Final Results - Year Ended 31 December 1999
ATA Group PLC
24 March 2000
ATA Group plc
Preliminary results for the year ended 31 December 1999
ATA Group plc ('ATA') is a human resource support services group,
which provides employment solutions and training services to client
companies in England, Scotland and Wales.
HIGHLIGHTS
* Turnover £6.64m (1998: £6.86m)
* Pre-tax profit £0.72m (1998: £1.09m)
* Earnings per share 7.27p (1998: 12.12p)
* Maintained final dividend of 3.8p making a total of 5.8p (1998:
5.8p) for the year
* 7% increase in consultant numbers
* Ninth location opened in Croydon
* Launch of ata-b2b.com
Commenting on the results Bill Douie, Chairman, said:
'After the difficult conditions experienced in the first half, we are
delighted by the strong recovery in the second half which compares
well with any in our history and allows us to look forward to the
future with confidence. '
24 March 2000
ENQUIRIES:
ATA Group plc Tel: (0117) 924 1600
Bill Douie, Chairman
Clive Chapman, Chief Executive
College Hill Tel: (0171) 457 2020
Giles Cooper
CHAIRMAN'S STATEMENT
I am pleased to present the Group preliminary statement for the year
ended 31 December 1999. The year has, as foreshadowed, been a trying
but successful year for the Company. Following a setback in earnings
in the first half, largely caused by challenging external trading
conditions, a sharp recovery was achieved in the second half.
Financial
Group pre-tax profits have decreased to £721,779 (1998: £1,085,223)
on turnover of £6,640,597 (1998: £6,863,304). Earnings per share on
share capital adjusted for options issued during the period have
fallen to 7.27 pence (1998: 12.12 pence).
Our core recruitment and consultancy businesses have recovered well in
the second half from an inefficient start to the year. Turnover for
the year in these divisions was £6,018,442 (1998: £6,385,136) and pre-
tax profits fell to £771,682 (1998: £1,114,991). Our embryonic
training companies, including Sloan Shrago Limited, are still in their
formative phase and have not yet achieved profitable trading.
In view of the sharp recovery in profitability in the second half the
directors are recommending a maintained final dividend of 3.8 pence
net per share, making a total of 5.8 pence net for the year (1998: 5.8
pence)
Trading
Recruitment
Trading conditions were difficult in the first four months of the year
mainly due to a cyclical downturn, amplified, in manufacturing, by
currency strength presenting significant challenges for exporters.
While there is some evidence that exporters have come to terms with
the new competitive conditions, improving economic conditions in the
second half of 1999 have been mainly in home markets. More
significantly, we have responded with some reorientation of our
industrial exposure and have achieved material advances in management
skills at all levels. During this period of consolidation overall
consultant numbers have continued to build and were 47 (1998: 44) in
the sales division and 47 (1998: 44) in the Engineering Technology
division at the year end. Operating ratios have recovered to the
levels experienced in 1998.
Consultancy
Our Advertising Selection business has continued to develop and
consultant numbers have risen to 18 (1998: 17) at the year end.
Turnover has fallen marginally to £1,080,213 (1998: £1,185,752) but
conditions adversely affected operating ratios and profits fell to
£4,112 (1998: £65,594) Again, in this year of consolidation, material
skills enhancement has taken place and the company enters 2000 with a
stronger infrastructure.
Training
We continue to build for the future. During the year terms were agreed
for the acquisition of the business of Sloan Shrago and a new company,
Sloan Shrago Limited was incorporated to offer clients consultancy
services in the fields of Organisational Development, Personnel
Appraisal & Assessment and Personnel Training & Development. This
company, providing the services of occupational psychologists, will
spearhead our thrust into providing training services to Corporate
Clients. Fairbourne Adventure will in the future form one of a
growing number of training and development tools available to back up
the services identified above.
Technology
ATA Group is at present in the final stages of development of its
first internet recruitment service which will facilitate operating
improvements in the present companies and provide opportunities for
additional and more extensive services to both candidates and clients.
ATA Group is determined not to lose sight of its core objective - to
supply the best available candidate for posts identified by our
clients.
Staff
During the year Graham Chivers retired as Finance Director to
concentrate on other business activities. I should like to thank him
for his diligent dedication to our Group from formation and to wish
him the best of good fortune in the future.
We are fortunate to have secured the services of Peter McWeeney to
succeed Graham as Finance Director and Company Secretary and welcome
him to the team.
John Green decided to move on and again I would like to thank him for
his services.
I should like to extend my thanks to all staff and management for
their commitment during an important year in our history.
Outlook
1999 was expected to be a challenging year and indeed it was. We
encountered difficult conditions and moved fast to deal with them.
