RNS Number:2990S
ATA Group PLC
15 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, training
and 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 being
taken 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 made
good progress improving our profitability and consolidating our balance sheet.
As a consequence we are favourably placed to continue to prosper in 2008, a year
which is likely to be mired in uncertainties and threats on both a local and
global scale. Although at this stage it is difficult to forecast the impact on
trading as a consequence of the turmoil in the global financial sector and
slowing world economies, we enter this period serving solid industries and the
Group has a strong balance sheet and no borrowings. I have no doubt that we will
acquit 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 4300
Jeremy Ellis / Chris Clarke
CHAIRMAN'S STATEMENT
Year ended 31 December 2007
FINANCIAL
2006 figures have been restated to reflect the adoption of International
Financial Reporting Standards ("IFRS"). To make comparisons meaningful, there
follows a table showing re-stated figures for 2006, figures for 2007 and changes
on 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) 863
Exceptional 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 item
Recruitment 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 the
Group profit and loss account benefited from a net payout from the Keyman
Insurance 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 its
way to surpassing previous best performance. This has been achieved, in a fast
changing market place, by maintenance of a strong position in permanent
recruitment and the addition of a sound and growing contract recruitment
business.
Railway Division (Catalis Rail Training, The Derby Conference Centre and
Ganymede Manpower Services)
The Catalis Rail Training business continues to recover steadily from the
changes wrought by Network Rail. During the year the premises at Derby were
completely re-furbished and re-launched, on the "glorious first of June", to
push into the conferencing business, both local and national, within a separate
legal entity, The Derby Conference Centre Limited. A pleasing start has been
made.
Capital Investment
During the year the opportunity was taken to refurbish the Group premises in
Derby.
GROUP PERFORMANCE INDICATORS
Earnings Per Share from continuing and discontinued operations (EPS) is a key
measure as it indicates the underlying profit of the business attributable to
shareholders. It measures not only the trading performance, but also the impact
of exceptional items, cash management and interest charges. EPS for the year of
6.07p compares with 5.35p in 2006.
DIVIDENDS
Group trading performance permits an increase in the final dividend per share of
0.5p 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, firstly
as a non-executive director and latterly, from 1 October, as our new Group Chief
Executive. Andy comes with a wealth of relevant experience and a raft of
refreshing new ideas. New blood was needed and he is proving to be a real shot
in the arm. In 2007 further efficiency driven changes were made to second line
management. There is more to do and top people to add as we continue to strive
for a top flight team.
OUTLOOK
2007 has been a good year. Market conditions have been benign and we have made
good progress improving our profitability and consolidating our balance sheet.
As a consequence we are favourably placed to continue to prosper in 2008, a year
which is likely to be enmired in uncertainties and threats on both a local and
global scale. Although at this stage it is difficult to forecast the impact on
trading as a consequence of the turmoil in the global financial sector and
slowing world economies, we enter this period serving solid industries and the
Group has a strong balance sheet and no borrowings. I have no doubt that we will
acquit ourselves creditably this year.
STAFF
There can be no more appropriate time for me to thank all our staff for their
efforts and successes in 2007 and to acknowledge the universal strength and
determination they have displayed.
W.J.C. Douie, Chairman 14 April 2008
CHIEF EXECUTIVE'S REPORT
Year ended 31 December 2007
Having joined ATA Group Plc as a non-executive Director in June 2007 I was
delighted to accept the Board's offer to take up the post of Chief Executive
Officer on 1 October 2007.
My immediate priority was to begin a wide ranging strategic review of each of
the Group's businesses to provide me with a thorough understanding of our core
activities and relative position in each of our respective markets. The review,
which has already proved extremely encouraging in terms of outlining the depth
of our capabilities, has identified some initial findings which have resulted in
a number of changes to our management structure and the way we compete in our
markets.
I believe management is already more focused on growing revenues and net fee
income and the benefits will feed through during the next financial year.
Further changes to the way we operate will emerge during 2008 as we drive
forward our plan to establish each of our revenue streams as independent
business units. In doing this it is the clear intention of the Board to begin
the process of appointing strong leadership to head each of our businesses once
the full scope and opportunity for each business has been adequately identified
and understood. These appointments will be open to both internal and external
candidates.
