TIDMPTY
RNS Number : 3260B
Parity Group PLC
20 September 2018
Parity Group PLC
Unaudited Financial Report for the six months ended 30 June
2018
Parity Group plc ("Parity", or the "Group"), the UK information
technology services group, announces its unaudited interim results
for the six months ended 30 June 2018.
Parity operates through two divisions, Parity Consultancy
Services ("Consultancy Services"), which provides niche technology
and data solutions and Parity Professionals, which specialises in
the sourcing of professional staff ("Professionals").
Financial Headlines:
Encouraging progress with over 30% growth in Consultancy
Services revenues
-- Group revenues(1) of GBP43.2m (H1 2017: GBP42.9m)
-- Consultancy Services revenue up by 30.8% to GBP5.1m (H1 2017:
GBP3.9m)
-- Professionals revenue(2) up by 2.2% to GBP41.6m (H1 2017:
GBP40.7m) despite a strong Q1 2017 comparative, prior to IR35
implementation
-- Operating profit(1) up 12.0% to GBP1.03m (H1 2017:
GBP0.92m)
-- Improved operating margin to 2.4% (H1 2017: 2.1%) with growth
in Consultancy Services revenues and robust cost management
enabling sustained, measured investment
o Consultancy Services' contribution(3) up by 12.7% to GBP0.62m
(H1 2017: GBP0.55m); now represents 35.2% of total segmental
contribution(3) (H1 2017: 32.5%)
o Professionals' contribution(3) up by 0.9% to GBP1.14m (H1
2017: GBP1.13m)
-- Profit before tax(1) increased by 25% to GBP0.85m (H1 2017:
GBP0.68m)
-- Basic earnings per share 0.74p (H1 2017: 0.62p)
-- Net debt of GBP1.9m (GBP1.6m at 31 December 2017, GBP2.3m at
30 June 2017) due to the working capital requirement associated
with the growth in contractor volumes in the Professionals
division
(1) On a Continuing Operations basis
(2) Including inter-segment revenues
(3) Before group costs, depreciation and amortisation, and share
based payments
Strategic and Operational Headlines:
-- Invested to develop Consultancy Services' growth through the
appointment of a Managing Director with extensive data experience
and recruitment of personnel to improve our sales and marketing
capability
-- New frameworks in our target markets, including:
o Crown Commercial Service G-Cloud 10 framework
o Northern Ireland Water Agency Temporary Staff and Permanent
Recruitment framework
o Ordnance Survey framework for Recruitment Services (permanent,
temporary, contingent and fixed term)
o NEST (National Employment Savings Trust) Recruitment Services
framework
o Award of the Primark managed service for IT recruitment
announced in March 2018
o Since the period end we have also successfully tendered for
the Crown Commercial Service Management Consultancy 2 framework for
consultancy and project delivery into the Public Sector
-- Enduring customer relationships which provide a high level of
repeat business, including significant contract extensions for
Consultancy Services with BAT and ESFA
-- 38 new clients across the business, with the majority (23 of
the 38) in the Private Sector
-- Exit from loss-making, non-core activity Inition marked the
final major milestone in shifting the Group to a more focussed,
aligned and profitable business
-- Inter-segment revenues have more than doubled to GBP3.50m (H1
2017: GBP1.73m) demonstrating the synergies from joint account
management and the increased use of contractors for Consultancy
Services managed projects
John Conoley, Chairman of Parity Group, said:
"It is pleasing to see the sustained progress that the Group is
making; delivering growth at a revenue and profit level whilst
having also rationalised, rebalanced and invested to support future
growth in line with its exciting strategic objectives.
"Parity's consulting business is well positioned to continue
broadening its client base, as clients increasingly look for a
solution which combines a deep understanding of analytics and
underlying technologies with the ability to deploy up to date
experts in the fast-evolving data capture and management field. As
a result, we have targeted further investment in senior experienced
operational management, and sales and marketing to drive continued
growth.
"We have also successfully exited the last of the legacy
operations from the previous strategy, leaving the business leaner
and stronger. The Group is demonstrating the synergies achievable
by aligning the consulting and recruitment functions, and further
developing its strong client relationships through delivering
broader capabilities. We expect that our proposition will benefit
further from the increased focus on data analysis and data
management enabled by the new expertise which we have now appointed
to help drive the next stage of growth.
"The improving financial results to date and the Group's
pipeline of opportunities underwrite the Board's confidence in the
Group's longer-term growth prospects. Whilst we are experiencing a
short-term client-side delay on one large contract, the rest of the
Group is performing in line with Board expectations. Without any
further delays, we expect a stronger second half, in line with the
Group's traditional seasonality, and to deliver on current
expectations for the year as a whole. Our investment in the Group
continues to drive revenue and profit growth, supporting cash flow
improvement and generating further shareholder value."
