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QA PLC (QA.)

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Tuesday 10 February, 2004

QA PLC

Final Results

QA PLC
10 February 2004


QA plc ("QA", "the Group" or "the Company")

Preliminary Results for the year ended 30 November 2003

QA plc, the specialist training and consulting company, today announces
Preliminary Results for the year ended 30 November 2003.

Highlights

  • Fundraising now unconditional and will raise approximately £5.89 million 
    (net of expenses)

  • Group's balance sheet significantly strengthened

  • Settlement of the GA Information Services Ltd ("GAIS") dispute

  • Turnover from continuing operations was £29.2 million, 11% down against
    the previous year

  • Adjusted operating loss from continuing operations before goodwill
    amortisation and exceptional charges was £0.4 million (2002: £2.1 million
    loss) with a small adjusted operating profit in the second half

  • The loss on ordinary activities before tax was £3.3 million  (2002: loss -
    £63.0 million)

  • Year end net borrowings of £5.2 million (2002: £3.6 million)

  • Ongoing cost reductions achieved to combat the impact of declining
    revenues

  • 12 outsourced training contracts all of which are delivering long-term
    profitable revenues

  • High levels of service innovation and continuing market success:
      • maintained good client relationships
      • 216 new and updated courses made available
      • unique blended learning services extended
      • expanded provision of non-IT training
      • Consulting practice aligned with training offerings

Keith Burgess, Executive Chairman, commented:

"Trading conditions have remained challenging in the fourth quarter of 2003.
However, the fundraising through the successful Rights Issue and Issue for Cash,
combined with the recent client wins and the continuing restructuring of the
market, have given the Directors increased confidence that performance in 2004
will improve over 2003 levels."

For further information please contact:

QA plc                                            020 7656 8495

Keith Burgess, Executive Chairman





QA plc ("QA", "the Group" or "the Company")

Preliminary Results for the year ended 30 November 2003

Chairman's Statement

Introduction

During 2003 the market for IT products and services continued to be extremely
difficult. It was a year in which QA continued to manage tightly and to reduce
costs further; a time during which consistent and close attention was paid to
the demands of its clients; and where a concerted effort was made to resolve a
number of outstanding legacy matters.

Financial results

Revenue declined by 11% to £29.2 million but effective cost reduction meant that
the operating loss before goodwill amortisation of £0.3 million and exceptional
operating charges of £3.0 million ("adjusted operating loss") was £0.4 million
compared with £2.1 million in 2002.  This reflected a small profit in the second
half of the year.

Net exceptional operating costs and non-operating costs, principally relating to
excess property costs and goodwill impairment, were  £2.4 million before tax
(2002: £57.7 million).

After these net exceptional charges, goodwill amortisation of £0.3 million
(2002: £3.1 million) and net interest payable of £0.2 million (2002: £0.2
million), the loss before tax is £3.3 million (2002: £63.0 million).

Operating performance

The first signs of the downturn in the market for IT products and services
appeared in late Spring 2001 and have continued with increasing severity
throughout 2002 and 2003. In QA's market segment, many businesses are heavily
loss making, several competitors have already withdrawn from the market and more
are expected to do the same.

Management has responded vigorously to these challenges and has achieved
extensive cost reductions in all areas of the business in order to combat the
impact of declining revenue. At the same time, QA has managed to sustain market
relevant offerings by refocusing its consulting and training services and by
developing new offerings without incurring incremental expense. In so doing,
QA's relative market standing has been maintained.

QA has increased its efforts to win more clients in sectors that are currently
relatively strong and, in particular, the public sector. Examples include the
Scottish Parliament, Ministry of Defence and the NHS. QA has also focused on
larger, longer-term contracts to produce more predictable and sustainable
revenue streams and the recent training service contract awards from Barclays,
Norwich Union and Alliance & Leicester have rewarded this strategy. These
contracts add further to the already important stream of clients that includes
the Royal Bank of Scotland (RBS) and several other significant financial and
commercial organisations.

