Final Results

RNS Number:4766B
ATA Group PLC
13 April 2006



                                 ATA Group plc

            Preliminary results for the year ended 31 December 2005


ATA Group plc ("ATA") is a human resource support services group, which provides
employment solutions and training services to client companies in the United
Kingdom and the Republic of Ireland.


                                 Highlights

Group pre-tax profits at #512,000 (2004: #1.38m).


Fully diluted earnings per share at 5.25p (2004:11.34p - restated).


Dividends for the year have reduced to 3.0 pence (2004: 6.4p).


Recruitment and labour supply had a difficult year but achieved pre-tax profits
at #217,000 (2004 : #233,000).


Training and consultancy has suffered the full impact of infrastructure
maintenance being taken over by Network Rail reducing profits to #295,000 (2004: 
#1.15m).


MANAGEMENT



Since the year end we have been deprived of the services of our Chief Executive
and founder director, Clive Chapman, who tragically died suddenly on January
27th whilst on holiday.  Whilst our deepest sympathies are extended to his
family at this time of loss, it is the duty of the Directors to deal with the
consequences of this event to ensure that no material and lasting damage is
suffered by any of the stakeholders in ATA Group Plc.  This subject is covered
in more detail in the full Chairman's statement.


Another challenging year is anticipated in 2006.

Commenting on the results Bill Douie, Chairman, said:


"In spite of fundamental change, over the last few years, in the culture and
processes in permanent recruitment which have assisted direct access to
candidates by employers, there are many talents, areas of experience and
personal aspirations and ambitions which can only be covered by expert
interviewing.  As a consequence there remains strong demand for quality
Recruitment Consultancies to handle the otherwise time consuming process to the
point of short-listing. Advances in IT have further increased efficiency in
processing contract recruitment and in this area strong expansion continues.



From a mothballed condition at the start of 2005, Gem-Weld has regained a
significant market position and early losses of #168,000 for the three and a
half months of ownership in 2004 have reduced to #101,000 for the whole of 2005.
Ganymede Tracklayers continued to build on its contracts with Network Rail and
Tube Lines.



Catalis Rail Training has suffered from the transfer of Signal Engineer training
for the National Rail Network to Network Rail.  Although reasonable levels of
such business continued from Tube Lines, Metronet and private sector National
Rail Renewals companies, overall turnover in this area of our business was
approximately halved from two years previously. Steady progress continues in
other areas of Rail and Non Rail Training."


13 April 2006


ENQUIRIES:


ATA Group plc                           Tel: [phone]

Bill Douie, Executive Chairman.         Andrew Bailey, Group Managing Director.



CHAIRMAN'S STATEMENT
Year ended 31 December 2005


I am pleased to present the fourteenth preliminary results of the company.



MANAGEMENT



Since the year end we have been deprived of the services of our Chief Executive
and founder director, Clive Chapman, who tragically died suddenly on January
27th whilst on holiday.  Whilst our deepest sympathies are extended to his
family at this time of loss, it is the duty of the Directors to deal with the
consequences of this event to ensure that no material and lasting damage is
suffered by any of the stakeholders in ATA Group Plc.  This subject is covered
in more detail below.



FINANCIAL



Recruitment and labour supply



Recruitment division turnover increased to #12.22m (2004 : #9.38m) reflecting
solid performances in recruitment and on-track labour supply. The main areas of
advance were in Gem-Weld where losses were reduced from #168,000 to #101,000 and
in contract recruitment where turnover advanced from #2.0m to #3.9m.  Divisional
profits fell to #217,000 (2004 : #233,000).



Training and consultancy



Following the decision by Network Rail in 2003 to bring back all Infrastructure
Maintenance "in-house" and thus to replace the work previously done by private
sector contractors the period of uncertainty which has adversely affected both
turnover and profits at Catalis Rail Training and Rail Training Audit Services
worsened and there was a consequential further reduction of divisional turnover
to #6.10m (2004 : #7.77m) and profits to #295,000 (2004 : #1.15m).



