Rtc Grp. Regulatory News (RTC)

8 Sep 2006 07:01

ATA Group PLC08 September 2006 ATA Group Plc CHAIRMAN'S STATEMENT I am pleased to present the interim report of the Company for the six months to30 June 2006. Structure and Management Following the loss of our Chief Executive in January certain changes have beeninstituted both in the reporting structure and the top management of our Group.The previous split of our activities into "Recruitment & Labour Supply" and"Training & Consultancy" has been replaced by "Recruitment" and "Railway". The Recruitment division, trading under the name of ATA Selection, now comprisesall of our permanent and contract recruitment activities serving the WhiteCollar markets in Engineering, Sales, Rail and, recently initiated,Construction. The Railway division comprises all Training activities in the Group, presentlysubstantially to the Railway Industry, trading as Catalis, and Blue Collarlabour supply, presently solely to the Overground and Underground railwaysystems, trading as Ganymede Tracklayers. In order to ensure continuity and quality of top management I have reverted tofull-time Group Executive Chairman, Andrew Bailey has been appointed GroupManaging Director and we have recruited a full-time Group Financial Controller.Although a number of possible names for non-executive director have beensuggested we have yet to locate a candidate who meets all the requirements andthe search continues. Accordingly, for the time being, the Group Board consistsof the above two named executives. The operational responsibility has been placed in the hands of the team of fourRegional Directors in the Recruitment division and in the hands of PaulMcLoughlin, recently promoted Managing Director of the Railway division. Disposal There follows the text of an announcement made on 28 July 2006. The Directors of ATA are pleased to announce the following disposal:- Completion took place today of the sale of the assets and goodwill of Gem-Weld(UK) Limited for a cash consideration of £264,000 payable in five instalmentsover fifteen months. Mr Bill Douie, Chairman of ATA Group Plc, commented "The provision by the private sector of rail Track Welding Services was throwninto turmoil following the return of maintenance of the infrastructure of theNational Rail Network to Network Rail. Since that time there have been periodsof feast and famine in demand for such services and during a period of lowdemand in 2004 ATA Group purchased Gem-Weld (UK) Limited. During late 2004 and2005 costly re-organisation of the Company took place and satisfactory businessflows and trading results were enjoyed for approximately twelve months to 31March 2006. At the beginning of the Network Rail budget year on 1 April 2006 demand againreduced to wholly un-commercial levels, a situation which continues, and ATAGroup reluctantly concluded that it was not possible to provide this servicethrough a stand-alone company. Accordingly the opportunity has been taken to dispose of this activity andterminate what has not been a successful investment for the Group. Theconsideration will be used to further strengthen the Group's cash reserves. This disposal allows further simplification of the Group's range of corebusiness activities which are strongly focussed on the provision of recruitmentand training services to the manufacturing, construction and transportindustries, predominantly in the UK." Gem-Weld (UK) Limited has been treated in the accounts as a discontinuedactivity. Losses to 30 June 2006 of £340,000 on turnover of £549,000 include agoodwill write-off of £129,000. Proceeds of sale will be accounted for in thesecond half. Trading General Economic conditions remain stable although threatening as the Global Economyfaces the possibility of recession and events in the Middle East and elsewhereserve to de-stabilise the world environment. General stability continues in thetrading environment in recruitment, although the Railway Industry is stillundergoing a process of fundamental change which continues to create significantuncertainty and challenging trading conditions much as expected. Group turnoverin the six months to 30 June 2006 increased 6% to £9.145m, (2005 £8.626m),profit before tax including non-recurring and exceptional items rose to £1.188m,(2005 £4,000). Earnings per share rose to 7.24p (2005 0.34p). All figures areadjusted to exclude the discontinued activity. Recruitment Recruitment turnover in the period was £5.55m (2005 £4.39m). Operating profitrose to £300,000 (2005 £89,000). The performance of ATA Selection improvedduring the period in permanent recruitment and further material progress wasmade in contract recruitment. In common with most of our peer group, we continueto experience difficulties in attracting and retaining consultants ofsatisfactory quality and consultant numbers in both permanent and contractrecruitment are broadly similar to those at the last year end. Greater attentionis being paid to the need for effective training and development of staff andearly signs, reflected in more efficient performance and better retention, areencouraging. This is, and will remain, a significant challenge and otherinitiatives to improve this important area