 18,134 Cost of sales (18,379) (13,692) ___________________________________ Gross Profit 5,236 4,442 Administrative expenses - normal (4,489) (4,558) ___________________________________ Operating profit before exceptional 747 (116) items Other income - exceptional - 974 ___________________________________ Operating Profit after exceptional 747 858 items Profit on disposal of fixed assets - 73 ___________________________________ 747 931 Investment income 5 13 Finance costs (6) (16) ________ ________ (1) (3) ___________________________________ Profit before tax 746 928 Income tax expense (248) (315) ___________________________________ Profit for the year from continuing 498 613 operations ___________________________________ Loss on discontinued operations - (174) after taxation ___________________________________ Profit for the year attributable to 498 439 equity holders ___________________________________ Earnings per share - continuing operations 6.07p 7.47p - continuing and discontinued 6.07p 5.35p operations ___________________________________ Fully diluted earnings per share - continuing operations 6.07p 7.47p - continuing and discontinued 6.07p 5.35p operations ___________________________________ Group Statement of Changes in Equity Year ended 31 December 2007 Share Share Capital Share Retained Total capital premium redemption based earnings equity account reserve payment reserve £'000 £'000 £'000 £'000 £'000 £'000 At 1 January 2007 82 1,817 50 31 1,877 3,857 _________________________________________________________ Profit for the year - - - - 498 498 Total recognised 82 1,817 50 31 2,375 4,355 income and expense for 2007 Share based payment - - - (6) - (6) reserve Dividends - note 2 - - - - (287) (287) _________________________________________________________ At 31 December 2007 82 1,817 50 25 2,088 4,062 _________________________________________________________ Year ended 31 December 2006 Share Share Capital Share Retained Total capital premium redemption based earnings Equity account reserve payment reserve £'000 £'000 £'000 £'000 £'000 £'000 At 1 January 2006 82 1,817 50 28 1,685 3,662 Profit for the year - - - - 439 439 _________________________________________________________ Total recognised 82 1,817 50 28 2,124 4,101 income and expense for 2006 Share based payment - - - 3 - 3 reserve Dividends - note 2 - - - - (247) (247) _________________________________________________________ At 31 December 2006 82 1,817 50 31 1,877 3,857 _________________________________________________________ Group Balance Sheet 31 December 2007 2007 2006 £'000 £'000 £'000 £'000 Assets Non current assets Intangible assets 924 924 Property, plant and equipment 738 654 ___________________________________ 1,662 1,578 Current assets Inventories 8 3 Trade and other receivables 4,982 3,452 Deferred tax asset 55 112 Cash and cash equivalents 266 939 ___________________________________ 5,311 4,506 ___________________________________ Total assets 6,973 6,084 Liabilities Current liabilities Trade and other payables (2,665) (1,941) Current borrowings (4) (13) Current tax payable (242) (271) ___________________________________ (2,911) (2,225) Non current liabilities Non current borrowings - (2) Total liabilities (2,911) (2,227) ___________________________________ Net assets 4,062 3,857 ___________________________________ Equity attributable to equity holders of the parent Share capital 82 82 Share premium 1,817 1,817 Capital redemption reserve 50 50 Share based payment reserve 25 31 Retained earnings 2,088 1,877 ___________________________________ Total equity 4,062 3,857 ___________________________________ Group Cash Flow Statement Year ended 31 December 2007 2007 2006 £'000 £'000 Cash flows from operating activities Operating result from continuing 747 931 operations Operating loss from discontinuing - (291) operations Adjustments for: Employee equity settled share options (6) 3 Depreciation 318 438 Profit on sale of property, plant and (29) (37) equipment Impairment of goodwill - 64 Change in inventories (5) 28 Change in trade and other receivables (1,675) 1,404 Change in trade and other payables 724 (628) ______________________ Cash generated from operations 74 1,912 Net interest paid (1) (3) Income taxes paid (220) (251) ______________________ Net cash from/(used in) operating (147) 1,658 activities ______________________ Cash flows from investing activities (451) (134) Purchases of property, plant and equipment 78 238 Proceeds from sale of property, plant and equipment Disposal of businesses 145 97 ______________________ Net cash from/(used in) investing (228) 201 activities ______________________ Cash from/(used) before financing (375) 1,859 Cash flows from Financing activities Decrease in medium term loans - (1) Capital element of finance lease rental (11) (86) payments Equity dividends paid (287) (247) ______________________ Net cash used in financing activities (298) (334) ______________________ Net (decrease)/increase in cash and cash (673) 1,525 equivalents ______________________ Cash and cash equivalents at the 939 (586) beginning of the period ______________________ Cash and cash equivalents at the end of 266 939 the period ______________________ Notes 1. CORPORATE INFORMATION The preliminary audited financial statements of the Group for the year ended 31 December 2007 were authorised for issue in accordance with a resolution of the directors on 14 April 2008. ATA Group Plc is a public limited company incorporated and domiciled in England whose shares are publicly traded. The principal activities of the Group are described in note 6. 