Once we have implemented these changes we will have a well defined and broad
business services group with four autonomous businesses - ATA Selection, Catalis
Rail Training, The Derby Conference Centre and Ganymede Manpower Services - all
branded independently. However, given their complimentary nature I believe we
have significant opportunity to provide a unique multi-service solution to many
of our clients enabling them to accelerate essential cost saving programmes
through consolidated purchasing. I am confident that our newly appointed Head of
Group Sales will identify and capture extensive opportunities to take advantage
of our reach across the diversity of sectors we support and engaging the full
scope of our capabilities. Initial feedback from clients targeted is promising
with discussions progressing on a variety of initiatives.
Our key focus for 2008 is sales growth as all our businesses now have well
established infrastructures with significant room for increased throughput. In
terms of ATA Selection, which already has a well proven sales methodology, the
challenge centres around increasing annual consultant billing and various steps
are being taken to increase this through additional training and development,
better consultant retention and a variety of measures to attract new experienced
consultants with greater billing capabilities. In terms of our other businesses
we have now installed separate sales teams and early indications show that this
focus and concentration on business development is beginning to pay off.
Finally during the short time that I have been Chief Executive Officer a
substantial amount of work has already been accomplished and I have been
extremely encouraged by the dedication, commitment and attitude of everybody
employed across all our businesses and it is my intention to build on this by
implementing a range of in-house and external training programmes and by
bringing in new employees with additional experience to broaden and extend the
overall capabilities of the Group.
Andy Pendlebury, Group Chief Executive 14 April 2008
CHIEF OPERATING OFFICER'S REPORT
Year Ended 31 December 2007
GROUP TRADING SUMMARY 2007
Group revenue from continuing operations has increased by 30% compared with
2006. Reduction in Railway Division revenues were offset by increases in
Recruitment. Whilst the change in sales mix, reflecting the continued growth in
lower margin contract recruitment, has impacted overall gross margin, the
operating profit for the year, before exceptional items, at �747,000 compares
with 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 recruitment
activities, 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 technical
engineering and manufacturing roles through our network of regional offices and
to national technical sales, rail and construction sectors from our East
Midlands locations. Whilst the number of permanent placements remained broadly
comparable with last year, overall permanent revenues grew by 22% mainly as a
result of an increase in average fees. The number of permanent placements made
is a key measure of performance of the business and is measured on the basis of
the vacancies filled per individual consultant. In 2007 the average placements
per permanent consultant were 8% ahead of 2006 reflecting a reduction in
consultant 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 previous
years. The new market sector of construction made a pleasing contribution
resulting 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 of
contract recruitment activity remains a key aim of the Group.
Towards the end of 2007 the decision was made to cease recruitment activities
from our Croydon location and to consolidate activities into the Slough and
Enfield branches. The full cost of closure is reflected in the trading results
for 2007.
RAILWAY
Services delivered within the Railway Division include the delivery of training
and competency assessment through Catalis, blue collar labour supply through
Ganymede and the provision of conferencing through The Derby Conference Centre.
Training activity grew positively across all major areas of delivery resulting
in an increase in revenues of 10% to �4.1m compared with 2006. The increased
level of trading reflects positive improvements in trainer utilisation and
course take up which are key indicators applied to measure the performance of
the business. The growth of the training business remains a key objective of the
Group.
The blue collar labour supply business operated by Ganymede was impacted by a
reduction in demand from its underground contract and fall in the third party
labour supply needs of Network Rail, both of which contributed to a fall in the
key performance measure of man hours worked. Overall revenue reduced to �985,000
compared with 2006.
The conference activity, previously reported within the training business, was
concentrated in the leasehold company, The Derby Conference Centre, at the start
of 2007. The aim being to refurbish, re-brand and re-launch the Derby site as a
commercial conferencing venue. Stage one of the refurbishment programme was
completed in May and the site re-launched on 1 June. The key performance measure
of 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 office
premises in Yate, South Gloucester, to terminate the lease and relocate all of
the central finance and administration functions to the Group site in Derby. The
move will deliver central overhead savings and operational efficiencies. The
relocation was completed by late summer 2007.
