Final Results
April 09 2003 - 3:30AM
UK Regulatory
RNS Number:8002J
ATA Group PLC
09 April 2003
ATA Group plc
Preliminary results for the year ended 31 December 2002
ATA Group plc ("ATA") is a human resource support services group, which provides
employment solutions and training services to client companies mainly in the
United Kingdom.
HIGHLIGHTS
* Pre-tax profit before exceptional credits of #1.07m (2001: #1.07m)
* Earnings per share before exceptional credits 8.64p (2001: 9.61p)
* Exceptional credits arising in the year #352,000 (2001: #Nil)
* Undiluted earnings per share including exceptional credits 11.41p (2001
: 9.61p)
* Maintained final dividend of 3.8p making a total of 5.8p (2001: 5.8p) for
the year
* A difficult but profitable year in recruitment
* Another strong performance from the training division
Commenting on the results Bill Douie, Chairman, said:
"Our Railway business goes from strength to strength. In recruitment, we are
proud to have remained profitable in a difficult year. We view the future with
confidence"
9th April 2003
ENQUIRIES:
ATA Group plc Tel: 01454 310069
Bill Douie, Chairman
Clive Chapman, Chief Executive
CHAIRMAN'S STATEMENT
I am pleased to present the eleventh preliminary report of the company.
FINANCIAL
Recruitment
The first full year of operations at our Rail Recruitment company, formed in
June 2001, has been highly successful but profits arising from Sales and
Engineering Technology were under pressure. The costs of the second and final
phase in the establishment of our interactive web site have been fully written
off in the period. Consequently, recruitment profitability in this very
difficult year has been further eroded with turnover falling to #5.3m (2001:
#6.4m) and profits declining to #246k (2001: #639k).
Training
The full benefits of re-organisation of our Railway Training interests, largely
completed in 2001, have resulted in a material reduction of direct and indirect
costs and have provided a strong base from which significant increases in
turnover have been achieved. Towards the year end it was decided that Fairbourne
Adventure Limited did not have the potential to become a significant contributor
to Group profits and that business ceased trading in December. Consequently
some closure costs have been incurred in this discontinued activity. Largely due
to difficult trading conditions leading to the closure of Fairbourne Adventure
Limited, The Fairbourne Hotel Limited suffered a fall in turnover, dropping to a
breakeven position. Nonetheless, overall training profits have increased
strongly to #826k (2001: #415k) before exceptional credits.
Group
Accordingly, Group pre-tax profits at #1.07m before exceptional credits (2001:
#1.07m) have remained consistent and undiluted earnings per share before
exceptional profits and after a higher than normal tax charge at 8.64p (2001:
9.61p) have declined by 10%.
Capital investment
During the period, significant investment has been made in enhanced information
technology and we have also successfully concluded the development and
establishment of our interactive recruitment web site. Additionally further
investment in Rail Training equipment has taken place but continuing progress
has been made in reducing the Group medium term loan.
Taxation
By the nature of our businesses, certain capital investments are not allowable
for taxation purposes. 2002 has been a year when this has been a material
factor and accordingly the effective group corporation tax rate has risen to
35%. Although this rate will reduce in future years our corporation tax rate is
likely to remain marginally above 30%.
Pension funds
The Group operates both defined contribution and defined benefit pension
schemes. Although recent asset valuations have 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 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
At the time of acquisition of the Catalis group of companies there were
substantial provisions in the balance sheets of companies in that group setting
aside resources for the payment of Local Authority Rates, primarily in Derby.
Following extended negotiations with the Rating Valuation Office an agreement
was reached which has permitted the release of a substantial proportion of those
provisions. Also during the year the decision was taken to write off all the
remaining goodwill in the accounts of Fairbourne Adventure Limited (as part of
the costs of closure) and all remaining costs of the first phase of our
interactive recruitment web site.
TRADING
Recruitment Following a difficult start to the year, Sales and Engineering
Technology recruitment enjoyed steady recovery with significant acceleration in
the third quarter. Quieter conditions returned towards the year end but
creditable profits were earned overall in this trying year. Once again our Rail
recruitment company experienced strong demand and has performed most
satisfactorily.
In October 2002 the decision was made to enter the field of On-Track labour
supply as a logical extension of our Rail contract recruitment activities. To
this end a small South East based, Network Rail approved, company was acquired.
The company, Ganymede Tracklayers Limited, having passed through a difficult
trading period was acquired for a minimal consideration and is presently
undergoing complete re-structuring.
Training In 2002, with the exception of the Wales based outdoor training
activities, all elements of the Training division made good progress with demand
in the Railway industry continuing to be buoyant. Following the decision to
cease trading at Fairbourne Adventure, moves have been made which the directors
believe will lead to the disposal of the Fairbourne Hotel during the current
year.
DIVIDENDS
Your Directors are recommending a maintained final dividend for the year of 3.8p
making 5.8p in total covered 2 times by earnings. We continue to take a cautious
view of world events and do not yet believe that the outlook is sufficiently
encouraging to change our view that cash conservation remains a high priority.