Group



Group pre-tax profits at #512,000 (2004 : #1.38m) have fallen by 63%, and fully
diluted earnings per share at 5.25p (2004 : 11.34p - restated) have reduced by
54%.  Emphasis continues to be placed on cash conservation but at the year end
Group net debt was #688,000 (2004 : #597,000 net cash).



TRADING



Recruitment and labour supply



Over the last few years the culture and processes in permanent recruitment have
undergone fundamental change following rapid and extensive changes in
Information Technology.  Essentially the system of press advertisement of
vacancies attracting applicants for specific jobs has largely been replaced by
massive candidate databases with applicant seekers paying to search for suitable
candidates for their positions.  In theory this should make possible staff
search by employers "from the desk" a practical reality.  However, in practice,
employers are faced with substantial numbers of possible candidates who may or
may not be actively seeking to change jobs.  Although keyword search techniques
have matured and improved and specific qualifications and skill sets can filter
to a degree, there are many talents, areas of experience and personal
aspirations and ambitions which cannot be covered. Consequently there remains a
need for skilled interviewing and, in order to reduce the time required to
process a search, expert short-listing and the demand for expert recruitment
consultancies remains strong.  Although volumes have been largely maintained in
permanent recruitment at ATA Selection, the time taken to seek and process
candidates and vacancies has extended and employment costs for consultants have
increased.  As a result net margins have been under pressure and steps are being
taken to address this issue by making more efficient use of our extensive
investment in up to the minute IT systems.  However, in contract recruitment,
Information Technology advances have materially cut the costs of processing even
short term weekly paid contracts and, in this area of our business, the pace
quickened and by the year end the majority of our locations had teams of
contract consultants.  Turnover in this important and growing section of our
business grew by 95% compared with 2004.



At the beginning of 2005, Gem-Weld had been reduced to only two employees and
was effectively mothballed pending an improvement in demand.  A major sales
initiative was commenced in late January with pleasing results, including the
securing of a Network Rail contract in the Thames Valley area.  Turnover
increased from #30,000 in January to #1.10m for the year as a whole. Ganymede
Tracklayers performed well in its contracts with Network Rail and Tube Lines and
made a satisfactory contribution to the Group.



Training and consultancy



Catalis Rail Training has suffered from the transfer of Signal Engineer training
for the National Rail Network to Network Rail.  Although reasonable levels of
such business continued from Tube Lines, Metronet and private sector National
Rail Renewals companies, turnover in this area of our business, was
approximately halved from two years previously. Steady progress continues in
other areas of Rail and Non Rail Training.



Rail Training Audit Services continued to perform creditably in the final year
of its contract with Network Rail but was unsuccessful in gaining a new
contract.



Capital investment



Following the completion of our investment programme in IT and rail training
equipment in 2004, capital investment continued at a figure significantly less
than depreciation, permitting a further strengthening of the Group balance
sheet.



Pension funds



On adoption of the full provisions of FRS 17 and following a formal actuarial
valuation of the Group's interest in this pension scheme the prepayment of
#826,000 at 1 January 2004 has been written off as a prior year adjustment. The
pension scheme meets the criteria of a multi-employer scheme and is accounted
for as a defined contribution scheme in the accounts for the year ended 31
December 2005 and for the restated comparatives for the year ended 31 December
2004.



DIVIDENDS



In view of the reduction in Group profitability at the half year the interim
dividend was reduced to 1.0p. Given the need for caution concerning the short
term changes needed at Catalis Rail Training your Directors are recommending a
final dividend of 2.0p.