For further information, contact:
Parity Group PLC http://www.parity.net/
Alan Rommel, CEO 0208 543 5353
Roger Antony, GFD
WH Ireland Limited http://www.whirelandcb.com/
Mike Coe / Ed Allsopp +44 (0) 117 945 3470
MHP Communications http://www.mhpc.com/
Katie Hunt / Kelsey Traynor +44 (0)203 128 8100
About Parity:
Parity Group enables people led, technology driven change
Parity drives business value and digital transformation through
consultancy, technology and people solutions. It helps customers
transform the way they deliver their services to improve speed,
efficiency and effectiveness. Its distinctive, integrated offering
combines:
-- the consulting business which has secured large ongoing
contracts at higher margins and is now focussed on high growth
services in fast-moving fields which are a challenge for clients to
keep abreast of; and
-- the recruitment business which provides access to
high-calibre and hard-to-find expertise direct to clients and for
Parity managed projects.
Parity Consultancy Services
Helping clients to make the best use of technology to inform
better decision making
This division is focussed on successful project delivery driven
by senior industry-experienced consultants who can take a client's
data and deliver the analysis required to achieve clear business
goals. They also work closely with clients to diagnose and clarify
specific strategic data requirements to guide development of data
strategy. Parity's consultants, supported by world-leading
associates, advise on every aspect of data management and deliver
data solutions which generate competitive advantage by closing the
gap between information and insight, enabling more effective
decision making which enable organisations to transform their
performance.
Parity Professionals
Helping clients to recruit the best people to deliver real
benefit to your business
Parity Professionals provides niche temporary and permanent
recruitment of professional and technical staff both direct to our
client base, and where required, to our Consultancy division which
delivers technology solutions and manages projects. This ensures
end clients have both the capacity and capability to transform
organisational performance in high growth and rapidly evolving
markets.
Group
By aligning both divisions, Parity provides an attractive
combination of trusted consultancy advice with access to the best
delivery expertise. When necessary, we supplement our industry and
technology specialists with access to the broader contractor market
through Parity Professionals. Parity's approach is both
client-centric and highly responsive, fulfilling client needs with
our internal expertise and best practice approach supplemented with
niche contract expertise. We are able to reduce risk and get
results for our clients whilst ensuring flexibility, speed to scale
up for new opportunities, and cost-effective delivery.
www.parity.net
www.parityprofessionals.co.uk
www.parityconsultancyservices.co.uk
Introduction
Further to our trading update announced on 18 July, we remain
encouraged by the robust first half performance with a further
period of revenue and profit growth in both business divisions.
Parity is maintaining sustained organic growth at the top line
whilst continuing to invest across the business with faster growth
observed in its Consultancy Services division which is in line with
our strategic goal of targeting the high growth data solutions
markets.
We have successfully undertaken the necessary steps to
restructure and rebalance the business, exiting from legacy and
non-profitable operations to focus on building upon our core
strengths, where we can align our capabilities to deliver more
effectively to our clients and thereby be more efficient. The Group
has again delivered like-for-like growth in both divisions at both
revenue and profit levels, managing organic growth through
measured, self-funded investment whilst maintaining strong working
capital controls which in turn protects us from potential interest
rate increases. We are reassured by the growing evidence of the
cross-sell and up-sell opportunity presented by closer alignment of
the businesses and the synergies that this demonstrates. Our
pension liabilities have reduced and our repayment schedule is both
affordable and is built into our outlook. This will enable further
organic investment to drive customer led profitable growth.
Results
Group revenues for the period grew by 1% to GBP43.2m in
comparison to H1 2017, reflecting recovery against a strong Q1 2017
before the implementation of IR35 reforms which significantly
reduced contractor volumes in our largest market, the Public
Sector.
The continued improvement in the business mix supported growth
in operating profit from continuing operations for the first half
of 12% to GBP1.03m from GBP0.92m in the equivalent period last
year. Group overheads increased slightly to GBP0.59m (H1 2017:
GBP0.57m), mainly due to necessary additional compliance and
advisor costs in relation to matters such as the new GDPR
legislation.
The relatively small cash outflow from operating activities of
GBP0.24m is mainly as a result of the growth in contractor volumes
in the Professionals division and the associated working capital
requirement. Debtor days at 30 June 2018 increased slightly to 20
days (18 days at 31 December 2017, excluding Inition). The increase
reflects the change in business mix with an increase in the
proportion of turnover from the Private Sector. As a result, net
debt was GBP1.9m (GBP2.3m as at 30 June 2017), up from GBP1.6m as
at 31 December 2017.
The defined benefit pension scheme is currently in the process
of a revised actuarial valuation as at 5 April 2018 and we expect
to provide an update in our 2018 Annual Report and Accounts. The
accounting valuation disclosed in this Interim Report has decreased
as a result of an increase in the applicable discount rate.
Overall, the continued improvement in the Group's financial
performance vindicates our strategy of rebalancing the business
towards the higher margin Consultancy Services, which represented
35% of Group contribution from 12% of external revenues in the
period (an increase from 9% of revenues H1 2017).
