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Quantica PLC (QTA)

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Tuesday 01 February, 2005

Quantica PLC

Final Results

Quantica PLC
01 February 2005




For Release                         7:00am                     1 February, 2005

                                  QUANTICA PLC

                            PRELIMINARY RESULTS 2004
   Significant growth achieved in Turnover, Net Fee Income, Profitability and
    Earnings; Net debt further reduced; Dividend increased; Confident Outlook
                                        
Quantica plc ('Quantica'), the recruitment and training group, announces its
preliminary results for the year ended 26 November 2004.

Financial Highlights

   • Turnover increased by 24% to £30.8m (2003: £24.9m)
   • Net fee income up 15% to £13.8m (2003: £12.0m)
   • Operating profit before exceptional costs and goodwill amortisation up
     27% to £2.8m (2003: £2.2m)
   • Pre-tax profits up 150% to £2.0m (2003: £0.8m)
   • Full year EPS (before exceptional costs and goodwill amortisation) up
     30% to 4.32p (2003:3.33p)
   • Basic EPS up 156% to 3.33p (1.30p)
   • Net cash inflow from operating activities increased by 24% to £2.1m
    (2003:£1.7m)
   • Net debt reduced to £6.7m (2003:£6.9m)
   • Final dividend increased by 15% to 1.15p (2003:1.0p)


Operational Highlights

   • Strong growth in Healthcare continues
   • Buoyant market drives big recovery in Technology
   • Successful integration of acquisition boosts Training
   • Solid performance from Search and Selection
   • Second half recovery in Legal
   • Fledgling Construction business makes good progress
   • Strong cash generation drives reduction in net debt


Strategy

   • Primary focus to concentrate on organic growth, supplemented by bolt-on
    acquisitions and start-ups where appropriate

Commenting for the Group, Les Lawson, Chairman, said :

'The progress made in 2004 confirms that the bright outlook we expressed at the
outset of the year was justified. 2005 will again hold significant opportunities
for us and our confidence for the future of Quantica remains undimmed'

For further information, please contact:

Quantica plc                                      Binns & Co PR Ltd
Les Lawson, Chief Executive                       Peter Binns
Robert Turner, Finance Director                   Victoria Stephens
Tel: 01422 310 088                                Tel: 020 7786 9600

Chairman's Statement

Financial results in brief

I am delighted to report continued strong growth in our business. Turnover, net
fee income and operating profit all improved considerably during 2004.

Turnover for the year ended 26 November 2004 increased by 24% to £30.8m (2003:
£24.9m). Net fee income increased by 15% to £13.8m (2003:£12.0m) with operating
profit before exceptional costs and amortisation of goodwill increasing by 27%
to £2.8m (2003:£2.2m). Pre-tax Profit increased by 150% to £2.0m (2003:£0.8m).

Net cash inflow from operating activities increased by 24% to £2.1m (2003:
£1.7m). Cash inflow before financing was £0.2m (2003:£0.5m) resulting in net
debt at the year end being reduced to £6.7m (2003:£6.9m), a significant
achievement in a year when sales have increased by nearly £6m.

Full year earnings per share before amortisation of goodwill increased by 30% to
4.32p (2003:3.33p). Basic full year earnings per share after amortisation of
goodwill increased by 156% to 3.33p (2003:1.30p).

Dividend

The Board is proposing to increase the final dividend by 15% to 1.15p (2003:
1.0p) per Ordinary share for the year ended 26 November 2004 which, if approved
by shareholders, would give a total dividend for the year of 1.15p (2003:1.0p).
The dividend will become payable on 22 April 2005 to shareholders on the
register on 29 March 2005.

The proposal to increase our dividend reflects both our confidence in the
business going forward, and our ability to translate growth into the generation
of cash.

Business Progress

Considerable progress has been made during the year. Revenue, net fee income and
operating profit have all shown strong growth. As well as year on year growth,
run rates also compare favorably on a first half versus second half basis. Year
on year revenue increased by 24%, net fee income by 15% and operating profit by
nearly 27%. On a first half versus second half split, revenue increased by 24%,
net fee income by 24% and operating profit by 39%.

The main growth areas continue to be the Technology and Healthcare contracting
businesses. Good progress was also made in our four other divisions, Training,
Legal, Search and Selection and Construction.

In Technology, as in the first half, contractor numbers have continued to rise
and at the time of reporting continue to do so. Revenue grew in the year by
nearly 30% and due to the high level of operational gearing this translated into
a 200% increase in Operating Profit. The average gross margins earned on these
contracts have also continued to improve during 2004, with competitive pressures
on the supply of contractors driving up charge and pay rates.