QA has introduced a number of new product offerings resulting in new client
wins. Our blended learning offering, which combines instructor-led training with
emerging eLearning, has contributed a small element of revenue and this is
expected to grow. To further support our commitment to blended learning and to
penetrate new markets, QA has also formed an alliance with SkillSoft, a leading
eLearning provider, to deliver business skills to business people by offering
instructor-led learning components to clients who purchase a SkillSoft suite of
eLearning products. As clients continue to require solutions that "deliver more
for less", there is increasing client interest in this offering.  I am
additionally gratified by the recognition of excellence afforded by Microsoft's
recent award to QA of the Global Certified Technical Education Centre (CTEC)
Solution of the Year, the first time that this award has been made to a UK
company.

Implementation of strategy

Even though the market has continued to be depressed, QA has pursued an approach
of making modest investments that can provide a worthwhile business return.
These include:



•   further development of the blended learning offerings;

•   the start-up of a QA Academy to offer both professional and technical 
    skill courses to middle and higher management;

•   increasing the sale of professional skills to non-IT audiences;

•   expanding partner relationships;

•   a further expansion of the number of contracts for the provision of 
    outsourced training services;

•   extending the development of enterprise-wide training solutions that deal 
    with large scale organisational change programmes; and

•   aligning training and consulting to create more offerings for the market.


Legacy issues

The success of the fundraising achieved by way of the Rights Issue and Issue for
Cash ("the Issues") will provide the means to bring to a successful conclusion
the major legacy issue that has faced QA. I have previously spoken of the GA
Information Services Limited (GAIS) dispute and I am pleased to report that this
matter can now be settled, removing a significant source of uncertainty for the
Group. The settlement reached with the vendors of GAIS requires QA to issue
£750,000 of new bank-guaranteed loan notes and further unsecured loan notes
totalling £900,000.  The total settlement of £1.65 million plus a limited
contribution to costs compares with the maximum potential of £2.0 million plus
costs, which was already accrued on the balance sheet.

Our significant property portfolio remains and it continues to receive
management attention. The Group continues to seek to sub-let or otherwise
dispose of the onerous leases of its surplus properties. A significant number of
disposals, lease breaks and sub-lets have been achieved since 2001 but the
commercial property market has been and remains difficult.

The remaining surplus properties comprise three leased properties that are empty
and four other properties where sub-tenants are in place and paying a rental
close to current market rates but below the level of head-lease rentals that
were established in different property market conditions some years ago. These
arrangements are reviewed periodically by the Board to ensure that the Group's
accounts contain provisions equivalent to the Board's best estimate of the
likely total future exposure.

We expect shortly to complete a further rationalisation of the training estate:
the Cirencester training centre has been closed and the surrender of the lease
is now almost complete. Existing space within QA's existing Swindon premises is
being converted into training rooms that will replace the Cirencester training
rooms. This move will save property and related costs and, based on a recent
survey of clients, should not reduce revenue.

Financing

The Rights Issue and Issue for Cash have now become unconditional, based on the
resolutions passed by shareholders at the Extraordinary General Meeting (EGM) on
9 February 2004 and the admission of the shares to the London Stock Exchange.
Completion of the Rights Issue and Issue for Cash will mark a very significant
step forward in terms of QA's financial strength as it will enable the
settlement of the GAIS dispute and the funds raised will leave QA with no net
borrowings as well as a better-funded business than many of its competitors.
This balance sheet strength, together with the new bank facility (put in place
as a result of the Issues), will improve our ability to compete for larger
training contracts and give management the flexibility to make selected
investments where opportunities for business improvement arise.

Dividends

The Board does not recommend the payment of a final dividend (2002: £nil).

Board and Employees

In the demanding year that has passed, the burden on the Board members has been
significant and I thank them for their contribution.

I would also like to record my thanks to the staff of QA. Their quality and
commitment is central to the market standing of QA and its successful recovery.
I am very grateful to them for their ongoing commitment and positive response to
the ever-increasing demands of the market.

Outlook

With the passing of the resolutions at the EGM, QA is able to proceed with the
Rights Issue and Issue for Cash. The fundraising will strengthen significantly
the Group's balance sheet and provide increased security for the medium term.
This, together with QA's market leading brand, strong client relationships and
tight rein on costs, leaves it well positioned to emerge from the present
difficult market conditions with an enhanced position.

