Interim Results

ATA Group PLC 14 September 2007 ATA Group plc Interim Results for the six months to 30 June 2007 ATA Group plc ('ATA') is a human resource support services group, which provides employment solutions and training services to client companies in the United Kingdom and the Republic of Ireland. HIGHLIGHTS Turnover 23% increase to £11.24m (2006: £9.15m) Operating profit from continuing operations before exceptionals at £242,000 (2006: £170,000). Earnings per share from continuing operations before exceptionals at 2.95p (2006: 2.07p). Interim dividend increased to 1.5p (2006: 1.0p). Commenting on the results Bill Douie, Chairman, said: 'As in 2006 we are in the midst of a challenging year. This time, however, the problems are those of optimising an already profitable business and planning for development and growth. 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 continue the trend to more effective working. Our first steps to enter the white collar Construction market in both contract and permanent recruitment have made a slow but steady start, as has our entry into the supply of engineering contractors to Large Corporates. Our training business continues to make progress and the renewed Derby Conference Centre has started well although significant business results are not expected until 2008.' 14th September 2007 ENQUIRIES: ATA Group plc Tel: 01332 263 122 Bill Douie, Executive Chairman. Andrew Bailey, Group Managing Director. Evolution Securities Limited Tel: 0207 071 4300 Jeremy Ellis ATA Group Plc CHAIRMAN'S STATEMENT I am pleased to present the interim report of the Company for the six months to 30 June 2007. Structure and Management I am pleased to report that our top management team has stabilised and is performing well. The Recruitment business, ATA Selection, has two regional Directors responsible for the North, Andrew Hardaker, and the South (including Corporate Contract), Charles Cornwell. Paul McLoughlin continues as Managing Director of the Railway business, Catalis Rail Training, The Derby Conference Centre and Ganymede Manpower Services. The Group Board now consists of Bill Douie, Executive Chairman, Andrew Bailey, Group Managing Director and the recent valuable addition of Andy Pendlebury, Non-Executive Director, supported by, Mark Kendall as Company Secretary and Group Financial Controller. Trading General Economic conditions have remained stable in the first half. As has been seen in the last few weeks, there is much instability in credit and consequently other markets as the Global Economy faces the possibility of recession and events in the Middle East and elsewhere serve to de-stabilise the world environment. For the time being this has not affected the trading environment in recruitment, and the Railway Industry seems now to have settled down and calmer conditions prevail. Group turnover in the six months to 30 June 2007 increased 23% to £11.24m, (2006 £9.15m), operating profit from continuing operations before exceptionals rose to £242,000 (2006 £170,000). Earnings per share from continuing operations before exceptionals rose to 2.95p (2006 2.07p). Recruitment Recruitment turnover in the period was £8.19m (2006 £5.55m). Operating profit rose to £355,000 (2006 £300,000). The performance of ATA Selection improved during the period in permanent recruitment and continuing progress was made in contract recruitment. Actions initiated to improve staff recruitment, development and retention are bearing fruit and consultant numbers are rising. Railway Railway turnover in the period was £3.05m (2006 £3.60m). Operating losses reduced to £113,000 (2006 £130,000). Catalis Rail Training is trading in calmer waters and has consolidated, following the final closure of the training school in Crewe, and now operates from London Road, Derby and Clapham in West London. The vast majority of all training is for clients from the private sector, with very little business directly with Network Rail. Nonetheless, our client base is wholly dependant upon Network Rail contracts and it is pleasing to note that a return to significant capital expenditure on the Railways has occurred, particularly in the field of signalling renewal contracts. There are also announced plans for significant spend in other areas covering track and station upgrading and major new projects including Thameslink and Crossrail. The rebranding of our Conferencing business as, The Derby Conferencing Centre Limited, operating from the recently refurbished premises at London Road, Derby has been completed and a formal re-opening took place on 1st June. Early business flows have been encouraging. Ganymede Manpower Services (Ganymede Tracklayers) has, however, encountered difficult trading conditions as projects on the London Underground network were completed with no follow on business for the time being. Firm management action has materially reduced costs and it is proving possible to continue to make a real but small financial contribution, whilst awaiting the establishment of further Underground work and the initiation of certain announced Network Rail projects. Although the nadir of the fortunes in this division has passed, a return to respectable profitability is not expected