With current levels of customer activity increasing and preferred supplier
agreements breaking down, Technology should continue to grow for the foreseeable
future. Staff numbers have been increased slightly to take account of the growth
over the forthcoming year.

Healthcare has once again had another record year in every sense. Sales, margin
and operating profit have increased every year without exception since the
business was formed six years ago. Operating Profit for the Division topped the
£1m mark for the first time ever in 2004, a considerable achievement for a
business so relatively young. There are no signs of downward pressure on margins
at the moment and they have remained at the same high level as last year. New
offices in Halifax and Manchester have performed very well, and we now plan to
open a further five branches during 2005, the first of which, in Preston, was
launched last month.

In the Training Division the strong progress made in the first half continued in
the second half producing another record year overall. Previous acquisitions
have been integrated successfully into our Manchester office and are now working
in tandem with the London office, creating one of the best training providers in
the country.

The Legal Division had a much better second half, more than doubling its revenue
from the first half of the year. It still has some way to go before it gets back
to the record levels of 2001 but we feel the division has now turned the corner
after a couple of difficult years and should perform well in 2005. We have
restructured the business and it now operates as a verticle market within the
Search and Selection Division, similar to Manufacturing, Retail, HR and others.

Search and Selection itself had another good year, again delivering over £1m of
Operating Profit. As we said in the Interim Announcement we are increasing the
number of consultants and working in more markets in order to grow the division
further. Revenue/Net Fee Income increased during the year, although profits
remained flat due to the aforementioned investment.

Our fledgling Construction Division made good progress during the year
increasing sales by over 50%, with a corresponding increase in profits.

Outlook

How bright is bright? Last year we said the outlook was bright. We believe that
the progress made in 2004 confirms that our confidence was justified. Our two
main contracting divisions, Technology and Healthcare, continued to grow
strongly as we anticipated throughout the year. On the permanent side, Search
and Selection had another very solid year, with the Legal Division also showing
an improved second half. Training continued to build organically on the
springboard provided by the recent acquisition integration in Hounslow and
Manchester. Construction moved into profit and another start-up, this time in
the catering market, has just been launched in London.

We believe that 2005 will again hold significant opportunities for us. We expect
our older more established businesses to return to historic levels of
profitability, and our newer businesses to continue growing at an exponential
rate. The results for 2004 put us in a strong position to achieve all this and
our confidence for the future of Quantica remains undimmed.

Les Lawson
Chairman & Chief Executive

1 February, 2005




Consolidated Profit and Loss Account
For the year ended 26 November 2004
                       
                                                     Year ended    Year ended
                                                    26 November   28 November
                                                           2004          2003
                                                          £'000         £'000
                                                     
Turnover
- existing operations                                    30,369        24,897
- acquisitions                                              479             -
                                                    -----------   -----------
                                                         30,848        24,897
                                                    -----------   -----------

Cost of sales
- contractor costs                                      (17,032)      (12,857)
                                                    -----------   -----------
Net fee income                                           13,816        12,040
- other cost of sales                                    (5,513)       (4,996)
                                                    -----------   -----------
Gross profit                                              8,303         7,044
Administrative expenses                                  (5,893)       (5,837)
-----------------------------------------------------------------------------
Operating profit before exceptional items and
amortisation of goodwill
- existing operations                                     2,653         2,207
- acquisitions                                              157             -
                                                    -----------   -----------
                                                          2,810         2,207
- exceptional items                                           -          (600)
- goodwill amortisation                                    (400)         (400)
-----------------------------------------------------------------------------
Operating profit                                          2,410         1,207
Interest payable and similar charges                       (453)         (428)
                                                    -----------   -----------
Profit on ordinary activities before taxation             1,957           779
Taxation                                                   (607)         (254)
                                                    -----------   -----------
Profit on ordinary activities after taxation              1,350           525
Dividends                                                  (466)         (404)
                                                    -----------   -----------
Retained profit for the period                              884           121
                                                    ===========   ===========

Earnings per share before exceptional items and
goodwill amortisation                                     4.32p         3.33p
                                                    ===========   ===========
Basic earnings per share after exceptional items
and goodwill amortisation                                 3.33p         1.30p
                                                    ===========   ===========
Diluted earnings per share after exceptional items
and goodwill amortisation                                 3.32p         1.29p
                                                    ===========   ===========

There were no recognised gains or losses other than the profit for the current
and the previous period. The above results are derived entirely from continuing
operations.

