TIDMPTY
RNS Number : 2514J
Parity Group PLC
08 September 2016
Parity Group PLC
Financial Report for the six months ended 30 June 2016
Parity Group plc ("Parity", or the "Group"), the UK information
technology services group, announces its interim results for the
six months ended 30 June 2016.
FINANCIAL HEADLINES
-- Group revenues increased by 15% to GBP47.5m (H1 2015:
GBP41.2m)
-- EBITDA before share based charges and non-recurring items
increased by 182% to GBP1.1m (H1 2015: GBP0.4m)
-- Profit before tax of GBP0.2m (H1 2015: loss before tax of
GBP0.9m)
-- Earnings per share 0.16p (H1 2015: loss per share 0.87p)
-- Cash inflow from operations increased to GBP1.1m (H1 2015:
GBP0.6m)
-- Reduction in net debt to GBP6.5m from GBP7.4m at 2015 year
end
-- Cash at period end GBP4.1 million (2015 year end: GBP2.6
million)
-- Finance facility extended on improved terms for two further
years until 31 December 2018
OPERATIONAL HEADLINES
-- Implementing the new growth strategy:
i. launching new initiatives to bring to market existing
expertise and new capabilities. Senior level consultants recruited
in July providing expertise in Utilities and Health alongside the
established Defence practice in Consultancy Services;
ii. building on our core service offering of IT Resources and
Talent Management under our Professionals division; and
iii. Board of Directors enhanced with the appointment of David
Firth as a Non-Executive Director, bringing additional direct
industry experience
-- Closer alignment and collaboration in service offerings
across the Group to target growing markets, in-demand skills, to
support joint and cross sales activity
-- Strengthening of the core recruitment service offerings with
improvement in volumes and margins in our Professionals
division
-- MoD Military Capability Output Costing System ("MCOCS")
Business Intelligence contract with the Consultancy division
extended by a further GBP1.8m
-- Strong control maintained on cost base and working capital
across the Group
-- Reduced pensions contributions commenced in line with the
improved payment terms on the legacy pension deficit
Reconciliation of Operating Profit/(Loss) to Adjusted EBITDA
Six Months Six Months Year to
to 30.06.16 to 30.06.15 31.12.15
GBP'000 GBP'000 GBP'000
----------------------------------------- ------------- ------------- ----------
Operating profit/(loss) from continuing
operations 408 (709) (3,343)
Non-recurring items 270 661 4,052
Share-based payment charges (3) 57 152
Depreciation and amortisation 407 375 719
Adjusted EBITDA 1,082 384 1,580
----------------------------------------- ------------- ------------- ----------
Alan Rommel, CEO of Parity Group, said:
"Parity has made strong progress in delivering the new growth
strategy, and it is clear to see the enthusiasm across the Group
with which this momentum is being maintained. The improved
financial results demonstrate that the Group has a stable and solid
base upon which it can continue to invest in our Professionals
division and to create new higher-value services through our
exciting new Consultancy Services division.
The Board remains confident in the progress being made in the
new strategic direction, and is focused on continuing to drive
profitability, cash flow and shareholder value. Current trading is
in line with expectations, with an improved performance expected in
the second half."
For further information, contact:
Alan Rommel CEO
Roger Antony GFD Parity Group plc 020 8543 5353
John Olsen
Kelsey Traynor MHP Communications 020 3128 8100
Andrew Pinder
Patrick Robb
Dominic Emery Investec 020 7597 4000
Parity Group PLC
Half Yearly Financial Report for the six months ended 30 June
2016
The Board announces its unaudited interim results for the first
half of 2016.
Introduction
Parity supports its clients by maximising the effectiveness of
people, processes and systems through two business divisions -
Parity Professionals and Parity Consultancy Services. Building upon
the Group's well-established and profitable businesses, whilst
managing the cost base, we have completed a successful first half
with notable improvements in our KPIs, and we are pleased to report
a significant increase in profitability in the first half of this
year.
We have identified and recruited expertise to support our new
growth strategy in Consultancy, supplementing deep industry
expertise with technology and people solutions from the wider
Group. Our new offerings focus this expertise to provide solutions
to specific industry problems, and develop our capability to add
value across our wider client community. We are delighted to
already be seeing the early signs of success with improved
collaboration across the business, both leveraging existing
relationships and working closer to develop unified offerings.
The increased depth in niche skills and services across the
business helps us to respond rapidly to changes in the market and
to present new offerings designed to meet client objectives. This
demand-driven flexibility is a founding principle of our
customer-centric, profitable growth.
