Final Results

ATA Group PLC 19 April 2004 ATA Group plc Preliminary results for the year ended 31 December 2003 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. Highlights Group pre-tax profits at £1.223m.(2002: £1.424m) including exceptional credits of £53,000 (2002: £352,000) Underlying, fully diluted, earnings per share at 9.66p (2002 : 8.60p) The freehold of The Fairbourne Hotel was sold at a profit. Dividends for the year have been raised to 6.0 pence (2002: 5.8p) Recruitment had another difficult year but remained profitable at £132,000 before restructuring costs at Ganymede Tracklayers. (2002: £246,000 before exceptional write off) Training has continued to develop strongly with profits before exceptional items rising to £1.24m (2002: £0.826m) A strong start to 2004 Commenting on the results Bill Douie, Chairman, said: 'Our Training business continues to perform well. In Recruitment, we are proud to have remained profitable in a difficult year and have positioned ourselves well in On Track Labour Supply. 2004 has started positively with, as previously announced, the securing of significant contracts with Network Rail and Tube Lines and all our businesses are trading profitably. We view the future with confidence' 16 April 2004 ENQUIRIES: ATA Group plc Tel: 01454 310069 Bill Douie, Chairman Clive Chapman, Chief Executive CHAIRMAN'S STATEMENT Year ended 31 December 2003 I am pleased to present the twelfth preliminary results of the company. Financial Recruitment Sales and Engineering Technology sustained a steady and profitable position in difficult markets but Rail Recruitment dealt less well with changing conditions in the industry and incurred trading losses. Ganymede Tracklayers completed a total restructure and repositioning in preparation for the move to direct maintenance by Network Rail and, as a result, incurred trading losses. Recruitment division turnover increased to £6.33m (2002 : £ 5.25m) but, after taking all these costs into account, divisional losses overall were £71,000, (2002: £246,000 profit, before exceptional write-off). Training Progress continued at Catalis Rail Training and Rail Training Audit Services, with satisfactory increases in both turnover and profits. The costs attendant upon the termination of our interest in the business of The Fairbourne Hotel at £59,000 were offset by a gain on disposal of the freehold property of £53,000. Overall divisional turnover increased to £8.57m (2002: £7.88m) and profits before exceptional items improved to £1.24m (2002: £0.826m). Group Group Pre-tax profits before exceptional credits at £1.17m (2002: £1.07m) have improved by 9.3%, and underlying, fully diluted, earnings per share at 9.66p (2002: 8.6p) have improved by 12.3%. Emphasis continues to be placed on reductions in Group net indebtedness and at the year end the position had improved to £225,000 net cash (2002: £783,000 net debt). Trading Recruitment Although the operating environment in Sales and Engineering Technology permanent markets remained difficult, ATA Selection continued to trade profitably and a start was made in the contract recruitment market. In contrast, ATA Rail Recruitment experienced unexpectedly tough conditions as major change in the means of provision of maintenance services to the Railway Infrastructure emerged, culminating in notice of termination of all maintenance outsource contracts by Network Rail. Here also steady progress was made in contract recruitment. At the year end Rail Recruitment was merged with ATA Selection, enhancing opportunities for cross trading and rationalising the overall management structure in Recruitment. Following its acquisition in October 2002, a complete restructure and repositioning of Ganymede Tracklayers took place during the year in order to prepare for the tender process for the provision of contract labour to the new Network Rail Directly Maintained Areas. This process, though costly, continued throughout the year and resulted in Ganymede incurring a trading loss, but enabled the company to gain a significant contract in the Thames Valley area as announced in January 2004. Training Catalis Rail Training enjoyed another positive year with further growth in both turnover and profits. Some uncertainty developed in the final quarter as infrastructure maintenance reorganisation evolved but demand continued at budgeted levels to the year end. Progress continued at Rail Training Audit Services with turnover rising in line with the registration and audit of additional product areas within the Railway industry. Following the closure of Fairbourne Adventure at the end of 2002, The Fairbourne Hotel was successfully sold during the early summer. A profit was made over original investment cost but was largely offset by costs and poor trading attendant upon the termination of our interest in that business. Capital investment Investment in enhanced information technology and the establishment of our interactive recruitment web site is all but complete. Additionally further investment in Rail Training equipment has taken place. Despite these investments, continuing progress has been made in reducing Group medium term indebtedness. Details may be found in note 24 to the accounts. Taxation By the nature of our businesses, certain capital investments are not allowable for taxation purposes. 