until 2008. During the period the decision was taken to exercise a break option on the lease of the Group head office premises at Yate, South Gloucester. All functions previously carried out at Yate, including the registered office address, have now been transferred to London Road, Derby. Dividends Your Directors consider that recovery from the problems of 2006 has begun and they are pleased that steady progress is being made in all areas and that profits for the period are derived entirely from normal trading. In view of this they have resolved to pay an improved interim dividend of 1.5p (2006: 1.0p). Strategy The massive changes wrought by a re-structured Railway Industry and by changes in the quantity of top management available to our Group prompted a strategic review in 2006. It was necessary to overcome these problems and return the Group to a healthy trading condition and that has largely occurred, although there is further ground to make up before we can claim to be fully back to robust health. Good management is in place and sound trading results are being achieved. All elements are in place to achieve the fulfilment of Phase One. The strategic focus must now shift to building on the solid base achieved in the programme. We have, therefore, decided to concentrate on the pursuit of organic start-up opportunities with vigour and seek acquisitions of support service companies with proven track records and management in current and compatible niche markets. I am particularly pleased that Andy Pendlebury, with his wealth of experience and contacts, has joined us with a particular brief to concentrate on those two objectives in support of the Chairman and Group Managing Director. Outlook As in 2006 we are in the midst of a challenging year. This time, however, the problems are those of optimising an already profitable business and planning for development and growth. 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 continue the trend to more effective working. Our first steps to enter the white collar Construction market in both contract and permanent recruitment have made a slow but steady start, as has our entry into the supply of engineering contractors to Large Corporates. Our training business continues to make progress and the renewed Derby Conference Centre has started well although significant business results are not expected until 2008. IFRS The results which follow are prepared for the first time in accordance with International Reporting Standards (IFRS) and in order to give the greatest level of clarity, we have prepared notes on the impact of adopting IFRS, which include reconciliation to the results on a UK GAAP basis. W.J.C.Douie, Chairman. 14th September 2007 CONSOLIDATED INCOME STATEMENT 6 Months 6 Months 12 Months to 30 Jun 2007 to 30 Jun 2006 to 31 Dec 2006 (unaudited) (unaudited) As restated As restated Notes £'000 £'000 £'000 £'000 £'000 £'000 Revenue 2 11,235 9,145 18,134 Cost of sales (8,877) (6,789) (13,692) Gross Profit 2,358 2,356 4,442 Administrative expenses (2,116) (2,186) (4,558) Operating profit from 2 242 170 (116) continuing operations before exceptional items Exceptional item 3 - 974 974 Profit on disposal of fixed 3 - 88 73 assets ________________________________________________ 242 1,232 931 Finance costs 6 (13) (3) ________________________________________________ Profit on ordinary 248 1,219 928 activities before taxation Income tax expense 4 (69) (356) (315) ________________________________________________ Profit on ordinary 179 863 613 activities after taxation Loss on discontinued 5 - (238) (174) operations after taxation ________________________________________________ Net profit 179 625 439 Earnings per share - 7 2.95 2.07 (1.41) operating profit from continuing operations before exceptional items Earnings per share - 7 2.18 10.52 7.47 continuing operations (pence) Earnings per share - 7 2.18 7.62 5.35 continuing and discontinued operations (pence) Fully diluted earnings per 7 2.18 10.52 7.47 share - continuing operations (pence) Fully diluted earnings per 7 2.18 7.62 5.35 share - continuing and discontinued operations (pence) CONSOLIDATED BALANCE SHEET As at As at As at 30 Jun 2007 30 Jun 2006 31 Dec 2006 (unaudited) (unaudited) As restated As restated Notes £'000 £'000 £'000 Assets Non current Goodwill 924 983 924 Property, plant & equipment 703 881 654 ____________________________________ 1,627 1,864 1,578 ____________________________________ Current Inventory 3 27 3 Trade and other receivables 5,416 5,411 3,564 Cash and cash equivalents 24 676 939 ____________________________________ 5,443 6,114 4,506 ____________________________________ Total assets 7,070 7,978 6,084 ____________________________________ Liabilities Current Trade and other payables (2,693) (3,084) (1,941) Borrowings (7) (26) (13) Tax liabilities (334) (487) (271) ____________________________________ (3,034) (3,597) (2,225) ____________________________________ Non current Borrowings - (46) (2) Deferred tax liability - (43) - ____________________________________ Total Liabilities (3,034) (3,686) (2,227) ____________________________________ Net Assets 4,036 4,292 3,857 ____________________________________ Equity Called up share capital 82 