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.

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