Results
Group revenues for the period grew by 15% to GBP47.5m,
reflecting revenue growth in both divisions.
Group EBITDA before share based charges and non-recurring items
has grown significantly to GBP1.1m (H1 2015: GBP0.4m).
Profit before tax was GBP0.2m (2015: GBP0.9m loss) reflecting
the increase in revenues and a reduction in non-recurring costs.
Cash generated from operations was GBP1.1m (2015: GBP0.6m) and
included a GBP0.3m inflow from working capital, reflecting an
improvement in debtor days at the end of June, being 27 days versus
31 days at the 2015 year end. The cash position at 30 June 2016 was
GBP4.1m (31 December 2015: GBP2.6m) with net debt at the period end
GBP6.5m (31 December 2015: 7.4m).
As announced on 17 March 2016, we reached agreement with the
trustees of the defined benefit pension scheme to reduce the
Group's deficit reduction contributions, linking amounts payable to
Group performance and affordability on a sliding scale as part of
the current triennial valuation review. Reduced commitments over
the next three years, which commenced in February 2016, will help
the Group's interest cover ratio and cash generating
capability.
On 1 September 2016 we extended our GBP15m finance facility with
PNC, the Group's asset-based lender, for a further two years, and
have agreed an improved discount rate effective from the extension
date. PNC have provided the facility since 2010, and the renewal
extends the relationship until 31 December 2018.
Given that the Group is in the early stages of executing its
strategy, and in order to help fund the further investment in
Parity's growth, the Board has not declared an interim dividend for
the period.
Parity Professionals Division
Parity Professionals provides targeted temporary and permanent
recruitment of professional and technical staff as well as
supporting the development of our clients' workforces through
training and coaching services. We enable our clients to have both
the capacity and the capability to transform organisational
performance in high growth and rapidly evolving markets.
Divisional revenues have grown by 15% against the same period
last year to GBP43.6m (H1 2015: GBP37.8m) with a segmental
contribution of GBP1.1m (H1 2015: GBP1.0m).
The recruitment offering has continued to grow with improvements
through the period in all key metrics for contractor volumes,
permanent fees and average margins. As the largest part of the
business, it is pleasing to see the volume of new orders increase
over H1 2015 with the gross profit generated from these sales 33%
higher than the same period last year. This has been a result of
further development of some key accounts with higher-value service,
as well as the addition of smaller SME clients in emerging sectors.
The focus remains in IT with more targeted specialism in high
growth areas such as Digital, Data and Information Security, but we
are also supporting clients with the provision of interim staff to
deliver broader business change programmes.
The talent management offering has again retained the contract
for the delivery of the FastStream graduate recruitment programme
on behalf of HMRC, though the Government funding for the INTRO
programme in Northern Ireland was discontinued with necessary
actions taken to reduce the costs attributed to this service. This
has accelerated our efforts to expand the mainland Great Britain
market with increased focus on a tighter range of programmes, which
has resulted in a number of larger scale and improved margin
sales.
Parity Consultancy Services Division
Parity Consultancy Services provides clients with niche
expertise driven by senior industry-experienced consultants,
exploiting technology and maximising the potential of information
to provide competitive advantage for our clients. There remains a
strong core of technology specialists from our IT solutions
offering which is complemented by the recent addition of specific
industry experts with deep knowledge of the challenges and
opportunities facing our clients in the sectors in which they
operate.
Divisional revenues have grown by 17% to GBP3.93m (H1 2015:
GBP3.35m) with a significant improvement in segmental contribution
to GBP0.61m (H1 2015: GBP0.19m).
We continue to develop our technology solutions offering, and we
have recently signed a partnership agreement with Magnitude
software in line with our strategy to increasingly focus upon data
analytics, data management and information security. The business
has also been awarded frameworks for G-Cloud 8, expanding the
portfolio of cloud services, and has won contracts through the
Digital Outcomes and Specialists framework into the Public Sector.
A closer working relationship with Parity Professionals is
demonstrating efficiencies in the management and processing of
consultants in the division, and also the speed and cost of hiring
specific expertise to support programmes in increasingly
specialised solutions.
Parity Consultancy Services is also building expertise in key
market sectors. As with the Defence market, where we have had a
further GBP1.8m extension on the MCOCS Business Intelligence
programme, we have invested in both the Health and Utilities
markets where our industry focussed consultants will be able to
apply market knowledge to deliver directly relevant solutions,
backed up by the Parity brand.
Inition, the Group's stand-alone Virtual Reality, Augmented
Reality and 3D technology production company, continues to build
presence in these exciting markets using the creativity of their
producers, artists and software developers to deliver
installation-based experiences and marketing solutions. In addition
to building relationships with some large brands, Inition is also
attracting new clients seeking to differentiate themselves by being
at the forefront of technology.