MANAGEMENT CHANGES AND RE-ORGANISATION



Following the unexpected death of Group Chief Executive, Clive Chapman, in
January immediate steps were taken to stabilise the organisation and a full
review was commenced.  As a first phase, Andrew Bailey, Group Commercial
Director, was promoted to the position of Group Managing Director and Bill
Douie, Group Chairman, reversed his decision to become part time, reverting to
the full time role of Group Executive Chairman.  These two moves, supported by
the appointment of a Financial Controller, whilst securing the necessary
continuity of management and leadership in the Group, nevertheless left the
Group without any non-executive directors.  It is the intention to seek and
appoint at least one non-executive with relevant industry and City experience at
the earliest opportunity.



My review of Group strategy is now well underway and will be concluded by the
end of April but early moves have been made to establish contacts within present
and past advisors both to seek advice and to make contacts which may serve to
facilitate a new Group strategy.



At operational level certain minor adjustments have been made to ensure that all
responsibilities for delivery below Group Board level, previously held by the
Chief Executive, have been covered.  The second line management team reports
directly to the Group Managing Director.  It is most pleasing to report that
without exception all members of that team have risen to the challenge with
enthusiasm and I remain confident that they will perform with credit.  There is
also gratifying evidence that all members of staff have responded well to the
new situation and are determined to succeed.



As phase two, the structure of the Group has been changed to reflect reality in
that the three subsidiaries serving the Railway Industry, Catalis, Ganymede and
Gem-Weld, have been combined to form the "Railway Division" and Paul McLoughlin,
already Managing Director of Ganymede and Gem-Weld, has been appointed to a new
post of Managing Director, Railway Division.  Paul will continue in his
responsibility for delivery at Ganymede and Gem-Weld but will oversee the
development and delivery of all three subsidiaries, with particular emphasis on
sales and market development and divisional and company expansion both within
and beyond the Railway Industry.  ATA Selection, covering both permanent and
contract recruitment, will form the Recruitment Division.



Medium and long term Group Strategy



Although it is possible to cover for the loss of a key management figure in most
respects and the moves outlined above substantially complete that process,
overall Group Strategy must reflect and play to the strengths available at Group
Board level.  It is clear that the quiver of talents available at that level has
changed and a new view must be taken.  There can be no doubt that Clive showed
particular strengths in transforming underperforming enterprises from within
with important concentration on spotting and developing latent management
talent.  As a consequence past strategy has been focused on acquisitions within
a narrow range of activities compatible with present Group Companies but with
inadequate or departing key management.  It is no longer possible, for the time
being, for ATA Group to provide such talents and to inject additional management
from other parts of the Group and, until that position changes with the full
flowering of present management resources, ATA Group Plc will be seeking
acquisitions of, and mergers with, organisations capable of demonstrating above
average self contained management resources at operating and Chief Executive
level.



Above all there is a renewed, urgent and keen focus on enhancement of
shareholder value.



OUTLOOK



This is a year when it is more difficult than usual to comment on outlook. That
accepted, the new picture within the Railway Industry is becoming clearer
although further fundamental shifts in the balance between the public and
private sectors cannot be ruled out.  The bulk of readjustment at Catalis has
now been concluded and events over the last few months give me optimism that a
final changeover with Network Rail will complete the picture to our mutual
advantage.  The newly formed Railway Division is performing to expectations and
will make a lower but satisfactory contribution to Group fortunes than was the
case two years ago.  This Division will now address the challenge of
diversification into other products and industries.



Notwithstanding the comments made above, the Recruitment Division is making
further progress with permanent recruitment maintaining its position and growth
continuing in contract recruitment and National and Local Preferred Supplier
Agreements.



Cost control and cash conservation remain high on the agenda to underpin the
beginnings of recovery from the setback of 2005.



As the position becomes more clear, the Company will make further announcements.



STAFF



There can be no more appropriate time for me to thank all our staff for their
efforts and successes in 2005 and to acknowledge the universal strength and
loyalty displayed by all under the difficult times at the start of 2006.  We are
fortunate indeed in having the team we have.



