Interim Results
ATA Group PLC
09 September 2005
ATA GROUP
INTERIM STATEMENT 2005
CHAIRMAN'S STATEMENT
I am pleased to present the interim report of the Company for the six months to
30 June 2005.
Trading
General
Economic conditions remain stable, as does the trading environment in
recruitment, although the Railway Industry is undergoing a process of
fundamental change which creates significant uncertainty and challenging trading
conditions much as expected. Although group turnover in the six months to 30
June 2005 increased 4.8% to £8.9m (2004 £8.5m), profit before tax fell to
£48,000 (2004 £0.55m). Earnings per share fell to 0.41p (2004 4.60p).
Recruitment
Recruitment and labour supply turnover in the period was £5.9m (2004 £4.5m), a
rise of 32%. Operating profit declined slightly to £0.15m (2004 £0.16m).
The performance of ATA Selection improved during the period in permanent
recruitment and further significant progress was made in contract recruitment.
The additional direct costs associated with rapid expansion in contract
personnel and subsequent turnover growth have served to restrain overall
contract gross margin as new recruits develop their skills and gain experience.
Ganymede Tracklayers, having secured its first contract with Network Rail to
supply labour in the Thames Valley maintenance area in 2004 has built on this
success and has important business flows in the London Underground system
through an expanding relationship with Tube Lines. The business flows from
National Rail Infrastructure Renewals Companies has, however, been
disappointingly slow. The combined effect of these achievements has been to
consolidate Ganymede on a wider client base and improve its contribution to
Group.
Gem Weld (UK) Limited, acquired in August 2004, has been fully integrated and,
following a very difficult period to December 2004, has made significant and
pleasing progress in generating good trading relationships with Renewals
companies and has joined Ganymede in securing a valuable contract from Network
Rail in the Thames Valley area. Revenue flows have consequently improved and
the business has achieved profitability at the period end.
Training
Training turnover in the period has been seriously impacted by reduced demand
for signal engineer and rail safety training following the transfer of all
Infrastructure Maintenance to Network Rail in 2H04 and has fallen to £3.0m
(2004 £4.02m) a fall of 25%. An operating loss of (£97,000) was incurred,
mostly falling in the first quarter (2004 first half profit £0.425m).
It is now clear that Network Rail have decided to abandon the facilities and
expertise, sold at the time of privatisation, available from the private sector
and, instead, establish competing facilities of their own. Whatever the
business case for this policy we have to deal with the consequences and do not
now expect to provide significant services in this area to Network Rail beyond
March 2006. This is expected to reduce turnover in this segment of our training
activities by a net £1.0m in 2005 and a further net £1.0m in 2006.
Rail Training Audit Services continues to trade at budgeted levels and is
tendering for renewal of the contract with Network Rail to commence at the
beginning of 2006.
Dividends
Your Directors consider that significant market change has taken place in the
first half of 2005 which has impacted severely on net pre-tax profits but that
trading at more satisfactory levels may be expected in the second half. In view
of this they have resolved to pay a reduced interim dividend of 1.0p (2004
2.5p).
Outlook
My previous statement predicted that 2005 would be a challenging year; so it is
proving. The bulk of this year's re-positioning has taken place in the first
half and the second should demonstrate a more stable picture. Further
development of contract recruitment is anticipated enabling more intensive use
to be made of our nationwide network of branches, where permanent recruitment is
expected to gather pace too. This is expected to generate continuing increases
in turnover and, through improvements in contract consultant maturity and skill,
to generate improvements in profits from this section of our business. Ganymede
Tracklayers is continuing steady development and expects to extend further its
client base outside Network Rail. Having completed a short period of adjustment
and integration, GemWeld will also build on the successes of the first half and
extend its business and profitability in a similar manner. The second half is
expected to produce a steadier performance from both Catalis and Rail Training
Audit Services although further ahead continued adjustment to changes at Network
Rail and the need to secure a renewal of their contract with Rail Training Audit
Services will present further challenges. The re-positioning of Catalis Rail
Training to take full advantage of a much altered Railway Industry will be
substantially complete by April 2006. Although I am confident that the Group
will continue to make solid progress in dealing with a fast changing trading
environment, I expect the recovery from the first half trading setback to be
slower than we would have wished. Consequently, profits for the year to 31
December 2005 are expected to be materially below expectations.