Board
David Firth will join the Board as a Non-Executive Director
shortly, as first announced on 31 May 2016. David is the Finance
Director of Penna Consulting plc and was the Finance Director of
Parity in the 1990's. As such, he brings with him a wealth of
direct industry experience in the people management and consultancy
markets.
Current Trading and Future Prospects
The Board is pleased to announce positive results which
highlight the progress made in the strategic direction of the
Group. Our experienced management team is fully focused on
continuing to execute this new strategy whilst retaining the
agility required to develop new and exciting solutions to customer
needs by combining our core services. This period has maintained
the strong momentum carried forward from the second half of 2015,
and trading in the early weeks of the second half remains strong.
Whilst it is too early to fully appreciate the potential impact of
the Brexit referendum on the wider economy, we have seen minimal
immediate direct impact on our business as we are UK-centric. We
have, however, formed a working party to track the impact and
potential risks of future Brexit-related developments.
Parity Professionals expects to maintain steady progress through
the remainder of the year, with further investment in building
niche skill capabilities and the increased focus on larger scale
opportunities in talent management.
Parity Consultancy Services will continue to refine the services
that they offer, building further expertise in data analysis, data
management and information security via partnerships with
technology providers in these markets, building upon the
established skills base in the Solutions offering. This is in
addition to self-funded investment in developing new services with
our consultancy expertise to support targeted market sectors
undergoing significant change. Inition remains an exciting node at
the forefront of a rapidly evolving market, and has increased its
contribution to the Group's results through an improved sales mix,
and the successful delivery of a number of 3D VR and AR projects to
high profile clients.
Parity is in a unique positon for its size, being able to
provide expertise led by people and enabled by technology. We are
ideally placed to support our clients and help deliver positive
change in their businesses which will drive their growth. Whilst
there will be continued investment to build the new higher margin
offerings aligned to our clients' needs, we will continue to manage
costs closely and minimise the restructuring costs associated with
the change in strategy announced last year.
The Board remains confident in the progress being made in the
new strategic direction. Current trading is in line with
expectations with an improved performance expected in the second
half. The improved financial results demonstrate that the Group has
a stable and solid base upon which it can continue to develop,
reflecting the drive and the enthusiasm of our people and the
quality of the service they provide. Parity is now very well
positioned with a clear strategy to support our clients with the
people, skills and technology they need to succeed.
Principal Risks and Uncertainties
Pursuant to the requirements of the Disclosure and Transparency
Rules the Group provides the following information on its principal
risks and uncertainties. The Group considers strategic, operational
and financial risks and identifies actions to mitigate those risks.
These risk profiles are updated at least annually. The principal
risks and uncertainties detailed within the Group's 2015 Annual
Report remain applicable for the final six months of this financial
year. The Group's 2015 Annual Report is available from the Party
website www.parity.net. The Board has set up a Brexit Working Group
to monitor and respond to any emerging risks as and when the
implications of Brexit unfold.
Consolidated condensed income statement
For the six months ended 30 June 2016
Six months to 30.06.16 Six months to 30.06.15 Year to 31.12.15
(Unaudited) (Unaudited) (Audited)
Notes Before Non-recurring After Before Non-recurring After non-recurring Before Non-recurring After
non-recurring items non-recurring non-recurring items items non-recurring items non-recurring
items (note items items (note GBP'000 items (note items
GBP'000 3) GBP'000 GBP'000 3) GBP'000 3) GBP'000
GBP'000 GBP'000 GBP'000
Continuing
operations
Revenue 47,490 - 47,490 41,175 - 41,175 84,842 - 84,842
---------------- ----- ------------- ------------- -------------- ------------- ------------- ------------------- ------------- ------------- --------------
Employee benefit
costs (3,818) (144) (3,962) (4,130) (421) (4,551) (7,800) (1,404) (9,204)
Depreciation
& amortisation (407) - (407) (375) - (375) (719) (341) (1,060)
Impairment
loss - - - - - - - (1,994) (1,994)
All other
operating
expenses (42,587) (126) (42,713) (36,718) (240) (36,958) (75,614) (313) (75,927)
