15th Apr 2008 07:00
ATA Group PLC15 April 2008 ATA Group plc ("ATA" or "the Company") Preliminary Results for the year ended 31 December 2007 ATA Group plc is a support services group, which provides recruitment, trainingand conferencing services. HIGHLIGHTS Operating profit before exceptionals and discontinued operations at £747,000(2006: loss of £116,000) Group profits after tax at £498,000 (2006: £439,000). Earnings per share from continued and discontinuing operations at 6.07p (2006:5.35p). Dividends for the year at 4.0p per share (2006: 3.0p). Recruitment made excellent progress and achieved operating profits at £973,000(2006: £414,000). Railway activities continued to recover from infrastructure maintenance beingtaken over by Network Rail and reduced operating losses to £226,000 (2006:£530,000). Taxation charges in 2007 at 33% (2006 34%), reflecting non-allowable expenses. Commenting on the results Bill Douie, Chairman, said: "2007 has been a good year. Market conditions have been benign and we have madegood progress improving our profitability and consolidating our balance sheet.As a consequence we are favourably placed to continue to prosper in 2008, a yearwhich is likely to be mired in uncertainties and threats on both a local andglobal scale. Although at this stage it is difficult to forecast the impact ontrading as a consequence of the turmoil in the global financial sector andslowing world economies, we enter this period serving solid industries and theGroup has a strong balance sheet and no borrowings. I have no doubt that we willacquit ourselves creditably this year." 14th April 2008 ENQUIRIES: ATA Group plc Tel: 01332 263 122 Bill Douie, Executive Chairman.Andy Pendlebury, Chief Executive Officer.Andrew Bailey, Chief Operating Officer. Evolution Securities Limited Tel: 0207 071 4300Jeremy Ellis / Chris Clarke CHAIRMAN'S STATEMENTYear ended 31 December 2007 FINANCIAL 2006 figures have been restated to reflect the adoption of InternationalFinancial Reporting Standards ("IFRS"). To make comparisons meaningful, therefollows a table showing re-stated figures for 2006, figures for 2007 and changeson a like for like basis. 2007 2006 Change Change £'000 £'000 £'000 % Revenue 23,615 18,134 5,481 30%Cost of sales (18,379) (13,692) (4,687) ____________________________________Gross Profit 5,236 4,442 794 18%Admin expenses (4,489) (4,558) 69 -2% ____________________________________Operating profit before exceptional item 747 (116) 863Exceptional item - 974 (974) ____________________________________Operating profit after exceptional item 747 858 (111)Profit on disposal of fixed assets - 73 (73)Finance costs (1) (3) 2 ____________________________________Profit before tax 746 928 (182)Income tax (248) (315) 67 ____________________________________Profit for continuing operations 498 613 (115)Loss on discontinued operations - (174) 174 ____________________________________Profit after tax 498 439 59 13% Segmental analysis:Operating profit before exceptional itemRecruitment 973 414 559 135%Railway (226) (530) 304 57% ____________________________Total 747 (116) 863 Exceptional item Consequent upon the untimely death of the then Group Chief Executive in 2006 theGroup profit and loss account benefited from a net payout from the KeymanInsurance policy in place at the time of £974,000. TRADING Recruitment Division (ATA Selection) The Recruitment division turned in another excellent year and is now well on itsway to surpassing previous best performance. This has been achieved, in a fastchanging market place, by maintenance of a strong position in permanentrecruitment and the addition of a sound and growing contract recruitmentbusiness. Railway Division (Catalis Rail Training, The Derby Conference Centre andGanymede Manpower Services) The Catalis Rail Training business continues to recover steadily from thechanges wrought by Network Rail. During the year the premises at Derby werecompletely re-furbished and re-launched, on the "glorious first of June", topush into the conferencing business, both local and national, within a separatelegal entity, The Derby Conference Centre Limited. A pleasing start has beenmade. Capital Investment During the year the opportunity was taken to refurbish the Group premises inDerby. GROUP PERFORMANCE INDICATORS Earnings Per Share from continuing and discontinued operations (EPS) is a keymeasure as it indicates the underlying profit of the business attributable toshareholders. It measures not only the trading performance, but also the impactof exceptional items, cash management and interest charges. EPS for the year of6.07p compares with 5.35p in 2006. DIVIDENDS Group trading performance permits an increase in the final dividend per share of0.5p to 2.5p making total dividends for the year of 4.0p per share. MANAGEMENT During 2007 we were fortunate to secure the services of Andy Pendlebury, firstlyas a non-executive director and latterly, from 1 October, as our new Group ChiefExecutive. Andy comes with a wealth of relevant experience and a raft ofrefreshing new ideas. New blood was needed and he is proving to be a real shotin the arm. In 2007 further efficiency driven changes were made to second linemanagement. There is more to do and top people to add as we continue to strivefor a top flight