W.J.C.Douie, Chairman. 9 September 2005.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
6 Months 6 Months 12 Months
to to to
30 Jun 30 Jun 31 Dec
2005 2004 2004
(unaudited) (unaudited)
As restated As restated
Notes £'000 £'000 £'000 £'000 £'000 £'000
Turnover
Continuing operations 8,930 8,519 17,054
Acquisitions - - 98
2 8,930 8,519 17,152
Operating Profit
Continuing operations 54 586 1,558
Acquisitions - - (140)
2 54 586 1,418
Net interest payable (6) (35) (57)
(6) (35) (57)
Profit on ordinary activities
before taxation 48 551 1,361
Tax on profit on ordinary
activities 3 (14) (176) (436)
Profit on ordinary activities
after taxation 34 375 925
Dividends 4 (319) (318) (522)
Retained profit / (loss) for the
financial period (285) 57 403
Earnings per share (pence) 5 0.41 4.60 11.34
There were no recognised gains or losses other than those reported in the Profit
and Loss Account.
CONSOLIDATED BALANCE SHEET
As at As at As at
30 Jun 30 Jun 31 Dec
2005 2004 2004
(unaudited) (unaudited)
Notes As restated As restated
£'000 £'000 £'000
FIXED ASSETS
Intangible assets 1,118 1,083 1,154
Tangible assets 1,323 1,771 1,588
2,441 2,854 2,742
CURRENT ASSETS
Stock 29 12 29
Debtors falling due after more than one year 802 817 809
Debtors falling due within one year 3,222 3,372 3,483
Cash at bank 803 1,314 715
4,856 5,515 5,036
CREDITORS: Due within one year (2,992) (3,998) (3,209)
NET CURRENT ASSETS 1,864 1,517 1,827
TOTAL ASSETS LESS CURRENT LIABILITIES 4,305 4,371 4,569
CREDITORS: Due after more than one year (50) (161) (50)
PROVISIONS FOR LIABILITIES AND CHARGES (101) (150) (101)
NET ASSETS 4,154 4,060 4,418
CAPITAL AND RESERVES
Called up share capital 82 82 82
Share premium account 1,817 1,784 1,796
Capital redemption reserve 50 50 50
Profit and loss account 8 2,205 2,144 2,490
7
SHAREHOLDERS' FUNDS 4,154 4,060 4,418
CONSOLIDATED CASH FLOW STATEMENT
6 Months 6 Months 12 Months
to to to
30 Jun 30 Jun 31 Dec
2005 2004 2004
(unaudited) (unaudited) (audited)
Notes £'000 £'000 £'000
CASH INFLOW FROM 6 312 1,186 1,857
OPERATING ACTIVITIES
Returns on investments and servicing of finance (6) (35) (57)
Taxation (135) (326) (506)
Payments to acquire tangible fixed assets (97) (190) (321)
Receipts on disposal of tangible fixed assets 31 20 35
Purchase of subsidiary undertaking - - (15)
Net Debt acquired with subsidiary (19)
Equity dividends paid - - (522)
Net cash inflow before use of
liquid resources and financing 105 655 452
Issue of ordinary share capital 21 9 21
Decrease in medium term loans (8) (136) (500)
Capital element of finance lease rental payments (30) (53) (97)
(DECREASE)/INCREASE IN CASH BALANCES 88 475 (124)
ATA GROUP PLC
NOTES TO THE INTERIM STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2005
1. ACCOUNTING POLICIES
The accounting policies used in the preparation of the interim accounts are
consistent with those used in the preparation of the audited annual accounts for
the year ended 31 December 2004 with the exception of the introduction of FRS 21
'Events after the balance sheet date', which requires dividends which are
proposed after the balance sheet date to be disclosed and not recognised as a
liability. Comparative data for the six months to 30 June 2004 and twelve
months to 31 December 2004 has been restated in accordance with this standard.
The interim accounts follow the provisions of SSAP 24 'Accounting for pension
costs' which is consistent with the policy used in the preparation of the
audited accounts for the year ended 31 December 2004. The company is required
to adopt the provisions of FRS 17 'Retirement benefits' for the year ended 31
December 2005, however it has been impracticable to prepare these interim
statements on this basis as it has not been possible to obtain appropriate
valuations. The Group financial information consolidates the accounts of ATA
Group Plc and all its material subsidiary undertakings using the acquisition
method.