---------------- ----- ------------- ------------- -------------- ------------- ------------- ------------------- ------------- ------------- --------------
Total operating
expenses (46,812) (270) (47,082) (41,223) (661) (41,884) (84,133) (4,052) (88,185)
---------------- ----- ------------- ------------- -------------- ------------- ------------- ------------------- ------------- ------------- --------------
Operating profit
/ (loss) 678 (270) 408 (48) (661) (709) 709 (4,052) (3,343)
---------------- ----- ------------- ------------- -------------- ------------- ------------- ------------------- ------------- ------------- --------------
Finance income 4 333 - 333 349 - 349 506 - 506
Finance costs 5 (554) - (554) (530) - (530) (1,072) - (1,072)
---------------- ----- ------------- ------------- -------------- ------------- ------------- ------------------- ------------- ------------- --------------
Profit / (loss)
before tax 457 (270) 187 (229) (661) (890) 143 (4,052) (3,909)
---------------- ----- ------------- ------------- -------------- ------------- ------------- ------------------- ------------- ------------- --------------
Tax
(charge)/credit 6 (76) 54 (22) (131) 135 4 (258) 252 (6)
---------------- ----- ------------- ------------- -------------- ------------- ------------- ------------------- ------------- ------------- --------------
Profit / (loss)
for the period
from continuing
operations 381 (216) 165 (360) (526) (886) (115) (3,800) (3,915)
Discontinued
operations
(Loss) for
the period
from
discontinued
operations 7 (2) - (2) (2) - (2) (4) - (4)
---------------- ----- ------------- ------------- -------------- ------------- ------------- ------------------- ------------- ------------- --------------
Profit / (loss)
for the period
attributable
to equity
shareholders 379 (216) 163 (362) (526) (888) (119) (3,800) (3,919)
---------------- ----- ------------- ------------- -------------- ------------- ------------- ------------------- ------------- ------------- --------------
Basic profit/(loss)
per share 8 0.16p (0.87p) (3.85p)
Diluted profit/(loss)
per share 8 0.16p (0.87p) (3.85p)
----------------------- ---- -------- ---------- ----------
Basic profit/(loss)
per share
from continuing
operations 8 0.16p (0.87p) (3.85p)
Diluted profit/(loss)
per share
from continuing
operations 8 0.16p (0.87p) (3.85p)
----------------------- ---- -------- ---------- ----------
Consolidated condensed statement of comprehensive income
For the six months ended 30 June 2016
Six months Six months Year to
to to
30.06.16 30.06.15 31.12.15
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
--------------------------------------- --- ------------- ------------- -----------
Profit/(loss) for the period 163 (888) (3,919)
Other comprehensive (expense)/income:
Exchange differences on translation
of foreign operations (116) 79 42
Actuarial (loss)/gain on defined
benefit pension scheme (179) (238) 848
Other comprehensive (expense)/income
for the period, net of tax (295) (159) 890
-------------------------------------------- ------------- ------------- -----------
Total comprehensive expense for
the period (132) (1,047) (3,029)
-------------------------------------------- ------------- ------------- -----------
Consolidated condensed statement of changes in equity
For the six months ended 30 June 2016
Share
Share Deferred premium Other Retained
capital Shares reserve reserves earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- --------- ----------- --------- ---------- ---------- ---------
At 1 January 2016 2,037 14,319 33,195 44,160 (87,689) 6,022
Profit for the period - - - - 163 163
Other comprehensive
expense for the period
net of tax - - - - (295) (295)
Share options - value
of employee services - - - - (3) (3)
At 30 June 2016 2,037 14,319 33,195 44,160 (87,824) 5,887
-------------------------- --------- ----------- --------- ---------- ---------- ---------
Share
Share Deferred premium Other Retained
capital Shares reserve reserves earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- --------- ----------- --------- ---------- ---------- ---------
At 1 January 2015 2,035 14,319 33,189 44,160 (84,812) 8,891
Loss for the period - - - - (888) (888)
Other comprehensive
expense for the period
net of tax - - - - (159) (159)
Share options - value
of employee services - - - - 57 57
At 30 June 2015 2,035 14,319 33,189 44,160 (85,802) 7,901
-------------------------- --------- ----------- --------- ---------- ---------- ---------
Consolidated condensed statement of financial position
As at 30 June 2016
As at As at As at
30.06.16 30.06.15 31.12.15
(unaudited) (unaudited) (audited)
Note GBP'000 GBP'000 GBP'000
------------------------------- ----- ------------- ------------- -----------
Non-current assets
Goodwill 5,759 7,753 5,759
Intangible assets - software 1,035 1,373 1,354
Property, plant and equipment 160 528 180
Deferred tax assets 485 540 507
------------------------------- ----- ------------- ------------- -----------