team. OUTLOOK 2007 has been a good year. Market conditions have been benign and we have madegood progress improving our profitability and consolidating our balance sheet.As a consequence we are favourably placed to continue to prosper in 2008, a yearwhich is likely to be enmired in uncertainties and threats on both a local andglobal scale. Although at this stage it is difficult to forecast the impact ontrading as a consequence of the turmoil in the global financial sector andslowing world economies, we enter this period serving solid industries and theGroup has a strong balance sheet and no borrowings. I have no doubt that we willacquit ourselves creditably this year. STAFF There can be no more appropriate time for me to thank all our staff for theirefforts and successes in 2007 and to acknowledge the universal strength anddetermination they have displayed. W.J.C. Douie, Chairman 14 April 2008 CHIEF EXECUTIVE'S REPORTYear ended 31 December 2007 Having joined ATA Group Plc as a non-executive Director in June 2007 I wasdelighted to accept the Board's offer to take up the post of Chief ExecutiveOfficer on 1 October 2007. My immediate priority was to begin a wide ranging strategic review of each ofthe Group's businesses to provide me with a thorough understanding of our coreactivities and relative position in each of our respective markets. The review,which has already proved extremely encouraging in terms of outlining the depthof our capabilities, has identified some initial findings which have resulted ina number of changes to our management structure and the way we compete in ourmarkets. I believe management is already more focused on growing revenues and net feeincome and the benefits will feed through during the next financial year.Further changes to the way we operate will emerge during 2008 as we driveforward our plan to establish each of our revenue streams as independentbusiness units. In doing this it is the clear intention of the Board to beginthe process of appointing strong leadership to head each of our businesses oncethe full scope and opportunity for each business has been adequately identifiedand understood. These appointments will be open to both internal and externalcandidates. Once we have implemented these changes we will have a well defined and broadbusiness services group with four autonomous businesses - ATA Selection, CatalisRail Training, The Derby Conference Centre and Ganymede Manpower Services - allbranded independently. However, given their complimentary nature I believe wehave significant opportunity to provide a unique multi-service solution to manyof our clients enabling them to accelerate essential cost saving programmesthrough consolidated purchasing. I am confident that our newly appointed Head ofGroup Sales will identify and capture extensive opportunities to take advantageof our reach across the diversity of sectors we support and engaging the fullscope of our capabilities. Initial feedback from clients targeted is promisingwith discussions progressing on a variety of initiatives. Our key focus for 2008 is sales growth as all our businesses now have wellestablished infrastructures with significant room for increased throughput. Interms of ATA Selection, which already has a well proven sales methodology, thechallenge centres around increasing annual consultant billing and various stepsare being taken to increase this through additional training and development,better consultant retention and a variety of measures to attract new experiencedconsultants with greater billing capabilities. In terms of our other businesseswe have now installed separate sales teams and early indications show that thisfocus and concentration on business development is beginning to pay off. Finally during the short time that I have been Chief Executive Officer asubstantial amount of work has already been accomplished and I have beenextremely encouraged by the dedication, commitment and attitude of everybodyemployed across all our businesses and it is my intention to build on this byimplementing a range of in-house and external training programmes and bybringing in new employees with additional experience to broaden and extend theoverall capabilities of the Group. Andy Pendlebury, Group Chief Executive 14 April 2008 CHIEF OPERATING OFFICER'S REPORTYear Ended 31 December 2007 GROUP TRADING SUMMARY 2007 Group revenue from continuing operations has increased by 30% compared with2006. Reduction in Railway Division revenues were offset by increases inRecruitment. Whilst the change in sales mix, reflecting the continued growth inlower margin contract recruitment, has impacted overall gross margin, theoperating profit for the year, before exceptional items, at £747,000 compareswith a loss of £116,000 in 2006. Turnover Operating Profit/(Loss) 2007 2006 2007 2006 £'000 £'000 £'000 £'000 Recruitment Division 17,617 11,584 973 414 Railway Division 5,998 6,550 (226) (530) ______________ ______________Group Total 23,615 18,134 747 (116) RECRUITMENT Recruitment Net Fee Income, representing total fees earned from all recruitmentactivities, net of contractor wages, grew by 19% in 2007 to £6.8m (2006: £5.7m). Permanent recruitment services focused on the provision of staff to technicalengineering and manufacturing roles through our