Trading conditions for QA have remained challenging in the fourth quarter of
2003.  However, recent client wins and the continuing restructuring of the
market have given the Directors increased confidence that performance in 2004
will improve over 2003 levels.


For further information please contact:


QA plc                                       020 7656 8495
Keith Burgess, Executive Chairman


About QA
QA improves client effectiveness with training and consulting solutions that
solve problems, accelerate the transfer of skills and drive business
performance. As a partner of choice for many of the FTSE100 companies and public
sector organisations, QA is recognised as a leading provider of IT personal
development training in the UK. www.qa.com


Group profit and loss account

QA plc and its subsidiary companies for the year ended 30 November 2003
                                                           
                                                               2003             2003         2003        2002
                                                Notes          pre-
                                                        exceptional      exceptional        Total
                                                              £'000            £'000        £'000       £'000

Turnover                                            2        29,158                -       29,158      32,823

Operating loss

Operating loss before amortisation of goodwill
and exceptional items                                          (394)               -         (394)     (2,027)
Amortisation of goodwill                            2          (333)               -         (333)     (3,113)

Operating loss before exceptional items                        (727)               -         (727)     (5,140)
Operating exceptional items                         3             -           (3,024)      (3,024)    (57,871)

Operating loss                                                 (727)          (3,024)      (3,751)    (63,011)

Adjustment to profit on disposal of businesses                    -              645          645         170

Loss on ordinary activities before interest                    (727)          (2,379)      (3,106)    (62,841)
Net interest payable                                           (240)               -         (240)       (165)

Loss on ordinary activities before taxation                    (967)          (2,379)      (3,346)    (63,006)
Tax credit/(charge) on loss on ordinary             
activities                                          4            68             (818)        (750)      2,527

Loss on ordinary activities after tax                          (899)          (3,197)      (4,096)    (60,479)
Loss attributable to minority interests                          46                -           46         328

Loss for the financial year attributable to
equity shareholders                                            (853)          (3,197)      (4,050)    (60,151)
                                                             

Retained loss                                                  (853)          (3,197)      (4,050)     (60,151)

Basic and fully diluted loss per share              5                                        (4.4)p      (67.7)p

Adjusted basic and fully diluted loss per share*    5                                        (0.6)p       (0.1)p


* Adjusted to exclude operating and non-operating exceptional items and goodwill
amortisation.


All turnover and operating loss in the current and prior period relate to
continuing operations.



Balance Sheets
QA plc and its subsidiary companies for the year as at 30 November 2003

                                                                   Group                   Company
                                                              2003         2002         2003      2002
                                                             £'000        £'000        £'000     £'000

Fixed assets

Intangible assets                                            3,507        5,473            -         -
Tangible assets                                              4,654        5,244            -         -
Investments                                                    142          268       25,838    33,030

                                                             8,303        10,985       25,838    33,030
Current assets

Stock                                                           98           128            -         -
Debtors                                                      6,772         8,649        5,132     7,986
Cash at bank and on deposit                                  1,114         1,669          806         -

                                                             7,984        10,446        5,938     7,986
Creditors - amounts due within one year
Borrowings                                                  (6,022)       (5,325)      (1,650)     (241)
Other creditors                                             (8,120)       (9,987)     (25,487)  (28,969)

                                                           (14,142)      (15,312)     (27,137)  (29,210)

Net current liabilities                                     (6,158)       (4,866)     (21,199)  (21,224)


Total assets less current liabilities                        2,145         6,119        4,639    11,806

Creditors - amounts due after more than one year

Borrowings                                                    (295)            -            -         -
Other creditors                                               (428)            -            -         -
                                                              (723)            -            -         -

Provisions for liabilities and charges                      (2,163)       (2,297)      (1,867)   (1,641)

Net assets                                                    (741)        3,822        2,772     10,165

Capital and reserves
Called up share capital                                      9,548         9,214        9,548      9,214
Deferred share capital                                           -         1,000            -      1,000
Share premium                                               46,679        46,679       46,679     46,679
Other reserves                                               1,501         1,501        2,297      2,297
Profit and loss account                                    (58,683)      (54,810)     (55,752)   (49,025)

Equity shareholders' funds                                    (955)        3,584        2,772     10,165

Minority interests                                             214           238            -          -