STAFF DEVELOPMENT
The Group continues to believe that the key to future success is strongly linked
to people development. We therefore operate a number of internal and external
initiatives, designed to develop individuals in sales, operational, management
and leadership skills. Staff retention is a key performance indicator of the
business and is monitored closely.
ENVIRONMENTAL POLICY
The Group monitors its activities to minimise its impact on the environment and
has undertaken various initiatives in order to reduce waste.
INFORMATION TECHNOLOGY AND THE INTERNET
The Group's investment, in Information Technology to support business
activities, through both a real time wide area network and front and back office
systems to support the growth in volume activities, is complete. Expenditure
during the year was therefore restricted to maintenance and upgrades to those
systems. Future expenditure will be aimed at gaining operational efficiency
through evolution into the latest technologies and leveraging business benefits
through increased and varied profile and presence on the internet.
The internet attracts many of our candidate applications to the recruitment
business. The web based capability built to take advantage of this market
dynamic has continued to gain profile in our vertical market sectors.
Expenditure to attract candidates in 2007 has however increased over 2006 and we
believe will continue to grow in the current candidate driven climate. To
mitigate the future impact of the increased cost of candidate recruitment, the
recruitment business continues to enhance its web presence and embrace mobile
technologies to further improve candidate efficiencies and communication. Third
party job boards will, however, continue to play an integral role in candidate
recruitment. To maximise the return on third party spend, we have invested in
systems which enable us to measure the response rates from advertisements, on
individual sites in terms of both volume and quality. We will continue to
investigate and adopt technology which delivers increased efficiencies and
reduced cost of operation within all of our businesses.
SHARE OPTIONS
The Government EMI scheme was adopted in 2001. Further options have been granted
in 2007. The management team and key staff will continue to be the focus of such
initiatives.
Andrew Bailey, Group Chief Operating Officer 14 April 2008
Group Income Statement
Year ended 31 December 2007
2007 2006
�'000 �'000 �'000 �'000
Revenue 23,615 18,134
Cost of sales (18,379) (13,692)
___________________________________
Gross Profit 5,236 4,442
Administrative expenses - normal (4,489) (4,558)
___________________________________
Operating profit before exceptional 747 (116)
items
Other income - exceptional - 974
___________________________________
Operating Profit after exceptional 747 858
items
Profit on disposal of fixed assets - 73
___________________________________
747 931
Investment income 5 13
Finance costs (6) (16)
________ ________
(1) (3)
___________________________________
Profit before tax 746 928
Income tax expense (248) (315)
___________________________________
Profit for the year from continuing 498 613
operations
___________________________________
Loss on discontinued operations - (174)
after taxation
___________________________________
Profit for the year attributable to 498 439
equity holders
___________________________________
Earnings per share
- continuing operations 6.07p 7.47p
- continuing and discontinued 6.07p 5.35p
operations
___________________________________
Fully diluted earnings per share
- continuing operations 6.07p 7.47p
- continuing and discontinued 6.07p 5.35p
operations
___________________________________
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 �'000
At 1 January 2007 82 1,817 50 31 1,877 3,857
_________________________________________________________
Profit for the year - - - - 498 498
Total recognised 82 1,817 50 31 2,375 4,355
income and expense for
2007
Share based payment - - - (6) - (6)
reserve
Dividends - 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 �'000
At 1 January 2006 82 1,817 50 28 1,685 3,662
Profit for the year - - - - 439 439
_________________________________________________________
Total recognised 82 1,817 50 28 2,124 4,101
income and expense for
2006
Share based payment - - - 3 - 3
reserve
Dividends - note 2 - - - - (247) (247)
_________________________________________________________
At 31 December 2006 82 1,817 50 31 1,877 3,857
_________________________________________________________
Group Balance Sheet
31 December 2007
2007 2006
�'000 �'000 �'000 �'000
Assets
Non current assets
Intangible assets 924 924
Property, plant and equipment 738 654
___________________________________
1,662 1,578
Current assets
Inventories 8 3
Trade and other receivables 4,982 3,452