Discontinued Operations
We sold the Inition business to Digital Communication Group
Limited on 20 April 2018. The Inition business was sub-scale and
considered non-core due to its lack of synergy with the Group's
strategy. The trading loss of the Inition business for H1 2018 up
until the date of disposal is included under 'Discontinued
Operations' in the Income Statement, together with the loss on
disposal.
Dividend
In line with our previous statements on dividends, we are not
declaring a dividend at this time, with funds being retained to
continue to support our investment in growth but we look forward to
restoring a dividend in the medium term. As the Group has continued
to deliver an improving performance, the Board is now taking advice
on the steps required to put in place sufficient distributable
reserves to enable the payment of a dividend at the appropriate
time.
Parity Consultancy Services Division - 35% of Group contribution
(H1 2017: 33%)
Parity Consultancy Services develops, implements and supports
technology solutions for our clients through three core service
offerings:
-- We provide consultancy support to help clients understand and interpret their data
-- We work closely with our clients to determine their data
needs to help them develop their strategy, and we deliver the data
management and analysis toolsets
-- We deliver data projects for our clients using a combination
of our expertise, underpinned by the best available skills in the
market
Our combination of industry specialism and IT solution expertise
provide our clients with the assurance that we understand their
needs and can provide the right systems to support them. We are
technology agnostic, delivering the most appropriate solution to a
client's specific needs, de-risking Parity from over-reliance on
specific technologies and isolating ourselves from the volatility
in a rapidly evolving solution market. We have the flexibility to
provide strategic advice on their IT and systems architecture
requirements and provide the niche expertise to deliver their
longer-term IT projects without needing to maintain a large bench
of available staff, enabling cost savings which allow competitive
pricing.
We have invested to build our expertise and capability in the
high growth data market. Matthew Bayfield joined the senior
management team of Parity Group plc as the Managing Director of
Parity Consulting in May 2018 to drive the development of the
sales, marketing and consultancy propositions. He is an
acknowledged expert in his field, recognised as one of the 50 most
influential people in data by DataIQ. Matthew has been on the Group
Board for Ogilvy & Mather as their Head of Data for EMEA, as
well as founding and leading a number of data strategy, research
and insight businesses, taking three to successful commercial
exit.
Parity Consultancy Services made solid progress with further
growth in divisional revenues on continuing operations of 30.8% to
GBP5.1m (H1 2017: GBP3.9m) with an increase in segmental
contribution from GBP0.55m to GBP0.62m over the same period.
Margins reflect the necessary further investment in sales and
senior data expertise, coupled with the faster revenue growth being
reliant upon contracted delivery staffing which generates lower
margins than internal staff. Nevertheless, Parity staff fee days
increased by 18.1% compared to H1 2017, whilst associate fee days
increased by 40.3%, underwriting the benefit of rapid scaling
enabled by aligning with Parity Professionals, helping to deliver
timely, demand-driven support to client projects.
Parity Consultancy Services continued its success with 7 new
clients in the period (4 public sector and 3 private sector), two
of which were generated by cross-selling in to existing
Professionals clients. In addition to the new framework award for
G-Cloud 10 in the public sector, the business secured a framework
with a further Health client for business intelligence and data
related project work. Our key relationships with British American
Tobacco, the Ministry of Defence and the Department for Education
form a strong foundation, driving additional opportunity and
extensions to current projects.
Parity Professionals Division - 65% of Group contribution (H1
2017: 67%)
Parity Professionals provides targeted recruitment of temporary
and permanent professionals with the skills required to ensure our
clients have both the capacity and the technical capability to
deliver their projects. Our clients' success depends on the
efficiency and competency of their people and, over the last 45
years, Parity has developed a strong reputation for recruiting the
best talent across many industry sectors and locations. Our core
strengths are in high growth IT skills relating to Digital, Data
and Information Security which also supports the Consultancy
Services division, though we have broader capability to support our
clients in the provision of interim staff to deliver business
change programmes.
Parity Professionals demonstrated a steady recovery from the
impact of IR35 which was implemented at the end of Q1 2017,
reducing contractor headcount in our largest market, the Public
Sector. Divisional revenues improved by 2% from GBP40.7m to
GBP41.6m (H1 2017 to H1 2018) with a 1% increase in divisional
contribution to GBP1.14m against the same period last year. We have
continued to invest in building sales capacity reflected in
improving key sales metrics, with an increase of approximately 10%
in both requirement volumes and placements, and permanent fees
increasing by 16% compared to H1 2017.