will be introduced in the secondhalf. Railway Training turnover in the period continues to be seriously impacted by reduceddemand for Signal Engineer Training following the transfer of all InfrastructureMaintenance to Network Rail in the second half of 2004 and the termination ofthe contract enjoyed by Rail Training Audit Services, but increased by theinclusion of Ganymede Tracklayers (previously reported under Recruitment andlabour supply) and shows a reduction to £3.60m (2005 £4.24m). An operating lossof £161,000 (2005 loss £79,000) was incurred, entirely due to continuingdifficulties at Catalis. These figures exclude the discontinued activity. During the period agreement has been concluded with Network Rail for a smoothtransition from provision of Signal Engineer Training to the maintenance marketby the private sector to provision, in the great majority, internally by NetworkRail. Under the terms of an agreement dated 21 June 2006, certain plant,equipment and other assets, used by Catalis to provide Signal Engineer Trainingcourses, were sold to Network Rail with proceeds being receivable over thesecond half of 2006. The assets will be decommissioned and delivered to NetworkRail over the remainder of 2006. As a result the lease on our premises at Crewehas been extended to 31 December 2006 but from 1 January 2007 the remainingSignal Engineer Training, supplied to the private sector renewals market, willbe provided from our premises in Derby and Clapham, London, and on Tube Linesown premises at Stratford, London. Although this agreement provides welcome clarity and will permit there-organisation of our training interests from a new and smaller base, there canbe no doubt that the short term outlook for this activity is significantlyreduced from that of two and more years ago. Ganymede Tracklayers continues to provide a quality service to the RailwayIndustry but the immediate prospects for growth in that market are limited. As mentioned above, Gem-Weld has been sold and is treated as discontinued. Non-recurring item Fortunately the Group had taken the prudent step of securing keyman insurance onthe life of the Chief Executive and the net payment received of £974,000 hasbeen shown as a non-recurring item. Dividends Your Directors consider that, although many problems have been experienced inthe business in the first six months of 2006, they are pleased that steadyprogress is being made in all areas and that results for the period are improvedover 2005. In view of this they have resolved to pay a maintained interimdividend of 1.0p (2005: 1.0p). Strategy The massive changes wrought by a re-structured Railway Industry and by changesin the quantity of top management available to our Group have prompted astrategic review which is now substantially complete. No longer can we set outto find growth through acquisition of poorly managed compatible companies whereintegration and overhaul led by our erstwhile Chief Executive could be expectedto lead to enhanced shareholder value. Nonetheless I am pleased with the levelof quality management at senior level in the divisions and there has been noabatement in the thrust towards organic start-ups to extend the range and volumeof our support service activities. We have, therefore, decided upon an alternative route which can briefly besummed up as; Simplify the Group with enhanced focus, optimise the presentbusinesses with re-orientation where required, pursue organic start-upopportunities with vigour and seek acquisitions of support service companieswith proven track records and management in current and compatible nichemarkets. I have no doubt that continued maturity and experience in our senior managerswill eventually provide the top level succession we now need. This process maybe accelerated through the continued acquisition strategy which we are pursuingwith energy and diligence. Outlook As in 2005 we are in the midst of a challenging year. Also, as in 2005, the bulkof this year's re-positioning has taken place in the first half and the secondshould demonstrate a more stable picture. Further development of contractrecruitment is anticipated enabling more intensive use to be made of ournationwide network of branches, where permanent recruitment is expected tocontinue the trend to more effective working. Additionally we have taken ourfirst steps to enter the white collar Construction market in both contract andpermanent recruitment, with this activity initially located in Derby. This isexpected to generate continuing increases in turnover and, through enhancementof contract consultant maturity and skill, to generate improvements in profitsfrom this section of our business. Ganymede Tracklayers is continuing steadyperformance and intends immediately to enter the Blue Collar contract market inConstruction, particularly within the 2012 footprint, and expects to extendfurther its client base, outside the Railway Industry. The second half isexpected to produce a steadier performance from Catalis as the agreement withNetwork Rail plays out to the year end and where repositioning to take fulladvantage of a much altered Railway Industry will be substantially complete byearly 2007. I remain confident that the Group will continue to make solidprogress in dealing with a fast changing trading environment. W.J.C.Douie, Chairman. 