2002 was a year when this was a material factor and accordingly the effective group corporation tax rate rose to 35%. This rate has reduced and in 2003 our corporation tax rate has dropped to marginally above 32%, a position which is likely to be maintained. This matter is covered in note 9 to the accounts. Pension funds The Group operates both defined contribution and defined benefit pension schemes. Although asset valuations in 2002 reduced the surplus value of our defined benefit scheme, funds available to cover all the future requirements of pensioners, deferred pensioners and current employee members of the scheme remain comfortably in excess of the minimum. Nonetheless accounting conventions require us to continue to amortise the reduction in the surplus over the estimated average remaining service lives of the scheme members, resulting in a charge to the profit and loss account of £17,000. Non recurring items The disposal of The Fairbourne Hotel at a profit was offset by the write off of goodwill associated with the business and poor trading in the period up to cessation. There are no longer any significant items concerning obligations to pay local authority rates and these will not recur in the future. Dividends In view of the improving trading outlook at the half year the interim dividend was increased to 2.1p. In continuation of that process, your Directors are recommending a final dividend for the year of 3.9p, making 6.0p in total. Outlook The adverse conditions pertaining throughout 2002 continued into 2003 and consequently the recruitment division found trading difficult. There are signs that market conditions have begun to improve and 2004 has started well. Penetration into the contract recruitment market in Rail and Engineering Technology is expected to quicken. Having successfully gained a first contract with Network Rail, Ganymede Tracklayers has moved into profits. Following major changes in the provision of maintenance services to the National Rail infrastructure, Catalis Rail Training is positioning itself to take advantage of the new order and has also successfully gained valuable contracts serving the London Underground network. Rail Training Audit Services continues to expand and has successfully achieved renewal of its contract with Network Rail. Board development During the year the Directors resolved, in the light of the accelerating pace of Group development and the intention to seek suitable acquisitions, to extend the board level resources available to support the Chief Executive. I am pleased to report that Andrew Bailey has joined the Group in that capacity and has also taken over the responsibilities of Finance Director and Company Secretary. Since the year end Karl Chapman, after two and a half years service, has retired from the Board. Staff I should like to extend my thanks to all staff and management for their continuing loyalty and commitment. W.J.C.Douie, Chairman. 16 April 2004. CHIEF EXECUTIVE'S REPORT Year ended 31 December 2003 GROUP VISION AND AIMS The Group has continued to focus on the creation of integrated delivery in recruitment, training and consultancy services supported by professional brands. This strategy is based on broad market sector appeal and hence diversity in the client base but with an emphasis on manufacturing and transport businesses. The knowledge base and expertise of the Group covers all forms of technical engineering, sales roles, training, assessment, verification and audit. Hence clients may procure the full range of Group services from base level recruitment to full competency modelling. The aim is to bolt on, through organic growth or acquisition, volume services within this strategic framework to add physical scale and scope to the existing specialist services. To this end two such activities were identified and established in 2002, with an organic start in engineering and rail contract recruitment services and an acquisition in rail contract labour supply services. During 2003 these volume service areas gathered momentum building on the underpinning core knowledge of the Group and targeting the existing client base. GROUP TRADING SUMMARY 2003 Turnover Operating Profit/(Loss) --------------------- ----------------------- 2003 2002 2003 2002 2003 2002 2003 2002 £'000 £'000 % % £'000 £'000 % % Recruitment 6,334 5,250 42.49 39.98 (61) 246 (5.01) 22.10 Training & Consultancy 8,572 7,880 57.51 60.02 1,278 867 105.01 77.90 ------------ -------- ------- ------- ------- ------- -------- ------- ------- Group Total 14,906 13,130 100.00 100.00 1,217 1,113 100.00 100.00 ------------ -------- ------- ------- ------- ------- -------- ------- ------- RECRUITMENT These services remain focused on the provision of staff in commercial and technical sales roles, technical engineering, manufacturing and rail sectors in permanent and contract recruitment. The growth in contract revenues continued in 2003 resulting in a 3 year contract win with Network Rail, commencing in March 2004, for the supply of maintenance and safety related staff. Several preferred supplier arrangements have also been secured for contract recruitment in