The Professionals business opened 33 new client relationships in
the first half. The private sector represents over 60% of new
clients that were opened in the half; many of these are SMEs in the
Digital space. The greater volume is with multiple hires, more
typical where we have a strong reputation in the Public Sector
which continues to form the backbone of opportunity for the
Professionals business. We have successfully won places on a number
of new frameworks including Ordnance Survey, NEST (National
Employment Savings Trust) and Northern Ireland Water. In addition,
Parity Professionals has strengthened the relationship with
Scottish Water who have reduced their suppliers from 5 to 2 for
their new framework covering the next 5 years. In the private
sector, we have been awarded frameworks with a number of housing
associations such as the Radian Group, broadened our client base in
utilities, and completed the successful migration of contractors
from other suppliers as part of the Primark managed service award.
These volume opportunities, typically agreed over a 3+ year
duration, provide better long-term visibility and aid our internal
resource planning.
Parity Professionals continues to work closely with the
Consulting Services business, increasing the number of clients
where they collaborate to ensure successful supply, increasing
inter-segment revenues to GBP3.5m from GBP1.7m in H1 2017, and
providing internal permanent recruitment services to support both
back-office operations and client delivery.
Our Market
Market reports (Report on Jobs published 8 August 2018 by IHS
Markit and the Recruitment and Employment Confederation) indicate
that IT and Computing was the most in-demand category for permanent
recruitment, and demand continues to build for contract positions
against a backdrop of reducing supply of skilled workers. This
continues to drive demand for both project delivery and staff
augmentation services despite some uncertainty surrounding Brexit
and potential interest rate rises. This market activity coupled
with our framework success has increased the volume of opportunity
whilst retaining our enduring customer relationships as a strong
foundation from which to sustain growth.
Current Trading and Future Prospects
The Consultancy Services business has recruited new sales and
marketing leadership, with early signs of success targeting data
consulting and analysis. So far they have been able to demonstrate
clear evidence of positive impact for the client, giving confidence
in the approach we are taking to build our service proposition in
target markets. In addition to these new and exciting service
offerings, we continue to drive our project delivery and managed
services projects winning a number of smaller opportunities with
both established and new clients. Whilst revenue growth in
Consultancy Services has been strong, there remains plenty of
opportunity for accelerating growth in the consulting and project
delivery service lines as we invest to further develop our
propositions.
Within Parity Professionals, our improving sales metrics have
driven recovery from the drop in contractor volumes experienced in
Q1 2017 which resulted from the change in the IR35 legislation.
Nevertheless, recovery has taken longer than we would have
anticipated with a sustained higher level of contract worker churn.
In response to this we have invested in measured headcount growth
to deliver permanent recruitment services, and continued to support
sales growth targeting higher demand skillsets. We are encouraged
by the impact of the new staff to support revenue growth in our
traditionally stronger second half.
Post close, we have successfully tendered for the Crown
Commercial Service Management Consultancy 2 framework for
consultancy and project delivery into the Public Sector. We have
also secured additional new project work with the Department for
Education for the Education and Skills Funding Agency. The
Professionals division has a growing pipeline of larger framework
opportunity for IT recruitment and managed services.
We will continue to invest in senior consulting expertise, sales
and marketing, and in permanent delivery headcount as repeat
revenues build, driving utilisation and enhancing long-term
operating profit. We are confident in our ability to sustain
organic growth through controlled investment in capacity and
capability, evidenced by the progress made to date and the market
opportunities that we have identified. We will also consider
opportunities to build this business should the right opportunity
arise to accelerate growth.
The improving financial results to date and the Group's pipeline
of opportunities underwrite the Board's confidence in the Group's
longer-term growth prospects. Whilst we are experiencing a
short-term client-side delay on one large contract, the rest of the
Group is performing in line with Board expectations. Without any
further delays, we expect a stronger second half, in line with the
Group's traditional seasonality, and to deliver on current
expectations for the year as a whole as our investment in the Group
continues to drive revenue and profit growth, supporting cash flow
improvement and generating further shareholder value.