Consequently, we are able to report second half figures comparing well
with any in our history in the contingency recruitment businesses and
have been able to maintain our dividend, albeit at a lower rate of
cover, and our cash reserves. We are still in the formative stages of
establishing our presence in training and believe we now are correctly
positioned to provide a complete consultancy approach in our chosen
areas at every level to our Corporate Clients. Advertising Selection
continues to gain strength and is now well placed for the future.
Economic conditions have improved and we are excited by the challenges
presented by new technology. We view the future with confidence.
W.J.C Douie
Chairman
24 March 2000
CHIEF EXECUTIVE'S REVIEW
Group Activities
ATA Group Plc is the holding Company for a range of business services
that provide our clients with a turnkey human resource package. The
aim of the group is to create real added value for these clients
through the maximisation of the competitive advantages that exist in
their employee base. The range of services encompass the following:
assessment services in the Contingency Database and Advertising
Selection recruitment businesses, development and training through the
outdoor leadership business and Organisational Development from the
Occupational Psychologists of Sloan Shrago.
Group turnover and operating profits for 1999 are presented on a by
profit centre basis with comparatives.
SUMMARY OF 1999 TRADING
.......Turnover.................Profit Before Tax.....
1999 1998 1999 1998 1999 1998 1999 1998
£,000 £,000 % % £,000 £,000 % %
Engineering 2,695 3,082 40.59 44.91 464.1 762.6 64.27 70.27
technology
Sales 2,243 2,117 33.78 30.85 303.5 286.8 42.04 26.43
Advertising 1,080 1,186 16.27 17.27 4.1 65.6 0.57 6.05
selection
Training 622 478 9.36 6.97 -49.7 -29.8 -6.88 -2.75
Group total 6,640 6,863 100.00 100.00 722.0 1085.2 100.00 100.00
Database Contingency Businesses
Sales recruitment business
The Operations Director ensured that effective selection and
development of staff occurred in this business, producing a strong
supply of skilled consultants and first line management succession.
The resultant growth in the labour force, turnover and operating
profits sustained the upward momentum, compared to 1998, despite a
contraction in the technical sales roles associated with
manufacturing.
The market direction of these activities is increasingly focused on
commercial sales roles, with burgeoning demand for assessment of the
emotional factors that affect ultimate selection. The efficiency of
this service is predominantly driven by our graduate workforce and
their capacity to screen candidates in the interview process, thereby
determining the specific motivation and calibre of the applicants
forwarded to the client companies.
The buoyancy in the domestic demand of the UK economy provides a
positive platform for further expansion in the consultant numbers
across 2000. The eighth Sales branch opened, in Croydon, in January
2000 and is progressing satisfactorily.
Engineering Technology recruitment business
Trading results in the second half reached record levels with a
strengthened management team and the appointment of an Operations
Director, commencing January 2000. The number of consultants employed
and their development are key drivers in the expansion of the
business, which will facilitate further geographical roll out.
The ninth branch was opened at the half year in Croydon and cements
our access to the London market. Early signs are very encouraging with
productivity gains beyond the average for this business.
Historically this has been the most significant business in the Group,
as demonstrated in the comparative figures above. The contraction in
the manufacturing job base over 1998 and 1999 created a reduction in
the operating efficiency of this business during that time period. In
the later part of last year the market stabilised with a noticeable
increase in demand for our services. Skill shortages loom once more
which boosts our trading advantages as a leading brand in the supply
of such candidates and this bodes well for the future of this
business.
Advertising Selection
The staff structure plan changed in 1999 to include the addition of a
tier of first line managers, designed to provide a support role for
the development of staff both external to the business and from
internal transfer. The majority of current staff have originated from
our Engineering Technology business. The future growth objectives
necessitate the formation of such training structures to ensure that
the consultant numbers increase in a smooth fashion.
The service solutions on offer through this business range from high
level retained campaigns, to multiple placement recruitment drives,
such as call centres, to the overlap with the Contingency businesses
at lower level job roles. The breadth of this range provides an ideal
platform for the development of staff to progress to higher level
campaign placements, which is the future of the business.
The turnover and operating profit performance remained flat in 1999,
but the development time was well spent and the growth objectives are
in sharp focus with a strong team of staff. With the general
improvement in market sentiment the business has every opportunity to
prosper.
Training and Development
The direct synergy that exists between the assessment of employees,
their development and the business objectives and goals of a company,
supports our strategic expansion of this aspect of Group activities.
In addition to the acquisition of an outdoor management and leadership
business in 1998 the Group acquired an Occupational Psychology
practice in August 1999, called Sloan Shrago.
This enhances the number of products readily available to our clients
through the corporate sales function, internally. Hence, the capacity
to broaden the diagnosis of client needs beyond that encompassed by
the outdoor training tool has raised our client profile and
marketability.
The growth in these businesses, including the associated hotel
accommodation supporting the Fairbourne training business, will come
from the successful application of a sales driven tactic and
collaborative association with existing clients of the Group on a
relationship basis.