82 82 Share premium account 1,817 1,817 1,817 Capital redemption reserve 50 50 50 Share based payment reserve 31 33 31 Profit and loss account 2,056 2,310 1,877 ____________________________________ Total equity 9 4,036 4,292 3,857 ____________________________________ CONSOLIDATED CASH FLOW STATEMENT 6 Months to 6 Months to 12 Months to 30 Jun 2007 30 Jun 2006 31 Dec 2006 (unaudited) (unaudited) £'000 £'000 £'000 Operating activities Operating result 242 1,232 931 Operating loss from discontinuing - (340) (291) operations Net interest received/(paid) 6 (13) (3) Employee equity settled share options - 5 3 Depreciation of property, plant & 141 242 438 equipment Loss on sale of property, plant & - (98) (37) equipment Impairment of goodwill - 134 64 Change in stock - 18 28 Change in trade and other receivables (1,949) (345) 1,404 Change in trade and other payables 746 475 (628) Taxes paid - - (251) ____________________________________ Net cash (outflow)/inflow from operating activities (814) 1,310 1,658 ____________________________________ Investing activities Purchases of property, plant & equipment (190) (39) (134) Proceeds from sale of property, plant & equipment - 21 238 Disposal of businesses 97 - 97 ____________________________________ Net cash used in investing activities (93) (18) 201 ____________________________________ Cash inflow/(outflow) before financing (907) 1,292 1,859 ____________________________________ Financing activities Decrease in medium term loans - (1) (1) Capital element of finance lease rental (8) (29) (86) payments Equity dividends paid - - (247) ____________________________________ Net cash used from financing activities (8) (30) (334) ____________________________________ Net (decrease)/increase in cash and cash equivalents (915) 1,262 1,525 ____________________________________ Cash and cash equivalents at the beginning of the period 939 (586) (586) ____________________________________ Cash and cash equivalents at the end of 24 676 939 the period ____________________________________ NOTES TO THE INTERIM STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2007 1. ACCOUNTING POLICIES a) Introduction The interim financial statements of ATA Group Plc are for the six months ended 30 June 2007. They have been prepared in accordance with IAS 34 - Interim Financial Reporting, and are covered by IFRS 1 - First-time adoption of IFRS, as they are part of the period covered by the company's first IFRS financial statements for the year ending 31 December 2007. These interim financial statements are prepared using the IFRS accounting policies (including IAS) and interpretations issued by the International Financial Reporting Interpretations Committee ('IFRIC') that are expected to be applicable for the full reporting year ending 31 December 2007. These remain subject to ongoing amendment and/or interpretation and are therefore subject to possible change. Consequently information included in these interim financial statements may need updating for any subsequent amendments to IFRS required for first time adoption, or for new standards that the Group may elect to adopt early. Previously the Group's financial statements were prepared in accordance with UK Generally Accepted Accounting Practice (UK GAAP). The principal accounting policies previously adopted are explained in the Group's last UK GAAP Annual Report for the year ended 31 December 2006. The principal accounting policies under IFRS are consistent with those adopted under UK GAAP, with the exception of those policies set out in note 1d below. b) Comparatives The comparative figures for the year ended 31 December 2006 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. c) Transition to IFRS ATA Group Plc's transition date for the adoption of IFRS is 1 January 2006 and the company has prepared its opening balance sheet at that date. The Group has elected not to apply IFRS 3 retrospectively to business combinations. d) Main impacts of International Financial Reporting Standards Outlined below are those International Financial Reporting Standards which will have an impact on the financial statements of ATA Group Plc. The numerical impact of the adoption of IFRS on the income statement and shareholders' equity is given in note 10. IFRS 3 'Business Combinations' prohibits the amortisation of goodwill, instead goodwill is subject to annual impairment reviews. Under the transitional provisions of IFRS 1, the goodwill balance at 31 December 2005 has been frozen and hence amortisation charges booked in the year to 31 December 2006 have been reversed. Impairment previously recognised under UK GAAP has not been reversed. The cash flow statements for the periods ended 30 June 2006 and 31 December 2006 as presented in the interim financial information 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. There is no impact on these financial statements from IAS 39, Financial Instruments Measurement. 2. SEGMENTAL ANALYSIS The primary segment for segmental analysis is by business activity. 