7,439 10,194 7,800
------------------------------- ----- ------------- ------------- -----------
Current assets
Stocks 28 34 61
Trade and other receivables 17,098 15,774 15,619
Cash and cash equivalents 4,114 3,023 2,648
------------------------------- ----- ------------- ------------- -----------
21,240 18,831 18,328
------------------------------- ----- ------------- ------------- -----------
Total assets 28,679 29,025 26,128
------------------------------- ----- ------------- ------------- -----------
Current liabilities
Loans and borrowings (10,575) (9,629) (10,016)
Trade and other payables (10,564) (9,156) (8,574)
Provisions (38) (37) -
------------------------------- ----- ------------- ------------- -----------
(21,177) (18,822) (18,590)
------------------------------- ----- ------------- ------------- -----------
Non-current liabilities
Loans and borrowings (11) (2) (11)
Provisions - - (14)
Retirement benefit liability 9 (1,604) (2,300) (1,491)
------------------------------- ----- ------------- ------------- -----------
(1,615) (2,302) (1,516)
------------------------------- ----- ------------- ------------- -----------
Total liabilities (22,792) (21,124) (20,106)
------------------------------- ----- ------------- ------------- -----------
Net assets 5,887 7,901 6,022
------------------------------- ----- ------------- ------------- -----------
Shareholders' equity
Called up share capital 16,356 16,354 16,356
Share premium account 33,195 33,189 33,195
Other reserves 44,160 44,160 44,160
Retained earnings (87,824) (85,802) (87,689)
------------------------------- ----- ------------- ------------- -----------
Total shareholders' equity 5,887 7,901 6,022
------------------------------- ----- ------------- ------------- -----------
Consolidated condensed statement of cash flows
For the six months ended 30 June 2016
Six months Six months Year
to
30.06.16 to to
(unaudited) 30.06.15 31.12.15
GBP'000 (unaudited) (audited)
Notes GBP'000 GBP'000
--------------------------------------- ---------- ------------- ---------------- -----------
Cash flows from operating activities
Profit / (loss) for period: 163 (888) (3,919)
Adjustments for:
Finance income 4 (333) (349) (506)
Finance costs 5 554 530 1,072
Share-based payment (credit)/expense (3) 57 152
Income tax charge/(credit) 6 22 (4) 6
Amortisation of intangible fixed
assets 332 268 546
Depreciation of property plant
and equipment 75 107 173
Impairment of goodwill - - 1,994
Loss on disposal of intangible
assets - - 3
Loss on disposal of property,
plant and equipment - - 341
810 (279) (138)
------------- ------------ -----------
Decrease/(increase) in stocks 32 (7) (34)
(Increase)/decrease in trade
and other receivables (1,488) (250) (96)
Increase/(decrease) in trade
and other payables 1,875 1,213 522
Increase/(decrease) in provisions 25 (45) (68)
Payments to retirement benefit
plan (130) (72) (28)
------------- ------------ -----------
Cash generated from operations 1,124 560 158
------------- ------------ -----------
Income taxes (paid) - - 23
Net cash flow from operating
activities 1,124 560 181
Investing activities
Acquisitions - (250) (250)
Purchase of property, plant
and equipment (55) (87) (92)
Purchase of intangible assets (13) (33) (349)
Net cash used in investing activities (68) (370) (691)
Financing activities
Net cash from issue of ordinary
shares - - 8
Net proceeds from finance facility 559 4 476
Interest paid (149) (145) (300)
------------- ------------ -----------
Net cash generated from financing
activities 410 (141) 184
------------- ------------ -----------
Net increase / (decrease) in
cash and cash equivalents 1,466 49 (326)
Cash and cash equivalents at
the beginning of the period 2,648 2,974 2,974
------------- ------------ -----------
Cash and cash equivalents at
the end of the period 4,114 3,023 2,648
------------- ------------ -----------
Notes to the interim results
1 Basis of preparation
The condensed financial statements comprise the unaudited
results for the six months to 30 June 2016 and 30 June 2015 and the
audited results for the twelve months ended 31 December 2015. The
financial information for the year ended 31 December 2015 does not
constitute the full statutory accounts for that period. The Annual
Report and Financial Statements for 2015 have been filed with the
Registrar of Companies. The Independent Auditor's Report on the
Annual Report and Financial Statements for 2015 was unqualified,
and did not contain a statement under 498(2) or 498(3) of the
Companies Act 2006.
The condensed financial statements for the period ended 30 June
2016 have been prepared in accordance with the Disclosure and
Transparency Rules of the Financial Services Authority and with IAS
34 'Interim Financial Reporting' as adopted by the European Union.
The information in these condensed financial statements does not
include all the information and disclosures made in the annual
financial statements.