OUTLOOK
The adverse conditions pertaining throughout 2002 have continued into 2003 and
consequently the recruitment division is still finding trading difficult.
Following cost reductions achieved during the last quarter of 2001 the effects
of the downturn have been substantially mitigated but it is likely that
recruitment will continue to make a below average contribution to group profits
in the first half of 2003. Beyond that the pace of recovery depends on
stabilisation and improving world and national economic conditions. Penetration
into the contract recruitment market in Rail is expected to quicken and entry
into contract recruitment in Engineering Technology is imminent.
The training division is continuing to expand and a good performance is
expected.
BOARD DEVELOPMENT
Since the year end the Directors have 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.
Accordingly moves are in hand to secure the services of a Commercial Director.
STAFF
I should like to extend my thanks to all staff and management for their
continuing loyalty and commitment.
W.J.C. Douie, Chairman. 9th April 2003
CHIEF EXECUTIVE'S REPORT
GROUP VISION
The consolidation of the niche market strategy of integrated recruitment,
training and consultancy continued in 2002. The outcome of this strategy is a
strong base with a healthy mix of earnings and an experienced senior management
team.
Since 1998 acquisitions have been focused in the training market to establish
the ability to deliver psychometric assessment, recruitment services and
training to each client. The move into the railway sector, in 2000, has provided
an excellent market within which to supply such an integrated delivery
maximising the use of Group resources and underpinning knowledge. The successful
implementation of this phase of Group strategy has resulted in a strong
performance in spite of market conditions.
Future strategic developments will be based on the desire to add a mass market
business that fits the current profile of the Group and provides a platform for
further earnings growth.
GROUP TRADING SUMMARY 2002
Turnover Operating Profit
2002 2001 2002 2001 2002 2001 2002 2001
#'000 #'000 % % #'000 #'000 % %
Recruitment 5,250 6,351 39.98 48.53 246 639 22.10 61.25
Training & Consultancy 7,880 6,735 60.02 51.47 867 454 77.90 38.75
Group Total 13,130 13,086 100.00 100.00 1,113 1,093 100.00 100.00
RECRUITMENT
The re-organisation of these predominantly permanent recruitment activities in
2001 and the establishment of trade in the Rail recruitment markets paid off in
2002. Whilst top line turnover fell the gross profit percentage was sustained as
the division demonstrated its strength and adaptability in times of variable
market conditions. Profits in the second half bucked the trend and provided a
commendable outcome for the year.
Contract recruitment activity in the core markets of engineering technology and
rail commenced in 2002 providing a base of learning and opportunity for 2003.
This diversification is supported by demand from our more substantial clients
and the attractive visibility of such earnings.
Reducing the indirect cost associated with the management of these businesses
through the expansion of the Group and dilution of central charges has provided
a significant competitive advantage. Hence, the future strategic vision of the
Group will continue to support the marginal cost gains in the divisional
businesses.
TRAINING AND CONSULTANCY
The impact of significant growth in this area of activity has had a material
affect on the earnings potential of the Group during 2002. The demand for
services in the railway markets has provided a very pleasing outcome for the
year. Ongoing safety requirements and the need for competence assurance provide
a mandatory base of future demand in the operational management of the trains
and the track.
Psychometric assessment and consultancy work remain an important, yet minor,
aspect of total delivery. The railway demand for these services is largely
optional with a move towards mandatory supervisory management and leadership
still a future prospect. The opportunity to consolidate all Group training and
consultancy delivery under one management team was taken at the end of 2002;
reducing cost and removing the geographically inaccessible Fairbourne
businesses. This simplified outcome provides for optimum return on the indirect
management costs and provides a better focus on higher margin direct activity.
INFORMATION TECHNOLOGY
Sensible investment in an IT strategy to match the growth vision of the Group
has taken place during 2002 and will continue in 2003. The establishment of a
central server environment to house the information assets of the Group and
provide individual user access from each business is in place.
Despite the initial concerns over the impact and threat of internet recruitment
activity we have successfully harnessed the benefits of such technology with
relatively modest expenditure. Our interactive web site provides a less
expensive flow of candidates compared to the historical cost and an element of
speed in working such resources not heralded prior to the internet. The
fundamentals of effective assessment and selection have, however, remained in
force and support the historical advantages of our business model.
The financial functions of the Group are based on a fully integrated accounts
package housed in a central facility. The strength of this platform supports the
acquisitive nature of the Group and allows for easy export and import of data to
facilitate the rapid take on of acquired company information. The recruitment
and training operational software also boast such compatibility in support of
niche acquisitions that fit our profile.
SHARE OPTIONS
The Board continues to support the ownership of shares by the staff and has
granted further options within the existing schemes in 2002. The Government
scheme for EMI was adopted in 2001 in addition to the existing approved and
unapproved schemes established in 1998.
The top management team and key staff will continue to be the focus of such
incentives.