                                                              (741)        3,822        2,772     10,165



The accounts were approved by the Board on 10 February 2004






Keith Burgess                                                  Colin J Gibson
Director                                                       Director




Cash Flow

QA plc and its subsidiary companies for the year ended 30 November 2003



Reconciliation of operating loss to net cash flow from operating activities

                                                 Pre-exceptional
                                                           2003    Exceptional       Total
                                                                          2003        2003       2002
                                                         £'000           £'000       £'000      £'000

Operating loss - before exceptional items                (727)               -        (727)    (5,140)
Operating exceptional items                                 -           (3,024)     (3,024)   (57,871)
                                                         (727)          (3,024)     (3,751)   (63,011)

Goodwill amortisation/impairment                          333            1,633       1,966     55,400
Depreciation                                            1,077                -       1,077      2,100
Write down of investments                                   -              126         126      2,900
Decrease in stock                                          30                -          30          -
Decrease in debtors                                       193                -         193      3,000
Decrease in creditors                                  (1,246)               -      (1,246)    (3,300)
(Decrease)/increase in provisions                      (1,334)           1,200        (134)       300

Net cash outflow from operating activities             (1,674)             (65)     (1,739)    (2,611)


Consolidated cash flow statement                                                       2003      2002
                                                                                      £'000     £'000

Net cash outflow from operating activities                                           (1,739)   (2,611)

Returns on investments and servicing of finance
Interest received                                                                        52         -
Interest paid                                                                          (538)     (200)
                                                                                       (486)     (200)
Taxation
Corporation tax received                                                                606       500

Capital expenditure and financial investment
Purchase of fixed assets                                                               (258)     (800)
Disposal of fixed assets                                                                  3     1,800
Increase in cash subject to restrictions                                               (755)        -
                                                                                     (1,010)    1,000
Acquisitions and disposals
Disposal of businesses
 - consideration cash received net of costs (note 3g)                                   642       600

Equity dividends paid                                                                     -      (400)

Net cash outflow before financing                                                    (1,987)   (1,111)



Proceeds from issue of share capital                                                    334         -

Increase/ (decrease) in borrowings                                                      335    (4,500)

Capital element of finance lease payments                                                 -      (100)



Net cash inflow/(outflow) from financing                                                669    (4,600)

Decrease in cash in the year                                                         (1,318)   (5,711)




Reconciliation of net cash flow to movement in net borrowings

                                                                                          2003      2002
                                                                                         £'000     £'000

Decrease in cash in the year                                                            (1,318)   (5,711)
Increase in cash subject to restrictions                                                   755         -
Cash (inflow)/outflow from (increase)/decrease in borrowings and lease financing          (335)    4,600
Increase in borrowing from settlement of deferred consideration obligations               (650)        -
Currency translation differences                                                             1         -
Movement in net borrowings in the year                                                  (1,547)   (1,111)
Net borrowings at 1 December                                                            (3,656)   (2,545)
Net borrowings at 30 November                                                           (5,203)   (3,656)





Statement of total Group recognised gains and losses


                                                                                           2003       2002
                                                                                          £'000      £'000

Loss for the financial year                                                              (4,050)   (60,151)
Currency translation differences                                                            177        200
Total recognised losses since last annual report                                         (3,873)   (59,951)





Reconciliation of movements in Group shareholders' funds


                                                                                          2003       2002
                                                                                         £'000      £'000

Opening equity shareholders' funds                                                       3,584     63,478
Loss for the financial year attributable to equity shareholders                         (4,050)   (60,151)
Nominal value of new shares issued                                                         334        385
Premium on shares issued                                                                     -      1,272
Deferred share capital adjustment arising in the year                                        -     (1,600)
Exchange movement on retranslation of foreign subsidiary                                   177        200
Reduction in deferred share capital arising from settlement of deferred consideration   (1,000)         -
obligations
Closing equity shareholders' funds                                                        (955)     3,584




On a historical cost basis the loss on ordinary activities before taxation and
minority interests was £3,404,000.







1    Basis of preparing the accounts

     The accounts have been prepared under the historical cost convention as 
     modified for the revaluation of an investment property and in accordance 
     with applicable  UK accounting standards. As in prior years, the accounts 
     have been prepared on a going concern basis.