The comparative figures for the year ended 31 December 2004 do not constitute
statutory accounts within the meaning of S.240 of the Companies Act 1995, but
they have been derived from the audited financial statements for that year,
which have been filed with the Registrar of Companies. The report of the
auditors was unqualified and did not contain a statement under section 237 (2)
or (3) of the Companies Act 1985.
2. SEGMENTAL ANALYSIS
6 Months to 6 Months to 12 Months to
30 Jun 2005 30 Jun 2004 31 Dec 2004
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
TURNOVER
Recruitment and labour supply 5,936 4,504 9,380
Training and consultancy 2,994 4,015 7,772
8,930 8,519 17,152
OPERATING PROFIT
Recruitment and labour supply 151 161 270
Training and consultancy (97) 425 1,148
54 586 1,418
Operating profit is stated after amortisation of goodwill of £36,000 in the
period (2004 £33,000).
3. TAX ON PROFIT ON ORDINARY ACTIVITIES
The tax on profit on ordinary activities for the period to 30 June 2005 has been
provided at the estimated rate applicable to the group for the period.
4. DIVIDENDS
The Board has approved an interim dividend of 1p per ordinary share net to be
paid on 12 December 2005 to shareholders on the register of members at 18
November 2005.
6 Months to 6 Months to 12 Months to
30 Jun 2005 30 Jun 2004 31 Dec 2004
(unaudited) (unaudited)
As restated As restated
£'000 £'000 £'000
Final dividend 2003, declared April 2004 - 318 318
Interim dividend 2004, declared September 2004 - - 204
Final dividend 2004, declared April 2005 319 - -
319 318 522
5. EARNINGS PER SHARE
The earnings per share have been calculated on the profit on ordinary activities
after taxation, both before and after exceptional items, and on the number of
shares in issue (8,195,812) during the period. The fully diluted earnings per
share is not materially different from the basic earnings per share and has not
been disclosed.
6. CASH FLOW
RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES
2004
£'000
Operating profit 54
Amortisation 36
Depreciation 333
Profit on sale of fixed assets (2)
Decrease in debtors 268
Decrease in creditors (377)
----------------
Net cash inflow from operating activities 312
================
ANALYSIS OF CHANGES IN NET FUNDS
At Cash Other At 30
1 Jan 2005 Flows Movements Jun 2005
£'000 £'000 £'000 £'000
Net Cash:
Cash in hand and at bank 715 88 803
Debt:
Debt due within 1 year (10) 8 (1) (3)
Debt due after 1 year (1) - 1 0
HP and finance leases (107) 30 (77)
Net Funds 597 126 0 723
7. MOVEMENT IN SHAREHOLDERS FUNDS
STATEMENT OF MOVEMENT IN GROUP SHAREHOLDERS FUNDS
As at As at As at
30 Jun 2005 30 Jun 2004 31 Dec 2004
£'000 £'000 £'000
Opening shareholders funds as previously stated 4,099 3,676 3,676
Prior period adjustment 319 318 318
Opening shareholders funds as restated 4,418 3,994 3,994
Profit / (loss) for the period (285) 57 403
Issue of shares 21 9 21
Closing shareholders funds 4,154 4,060 4,418
8. PRIOR PERIOD ADJUSTMENTS
FRS 21 Events after the balance sheet date.
Under the terms of FRS 21 dividends which have been declared after the balance
sheet date are not recognised as a liability at that date.
The effect of changes in accounting policy on comparative financial information
of prior periods is as follows:
Period ended Year ended
30 Jun 2004 31 Dec 2004
(unaudited)
£'000 £'000
Dividends: 204 523
Dividend previously charged to profit and loss in the period
Dividend charged to profit and loss under FRS 21 (318) (522)
Net (reduction) / increase to retained profit in the period (114) 1
Profit / (loss) for year:
As previously reported 171 402
FRS 21 (114) 1
As restated 57 403
Creditors:
As previously reported (4,202) (3,528)
FRS 21 204 319
As restated (3,998) (3,209)
Reserves profit and loss account:
As previously reported 1,940 2,171
FRS 21 204 319
As restated 2,144 2,490
ATA GROUP PLC
Registered Office
Kingston House,
Oaklands Business Park,
Armstrong Way,
Yate,
South Gloucestershire BS37 5NA
Approved and authorised for release
for and on behalf of ATA Group Plc
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