PROSPECTS
Further organic growth and consolidation within the niche strategy of
recruitment, training and consultancy will continue to strengthen the outlook
despite adverse market conditions in mainstream recruitment.
The strategic addition of a volume based, mass market, entity to the Group will
be the focus of proactive acquisitive activity whilst the logical fit of
businesses that slot into the existing structure and niche strategy will
continue. The strengthening of the Group Board in 2003 through the appointment
of an executive Commercial Director will provide the necessary operational
capacity to meet such challenges.
Clive Chapman, Chief Executive 9th April 2003
Consolidated Profit and Loss Account
2002 2001
Turnover Notes #'000 #'000 #'000 #'000
Continuing operations 12,554 12,818
Acquisitions 330 -
12,884 12,818
Discontinued operations 246 268
13,130 13,086
Cost of sales (7,487) (6,759)
Gross Profit 5,643 6,327
Administrative Expenses (4,678) (5,328)
Other operating income 148 94
Operating profit
Continuing operations 1,187 1,147
Acquisitions (16) -
1,171 1,147
Discontinued operations (58) (54)
1,113 1,093
Loss on termination of operations (66) -
Exceptional item 418 -
Interest receivable and similar income 17 49
Interest payable and similar charges (58) (71)
311 (22)
Profit on ordinary activities before taxation 1,424 1,071
Tax on profits on ordinary activities (500) (294)
Profit on ordinary activities after taxation 924 777
Dividends 1 (471) (469)
Retained profit for the financial year 453 308
Earnings per share 2 11.41p 9.61p
Fully diluted earnings per share 2 11.35p 9.58p
Underlying earnings per share 2 8.64p 9.61p
Underlying fully diluted earnings per share 2 8.60p 9.58p
There were no recognised gains or losses other than those reported in the Profit
and Loss Account.
Consolidated Balance Sheet
2002 2001
Notes #'000 #'000 #'000 #'000
Fixed assets
Intangible assets 1,181 1,224
Tangible assets 2,375 2,261
Current assets 3,556 3,485
Stock 20 30
Debtors
Amounts falling due after more than one year 843 860
Amounts falling due within one year 4,391 2,289
Cash at bank and in hand 475 1,777
5,729 4,356
Creditors
Amounts falling due within one year (5,194) (4,132)
Net current assets 535 224
Total assets less current liabilities 4,091 3,709
Creditors
Amounts falling due after more than one year (569) (666)
Provisions for liabilities and charges (201) (206)
Net assets 3,321 2,837
Capital and reserves
Called up share capital 81 81
Share premium account 1,763 1,732
Capital redemption reserve 50 50
Profit and loss account 1,427 974
Equity shareholders' funds 3,321 2,837
Consolidated Cash Flow Statement
2002 2001
Notes #'000 #'000 #'000 #'000
Net cash inflow from operating activities 3 569 1,709
Return on investments and servicing of finance
Interest received 17 49
Interest paid (58) (71)
Net cash (outflow) from return on investment and
servicing of finance (41) (22)
Taxation
UK corporation tax paid (249) (452)
Capital expenditure
Sale of tangible fixed assets 72 78
Purchase of tangible fixed assets (602) (409)
Net cash (outflow) from capital expenditure (530) (331)
Acquisition and disposals
Purchase of subsidiary undertaking - 4
Net debt acquired with subsidiary (26) -
Net cash (outflow)/inflow from acquisitions
and disposals (26) 4
Equity dividends paid (438) (469)
Net cash (outflow)/inflow before use of financing (715) 439
Financing
Decrease in loans (266) (372)
Capital element of finance lease rental payments (32) (25)
Net cash (outflow) from financing (298) (397)
(Decrease)/increase in cash (1,013) 42
NOTES
1. Dividends
On 2 September 2002 an interim dividend of 2.0p net per share was resolved by
the Board to be paid to shareholders on the register on 29 November 2002. The
interim dividend was paid on 16 December 2002.
A final dividend for the year of 3.8p net per share will be proposed at the
forthcoming Annual General Meeting, and if approved, will be paid on 30 July
2003 to shareholders on the register on 27 June 2003.
2. Earnings per Share
The calculation of earnings per share is based on a profit after taxation
of #924,000 (2001: #777,000) and a weighted average of 8,099,672 (2001:
8,082,400) shares in issue.
The underlying earnings per share figure is based upon earnings excluding
the exceptional credits and attributable tax charge.
3. Net Cash Inflow from Operating Activities
2002 2001
#'000 #'000
Operating profit 1,113 1,093
Depreciation of tangible fixed assets 553 583
Loss/(Profit) on sale of tangible fixed assets 13 (10)
Amortisation of intangible fixed assets 70 73
Decrease/(increase) in stocks 10 (16)
Increase in Debtors (1,690) (84)
Increase in Creditors 500 70
569 1,709
Report & Accounts
The above results do not represent the statutory accounts. The statutory
accounts for 2001 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
END
FR BRGDSSSGGGXI