engineering and rail roles. The demand for services in the permanent markets served by the Group showed little sign of improvement during the year as candidates lacked enough confidence in the economy to change jobs. Activity in this market is driven by the confidence of candidates to progress their careers, through technical progression or line management moves, rather than just through the creation of new jobs. The segmental split in the recruitment revenues, between contract and permanent, has altered the amalgamated gross margin outcome. Margins range from 15% in contract to 38% in permanent. Revenue gains in contract, compared to permanent, have diluted the gross margin accordingly. This is entirely consistent with the volume services strategy of the Group and will provide the opportunity to drive up the total gross margin as a value against relatively static indirect infrastructure costs. TRAINING AND CONSULTANCY The bulk of these services are focused on the rail industry, ranging from training needs analysis, development of training materials, training and development delivery, competence assessment, audit services and verification. The rail client base includes Network Rail, London Underground, the infrastructure maintenance and renewal companies, the train operating companies, manufacturers and consultancies. Further revenue gains were achieved during the year supported by a number of outsource arrangements and contracted spend agreements with core clients. This culminated in a significant outsource contract win with Tube Lines, the consortium responsible for maintaining the Jubilee, Northern and Piccadilly London Underground lines, that commenced in February 2004, for a term of 10 years. The announcement by Network Rail that all infrastructure maintenance would be taken in-house by 2004, whilst leaving the bulk of the renewals work with the infrastructure maintenance companies, has not affected the demand for services during 2003. The implication of this change will unfold during 2004 subject to the framework for training and development selected by Network Rail. We remain well positioned to supply services to the new framework whatever the format. The consultancy services are contracted to Network Rail as part of the Sentinel Alliance providing a registration, licensing and assurance audit regime for all Rail Safety Training organisations, trainers and assessors. Additional revenues are derived from psychometric assessments and occupational consultancy services to core clients. INFORMATION TECHNOLOGY The Group invested in a real time network during 2002 and 2003 to ensure that the information assets in the various businesses could be fully utilised. This phase of the investment has been completed creating an IT platform commensurate with the growth plans of the Group. The decline in newspaper based recruitment advertising and the emergence of numerous internet sites has posed a challenge and a threat to our business over the last 3 years. The outcome of this transition has resulted in a significant reduction in the candidate response volumes, per advertisement posted, either from the web or a newspaper. This fact continues to underpin the competitive advantage enjoyed by those with a strong market brand and face to face interview and selection processes. The capital expenditure to sustain the IT infrastructure is expected to return to a maintenance level in 2004, now that the system is fully installed and running. SHARE OPTIONS The Government EMI scheme was adopted in 2001. Further options have been granted in 2003 in this scheme (details may be found in note 20 to the accounts). The management team and key staff will continue to be the focus of such incentives. PROSPECTS The balance of revenues between the two core markets of recruitment and training have served us well during the recent economic period; producing a profitable gain in one, offsetting a decline in the other. During this period a great deal of business strengthening has taken place through the investment in an IT platform, the addition of organic revenues in contract, the acquisition of a labour supply business and improvements in middle and senior management. The fruits of these labours hinge, to some extent, on the improvements to be seen in the recruitment markets, whilst maintaining demand in training, which will provide the Group with a positive level of operational gearing. Capacity exists within both sides of the Group to take full advantage of increased demand. Accordingly, the Group will push ahead with the organic initiatives and growth in labour supply but will also remain active and proactive in pursuit of a suitable target that adds a further level of volume and mass, in recruitment or training, in a new market area. Clive Chapman, Chief Executive 16 April 2004 Consolidated Profit and Loss Account 2003 2002 (as restated) Notes £'000 £'000 £'000 £'000 Turnover Continuing operations 14,789 12,465 Discontinued operations 117 665 ------- ------- 14,906 13,130 Cost of sales (8,677) (7,487) ------- ------- ------- ------- Gross Profit 6,229 5,643 Administrative expenses (5,183) (4,678) Other operating income 171 148 ------- ------- ------- ------- Operating Profit Continuing operations 