network of regional offices andto national technical sales, rail and construction sectors from our EastMidlands locations. Whilst the number of permanent placements remained broadlycomparable with last year, overall permanent revenues grew by 22% mainly as aresult of an increase in average fees. The number of permanent placements madeis a key measure of performance of the business and is measured on the basis ofthe vacancies filled per individual consultant. In 2007 the average placementsper permanent consultant were 8% ahead of 2006 reflecting a reduction inconsultant numbers in line with a change in our internal recruitment policy. Contract recruitment in the Group's core markets of technical manufacturing,engineering and rail continued to grow on the solid base established in previousyears. The new market sector of construction made a pleasing contributionresulting in an overall increase in revenues of 59% compared with 2006.Contractor heads out per contract consultant, as a key measure of performance,delivered a 28% increase on 2006. The continued expansion and diversification ofcontract recruitment activity remains a key aim of the Group. Towards the end of 2007 the decision was made to cease recruitment activitiesfrom our Croydon location and to consolidate activities into the Slough andEnfield branches. The full cost of closure is reflected in the trading resultsfor 2007. RAILWAY Services delivered within the Railway Division include the delivery of trainingand competency assessment through Catalis, blue collar labour supply throughGanymede and the provision of conferencing through The Derby Conference Centre. Training activity grew positively across all major areas of delivery resultingin an increase in revenues of 10% to £4.1m compared with 2006. The increasedlevel of trading reflects positive improvements in trainer utilisation andcourse take up which are key indicators applied to measure the performance ofthe business. The growth of the training business remains a key objective of theGroup. The blue collar labour supply business operated by Ganymede was impacted by areduction in demand from its underground contract and fall in the third partylabour supply needs of Network Rail, both of which contributed to a fall in thekey performance measure of man hours worked. Overall revenue reduced to £985,000compared with 2006. The conference activity, previously reported within the training business, wasconcentrated in the leasehold company, The Derby Conference Centre, at the startof 2007. The aim being to refurbish, re-brand and re-launch the Derby site as acommercial conferencing venue. Stage one of the refurbishment programme wascompleted in May and the site re-launched on 1 June. The key performance measureof room utilisation, improved following the re-launch resulting in a 17%increase in external revenue to £950,000. HEAD OFFICE AND CENTRAL FUNCTIONS Advantage was taken of a break option in the lease of the Group head officepremises in Yate, South Gloucester, to terminate the lease and relocate all ofthe central finance and administration functions to the Group site in Derby. Themove will deliver central overhead savings and operational efficiencies. Therelocation was completed by late summer 2007. STAFF DEVELOPMENT The Group continues to believe that the key to future success is strongly linkedto people development. We therefore operate a number of internal and externalinitiatives, designed to develop individuals in sales, operational, managementand leadership skills. Staff retention is a key performance indicator of thebusiness and is monitored closely. ENVIRONMENTAL POLICY The Group monitors its activities to minimise its impact on the environment andhas undertaken various initiatives in order to reduce waste. INFORMATION TECHNOLOGY AND THE INTERNET The Group's investment, in Information Technology to support businessactivities, through both a real time wide area network and front and back officesystems to support the growth in volume activities, is complete. Expenditureduring the year was therefore restricted to maintenance and upgrades to thosesystems. Future expenditure will be aimed at gaining operational efficiencythrough evolution into the latest technologies and leveraging business benefitsthrough increased and varied profile and presence on the internet. The internet attracts many of our candidate applications to the recruitmentbusiness. The web based capability built to take advantage of this marketdynamic has continued to gain profile in our vertical market sectors.Expenditure to attract candidates in 2007 has however increased over 2006 and webelieve will continue to grow in the current candidate driven climate. Tomitigate the future impact of the increased cost of candidate recruitment, therecruitment business continues to enhance its web presence and embrace mobiletechnologies to further improve candidate efficiencies and communication. Thirdparty job boards will, however, continue to play an integral role in candidaterecruitment. To maximise the return on third party spend, we have invested insystems which enable us to measure the response rates from advertisements, onindividual sites in terms of both volume and quality. We will continue toinvestigate and adopt technology which delivers