W.J.C. Douie, Chairman        13 April 2006



OPERATIONAL REPORT

Year ended 31 December 2005



GROUP TRADING SUMMARY 2005



Group revenue for the year has increased by 7% compared with 2004. Reductions in
training and consultancy were offset by increased revenues in recruitment and
labour supply. The change in sales mix, reflecting the growth in lower margin
contract recruitment and labour supply against reductions in higher margin
technical and rail safety training revenues, has resulted in an overall decrease
in group operating profit of 62% compared with 2004.




                                          Turnover                                    Operating Profit

                                     2005      2004      2005       2004      2005       2004       2005        2004
                                    #'000     #'000         %          %     #'000      #'000          %           %

Recruitment and Labour Supply      12,224     9,380     66.72      54.69       239        270      43.77       18.82

Training and Consultancy            6,097     7,772     33.28      45.31       307      1,165      56.23       81.18

Group Total                        18,321    17,152    100.00     100.00       546      1,435     100.00      100.00




Operating profits are stated before net interest payable of #34,000 (2004 :
#57,000) and after deduction of goodwill  of #76,000 (2004 : #68,000).



RECRUITMENT AND LABOUR SUPPLY



The permanent recruitment services remain focused on the provision of staff in
commercial and technical sales roles, technical engineering, manufacturing and
rail. Whilst top line turnover fell the gross margin percentage increased as the
division demonstrated its strength and adaptability in times of variable market
conditions.



Contract recruitment activity in the Group's core market of technical
manufacturing and engineering continued to grow on the solid base established in
the previous two years. Underlying revenues increased by 95% to #3.9m with
excellent quarter on quarter growth. The continued expansion and diversification
of this area of activity remains a key aim of the Group.



The labour supply business benefited from success in winning further supply
contracts. Whilst revenues in the traditional maintenance market have fallen
short of expectation, the development of opportunities in other market areas has
contributed to the growth in revenues of 40% to #3.5m compared with 2004.



The Group is well placed, through its investment in front and back office
systems and structure, to benefit from continued growth and development of these
volume service revenues.



TRAINING AND CONSULTANCY



The majority of these services are focused on the rail industry, ranging from
the development of training materials, training and development delivery,
competence assessment, audit services and verification.



Training revenues in 2005 suffered a continuation of the slow down in demand
from Network Rail for technical and rail safety training, first witnessed in the
second half of 2004, as a result of the re-nationalisation of the maintenance of
the railways. Revenues fell as a result by 23% to #5.4m. The impact on gross
margin was mitigated to some extent by the use of a mix of permanent trainers
and associates.



The implications of Network Rail providing its own in-house training have been
addressed by a restructure of the business to ensure that it is best shaped to
fit the alternative external rail market provided by the Train and Freight
operating companies, the construction based renewals market of rail,
international rail demand, rail manufacturers, consultancies and London
Underground and to accelerate the diversification into opportunities outside of
the rail market.



Group consultancy services provide specialists to support the core elements of
recruitment and training in rail related audit and verification work, with
quality, health and safety, occupational assessment, development and general
management courses.  Whilst revenues from these activities are not material in
Group terms, the attractive margin contribution was maintained.



STAFF DEVELOPMENT



The Group continues to believe that the key to future success is strongly linked
to people development. During the year the establishment of a Group wide
competence framework was largely completed and is expected to be rolled out in
2006, alongside our continuing leadership and staff development initiatives.



INFORMATION TECHNOLOGY



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 contract activity, was substantially completed
in 2004. Expenditure during the year was therefore restricted to maintenance and
upgrades to those systems. Future investment will be aimed at leveraging
business benefits through increased profile and presence on the internet.



The internet continues to account for a substantial proportion of candidate
applications to the recruitment businesses. The web based capability built up to
take advantage of this market change has resulted in further reductions in
expenditure to attract candidates during 2005.