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 2017 Annual
Report remain applicable for the final six months of this financial
year. The Group's 2017 Annual Report is available from the Parity
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 2018
Six months Six months Year
to 30.06.18 to 30.06.17 to 31.12.17
(Unaudited) (Unaudited) (Audited)
Notes GBP'000 GBP'000 GBP'000
------------------------------------ ------- -------------- ------------- -------------
Continuing operations
Revenue 2 43,220 42,915 83,815
Employee benefit costs (3,098) (3,158) (5,939)
Depreciation and amortisation (112) (143) (286)
All other operating expenses (38,984) (38,695) (75,534)
------------------------------------ ------- -------------- ------------- -------------
Total operating expenses (42,194) (41,996) (81,759)
------------------------------------ ------- -------------- ------------- -------------
Operating profit 1,026 919 2,056
Finance costs 3 (179) (235) (394)
------------------------------------ ------- -------------- ------------- -------------
Profit before tax 847 684 1,662
Tax (charge)/credit 4 (88) (56) 534
------------------------------------ ------- -------------- ------------- -------------
Profit for the period from
continuing operations 759 628 2,196
------------------------------------ ------- -------------- ------------- -------------
Discontinued operations
Loss for the period from
discontinued operations,
net of tax 5 (388) (430) (2,182)
------------------------------------ ------- -------------- ------------- -------------
Profit for the period attributable
to owners of the parent 371 198 14
------------------------------------ ------- -------------- ------------- -------------
Earnings per share - Continuing operations
Basic earnings per share 6 0.74p 0.62p 2.15p
Diluted earnings per share 6 0.71p 0.59p 2.08p
Earnings per share - Continuing and discontinued operations
Basic earnings per share 6 0.36p 0.20p 0.01p
Diluted earnings per share 6 0.35p 0.18p 0.01p
------------------------------------ ------- -------------- ------------- -------------
Consolidated condensed statement of comprehensive income
For the six months ended 30 June 2018
Six months Six months Year
to 30.06.18 to 30.06.17 to 31.12.17
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
------------------------------------------ -------------- ------------- -------------
Profit for the period 371 198 14
Other comprehensive income:
Items that may be reclassified to
profit or loss
Exchange differences on translation
of foreign operations - (33) (39)
Items that will never be reclassified
to profit or loss
Remeasurement of defined benefit
pension scheme 124 137 800
Deferred taxation on remeasurement
of defined benefit pension scheme (21) - (136)
------------------------------------------ -------------- ------------- -------------
Other comprehensive income for the
period, net of tax 103 104 625
Total comprehensive income for the
period 474 302 639
------------------------------------------ -------------- ------------- -------------
Consolidated condensed statement of changes in equity
For the six months ended 30 June 2018
Six months to 30 June 2018 (Unaudited)
Share Capital
Share Deferred premium redemption Other Retained
capital shares reserve reserve reserves earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- --------- ----------- --------- ------------ ---------- ---------- ---------
At 1 January 2018 2,043 - 33,211 14,319 44,160 (86,544) 7,189
Profit for the period - - - - - 371 371
Other comprehensive
income for the period,
net of tax - - - - - 103 103
Issue of new ordinary
shares 10 - 33 - - - 43
Share options - value
of employee services - - - - - 27 27
At 30 June 2018 2,053 - 33,244 14,319 44,160 (86,043) 7,733
------------------------- --------- ----------- --------- ------------ ---------- ---------- ---------
Six months to 30 June 2017 (Unaudited)
Share Capital
Share Deferred premium redemption Other Retained
capital shares reserve reserve reserves earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- --------- ----------- --------- ------------ ---------- ---------- ---------
At 1 January 2017 2,037 14,319 33,195 - 44,160 (87,251) 6,460
Profit for the period - - - - - 198 198
Other comprehensive
income for the period,
net of tax - - - - - 104 104
Issue of new ordinary
shares 6 - 16 - - - 22
Share options - value
of employee services - - - - - 52 52
Cancellation of deferred
shares - (14,319) - 14,319 - - -
At 30 June 2017 2,043 - 33,211 14,319 44,160 (86,897) 6,836
-------------------------- --------- ----------- --------- ------------ ---------- ---------- ---------
Year to 31 December 2017 (Audited)
Share Capital
Share Deferred premium redemption Other Retained
capital shares reserve reserve reserves earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- --------- ----------- --------- ------------ ---------- ---------- ---------
At 1 January 2017 2,037 14,319 33,195 - 44,160 (87,251) 6,460
Profit for the year - - - - - 14 14
Other comprehensive
income for the year,
net of tax - - - - - 625 625
Issue of new ordinary
shares 6 - 16 - - - 22
Share options - value
of employee services - - - - - 68 68
Cancellation of deferred
shares - (14,319) - 14,319 - - -
At 31 December 2017 2,043 - 33,211 14,319 44,160 (86,544) 7,189
-------------------------- --------- ----------- --------- ------------ ---------- ---------- ---------
Consolidated condensed statement of financial position
As at 30 June 2018
As at As at As at
30.06.18 30.06.17 31.12.17
(Unaudited) (Unaudited) (Audited)
Notes GBP'000 GBP'000 GBP'000
-------------------------------- ------ ------------- ------------- -----------
Assets
Non-current assets
Goodwill and intangible assets 4,733 4,932 4,821
Property, plant and equipment 61 68 78
Deferred tax assets 810 411 919
-------------------------------- ------ ------------- ------------- -----------
Total non-current assets 5,604 5,411 5,818
-------------------------------- ------ ------------- ------------- -----------
Current assets
Trade and other receivables 13,279 12,656 12,033