2. DIVIDENDS On 14 September 2007 an interim dividend of 1.5p net per share was resolved by the Board to be paid to shareholders on the register on 16 November 2007. The interim dividend was paid on 11 December 2007. A final dividend for the year of 2.5p net per share will be proposed at the forthcoming Annual General Meeting, and if approved, will be paid on 18 July 2008 to shareholders on the register on 20 June 2008. 3. EARNINGS PER SHARE The calculation of earnings per share is based on a profit after tax expense of £498,000 (2006: £377,000) and a weighted average of 8,203,331 (2006: 8,203,331) shares in issue. 4. BASIS OF PREPARATION This is the first year that the Group has presented its consolidated financial statements under IFRS. In preparing its opening IFRS balance sheet, the Group has adjusted amounts previously reported in financial statements prepared in accordance with UK GAAP. The analysis below shows a reconciliation of shareholders' equity and profits as reported under UK GAAP as at, and for the period ended, 31 December 2006 to the revised shareholders' equity and profits under IFRS as reported in these accounts. The only reconciling item is in respect of goodwill, for which the charge for 2006 has been written back. In addition, there is a reconciliation of shareholders' equity under UK GAAP to IFRS at the transition date for the Group, being 1 January 2006. As the Group took advantage of the exemption available under IFRS 1, the write back of goodwill has not been extended beyond the accounting transition date. a)Reconciliation of profit Year ended 31 December 2006 £'000 Profit for the period under UK GAAP 377 Goodwill amortisation 62 _____________ Profit for the period as reported under 439 IFRS b) Reconciliation of equity As at 1 As at 31 January 2006 December 2006 £'000 £'000 Equity as reported under UK GAAP 3,662 3,795 Goodwill amortisation - 62 _________________________ Equity as reported under IFRS 3,662 3,857 The cash flow statements for the year ended 31 December 2006 as presented in these financial statements have been subject to a number of presentational adjustments following the transition to IFRS. There is no impact in the net increase in cash and cash equivalents for each period as reported under IFRS compared with that originally reported under UK GAAP. 5. EXCEPTIONAL ITEMS The exceptional other income in 2006 of £974,000 consists of the net payment received in respect of Keyman Insurance in relation to the death of the former Chief Executive. The profit on disposal of fixed assets in 2006 amounting to £73,000 represents the net profit of the sale of training assets to Network Rail. 6. SEGMENTAL ANALYSIS The Group's results are derived from in two classes of business, which are primarily conducted in the United Kingdom although there is a small international element. The segmental analysis of turnover, operating profit and profit before taxation is as follows: - 2007 2006 £'000 £'000 Revenue Recruitment Division 17,617 11,584 Railway Division 5,998 6,550 ________________ 23,615 18,134 ________________ Operating profit from continuing operations Recruitment Division 973 414 Railway Division (226) (530) Exceptional Item - 974 ________________ 747 858 ________________ Profit on ordinary activities before income tax expense Recruitment Division 972 413 Railway Division (226) (459) Exceptional Item - 974 ________________ 746 928 ________________ 7. INCOME TAX EXPENSE 2007 2007 2007 2006 2006 2006 Continuing Discontinued Total Continuing Discontinued Total £'000 £'000 £'000 £'000 £'000 £'000 Analysis of tax expense :- Current Tax UK corporation tax 266 - 266 369 (74) 295 Adjustment in (75) - (75) 6 - 6 respect of previous periods _______________________________________________________________ 191 - 191 375 (74) 301 Deferred Tax Origination and 6 - 6 (60) - (60) reversal of timing differences Adjustment in 51 - 51 - - respect of previous periods _______________________________________________________________ Tax expense 248 - 248 315 (74) 241 _______________________________________________________________ Report & Accounts The above results do not represent the statutory accounts. The statutory accounts for 2006 have been filed with the Registrar of Companies, received an unqualified audit report and did not contain a statement under Section 237 (2) or (3) of the Companies Act 1985. The audited accounts for the year ended 31 December 2007 will be mailed to shareholders shortly and will be available from the Company's registered office:- The Derby Conference Centre, London Road, Derby, DE24 8UX. This information is provided by RNS The company news service from the London Stock Exchange

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