SHARE OPTIONS



The Government EMI scheme was adopted in 2001. Further options have been granted
in 2005 in this scheme (details may be found in note 19 of the accounts). The
management team and key staff will continue to be the focus of such incentives.


Andrew Bailey, Group Managing Director     13 April 2006



CONSOLIDATED PROFIT AND LOSS ACCOUNT





                                                                           2005                    2004
                                                      Notes         #'000       #'000        #'000        #'000
                                                                                        (Restated) (Restated)

Turnover                                                                       18,321                    17,152
Cost of sales                                                                (12,617)                  (10,464)
Gross Profit                                                                    5,704                     6,688
Administrative expenses                                                       (5,326)                   (5,365)
Other operating income                                                            168                       112
Operating Profit                                                                  546                     1,435
Interest receivable and similar income                                  6                        6
Interest payable and similar charges                                 (40)                     (63)
                                                                                 (34)                      (57)
Profit on ordinary activities before taxation                                     512                     1,378
Tax on profit on ordinary activities                                             (78)                     (436)
Profit on ordinary activities after taxation                                      434                       942

Earnings per share                                      2                       5.29p                    11.55p
Fully diluted earnings per share                        2                       5.25p                    11.34p



All amounts relate to continuing operations.



RECONCILIATION OF MOVEMENT IN EQUITY SHAREHOLDERS' FUNDS
YEAR ENDED 31 DECEMBER 2005


                                                                                        2005             2004
                                                                   Notes               #'000            #'000
                                                                                                   (Restated)

Equity shareholders' funds at 1 January 2005 as previously                             4,099            3,676
reported
Prior year adjustment                                                3                 (490)            (508)
As restated                                                                            3,609            3,168
Profit for the year                                                                      434              942
Dividends                                                                              (402)            (522)
Additional share capital issued                                                            -                1
Premium on share issue                                                                    21               20
Equity shareholders' funds at 31 December 2005                                         3,662            3,609




CONSOLIDATED STATEMENT OF TOTAL
RECOGNISED GAINS AND LOSSES


                                                                                        2005             2004
                                                                   Notes               #'000            #'000
                                                                                                   (Restated)

Profit on ordinary activities after taxation                                             434              942

Total recognised gains and losses relating to the year                                   434

Prior year adjustment                                                3                 (490)

Total gains and losses recognised since the last annual report                          (56)





CONSOLIDATED BALANCE SHEET
31 DECEMBER 2005


                                                                     2005                       2004
                                                             #'000       #'000          #'000          #'000
                                                                                   (Restated)     (Restated)
Fixed assets

Intangible assets                                            1,117                      1,154

Tangible assets                                              1,175                      1,588
                                                                         2,292                         2,742
Current assets
Stock                                                           45                         29

Debtors                                                      4,817                      3,483

Cash at bank and in hand                                       178                        715

                                                             5,040                      4,227

Creditors
Amounts falling due within one year                        (3,583)                    (3,209)
                                                                         1,457                         1,018
Total assets less current liabilities                                    3,749                         3,760
Creditors
Amounts falling due after more than one                                   (44)                          (50)
year
Provisions for liabilities and charges                                    (43)                         (101)
Net assets                                                               3,662                         3,609

Capital and reserves
Called up share capital                                                     82                            82
Share premium account                                                    1,817                         1,796
Capital redemption reserve                                                  50                            50
Profit and loss account                                                  1,713                         1,681
Equity shareholders' funds                                               3,662                         3,609




CONSOLIDATED CASH FLOW STATEMENT
YEAR ENDED 31 DECEMBER 2005


                                                                        2005                    2004
                                                                 #'000        #'000       #'000       #'000


Net cash (outflow) / inflow from operating                                    (308)                   1,857
activities

Return on investments and servicing of finance
Interest received                                                    6                        6

Interest paid                                                     (40)                     (63)

Net cash outflow from return on investments and                                (34)                    (57)
servicing of finance