2    Analysis of results


                                                                       2003                 2002
                                                                                        Restated
Turnover                                                              £'000                £'000
Continuing Operations
Training                                                             23,162               25,502
Consulting                                                            5,996                7,321

                                                                     29,158               32,823
Cost of Sales                                                       (15,970)             (16,129)

Gross profit                                                         13,188               16,694
Selling and distribution costs                                         (684)              (1,361)
Administrative expenses

- base                                                              (12,898)             (17,360)
- goodwill amortisation                                                (333)              (3,113)
- exceptional goodwill impairment charge (note 3d)                   (1,633)             (52,307)
- other exceptional items (note 3)                                   (1,391)              (5,564)

                                                                    (16,255)             (78,344)


Operating loss                                                       (3,751)             (63,011)


The Group operates as an integrated business in only one market segment,
providing IT training and consulting services to a single UK customer base.  
Turnover is analysed between the two major service lines to provide additional 
information.

Within the analysis of turnover, third party training courses delivered to
clients in connection with learning consulting projects which were formerly 
included within Consulting have been classified as Training revenue.  The value 
of this revenue was £668,000 in the year ended 30 November 2002 and comparative 
figures have been adjusted accordingly.


3    Exceptional items

                                                                       Note        2003            2002
                                                                                  £'000           £'000
Operating exceptional items
Property disposals, write downs and onerous lease provisions              a      (1,200)         (1,953)
Restructuring charges                                                     b           -            (743)
Abortive acquisition costs                                                c         (65)              -
Write down of investments                                                 d        (126)         (2,868)
                                                                                 (1,391)         (5,564)

Writedown to reflect impairment of carrying value of purchased            
goodwill                                                                  d      (1,633)        (52,307)

                                                                                 (3,024)        (57,871)
Non-operating exceptional items
Further gain on disposal of GAIS                                          e         645               -
Loss on sales of properties                                               f           -            (200)
Adjustment to consideration in respect of business disposal in            
prior periods                                                             g           -             370

                                                                                 (2,379)        (57,701)

                                                                                 


a   Property related charges relate to the reassessment of onerous lease
    provisions required on a number of existing non-operational properties to 
    reflect the absence of subtenants and anticipated rent deficits on 
    properties which have been sublet.

    In 2002 the charges related to additional provisions for onerous leases and 
    the writedown of an interest in a  Belgian freehold property and the write 
    off of leasehold improvements furniture and other capitalised costs in 
    respect of an onerous lease which was reassigned.

b   Restructuring charges in 2002 related to employee severance and
    outplacement costs incurred as headcount was reduced to bring the costs and 
    infrastructure of the business more closely in line with demand.

c   Professional fees were in relation to the Board's investigation of a
    potential acquisition, and were incurred before the acquisition proved 
    abortive.

d   The directors have considered the value of those parts of the business
    which derive from the 1999 and 2000 acquisitions of Knowledge Centre, Cap 
    Gemini (UK) Training, Pontis Consulting and Direct Media Technology.
    The value in use of the income generating units deriving from those 
    acquisitions has been evaluated using cash flow projections discounted at 
    16.8% (2002:16.8%) and total goodwill impairments of £1,633,000 (2002: 
    £52,307,000) have been assessed accordingly.  These projections have also 
    been used to assess the write down of the value of QA plc shares held in the 
    Group's employee benefit trust and the carrying value of these has been 
    written down by £126,000 to 7.1 pence per share (2002: £2,868,000 to 13.4 
    pence per share).

    The same methodology was used in determining the impairment write down 
    applied to investments in subsidiaries in the parent Company balance sheet.

e   Settlement was reached during the year in the Group's dispute with the
    vendors of GA Information Services Limited, a business which the Group 
    purchased in September 1999 but has subsequently sold on.

    The balance sheet contained full provision for the maximum amounts of 
    deferred consideration claimed by the vendor (£2.0 million) and for the 
    anticipated legal costs of settling the dispute.  The settlement reached
    involved final deferred consideration of £1.65 million with a limited
    contribution to costs.  Compared to the relevant balance sheet amounts this 
    generated a non-cash gain of £645,000 by way of an adjustment to the 
    non-operating loss recorded in 2000 on the disposal of the business.

