Protocol knocked by £3.8m rebate
CHESHIRE training company Protocol Skills has seen profits slump after being forced to refund £3.8m to its biggest customer, the Government’s Skills Funding Agency (SFA).
The Ellesmere Port-based firm, which employs 890 staff, is a vocational skills trainer providing apprenticeships and NVQ training to around 15,000 16 to 24-year-old learners a year.
Most of the company’s revenue comes through the SFA, formerly the Learning and Skills Agency, but following a Government audit the body challenged Protocol’s fees and demanded a rebate.
Chief executive Dan Wright told TheBusinessDesk.com the dispute was related to the “highly technical” calculations of the time spent with students, or ‘learning hours’.
A discrepancy arose because Protocol’s interpretation was different to the SFA’s, said Mr Wright. The figures were also skewed because some learners left courses and this was not accounted for.
During the year to July 31, 2009 pre-tax profits fell 59% to £1.7m compared with the 13 months to July 31, 2008. Sales slipped 17% to £34m. After stripping out the exceptional charge of £3.8m, sales were down by 8%.
While heavily dependent on Government funding Mr Wright said planned cuts could present the business with an opportunity. “The Government wishes to reduce bureaucracy and that’s down to the plethora of small providers that need managing on a regional level”, he said.
“As contract awards progress they’ll look to big providers to take on larger contracts. Scale is going to be of some advantage when the Government is looking to cut out micro-management. We do see it as an opportunity.”
Protocol was the subject of £46.5m management buyout backed by Close Brothers Private Equity in 2007.
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