Cash and cash equivalents 5,461 4,479 4,968
Assets classified as held for
sale - 2,168 791
-------------------------------- ------ ------------- ------------- -----------
Total current assets 18,740 19,303 17,792
-------------------------------- ------ ------------- ------------- -----------
Total assets 24,344 24,714 23,610
-------------------------------- ------ ------------- ------------- -----------
Liabilities
Current liabilities
Loans and borrowings (7,364) (6,805) (6,592)
Trade and other payables (8,324) (8,943) (8,349)
Liabilities classified as held
for sale - (344) (395)
-------------------------------- ------ ------------- ------------- -----------
Total current liabilities (15,688) (16,092) (15,336)
-------------------------------- ------ ------------- ------------- -----------
Non-current liabilities
Loans and borrowings (2) (18) (8)
Provisions (19) (17) (18)
Retirement benefit liability 7 (902) (1,751) (1,059)
Total non-current liabilities (923) (1,786) (1,085)
-------------------------------- ------ ------------- ------------- -----------
Total liabilities (16,611) (17,878) (16,421)
-------------------------------- ------ ------------- ------------- -----------
Net assets 7,733 6,836 7,189
-------------------------------- ------ ------------- ------------- -----------
Shareholders' equity
Called up share capital 2,053 2,043 2,043
Share premium account 33,244 33,211 33,211
Capital redemption reserve 14,319 14,319 14,319
Other reserves 44,160 44,160 44,160
Retained earnings (86,043) (86,897) (86,544)
-------------------------------- ------ ------------- ------------- -----------
Total shareholders' equity 7,733 6,836 7,189
-------------------------------- ------ ------------- ------------- -----------
Consolidated condensed statement of cash flows
For the six months ended 30 June 2018
Six months Six months Year
to 30.06.18 to 30.06.17 to 31.12.17
(Unaudited) (Unaudited) (Audited)
Notes GBP'000 GBP'000 GBP'000
-------------------------------------- ------- -------------- ------------- -------------
Cash flows from operating activities
Profit for period 371 198 14
Adjustments for:
Finance costs 179 235 394
Share-based payment expense 27 52 68
Income tax credit (85) (8) (619)
Amortisation of intangible
assets 99 123 341
Depreciation of property, plant
and equipment 37 114 106
Impairment of goodwill - - 1,165
Loss on write down of intangible
assets - - 3
Loss on disposal of discontinued
operation 5 312 - -
-------------------------------------- ------- -------------- ------------- -------------
940 714 1,472
Working capital movements
Decrease in work in progress - - 3
(Increase) / decrease in trade
and other receivables (958) 1,882 2,619
Decrease in trade and other
payables (96) (349) (910)
Increase in provisions 1 - 1
Payments to retirement benefit
plan (125) (92) (184)
-------------------------------------- ------- -------------- ------------- -------------
Net cash flow (used in) / from
operating activities (238) 2,155 3,001
-------------------------------------- ------- -------------- ------------- -------------
Investing activities
Purchase of property, plant
and equipment (11) (50) (91)
Purchase of intangible assets - - (5)
Net proceeds from disposal
of subsidiary 5 14 - -
-------------------------------------- ------- -------------- ------------- -------------
Net cash from / (used in) investing
activities 3 (50) (96)
-------------------------------------- ------- -------------- ------------- -------------
Financing activities
Net cash from issue of ordinary
shares 43 22 22
Net proceeds from / (repayment
of) finance facility 771 (1,817) (2,032)
Interest paid (86) (103) (199)
-------------------------------------- ------- -------------- ------------- -------------
Net cash from / (used in) financing
activities 728 (1,898) (2,209)
-------------------------------------- ------- -------------- ------------- -------------
Net increase in cash and cash
equivalents 493 207 696
Cash and cash equivalents at the
beginning of the period 4,968 4,272 4,272
----------------------------------------------- -------------- ------------- -------------
Cash and cash equivalents at the
end of the period 5,461 4,479 4,968
----------------------------------------------- -------------- ------------- -------------
Notes to the interim results
1 Basis of preparation
The condensed financial statements comprise the unaudited
results for the six months to 30 June 2018 and 30 June 2017 and the
audited results for the year ended 31 December 2017. The financial
information for the year ended 31 December 2017 does not constitute
the full statutory accounts for that period. The Annual Report and
Financial Statements for 2017 have been filed with the Registrar of
Companies. The Independent Auditor's Report on the Annual Report
and Financial Statements for 2017 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
2018 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.
Going concern
The directors are satisfied that the Group has sufficient
resources to continue in operational existence for the foreseeable
future. Accordingly, they continue to adopt the going concern basis
in preparing these 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 year ended 31 December 2017 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 2018. 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. IFRS 9: Financial Instruments and IFRS 15: Revenue from
Contracts with Customers were adopted from 1 January 2018. As
stated in the Annual Report and Accounts for the year ended 31
December 2017 these have not had a material impact on the financial
statements.
The Group is reviewing the impact of on the financial statements
of the relevant forthcoming standards, including IFRS 16: Leases
(effective 1 January 2019). Under IFRS 16 the Group's operating
leases will be accounted for as right of use assets, which will be
largely offset by equivalent lease liabilities. The assets will be
recognised as property, plant and equipment and the lease liability
will increase net debt. The impact to profit before tax is not
expected to be material.