Accounting policies
The condensed financial statements have been prepared in a
manner consistent with the accounting policies set out in the group
financial statements for the twelve months ended 31 December 2015
and on the basis of the International Financial Reporting Standards
(IFRS) as adopted for use in the EU that the Group expects to be
applicable as at 31 December 2016. IFRS are subject to amendment
and interpretation by the International Accounting Standards Board
(IASB) and there is an ongoing process of review and endorsement by
the European Commission.
None of the new standard amendments or interpretations that have
become effective in the period has had a material effect on the
Group.
2 Segmental information
Six months to 30 June
2016
(unaudited)
Parity
Parity Professionals Consultancy
Note Services Total
GBP'000 GBP'000 GBP'000
Revenue from external
customers 43,561 3,929 47,490
Attributable costs (42,447) (3,322) (45,769)
----------------------------------- ----------------------- ------------- ---------
Segmental Contribution 1,114 607 1,721
Central costs (639)
----------------------------------------------------- ------
EBITDA before share based charges and non-recurring
items 1,082
Depreciation and amortisation (407)
Share based payment 3
Non-recurring items 3 (270)
Finance income 333
Finance costs (554)
----------------------------------------------------- ------
Profit before tax (continuing activities) 187
----------------------------------------------------- ------
Six months to 30 June
2015
(unaudited)
Parity
Parity Professionals Consultancy
Note Services Total
GBP'000 GBP'000 GBP'000
Revenue from external
customers 37,825 3,350 41,175
Attributable costs (36,813) (3,157) (39,970)
------------------------------------------- ----------------------- ------------- ---------
Segmental Contribution 1,012 193 1,205
Central costs (821)
----------------------------------------------------- ------
EBITDA before share based charges and non-recurring
items 384
Depreciation and amortisation (375)
Share based payment (57)
Non-recurring items 3 (661)
Finance income 349
Finance costs (530)
----------------------------------------------------- ------
Loss before tax (continuing activities) (890)
----------------------------------------------------- ------
2 Segmental information (continued)
Year ended 31 December
2015
(audited)
Parity
Parity Professionals Consultancy
Note Services Total
GBP'000 GBP'000 GBP'000
Revenue from external
customers 78,190 6,652 84,842
Attributable costs (75,914) (5,851) (81,765)
------------------------------------- ----------------------- ------------- ---------
Segmental contribution 2,276 801 3,077
Central costs (1,497)
----------------------------------------------------- --------
EBITDA before share based charges and non-recurring
items 1,580
Depreciation and amortisation (719)
Share based charges (152)
Non-recurring items 3 (2,058)
Impairment losses 3 (1,994)
Finance income 506
Finance costs (1,072)
----------------------------------------------------- --------
Loss before tax (continuing activities) (3,909)
----------------------------------------------------- --------
3 Non-recurring items
Six months Six months Year to
to to 31.12.15
30.06.16 30.06.15 (audited)
(unaudited) (unaudited) GBP'000
GBP'000 GBP'000
-------------------------------- ---- ------------- ------------- -----------
Continuing operations
Transaction costs 48 123 125
Restructuring
- Employee benefit costs 144 421 1,404
- Write down of tangible fixed
assets - - 341
- Other operating costs 34 101 126
Property costs 44 16 62
Total non-recurring items from
continuing operations 270 661 2058
Impairment of Goodwill - - 1,994
-------------------------------------- ------------- ------------- -----------
Total non-recurring items 270 661 4,052
-------------------------------------- ------------- ------------- -----------
Non-recurring items in H1 2016 include GBP178,000 of
restructuring costs. Of this amount approximately GBP105,000
related to Group restructuring in line with the Board's strategy to
focus on core business, GBP39,000 related to downsizing the Talent
Management service offering in Northern Ireland, and GBP34,000
related to residual costs incurred to close the Golden Square
service offering. In addition, GBP48,000 of transaction costs were
incurred.
Property costs of GBP44,000 represent empty property costs
incurred as a result of centralising the London office.
Non-recurring items in H1 2015 included GBP522,000 of
restructuring costs. Of this amount, approximately GBP443,000
related to the restructuring of the Supercommunications business,
including GBP315,000 relating to the termination of the Golden
Square Content service offering. In addition, costs of GBP123,000
were incurred during the period in relation to an aborted
transaction.
Property costs of GBP16,000 represented empty property costs
incurred as a result of the relocation of the PLC head office.
Goodwill was tested for impairment in accordance with IAS 36 at
the 2015 year end. An impairment charge of GBP1,994,000 was
recorded in respect of the Group's investment in Inition Limited.