Balance Sheet
As at 26 November 2004
                               Group         Group       Company       Company
                         26 November   28 November   26 November   28 November
                                2004          2003          2004          2003
                               £'000         £'000         £'000         £'000
Fixed assets
Intangible assets              2,975         2,619             -             -
Tangible assets                  738           796           534           522
Investments                        -             -        25,406        25,139
                          ----------    ----------    ----------    ----------
                               3,713         3,415        25,940        25,661
                          ----------    ----------    ----------    ----------
Current assets
Debtors                        6,156         5,283        14,953        18,124
                          ----------    ----------    ----------    ----------
Creditors: amounts
falling due within one
year                          (7,263)       (6,743)      (15,634)      (19,511)
                          ----------    ----------    ----------    ----------
Net current
(liabilities)                 (1,107)       (1,460)         (681)       (1,387)
                          ----------    ----------    ----------    ----------
Total assets less
current liabilities            2,606         1,955        25,259        24,274
                          ----------    ----------    ----------    ----------
Creditors: amounts
falling due after one
year                          (4,615)       (4,876)       (4,615)       (4,876)
                          ----------    ----------    ----------    ----------
Net
(liabilities)/assets          (2,009)       (2,921)       20,664        19,398
                          ==========   ===========   ===========    ==========
Capital and reserves
Called up share
capital                          430           429           430           429
Share premium account             92            65            92            65
Merger reserve                   694           694         2,042         2,042
Capital reserve                    -             -        13,749        13,749
Capital redemption
reserve                        2,346         2,346         2,346         2,346
Profit and loss
account                       (5,571)       (6,455)        1,985           767
                          ----------    ----------    ----------    ----------
Shareholders'
(deficit)/funds               (2,009)       (2,921)       20,664        19,398
                         ===========    ===========  ===========    ==========
Shareholders' (deficit)/
funds may be analysed
as:
Equity interests              (2,034)       (2,946)       20,619        19,373
Non-equity interests              25            25            25            25
                          ----------    ----------    ----------    ----------
                              (2,009)       (2,921)       20,664        19,398
                          ==========   ===========   ===========    ==========



Consolidated Cash Flow Statement
For the year ended 26 November 2004
                    
                                                    Year ended      Year ended
                                                   26 November     28 November
                                                          2004            2003
                                                         £'000           £'000
                     
Net cash inflow from operating activities                2,079           1,740
Returns on investments and servicing of finance           (453)           (428)
Taxation                                                  (565)           (194)
Capital expenditure                                       (131)            (83)
Acquistions and disposals                                 (344)           (100)
Dividends paid                                            (404)           (404)
                                                  ------------      ----------
Cash inflow before financing                               182             531
Financing                                                 (323)           (584)
                                                  ------------      ----------
Decrease in cash in the year                              (141)            (53)
                                                  ============      ===========

Reconciliation of Net Cash Flow to Movement in Net Debt
for the year ended 26 November 2004

              
                                                  Year ended        Year ended
                                                 26 November       28 November
                                                        2004              2003
                                                       £'000             £'000
              
Decrease in cash in the year                            (141)              (53)
Cash outflow from net decrease in debt                   354               600
                                                  ----------        ----------
Movement in net debt in the year                         213               547
                                                  ==========        ==========     
Opening net debt                                      (6,865)           (7,412)
Closing net debt                                      (6,652)           (6,865)
                                                  ----------        ----------
Movement in net debt                                     213               547
                                                  ==========        ==========

Quantica plc Notes

 1. The financial information set out above does not constitute the Company's
    statutory accounts for the year ended 26 November 2004 or the year ended 28
    November 2003 but is derived form those accounts. Statutory accounts for
    2003 have been delivered to the Registrar of Companies, and those for 2004
    will be delivered following the Company's Annual General Meeting. The
    Auditors have reported on those accounts: their reports were unqualified and
    did not contain statements under Section 237 (2) or (3) of the Companies Act
    1985.

 2. The calculation of basic earnings per share is based on a profit after tax of
    £1,350,000 (2003:£525,000) divided by the weighted average number of
    Ordinary shares in issue during the period of 40,523,313 (2003:40,392,024).

    Diluted earnings per share is calculated by dividing the profit attributable to
    Ordinary shareholders of £1,350,000 (2002 : £525,000) by the average number of
    shares in issue during the period of 40,523,313 (2003: 40,392,024) plus dilutive
    shares of 84,680 (2003:156,033) which totals 40,607,993 (2003:40,548,057).

    The Directors have presented an earnings per share figure based on the profit
    before goodwill amortisation and exceptional items as they believe this
    represents the underlying performance of the Group. This is calculated based on
    the profit attributable to Ordinary shareholders of £1,350,000 (2003:£525,000)
    plus goodwill amortisation of £400,000 (2003:£400,000) and exceptional items of
    £nil (2003:£600,000), and less the taxation effect of these items of £nil (2003:
    £180,000).



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