6 Months to 6 Months to 12 Months to 30 Jun 2007 30 Jun 2006 31 Dec 2006 (unaudited) (unaudited) As restated As restated £'000 £'000 £'000 REVENUE Recruitment Division 8,190 5,546 11,584 Railway Division 3,045 3,599 6,550 ____________________________________ 11,235 9,145 18,134 ____________________________________ OPERATING PROFIT/(LOSS) - Before exceptional items Recruitment Division 355 300 414 Railway Division (113) (130) (530) ____________________________________ 242 170 (116) ____________________________________ 3. NON-RECURRING ITEM AND PROFIT ON DISPOSAL OF FIXED ASSETS IN 2006 The non-recurring item in 2006 related to the net payment received in respect of keyman insurance in relation to the former Chief Executive. The profit on disposal of fixed assets in 2006 relates to maintenance assets sold to Network Rail under the terms of an agreement dated 21 June 2006. 4. TAX ON PROFIT ON ORDINARY ACTIVITIES The tax on profit on ordinary activities for the period to 30 June 2007 has been provided at the estimated rate applicable to the Group for the period. 5. LOSS ON DISCONTINUED OPERATIONS 6 Months 6 Months 12 Months to 30 Jun 2007 to 30 Jun 2006 to 31 Dec 2006 (unaudited) (unaudited) As restated As restated £'000 £'000 £'000 Revenue - 549 580 ___________________________________ Operating profit - (340) (291) Attributable tax credit - 102 87 ___________________________________ Net operating loss - (238) (204) attributable to discontinued operations Profit on disposal of discontinued operations - - 43 Attributable tax charge - - (13) ___________________________________ - - 30 ___________________________________ Loss on discontinued operations after taxation - (238) (174) ___________________________________ 6. DIVIDENDS The Board has approved an interim dividend of 1.5p per ordinary share net to be paid on 11 December 2007 to shareholders on the register of members on 16 November 2007. 7. EARNINGS PER SHARE The earnings per share have been calculated both on the profit on continuing operations after taxation and on the loss on continuing and discontinued operations, based on the number of shares in issue during the period. The outstanding share options are not considered to be dilutive in either the current or comparative periods. In addition, because of the impact of exceptional items in the comparative periods, the earnings per share on operating profit before exceptional items have been disclosed. 6 Months to 6 Months to 12 Months to 30 Jun 2007 30 Jun 2006 31 Dec 2006 (unaudited) (unaudited) Weighted average number of shares 8,203,331 8,203,331 8,203,331 Earnings from operating profit before exceptional items (£'000) 242 170 (116) Earnings from continuing operations (£'000) 179 863 613 Earnings from continuing and discontinued operations (£'000) 179 625 439 ___________________________________________ Earnings per shares - Operating profit before exceptional items 2.95 2.07 (1.41) Earnings per share - continuing operations (pence) 2.18 10.52 7.47 Earnings per share - continuing and discontinued operations (pence) 2.18 7.62 5.35 ___________________________________________ 8. ANALYSIS OF CHANGES IN NET FUNDS At Other At 30 1 Jan 2007 Cash Flows Movements Jun 2007 £'000 £'000 £'000 £'000 Cash at bank and in hand 939 (915) - 24 Debt due within more than 1 year: HP and finance leases (2) 2 - Debt due within 1 year: _______________________________________ HP and finance leases (13) 6 - (7) _______________________________________ Net Funds 924 (907) - 17 _______________________________________ 9. MOVEMENT IN SHAREHOLDERS' EQUITY STATEMENT OF MOVEMENT IN GROUP SHAREHOLDERS' EQUITY As at As at As at 30 Jun 2007 30 Jun 2006 31 Dec 2006 As restated As restated £'000 £'000 £'000 Opening shareholders' funds 3,857 3,662 3,662 Profit for the period 179 625 439 Dividends - - (247) Issue of shares - - - Share based payment reserve - 5 3 _______________________________ Closing shareholders' funds 4,036 4,292 3,857 _______________________________ 10. TRANSITION TO INTERNATIONAL REPORTING STANDARDS ATA Group Plc reported under UK GAAP in its previously published financial statements for the year ended 31 December 2006 and its unaudited interim financial statement dated 30 June 2006. The analysis below shows a reconciliation of shareholders' equity and profits as reported under UK GAAP as at, and for the periods ended, 31 December 2006 and 30 June 2006 to the revised shareholders' equity and profits under IFRS as reported in this interim financial information. 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. a) Reconciliation of profit for the period: Year ended 31 Six months ended 30 December 2006 June 2006 £'000 £'000 Profit for the period under UK GAAP 377 594 Goodwill amortisation 62 31 _______________________________ Profit for the period as reported under 439 625 IFRS b) Reconciliation of shareholders' equity As at 1 As at 31 As at 30 January December June 2006 2006 2006 £'000 £'000 £'000 Shareholders' equity as reported under 3,662 3,795 4,261 UK GAAP Goodwill amortisation - 62 31 ______________________________ Shareholders' equity as reported under 3,662 3,857 4,292 IFRS ATA Group Plc Registered Office The Derby Conference Centre, London Road, Derby, DE24 8UX Approved and authorised for release for and on behalf of ATA Group Plc This information is provided by RNS The company news service from the London Stock Exchange

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