The impairment charge was driven by the Group's decision to
discontinue its digital "buy and build" acquisition initiative, and
to subsequently focus management attention on its core
businesses.
4 Finance income
Six months Six months Year to
to to
30.06.16 30.06.15 31.12.15
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
----------------------------------- ---- ------------- ------------- -----------
Expected return on pension scheme
assets 333 349 506
----------------------------------------- ------------- ------------- -----------
5 Finance costs
Six months Six months Year to
to to 31.12.15
30.06.16 30.06.15 (audited)
(unaudited) (unaudited) GBP'000
GBP'000 GBP'000
-------------------------- ---- ------------- ------------- -----------
Bank interest payable 149 145 300
Post-retirement benefits 405 385 772
Total finance costs 554 530 1,072
-------------------------------- ------------- ------------- -----------
Bank interest payable is in respect of the Group's invoice
financing facilities.
6 Tax
Six months Six months Year to
to to 31.12.15
30.06.16 30.06.15 (audited)
(unaudited) (unaudited) GBP'000
GBP'000 GBP'000
--------------------------- ---- ------------- ------------- -----------
Current tax - - (23)
Deferred tax 22 (4) 29
--------------------------------- ------------- ------------- -----------
Total tax (credit)/charge 22 (4) 6
--------------------------------- ------------- ------------- -----------
Six months Six months Year to
to to 31.12.15
30.06.16 30.06.15 (audited)
(unaudited) (unaudited) GBP'000
GBP'000 GBP'000
--------------------------- ---- ------------- ------------- -----------
Continuing operations 22 (4) 6
Discontinued operations - - -
--------------------------- ---- ------------- ------------- -----------
Total tax (credit)/charge 22 (4) 6
--------------------------------- ------------- ------------- -----------
7 Discontinued operations
Six months Six months Year to
to to 31.12.15
30.06.16 30.06.15 (audited)
(unaudited) (unaudited) GBP'000
GBP'000 GBP'000
-------------------------------- ---- ------------- ------------- -----------
Pre-tax loss from discontinued
operations (2) (2) (4)
Taxation - - -
-------------------------------- ---- ------------- ------------- -----------
Loss for the period (2) (2) (4)
-------------------------------------- ------------- ------------- -----------
The pre-tax losses in 2016 and 2015 relate to costs incurred by
legacy Group companies.
8 Earnings per share
The calculation of the earnings per share is based on a profit
after taxation of GBP163,000 (30 June 2015: loss of GBP888,000, 31
December 2015: loss of GBP3,919,000). The calculation of the
earnings per share from continuing operations is based on a profit
after taxation of GBP165,000 (30 June 2015: loss of GBP886,000, 31
December 2015: loss of GBP3,915,000). The calculation of the
earnings per share from discontinued operations below is based on a
loss after taxation of GBP2,000 (30 June 2015: loss of GBP2,000, 31
December 2015: loss of GBP4,000).
The weighted average number of shares used in the calculation of
the basic and diluted earnings per share are as follows:
Six months Six months Year to
to to 30.06.15 31.12.15
30.06.15 (unaudited) (audited)
(unaudited) Number Number
Number
---------------------------------- ---- ------------- ------------- --------------
Basic
Weighted average number of fully
paid ordinary shares in issue
during the period 101,824,020 101,726,520 101,731,321
Dilutive
Weighted average number of fully
paid ordinary shares in issue
during the period 101,824,020 101,726,520 101,731,321
Dilutive effect of potential -
ordinary shares 1,845,606 -
Diluted weighted average number
of ordinary shares in issue
during the period 103,669,626 101,726,520 101,731,321
---------------------------------------- ------------- ------------- --------------
Number of issued ordinary shares
at the end of the period 101,824,020 101,726,520 101,824,020
----------------------------------- -------------- -------------- --------------
Basic earnings per share is calculated by dividing the basic
earnings for the period by the weighted average number of fully
paid ordinary shares in issue during the period.
Diluted earnings per share is calculated on the same basis as
the basic earnings per share with a further adjustment to the
weighted average number of fully paid ordinary shares to reflect
the effect of all potentially dilutive ordinary shares. During 2015
none of the potential ordinary shares were dilutive, as the Group
made a loss on continuing activities during the year.
9 Post retirement benefits
The Group provides employee benefits under various arrangements,
including through defined benefit and defined contribution pension
plans, the details of which are disclosed in the 2015 Annual Report
and Accounts. At the interim balance sheet date the major
assumptions used in assessing the defined benefit pension scheme
liability have been reviewed and updated based on a roll-forward of
the last formal actuarial valuation, which was carried out as at 5
April 2012.