Taxation
UK corporation tax paid                                                       (335)                   (506)

Capital expenditure

Sale of tangible fixed assets                                       37                       35

Purchase of tangible fixed assets                                (219)                    (321)
Net cash outflow from capital expenditure                                     (182)                   (286)
Acquisitions and disposals
Purchase of subsidiary undertaking                                   -                     (15)

Net debt acquired with subsidiary                                    -                     (19)

Net cash outflow from acquisitions and disposals                                  -                    (34)

Equity dividends paid                                                         (402)                   (522)

Net cash (outflow) / inflow before use of                                   (1,261)                     452
financing
Financing
Issue of ordinary share capital                                     21                       21

Decrease in loans                                                 (10)                    (500)

Capital element of finance lease rental payments                  (51)                     (97)

Net cash outflow from financing                                                (40)                   (576)

Decrease in cash                                                            (1,301)                   (124)



                                     NOTES

1.    Dividends


On 7 September 2005 an interim dividend of 1.0p net per share was
resolved by the Board to be paid to shareholders on the register on 18 November
2005.  The interim dividend was paid on 12 December 2005.



A final dividend for the year of 2.0p net per share will be proposed at
the forthcoming Annual General Meeting (to be held at the offices of Lawrence
Graham, 190 Strand, London, WC2R 1JN on 19 May 2006 at 12.00 noon) and if
approved, will be paid on 28 July 2006 to shareholders on the register on 23
June 2006.



2.    Earnings per Share



The calculation of earnings per share is based on a profit after taxation
of #434,000 (2004: #942,000 - restated) and a weighted average of 8,199,290
(2004: 8,155,492) shares in issue.

All outstanding share options are considered to be dilutive.



3.      Basis of Preparation

The preliminary announcement of results for the year ended 31 December 2005 has
been prepared on the basis of the same historical cost accounting polices as set
out in the group's financial statements for the year ended 31 December 2004 with
the following exceptions:


FRS 17 : Retirement benefits


In previous years the Group has accounted for the defined benefit pension scheme
in respect of certain employees of Catalis Rail Training Limited under the
provisions of SSAP 24. At 31 December 2004 a prepayment of pension contributions
of #809,000 was being carried forward and this amount was being written off over
the future working lifetime of the members.



On adoption of the full provisions of FRS 17 and following a formal actuarial
valuation of the Groups interest in this pension scheme the prepayment of
#826,000 at 1 January 2004 has been written off as a prior year adjustment. The
pension scheme meets the criteria of a multi employer scheme and is accounted
for as a defined contribution scheme in the accounts for the year ended 31
December 2005 and for the restated comparatives for the year ended 31 December
2004.



FRS 21 : Events after the balance sheet date



Under the terms of FRS 21 dividends which have been declared after the balance
sheet date are not recognised as a liability at that date.



As a result the accounts have been amended to reflect only dividends that were
declared during the year.



The effect of these changes in accounting policies on the comparative financial
information is as follows :


                                                                           Group
                                                                            2004
                                                                           #'000
       Dividends
       Dividend previously charged to profit and loss                        523
       Dividend charged to profit and loss under FRS 21                    (522)
       Net reduction on dividend charged to profit and loss                    1

       Retained profit for the year
       As previously reported                                                402
       FRS 17                                                                 17
       FRS 21                                                                  1
       As restated                                                           420

       Debtors - amounts falling due after one year
       As previously reported                                                809
       FRS 17                                                              (809)
       As restated                                                             -

       Creditors
       As previously reported                                              3,528
       FRS 21                                                              (319)
       As restated                                                         3,209

       Profit and loss reserve
       As previously reported                                              2,171

       FRS 17                                                              (809)
       FRS 21                                                                319
       Net effect of FRS17 and FRS 21                                      (490)

       As restated                                                         1,681


Report & Accounts



The above results do not represent the statutory accounts.  The statutory
accounts for 2004 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.


ENDS







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