8th September 2006. ATA Group Plc CONSOLIDATED PROFIT AND LOSS ACCOUNT 6 Months 6 Months 12 Months to 30 Jun 2006 to 30 Jun 2005 to 31 Dec 2005 (unaudited) (unaudited) As restated As restated Notes £'000 £'000 £'000 £'000 £'000 £'000TurnoverContinuing operations 9,145 8,626 17,277Discontinued operations 549 304 1,044 ____________________________________________ 2 9,694 8,930 18,321 ____________________________________________Operating ProfitContinuing operations 139 10 515- Non-recurring item 3 974 - -Discontinued operations (340) 38 19 ____________________________________________ 2 773 48 534 Net interest payable (13) (6) (34) ____________________________________________ 760 42 500 Profit on disposal of 4 88 - -Fixed Assets ____________________________________________Profit on ordinary 848 42 500activitiesbefore taxation Tax on profit on ordinaryactivities 5 (254) (14) (78) ____________________________________________Profit on ordinaryactivitiesafter taxation 594 28 422 ____________________________________________Earnings per share (pence) 7 7.24 0.34 5.15 ATA Group Plc CONSOLIDATED BALANCE SHEET As at As at As at 30 Jun 2006 30 Jun 2005 31 Dec 2005 (unaudited) (unaudited) As restated As restated Notes £'000 £'000 £'000FIXED ASSETSIntangible assets 952 1,118 1,117Tangible assets 881 1,323 1,175 _________________________________ 1,833 2,441 2,292 _________________________________CURRENT ASSETSStock 27 29 45Debtors 5,411 3,222 4,817Cash at bank and in hand 676 803 178 _________________________________ 6,114 4,054 5,040 _________________________________CREDITORS: Due within one year (3,597) (2,992) (3,583) _________________________________ NET CURRENT ASSETS 2,517 1,062 1,457 _________________________________ 4,350 3,503 3,749 TOTAL ASSETS LESS CURRENT LIABILITIES (46) (50) (44) CREDITORS: Due after more than one year PROVISIONS FOR LIABILITIES AND CHARGES (43) (101) (43) _________________________________ NET ASSETS 4,261 3,352 3,662 _________________________________ CAPITAL AND RESERVESCalled up share capital 82 82 82Share premium account 1,817 1,817 1,817Capital redemption reserve 50 50 50Share based payment reserve 33 22 28Profit and loss account 10 2,279 1,381 1,685 _________________________________ 9 SHAREHOLDERS' FUNDS 4,261 3,352 3,662 _________________________________ ATA Group Plc CONSOLIDATED CASH FLOW STATEMENT 6 Months to 6 Months to 12 Months to 30 Jun 2006 30 Jun 2005 31 Dec (unaudited) (unaudited) 2005 Notes £'000 £'000 £'000 CASH INFLOW / (OUTFLOW) FROM OPERATING ACTIVITIES 8 1,323 312 (308) Returns on investments and servicing offinance (13) (6) (34) Taxation - (135) (335) Payments to acquire tangible fixed (39) (97) (219)assets Receipts on disposal of tangible fixed 21 31 37assets Equity dividends paid - - (402) _________________________________Net cash inflow/(outflow) before use of 1,292 105 (1,261)liquid resources and financing Issue of ordinary share capital - 21 21 Decrease in medium term loans (1) (8) (10) Capital element of finance lease rental (29) (30) (51)payments _________________________________INCREASE / (DECREASE) IN CASH BALANCES 1,262 88 (1,301) _________________________________ ATA Group Plc NOTES TO THE INTERIM STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2006 1. ACCOUNTING POLICIES The accounting policies used in the preparation of the interim accounts areconsistent with those used in the preparation of the audited annual accounts forthe year ended 31 December 2005 with the exception of the introduction of FRS 20"Share based payments", which requires a charge to be made to the profit andloss account in respect of transactions that can be settled by the issuing ofequity instruments. The Group has applied the requirements of FRS 20 Share based payments. Inaccordance with the transitional provisions, FRS 20 has been applied to allgrants of equity instruments after 7 November 2002 that were unvested as of 1January 2005. The Group issues equity settled share based payments to certain employees.Equity settled share based payments are measured at fair value (excluding theeffect of non market based vesting conditions) at the date of grant. The fairvalue determined at the date of grant of the equity settled share based paymentsis expensed on a straight line basis over the vesting period, based on theGroup's estimate of shares that will eventually vest and adjusted for the effectof non market based vesting conditions. Fair value is measured by use of a Black-Scholes model. The Group financial information consolidates the accounts of ATA Group Plc andall its material subsidiary undertakings using the acquisition method. The comparative figures for the year ended 31 December 2005 do not constitutestatutory accounts within the meaning of S.240 of the Companies Act 1995, butthey have been derived from the audited financial statements for that year,which have been filed with the Registrar of Companies. The report of theauditors was unqualified and did not contain a statement under section 237 (2)or (3) of the Companies Act 1985. 