The following changes in estimate have been applied to the IAS19
valuation as at 30 June 2016:
30.06.16 30.06.15 31.12.15
% % %
--------------------------------- ---------- ---------- ----------
Rate of increase in pensions in 3.6 - 3.9 3.7 - 4.0 3.6 - 3.9
payment
Discount rate 2.9 3.8 3.8
Retail price inflation 3.1 3.5 3.1
Consumer price inflation 2.1 2.5 2.1
--------------------------------- ---------- ---------- ----------
10 Commitments and contingencies
The Group leases various buildings which operate within all the
segments. The leases are non-cancellable operating agreements with
varying terms and renewal rights. The Group also has various other
non-cancellable operating lease commitments and a small number of
assets that are held under finance leases. The finance leases have
varying terms and renewal rights.
11 Related party transactions
Director transactions
There were no related party director transactions for the six
months' period to 30 June 2016. During the six months' period to 30
June 2015 and year to 31 December 2015 the Group transacted with
one entity over which one of the Group's directors, at the time,
had control or significant influence, as follows:
Director Transaction Transaction value Balance outstanding
Six months Year
to to As at As at As at
Six months
to 30.06.15 31.12.15 30.06.16 30.06.15 31.12.15
30.06.16 (unaudited) (audited) (unaudited) (unaudited) (audited)
(unaudited)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------- -------------- -------------- ------------- ----------- ------------- ------------- -----------
IT interim
D. Courtley recruitment - 49 81 - 10 -
------------- -------------- -------------- ------------- ----------- ------------- ------------- -----------
During the comparative periods, the Group provided IT
contractors to Mozaic Services Limited, a company that was
significantly influenced by Mr D Courtley. Mr Courtley was a
non-executive director of the Group during 2015 until he stepped
down on 13 August 2015. Amounts were billed at normal market rates
for such services, and were due and payable under standard client
payment terms.
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are
therefore not disclosed in this note.
There were no other related party transactions during the period
(2015: none).
12 Post balance sheet events
There are no post balance sheet events to report
Statement of directors' responsibilities
The directors confirm, to the best of their knowledge:
-- The condensed set of financial statements has been prepared
in accordance with IAS 34 'Interim Financial Reporting', as adopted
by the European Union;
-- The interim management report includes a fair review of the
information required by DTR 4.2.7R of the Disclosure and
Transparency Rules of the United Kingdom's Financial Services
Authority, being an indication of important events that have
occurred during the first six months of the financial year and
their impact on the condensed set of financial statements, and a
description of the principal risks and uncertainties for the
remaining six months of the year, and gives a true and fair view of
the assets, liabilities, financial position and loss for the period
of the Group; and
-- The interim management report includes a fair review of the
information required by DTR 4.2.8R of the Disclosure and
Transparency Rules of the United Kingdom's Financial Services
Authority, being a disclosure of related party transactions and
changes therein since the previous annual report.
By order of the Board
Lord Freeman
Non-Executive Chairman
7 September 2016
Independent review report to the members of Parity Group plc
for the six months ended 30 June 2016
Introduction
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly report for the six
months ended 30 June which comprises consolidated condensed income
statement, the consolidated condensed statement of comprehensive
income, the consolidated condensed statement of changes in equity,
the consolidated condensed statement of financial position, the
consolidated condensed statement of cash flows and the related
explanatory notes. We have read the other information contained in
the half-yearly report and considered whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
This report is made solely to the company in accordance with the
terms of our engagement. Our review has been undertaken so that we
might state to the company those matters we are required to state
to it in this report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the company for our review work, for this
report, or for the conclusions we have reached.
Directors' responsibilities
The half-yearly report is the responsibility of, and has been
approved by, the directors. The directors are responsible for
preparing the half-yearly report in accordance with the AIM
Rules.
As disclosed in note 1, the annual financial statements of the
group are prepared in accordance with IFRSs as adopted by the EU.
The condensed set of financial statements included in this
half-yearly report has been prepared in accordance with IAS 34
Interim Financial Reporting as adopted by the EU.
Our responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial statements in the half-yearly report
based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity issued by the Auditing Practices Board for use in the
UK. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
(UK and Ireland) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly report for the six months ended 30 June 2016 is
not prepared, in all material respects, in accordance with IAS 34
as adopted by the EU and the AIM Rules.
Kelly Dunn (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
15 Canada Square
E14 5GL
London
United Kingdom
7th September 2016
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR AKODBCBKDACK
(END) Dow Jones Newswires
September 08, 2016 02:00 ET (06:00 GMT)