increased efficiencies andreduced cost of operation within all of our businesses. SHARE OPTIONS The Government EMI scheme was adopted in 2001. Further options have been grantedin 2007. The management team and key staff will continue to be the focus of suchinitiatives. Andrew Bailey, Group Chief Operating Officer 14 April 2008 Group Income StatementYear ended 31 December 2007 2007 2006 £'000 £'000 £'000 £'000 Revenue 23,615 18,134Cost of sales (18,379) (13,692) ___________________________________Gross Profit 5,236 4,442Administrative expenses - normal (4,489) (4,558) ___________________________________Operating profit before exceptional 747 (116)itemsOther income - exceptional - 974 ___________________________________Operating Profit after exceptional 747 858itemsProfit on disposal of fixed assets - 73 ___________________________________ 747 931Investment income 5 13Finance costs (6) (16) ________ ________ (1) (3) ___________________________________Profit before tax 746 928Income tax expense (248) (315) ___________________________________Profit for the year from continuing 498 613operations ___________________________________Loss on discontinued operations - (174)after taxation ___________________________________Profit for the year attributable to 498 439equity holders ___________________________________ Earnings per share- continuing operations 6.07p 7.47p- continuing and discontinued 6.07p 5.35poperations ___________________________________Fully diluted earnings per share- continuing operations 6.07p 7.47p- continuing and discontinued 6.07p 5.35poperations ___________________________________ Group Statement of Changes in Equity Year ended 31 December 2007 Share Share Capital Share Retained Total capital premium redemption based earnings equity account reserve payment reserve £'000 £'000 £'000 £'000 £'000 £'000At 1 January 2007 82 1,817 50 31 1,877 3,857 _________________________________________________________Profit for the year - - - - 498 498Total recognised 82 1,817 50 31 2,375 4,355income and expense for2007Share based payment - - - (6) - (6)reserveDividends - note 2 - - - - (287) (287) _________________________________________________________At 31 December 2007 82 1,817 50 25 2,088 4,062 _________________________________________________________ Year ended 31 December 2006 Share Share Capital Share Retained Total capital premium redemption based earnings Equity account reserve payment reserve £'000 £'000 £'000 £'000 £'000 £'000At 1 January 2006 82 1,817 50 28 1,685 3,662Profit for the year - - - - 439 439 _________________________________________________________Total recognised 82 1,817 50 28 2,124 4,101income and expense for2006Share based payment - - - 3 - 3reserveDividends - note 2 - - - - (247) (247) _________________________________________________________At 31 December 2006 82 1,817 50 31 1,877 3,857 _________________________________________________________ Group Balance Sheet31 December 2007 2007 2006 £'000 £'000 £'000 £'000 AssetsNon current assetsIntangible assets 924 924Property, plant and equipment 738 654 ___________________________________ 1,662 1,578Current assetsInventories 8 3Trade and other receivables 4,982 3,452Deferred tax asset 55 112Cash and cash equivalents 266 939 ___________________________________ 5,311 4,506 ___________________________________Total assets 6,973 6,084 LiabilitiesCurrent liabilitiesTrade and other payables (2,665) (1,941)Current borrowings (4) (13)Current tax payable (242) (271) ___________________________________ (2,911) (2,225)Non current liabilitiesNon current borrowings - (2)Total liabilities (2,911) (2,227) ___________________________________Net assets 4,062 3,857 ___________________________________ Equity attributable to equityholders of the parentShare capital 82 82Share premium 1,817 1,817Capital redemption reserve 50 50Share based payment reserve 25 31Retained earnings 2,088 1,877 ___________________________________Total equity 4,062 3,857 ___________________________________ Group Cash Flow StatementYear ended 31 December 2007 2007 2006 £'000 £'000 Cash flows from operating activities Operating result from continuing 747 931operations Operating loss from discontinuing - (291)operations Adjustments for: Employee equity settled share options (6) 3 Depreciation 318 438 Profit on sale of property, plant and (29) (37) equipment Impairment of goodwill - 64 Change in inventories (5) 28 Change in trade and other receivables (1,675) 1,404 Change in trade and other payables 724 (628) ______________________Cash generated from operations 74 1,912 Net interest paid (1) (3) Income taxes paid (220) (251) ______________________Net cash from/(used in) operating (147) 1,658activities ______________________Cash flows from investing activities (451) (134) Purchases of property, plant andequipment 78 238 Proceeds from sale of property, plant andequipmentDisposal of businesses 145 97 ______________________Net cash from/(used in) investing (228) 201activities ______________________ Cash from/(used) before financing (375) 1,859 Cash flows from Financing activities Decrease in medium term loans - (1) Capital element of finance lease rental (11) (86)payments Equity dividends paid (287) (247) ______________________Net cash used in financing activities (298) (334) ______________________Net (decrease)/increase in cash and cash (673) 1,525equivalents ______________________Cash and cash equivalents at the 939 (586)beginning of the period ______________________Cash and cash equivalents at the end of 266 939the period ______________________ Notes 1. CORPORATE INFORMATION The preliminary audited financial statements of the Group for the year ended 31December 2007 were authorised for issue in accordance with a resolution of thedirectors on 14 April 2008. ATA Group Plc is a public limited companyincorporated and domiciled in England whose shares are publicly traded. Theprincipal activities of the Group are described in note 6. 