Turnover is, therefore, growing positively with real gains in the
management and leadership business, although this has yet to convert
into operating profit. The future is structured around the expansion
of the corporate sales function with a management overview being
provided by the psychologist business.
Further acquisitions of additional training products, to support
client demand, will materialise as the growth objectives are met.
Share Options
The Board continues to support the ownership of shares within the
staff and made a further disposal within the tax-approved scheme in
1999. It is our intention to provide key staff with such incentives in
2000.
Prospects
The strategic aim of the Group is based on the development of added
value services in relation to the employee base of our clients. To
this end, the expansion of training and development services, together
with the acquisition of an occupational psychology business have
furthered our cause in an otherwise difficult set of trading
conditions. It has been testimony to the resilience and determination
of management that such gains have been made in the face of a
technical recession in our core manufacturing market.
ata-b2b.com
The advent of Internet interactive technology has provided a threat to
the typical agency based curriculum vitae approach, but has provided
our Group with an opportunity to embrace the value of our national
brands, candidate databases and the importance attached to the
emotional assessment criteria.
The Group has plans to launch an interactive site in the first half
that will both reduce costs and generate client revenue opportunities.
The branding opportunity for national databases of niche portal
candidates in both of our core markets, Sales roles and Engineering
Technology, is a significant opportunity afforded to the Group. The 37-
year history of the ATA Selection brand and the marketing capacity of
our advertising budgets will accelerate the growth of the site,ata-
b2b.com.
Clive Chapman
Chief Executive
24 March 2000
CONSOLIDATED PROFIT AND LOSS ACCOUNT
1999 1998
£'000 £'000 £'000 £'000
Turnover
Continuing operations 6,625 6,863
Acquisitions 16 -
6,641 6,863
Cost of Sales (3,968) (4,189)
Gross profit 2,673 2,674
Administrative (1,986) (1,631)
expenses
Operating profit
Continuing operations 705 1,043
Acquisitions (18) -
687 1,043
Interest receivable 53 61
and similar income
Interest payable and (18) (20)
similar charges
35 42
Profit on ordinary
activities before 722 1,085
taxation
Tax on profit on (250) (333)
ordinary activities
Profit on ordinary
activities after 472 752
taxation
Dividends (376) (376)
Retained profit for
the financial year 96 376
Earnings per share 7.27p 12.12p
Fully diluted earnings
per share 7.27p 12.12p
There were no recognised gains or losses other than those reported in
the Profit and Loss Account.
CONSOLIDATED CASH FLOW STATEMENT
1999 1998
£'000 £'000 £'000 £'000
Net cash inflow from 625 1283
operating activities
Return on investments and
servicing of finance
Interest received 53 49
Interest paid (18) (19)
Net cash inflow from return
on investments and servicing 35 30
of finance
Taxation
UK corporation tax paid (343) (288)
Capital expenditure
Sale of tangible fixed assets 28 28
Purchase of tangible fixed (191) (356)
assets
Net cash outflow from capital (163) (328)
expenditure
Acquisitions and disposals
Purchase of business from
unincorporated undertaking - (474)
Equity dividends paid (376) (306)
Net cash outflow before use (222) (83)
of liquid resources and
financing
Financing and Management of
Liquid resources
Decrease/(increase) in short 750 (25)
term deposits
Net proceeds from issue of - 439
share capital
(Decrease)/increase in medium (58) 270
term loans
692 684
Increase in cash 470 601
CONSOLIDATED BALANCE SHEET
1999 1998
£'000 £'000 £'000 £'000
Fixed assets
Intangible assets 72 96
Tangible assets 720 779
792 875
Current assets
Stock 18 14
Debtors 888 688
Cash at bank and in hand 1,107 1,357
2,013 2,059
Creditors
Amounts falling due (1,601) (1,750)
within one year
Net current assets 412 309
Total assets less current 1,204 1,184
liabilities
Creditors
Amounts falling due after
more than one year (155) (231)
Provision for liabilities (4) (4)
and charges
Net assets 1,045 949
Capital and reserves
Called up share capital 65 65
Share premium account 433 433
Capital redemption 50 50
reserve
Profit and loss account 497 401
Equity shareholders' 1,045 949
funds
Approved by the board of directors on
WJC Douie Chairman
P McWeeney Financial Director
NOTES
1. Dividends
Interim dividends paid on 17 September 1999 of 2.0p per share (1998:
2.0p). Final dividend proposed of 3.8p per share (1998: 3.8p)
payable to shareholders on the register on April 7th 2000
2. Earnings per Share
The calculations of earnings per share and of the fully diluted
earnings per share are based on a profit after taxation of £471,485
(1998:- £752,220) and a weighted average of 6,482,400 (1998:-
6,205,477) shares in issue. The share options that have been granted
to date are not dilutive.
3. Report & Accounts
The above results do not represent the statutory accounts. The
statutory accounts for 1998 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:- 20 Portland
Square, Bristol, BS2 8SJ.