2 Segmental information
Six months to 30 June 2018 (Unaudited)
Parity
Parity Professionals Consultancy
Services Total
GBP'000 GBP'000 GBP'000
Revenue from external customers 38,078 5,142 43,220
Inter-segment revenue 3,495 - 3,495
--------------------------------- ----------------------- ------------- ---------
Segment revenue 41,573 5,142 46,715
Attributable costs (40,437) (4,524) (44,961)
--------------------------------- ----------------------- ------------- ---------
Segmental contribution 1,136 618 1,754
Group costs (589)
Depreciation and amortisation (112)
Share based payment (27)
Operating profit 1,026
Finance costs (179)
--------------------------------- ----------------------- ------------- ---------
Profit before tax (continuing
operations) 847
--------------------------------- ----------------------- ------------- ---------
Six months to 30 June 2017 (Unaudited)
Parity
Parity Professionals Consultancy
Services Total
GBP'000 GBP'000 GBP'000
Revenue from external customers 38,988 3,927 42,915
Inter-segment revenue 1,725 - 1,725
--------------------------------- ----------------------- ------------- ---------
Segment revenue 40,713 3,927 44,640
Attributable costs (39,581) (3,381) (42,962)
--------------------------------- ----------------------- ------------- ---------
Segmental contribution 1,132 546 1,678
Group costs (566)
Depreciation and amortisation (141)
Share based payment (52)
Operating profit 919
Finance costs (235)
--------------------------------- ----------------------- -------------
Profit before tax (continuing
operations) 684
--------------------------------- ----------------------- ------------- ---------
Year to 31 December 2017 (Audited)
Parity
Parity Professionals Consultancy
Services Total
GBP'000 GBP'000 GBP'000
Revenue from external customers 74,272 9,543 83,815
Inter-segment revenue 5,764 - 5,764
------------------------------------ ----------------------- ------------- ---------
Segment revenue 80,036 9,543 89,579
Attributable costs (77,729) (8,395) (86,124)
------------------------------------ ----------------------- ------------- ---------
Segmental contribution 2,307 1,148 3,455
Group costs (1,045)
Depreciation and amortisation (286)
Share based payment (68)
Operating profit 2,056
Finance costs (394)
------------------------------------ ----------------------- ------------- ---------
Profit before tax (continuing
operations) 1,662
------------------------------------ ----------------------- ------------- ---------
3 Finance costs
Six months Six months Year to
to to 31.12.17
30.06.18 30.06.17 (Audited)
(Unaudited) (Unaudited) GBP'000
GBP'000 GBP'000
------------------------------------------- ------------- ------------- -----------
Interest expense on financial liabilities 86 102 199
Net finance costs in respect of
post-retirement benefits 93 133 195
Total finance costs 179 235 394
------------------------------------------- ------------- ------------- -----------
The interest expense on financial liabilities represents
interest paid on the Group's asset-based financing facilities.
4 Taxation
Continuing operations
Six months Six months Year to
to to 31.12.17
30.06.18 30.06.17 (Audited)
(Unaudited) (Unaudited) GBP'000
GBP'000 GBP'000
------------------------------------ ------------- ------------- -----------
Recognised in the income statement
Current tax charge - 58 112
Deferred tax charge/(credit) 88 (2) (646)
------------------------------------ ------------- ------------- -----------
Total tax charge/(credit) 88 56 (534)
------------------------------------ ------------- ------------- -----------
Recognised in other comprehensive
income
Deferred tax charge 21 - 136
------------------------------------ ------------- ------------- -----------
5 Discontinued operations
In April 2018 the Group sold Inition Limited. As such, Inition's
operating result for the current and comparative periods, as well
as the loss on disposal of Inition and impairment of goodwill
associated with the Inition cash generating unit is presented as
discontinued.
