ATA Group said ATA Selection, its recruitment division, saw turnover rise to £11.58m in 2006, compared with £8.76m in 2005.

The company said this reflected solid performance in permanent recruitment and continuing growth in contract recruitment. The division’s operating profits rose to £414,000, from £177,000.

It said early progress was gratifying following a move into a new high demand market area in white collar construction. The group, which also includes a railway business, saw pre-tax profits rise to £618,000 from £500,000.

Bill Douie, chairman, said: “There can be no doubt that, as expected, 2006 was a trying year. Opportunities to resolve outstanding problems were taken and a clean out of underperforming operations has now all but concluded.”

He said the recruitment part of the group was “growing” and “tightly focused”.

The shares fell to their lowest in more than a year yesterday.