1,276 1,162 Discontinued operations (59) (49) ------- ------- ------- ------- 1,217 1,113 Profit on disposal of fixed assets 53 - Loss on termination of operations - (66) Exceptional item - 418 Interest receivable and similar 11 17 income Interest payable and similar charges (58) (58) ------- ------- ------- ------- 6 311 ------- ------- ------- ------- Profit on ordinary activities before taxation 1,223 1,424 Tax on profit on ordinary activities (393) (500) ------- ------- ------- ------- Profit on ordinary activities after taxation 830 924 Dividends 1 (488) (471) ------- ------- ------- ------- Retained profit for the financial 342 453 year ------- ------- ------- ------- Earnings per share 2 10.21p 11.41p Fully diluted earnings per share 2 10.11p 11.35p Underlying earnings per share 2 9.75p 8.64p Underlying fully diluted earnings per 2 9.66p 8.60p share There were no recognised gains or losses other than those reported in the Profit and Loss Account Consolidated Balance Sheet 2003 2002 £'000 £'000 £'000 £'000 Fixed assets Intangible assets 1,116 1,181 Tangible assets 1,843 2,375 -------- -------- -------- -------- 2,959 3,556 Current assets Stock 12 20 Debtors Amounts falling due after more than one year 826 843 Amounts falling due within one year 3,819 4,391 Cash at bank and in hand 839 475 -------- -------- -------- -------- 5,496 5,729 Creditors Amounts falling due within one year (4,372) (5,194) -------- -------- -------- -------- 1,124 535 -------- -------- -------- -------- Total assets less current liabilities 4,083 4,091 Creditors Amounts falling due after more than one year (257) (569) Provisions for liabilities and charges (150) (201) -------- -------- -------- -------- Net assets 3,676 3,321 -------- -------- -------- -------- Capital and reserves Called up share capital 81 81 Share premium account 1,776 1,763 Capital redemption reserve 50 50 Profit and loss account 1,769 1,427 -------- -------- -------- -------- Equity shareholders' funds 3,676 3,321 -------- -------- -------- -------- Approved by the Board of Directors on 16 April 2004. C CHAPMAN Chief Executive A BAILEY Director Consolidated Cash Flow Statement 2003 2002 £'000 £'000 £'000 £'000 Net cash inflow from operating activities 2,109 569 Return on investments and servicing of finance Interest received 11 17 Interest paid (58) (58) -------- -------- -------- -------- Net cash (outflow) from return on investments (47) (41) and servicing of finance Taxation UK corporation tax paid (518) (249) Capital expenditure Sale of tangible fixed assets 473 72 Purchase of tangible fixed assets (459) (602) -------- -------- -------- -------- Net cash inflow/(outflow) from capital expenditure 14 (530) Acquisitions and disposals Purchase of subsidiary undertaking (6) - Net debt acquired with subsidiary - (26) -------- -------- -------- -------- Net cash (outflow) from acquisitions and disposals (6) (26) Equity dividends paid (479) (438) -------- -------- -------- -------- Net cash inflow/(outflow) before use of financing 1,073 (715) Financing Issue of ordinary share capital 13 - Decrease in loans (262) (266) Capital element of finance lease rental payments (116) (32) -------- -------- -------- -------- Net cash (outflow) from financing (365) (298) -------- -------- -------- -------- Increase/(Decrease) in cash 708 (1,013) -------- -------- -------- -------- NOTES 1. Dividends On 3 September 2003 an interim dividend of 2.1p net per share was resolved by the Board to be paid to shareholders on the register on 21 November 2003. The interim dividend was paid on 15 December 2003. A final dividend for the year of 3.9p net per share will be proposed at the forthcoming Annual General Meeting, and if approved, will be paid on 30 July 2004 to shareholders on the register on 25 June 2004. 2. Earnings per Share The calculation of earnings per share is based on a profit after taxation of £830,000 (2002: £924,000) and a weighted average of 8,130,104 (2002: 8,099,672) shares in issue. Details of share options in place may be found in note 20 to the accounts. The 35,000 options remaining out of the 85,000 options granted on 5 March 1999, the 77,880 options remaining out of the 241,069 options granted on 3 May 2000, the 75,000 options remaining out of the 95,000 options granted on 27 September 2001, the 145,000 options remaining out of the 195,000 options granted on 2 July 2002 and the 125,500 options granted on 2 May 2003, under the approved schemes are considered to be dilutive. These options increase the weighted average number of shares by 78,095 (2002: 42,918). The underlying earnings per share figures are based upon earnings excluding the exceptional credits and attributable tax charge as disclosed in note 7 to the accounts. Report & Accounts The above results do not represent the statutory accounts. The statutory accounts for 2002 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 will be mailed to shareholders shortly and will be available from the Company's registered office: - Kingston House, Oaklands Business Park, Armstrong Way, Yate, BS37 5NA. This information is provided by RNS The company news service from the London Stock Exchange

Companies

RTC Group (RTC)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today