Deferred tax asset 55 112
Cash and cash equivalents 266 939
___________________________________
5,311 4,506
___________________________________
Total assets 6,973 6,084
Liabilities
Current liabilities
Trade and other payables (2,665) (1,941)
Current borrowings (4) (13)
Current tax payable (242) (271)
___________________________________
(2,911) (2,225)
Non current liabilities
Non current borrowings - (2)
Total liabilities (2,911) (2,227)
___________________________________
Net assets 4,062 3,857
___________________________________
Equity attributable to equity
holders of the parent
Share capital 82 82
Share premium 1,817 1,817
Capital redemption reserve 50 50
Share based payment reserve 25 31
Retained earnings 2,088 1,877
___________________________________
Total equity 4,062 3,857
___________________________________
Group Cash Flow Statement
Year ended 31 December 2007
2007 2006
�'000 �'000
Cash flows from operating activities
Operating result from continuing 747 931
operations
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) 1,658
activities
______________________
Cash flows from investing activities
(451) (134)
Purchases of property, plant and
equipment
78 238
Proceeds from sale of property, plant and
equipment
Disposal of businesses 145 97
______________________
Net cash from/(used in) investing (228) 201
activities
______________________
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) 1,525
equivalents
______________________
Cash and cash equivalents at the 939 (586)
beginning of the period
______________________
Cash and cash equivalents at the end of 266 939
the period
______________________
Notes
1. CORPORATE INFORMATION
The preliminary audited financial statements of the Group for the year ended 31
December 2007 were authorised for issue in accordance with a resolution of the
directors on 14 April 2008. ATA Group Plc is a public limited company
incorporated and domiciled in England whose shares are publicly traded. The
principal 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 by
the Board to be paid to shareholders on the register on 16 November 2007. The
interim dividend was paid on 11 December 2007.
A final dividend for the year of 2.5p net per share will be proposed at the
forthcoming Annual General Meeting, and if approved, will be paid on 18 July
2008 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 financial
statements under IFRS.
In preparing its opening IFRS balance sheet, the Group has adjusted amounts
previously reported in financial statements prepared in accordance with UK GAAP.
The analysis below shows a reconciliation of shareholders' equity and profits as
reported under UK GAAP as at, and for the period ended, 31 December 2006 to the
revised shareholders' equity and profits under IFRS as reported in these
accounts. The only reconciling item is in respect of goodwill, for which the
charge for 2006 has been written back.
In addition, there is a reconciliation of shareholders' equity under UK GAAP to
IFRS at the transition date for the Group, being 1 January 2006. As the Group
took advantage of the exemption available under IFRS 1, the write back of
goodwill has not been extended beyond the accounting transition date.
a)Reconciliation of profit
Year ended 31
December 2006
�'000
Profit for the period under UK GAAP 377
Goodwill amortisation 62
_____________
Profit for the period as reported under 439
IFRS
b) Reconciliation of equity
As at 1 As at 31
January 2006 December
2006
�'000 �'000
Equity as reported under UK GAAP 3,662 3,795
Goodwill amortisation - 62
_________________________
Equity as reported under IFRS 3,662 3,857
The cash flow statements for the year ended 31 December 2006 as presented in
these financial statements have been subject to a number of presentational
adjustments following the transition to IFRS. There is no impact in the net
increase in cash and cash equivalents for each period as reported under IFRS
compared with that originally reported under UK GAAP.
5. EXCEPTIONAL ITEMS
The exceptional other income in 2006 of �974,000 consists of the net payment
received in respect of Keyman Insurance in relation to the death of the former
Chief Executive.
The profit on disposal of fixed assets in 2006 amounting to �73,000 represents
the 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 are
primarily conducted in the United Kingdom although there is a small
international element.
The segmental analysis of turnover, operating profit and profit before taxation
is 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 statutory
accounts for 2006 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 for the year ended 31
December 2007 will be mailed to shareholders shortly and will be available from
the 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 Exchange
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