2. SEGMENTAL ANALYSIS 6 Months to 6 Months to 12 Months to 30 Jun 2006 30 Jun 2005 31 Dec 2005 (unaudited) (unaudited) As restated As restated £'000 £'000 £'000TURNOVER Recruitment Division 5,546 4,386 8,758Railway Division 4,148 4,544 9,563 _________________________________ 9,694 8,930 18,321 _________________________________ OPERATING (LOSS)/PROFIT - Excludingnon-recurring item Recruitment Division 300 89 16Railway Division (501) (41) 518 _________________________________ (201) 48 534 _________________________________ Operating (loss)/profit is stated after amortisation of goodwill of £165,000 inthe period (2005 £36,000), £129,000 of which relates to the full write off ofgoodwill relating to Gem-Weld (UK) Limited following an impairment review. 3. NON-RECURRING ITEM - Operating Profit Net payment received in respect of keyman insurance in relation to the formerChief Executive. 4. PROFIT ON DISPOSAL OF FIXED ASSETS Profit on maintenance assets sold to Network Rail under the terms of anagreement dated 21 June 2006. 5. TAX ON PROFIT ON ORDINARY ACTIVITIES The tax on profit on ordinary activities for the period to 30 June 2006 has beenprovided at the estimated rate applicable to the group for the period. 6. DIVIDENDS The Board has approved an interim dividend of 1p per ordinary share net to bepaid on 11 December 2006 to shareholders on the register of members at 17November 2006. 7. EARNINGS PER SHARE The earnings per share have been calculated on the profit on ordinary activitiesafter taxation, based on the number of shares in issue (8,202,331) during theperiod. The fully diluted earnings per share is not materially different fromthe basic earnings per share and has not been disclosed. 8. CASH FLOW STATEMENT RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES 2006 £'000 Operating profit 773Amortisation 165Depreciation 242Share-based payment depreciation 5Profit on sale of fixed assets (10)Decrease in stocks 18Increase in debtors (345)Increase in creditors 475 ------Net cash inflow from operating activities 1,323 ====== ANALYSIS OF CHANGES IN NET (DEBT)/ FUNDS At Other At 30 1 Jan 2006 Cash Flows Movements Jun 2006 £'000 £'000 £'000 £'000 Cash at bank and in hand 178 498 - 676Bank overdraft (764) 764 - - Debt due within 1 year (1) 1 - -HP and finance leases (101) 29 - (72) ____________________________________________Net (Debt)/Funds (688) 1,292 - 604 ____________________________________________ 9. MOVEMENT IN SHAREHOLDERS' FUNDS STATEMENT OF MOVEMENT IN GROUP SHAREHOLDERS' FUNDS As at As at As at 30 Jun 2006 30 Jun 2005 31 Dec 2005 £'000 £'000 £'000 As previously reported 3,662 4,418 3,609FRS 17 - (802) - _____________________________________Opening shareholders' funds as restated 3,662 3,616 3,609Profit for the period 594 28 422Dividends - (319) (402)Issue of shares - 21 21Share based payment reserve 5 6 12 _____________________________________Closing shareholders' funds 4,261 3,352 3,662 _____________________________________ 10. PRIOR PERIOD ADJUSTMENTS FRS 17 : Retirement benefits In previous years the Group has accounted for the defined benefit pension schemein respect of certain employees of Catalis Rail Training Limited under theprovisions of SSAP24. At 31 December 2004 a prepayment of pension contributionsof £809,000 was being carried forward and this amount was being written off overthe future working lifetime of the members. On adoption of the full provisions of FRS 17 and following a formal actuarialvaluation of the Group's interest in this pension scheme the prepayment of£826,000 at 1 January 2004 was written off as a prior year adjustment in thefinancial statements for the year ended 31 December 2005. The pension schememeets the criteria of a multi employer scheme and was accounted for as a definedcontribution scheme in the accounts for the year ended 31 December 2005 and forthe restated comparatives for the period ended 30 June 2005. FRS 20 : Share Based Payments Equity settled share option scheme The Company operates an EMI based share option scheme for certain employees ofthe Group. Options are exercisable at a price equal to the average quoted marketprice of the Company's shares on the date of grant. The vesting period is threeyears. If the options remain unexercised after a period of seven years from thedate of grant the options expire. Options are forfeited if the employee leavesthe Group before the options vest. The effect of these changes in accounting policies on the comparative financialinformation is as follows:- As at As at 30 Jun 2005 31 Dec 2005 £'000 £'000Profit and loss reserveAs previously reported 2,205 1,713FRS 17 (802) -FRS 20 (22) (28) ________________________As restated 1,381 1,685 ________________________ Debtors - amounts falling due after one yearAs previously reported 802 -FRS 17 (802) - ________________________As restated - - ________________________Share based payment reserveAs previously reported - -FRS 20 22 28 ________________________As restated 22 28 ________________________ ATA GROUP PLCRegistered OfficeKingston House,Oaklands Business Park,Armstrong Way,Yate,South Gloucestershire BS37 5NA Approved and authorised for releasefor and on behalf of ATA Group Plc This information is provided by RNS The company news service from the London Stock Exchange