The post-tax loss on disposal of Inition Limited was determined
as follows:
Six months Six months Year to
to to 31.12.17
30.06.18 30.06.17 (Audited)
(Unaudited) (Unaudited) GBP'000
GBP'000 GBP'000
--------------------------------- --- ------------- ------------- -----------
Cash 100 - -
Deferred consideration 100 - -
--------------------------------- --- ------------- ------------- -----------
Total consideration 200 - -
Cash disposed of 86 - -
Net assets disposed of (other
than cash)
Intangible assets 33 - -
Property, plant and equipment 62 - -
Trade and other receivables 701 - -
Trade and other payables (485) - -
--------------------------------- --- ------------- ------------- -----------
Total net assets disposed 397 - -
of
Loss on disposal before disposal (197) - -
expenses
Disposal expenses (115) - -
Post-tax loss on disposal (312) - -
of Inition Limited
--------------------------------- --- ------------- ------------- -----------
5 Discontinued operations (continued)
The post-tax result of discontinued operations was determined as
follows:
Six months Six months Year to
to to 31.12.17
30.06.18 30.06.17 (Audited)
(Unaudited) (Unaudited) GBP'000
Note GBP'000 GBP'000
----------------------------- ----- ------------- ------------- -----------
Revenue 523 1,340 2,324
Expenses (812) (1,834) (3,426)
----------------------------- ----- ------------- ------------- -----------
Operating loss (289) (494) (1,102)
Impairment of goodwill - - (1,165)
Debtor insolvency dividend 40 - -
Taxation credit 173 64 85
Loss on disposal after tax (312) - -
----------------------------- ----- ------------- ------------- -----------
Loss for the period, net of
tax (388) (430) (2,182)
----------------------------- ----- ------------- ------------- -----------
Basic loss per share 6 0.38p 0.42p 2.14p
Diluted loss per share 6 0.36p 0.41p 2.07p
----------------------------- ----- ------------- ------------- -----------
The discontinued operations revenue in both 2018 and 2017
related entirely to Inition Limited. The debtor insolvency dividend
represents a one-off payment received from the administrators of
Atraxis AG and relates to a bad debt previously written off by a
former Group subsidiary registered in Switzerland. The discontinued
operations tax credit of GBP173,000 for the six months to 30 June
2018 is a research and development tax credit claimed by Inition
Limited.
The cash flows related to discontinued operations are as
follows:
Six months Six months Year
to 30.06.18 to 30.06.17 to 31.12.17
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Net cash flow from / (used in) operating
activities 45 (453) (674)
Net cash used in investing activities (5) (34) (38)
Net cash flow for the period 40 (487) (712)
------------------------------------------ -------------- ------------- -------------
Net proceeds received upon the disposal of Inition Limited were
as follows:
Six months Six months Year
to 30.06.18 to 30.06.17 to 31.12.17
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Cash consideration received 100 - -
Cash disposed of (86) - -
Net proceeds from the disposal of 14 - -
Inition Limited
---------------------------------- -------------- ------------- -------------
6 Earnings per share
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 dilutive
potential ordinary shares.
Six months to 30.06.2018 Six months to 30.06.2017 Year to 31.12.2017
(Unaudited) (Unaudited) (Audited)
---------- ---------------------------------- ---------------------------------- ----------------------------------
Weighted Weighted Weighted
average Earnings average Earnings average Earnings
Earnings number / (loss) Earnings number / (loss) number / (loss)
/ (loss) of per / (loss) of per Earnings of per
GBP'000 shares share GBP'000 shares share GBP'000 shares share
000's Pence 000's Pence 000's Pence
---------- ---------- --------- ----------- ---------- --------- ----------- ---------- --------- -----------
Continuing operations
Basic
earnings
per
share 759 102,302 0.74 628 102,051 0.62 2,196 102,087 2.15
Effect of
dilutive
options - 4,259 - - 3,878 - - 3,263 -
Diluted
earnings
per
share 759 106,561 0.71 628 105,929 0.59 2,196 105,350 2.08
Discontinued operations
Basic
loss per
share (388) 102,302 (0.38) (430) 102,051 (0.42) (2,182) 102,087 (2.14)
Effect of
dilutive
options - 4,259 - - 3,878 - - 3,263 -
Diluted
earnings
per
share (388) 106,561 (0.36) (430) 105,929 (0.41) (2,182) 105,350 (2.07)
Continuing and discontinued operations
Basic
earnings
per
share 371 102,302 0.36 198 102,051 0.20 14 102,087 0.01
Effect of
dilutive
options - 4,259 - - 3,878 - - 3,263 -
Diluted
earnings
per
share 371 106,561 0.35 198 105,929 0.18 14 105,350 0.01
---------- ---------- --------- ----------- ---------- --------- ----------- ---------- --------- -----------
As at 30 June 2018 the number of ordinary shares in issue was
102,624,020 (30 June 2017 and 31 December 2017: 102,124,020).
7 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 2017 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 2015.
The following changes in estimate have been applied to the IAS
19 valuation as at 30 June 2018:
30.06.18 30.06.17 31.12.17
% % %
--------------------------------- ---------- ---------- ----------
Rate of increase in pensions in 3.7 - 3.9 3.7 - 3.9 3.7 - 3.9
payment
Discount rate 2.7 2.6 2.45
Retail price inflation 3.2 3.3 3.3
Consumer price inflation 2.2 2.3 2.3
--------------------------------- ---------- ---------- ----------
8 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.
9 Related party transactions
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
(2017: none).
10 Post balance sheet events
There are no post balance sheet events to report.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR SFLFWUFASEDU
(END) Dow Jones Newswires
September 20, 2018 02:00 ET (06:00 GMT)
Partway (LSE:PTY)
Historical Stock Chart
From Apr 2024 to May 2024
Partway (LSE:PTY)
Historical Stock Chart
From May 2023 to May 2024