    Completion of the settlement was enabled through the passing of the 
    resolutions at the Extraordinary General Meeting on 9 February 2004 
    in relation to the Rights Issue and Issue for Cash.

f   The disposal in 2002 of three freehold properties resulted in a combined
    net loss on disposal of £0.2 million and generated a net cash inflow of 
    £1.6 million.

g   In 2002, the adjustment to the consideration in respect of the business
    disposals in prior periods related to the disposals of Acuma Solutions and 
    P&P Belgium.


4  Tax on loss on ordinary activities
                                                                      2003                2002
                                                                     £'000               £'000
Analysis of charge/(credit) in period

United Kingdom corporation tax at 30% (2002: 30%)
Current year                                                             -                (508)
                                                                         -                (508)

Prior year                                                            (154)               (873)
                                                                      (154)             (1,381)
Deferred tax
Current year                                                         1,442                (894)
Prior year                                                            (624)               (320)

                                                                       818              (1,214)
Overseas taxation
Current year                                                            86                  68
                                                                       750              (2,527)



The deferred tax charge of £818,000 in 2003 relates to the reassessment of the
recoverability of existing deferred tax assets offset in part by the release of 
provisions held against a number of contingencies where the risk of 
crystallisation has now passed.  These items are considered exceptional in view
of their significant value.  At the year end, there was an unrecognised deferred
tax asset of £1,966,000 (2002: £nil) in respect of losses available for offset 
against taxable profits and disclaimed capital allowances.

                                                                                     
5   Earnings per share                                    2003        2003          2002         2002
                                                                     pence                      pence
                                                         £'000   per share         £'000    per share

   Basic loss                                          (4,050)       (4.4)       (60,151)      (67.7)
   Exceptional net profit on non operating items         (645)       (0.7)          (170)       (0.2)
   Goodwill amortisation/impairment                     1,966         2.1         55,420        62.3

   IIMR loss                                           (2,729)       (3.0)        (4,901)       (5.6)
   Exceptional operating charges (net of tax)           2,209         2.4          5,150         5.8
   Exceptional operating charges (net of tax)               -           -           (328)       (0.3)
   attributable to minority interests

   Adjusted loss                                         (520)       (0.6)           (79)       (0.1)

   Fully diluted basic loss                            (4,050)       (4.4)       (60,151)      (67.7)

   Adjusted fully diluted loss                           (520)       (0.6)           (79)       (0.1)



The calculation of earnings per share is based upon profit on ordinary 
activities after taxation and a weighted average of 94,472,587 (2002: 
88,976,000) shares.  Fully diluted earnings per share is based upon a weighted 
average of 94,472,587 (2002: 88,976,000) shares.

There is no dilution in the current or prior year in respect of outstanding 
share options.

Adjusted earnings per share is based on the continuing operations' result before 
goodwill amortisation and operating and non-operating exceptional charges and 
is presented to show a clearer representation of the underlying result for
the Group.

After the balance sheet date, shares have been issued by way of a rights issue 
and an issue for cash.

6.  The results for the year ended 30 November 2003 are abridged from the 
    Group's full report and accounts on which the auditors gave an unqualified 
    opinion.  The Group accounts include the accounts of the Company and all its 
    subsidiaries made  up to the end of the financial year. The accounts have 
    therefore been prepared  for 52 weeks ended 30 November 2003 (2002: 52 weeks 
    ended 30 November 2002). The Group's full report and accounts for the year 
    ended 30 November 2003 will be filed with the Registrar of Companies in due 
    course and will include the  unqualified Auditor's report.

7.  Copies of the Group's full report and accounts will be sent to all
    shareholders in due course. Additional copies will be available from the 
    Company's registered office, QA plc, QA House, Delta Office Park, Welton 
    Road,  Swindon, SN5 7WZ.

8.  The Annual General Meeting will be held on 25 March 2004.

9.  At a meeting held on 9 February 2004, the Board of QA plc recommended that
    no final dividend be paid to shareholders.

10. This statement constitutes non-statutory accounts within the meaning of
    Section 240 of the Companies Act 1985 and was approved by the directors and 
    agreed with the Company's auditors PricewaterhouseCoopers LLP on 10 February 
    2004.





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