2. DIVIDENDS On 14 September 2007 an interim dividend of 1.5p net per share was resolved bythe Board to be paid to shareholders on the register on 16 November 2007. Theinterim dividend was paid on 11 December 2007. A final dividend for the year of 2.5p net per share will be proposed at theforthcoming Annual General Meeting, and if approved, will be paid on 18 July2008 to shareholders on the register on 20 June 2008. 3. EARNINGS PER SHARE The calculation of earnings per share is based on a profit after tax expense of£498,000 (2006: £377,000) and a weighted average of 8,203,331 (2006: 8,203,331)shares in issue. 4. BASIS OF PREPARATION This is the first year that the Group has presented its consolidated financialstatements under IFRS. In preparing its opening IFRS balance sheet, the Group has adjusted amountspreviously reported in financial statements prepared in accordance with UK GAAP.The analysis below shows a reconciliation of shareholders' equity and profits asreported under UK GAAP as at, and for the period ended, 31 December 2006 to therevised shareholders' equity and profits under IFRS as reported in theseaccounts. The only reconciling item is in respect of goodwill, for which thecharge for 2006 has been written back. In addition, there is a reconciliation of shareholders' equity under UK GAAP toIFRS at the transition date for the Group, being 1 January 2006. As the Grouptook advantage of the exemption available under IFRS 1, the write back ofgoodwill has not been extended beyond the accounting transition date. a)Reconciliation of profit Year ended 31 December 2006 £'000Profit for the period under UK GAAP 377Goodwill amortisation 62 _____________Profit for the period as reported under 439IFRS b) Reconciliation of equity As at 1 As at 31 January 2006 December 2006 £'000 £'000Equity as reported under UK GAAP 3,662 3,795Goodwill amortisation - 62 _________________________Equity as reported under IFRS 3,662 3,857 The cash flow statements for the year ended 31 December 2006 as presented inthese financial statements have been subject to a number of presentationaladjustments following the transition to IFRS. There is no impact in the netincrease in cash and cash equivalents for each period as reported under IFRScompared with that originally reported under UK GAAP. 5. EXCEPTIONAL ITEMS The exceptional other income in 2006 of £974,000 consists of the net paymentreceived in respect of Keyman Insurance in relation to the death of the formerChief Executive. The profit on disposal of fixed assets in 2006 amounting to £73,000 representsthe net profit of the sale of training assets to Network Rail. 6. SEGMENTAL ANALYSIS The Group's results are derived from in two classes of business, which areprimarily conducted in the United Kingdom although there is a smallinternational element. The segmental analysis of turnover, operating profit and profit before taxationis as follows: - 2007 2006 £'000 £'000 Revenue Recruitment Division 17,617 11,584 Railway Division 5,998 6,550 ________________ 23,615 18,134 ________________ Operating profit from continuing operations Recruitment Division 973 414 Railway Division (226) (530) Exceptional Item - 974 ________________ 747 858 ________________ Profit on ordinary activities before income tax expense Recruitment Division 972 413 Railway Division (226) (459) Exceptional Item - 974 ________________ 746 928 ________________ 7. INCOME TAX EXPENSE 2007 2007 2007 2006 2006 2006 Continuing Discontinued Total Continuing Discontinued Total £'000 £'000 £'000 £'000 £'000 £'000 Analysis of tax expense :- Current Tax UK corporation tax 266 - 266 369 (74) 295 Adjustment in (75) - (75) 6 - 6 respect of previous periods _______________________________________________________________ 191 - 191 375 (74) 301 Deferred Tax Origination and 6 - 6 (60) - (60) reversal of timing differences Adjustment in 51 - 51 - - respect of previous periods _______________________________________________________________ Tax expense 248 - 248 315 (74) 241 _______________________________________________________________ Report & Accounts The above results do not represent the statutory accounts. The statutoryaccounts for 2006 have been filed with the Registrar of Companies, received anunqualified audit report and did not contain a statement under Section 237 (2)or (3) of the Companies Act 1985. The audited accounts for the year ended 31December 2007 will be mailed to shareholders shortly and will be available fromthe Company's registered office:- The Derby Conference Centre, London Road,Derby, DE24 8UX. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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