TIDMPTY
RNS Number : 5220M
Parity Group PLC
22 September 2021
PARITY GROUP PLC
INTERIM RESULTS FOR THE SIX MONTHS TO 30 JUNE 2021
22 September 2021
Parity Group plc ("Parity" or the "Group"), the data and
technology focused professional services business, announces its
half year results for the six months ended 30 June 2021 ("H1
2021").
Headlines
-- Adjusted EBITDA for H1 2021 of GBP251k (H1 2020: GBP567k).
-- Loss before tax of GBP491k (H1 2020: GBP383k) due primarily
to one-off change management costs of GBP400k.
-- New systems and processes resulted in a reduction of back-office costs by c.GBP250k.
-- Pension scheme surplus of GBP1.3m (H1 2020: deficit of GBP0.5m).
-- H1 2021 financial results impacted by lower revenue of GBP26m (H1 2020: GBP30m).
-- External contribution of GBP2.3m (H1 2020: GBP2.9m).
-- New management refocusing investment in front line resources
in the Group's core recruitment services business since period
end.
-- The Board expects a return to growth and profitability in FY 2022.
Key Financials
For the six months ended 30 June 2021
Six months Six months Year
to 30.06.21 to 30.06.20 to 31.12.20
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
---------------------------------------- -------------- ------------- -------------
Revenue 25,998 29,949 57,827
External contribution 2,322 2,863 5,561
Adjusted EBITDA(1) 251 567 1,056
Operating profit before non-underlying
items 18 246 470
Adjusted (loss)/profit before tax(1) (91) 61 122
Loss before tax (491) (383) (325)
Net (debt)/cash excluding lease
liabilities (1,112) 654 231
---------------------------------------- -------------- ------------- -------------
(1) Adjusted EBITDA and adjusted profit/loss before tax are
non-IFRS alternative performance measures, defined in Note 1 of the
notes to the interim results.
Mark Braund, Executive Chairman of Parity Group plc, said:
"It has been a tough start to the year for Parity. Whilst the
increase in economic activity has helped to re-energise the
recruitment industry, it has exposed the underinvestment in the
Group's core recruitment business, which has inevitably impacted
our financial results.
We have taken action to address the challenges within the
business by refreshing our strategy and are investing in frontline
resources to capitalise on our reputable brand name during a time
of heightened market opportunity.
The response from colleagues has been tremendous; their
enthusiasm and hard work has already helped us to focus the
business and combined with strong demand in Parity's core markets,
I believe we can re-establish growth and profitability in the
medium term."
Contacts
Parity Group PLC www.parity.net
Mark Braund, Executive Chairman
Mike Johns, CFO + 44 (0) 208 543 5353
finnCap Ltd (Nomad & Broker) https://www.finncap.com/
Jonny Franklin-Adams / Simon
Hicks / Fergus Sullivan +44 (0) 20 7220 0500
This announcement contains certain statements that are or may be
forward-looking with respect to the financial condition, results or
operations and business of Parity Group plc. By their nature
forward-looking statements involve risk and uncertainty because
they relate to events and depend on circumstances that will occur
in the future. There are a number of factors that could cause
actual results and developments to differ materially from those
expressed or implied by such forward-looking statements. These
factors include but are not limited to (i) adverse changes to the
current outlook for the UK IT recruitment and solutions market,
(ii) adverse changes in tax laws and regulations, (iii) the risks
associated with the introduction of new products and services, (iv)
pricing and product initiatives of competitors, (v) changes in
technology or consumer demand, (vi) the termination or delay of key
contracts and (vii) volatility in financial markets.
Overview
During H1 2021 Parity experienced an increase in both sentiment
and activity in the key markets served by the Group. However,
trading was impacted by underinvestment in the core recruitment
solutions business and the inability to establish a sustainable and
scalable consulting division.
A change in leadership has taken place during the period; Mark
Braund was appointed Non-Executive Chairman 21 April 2021, and
subsequently as interim Executive Chairman 9 June 2021.
The management team has since undertaken a review of the
business and refined the strategy to focus on and reinvest in
Parity's core business of recruitment solutions; targeting
in-demand skills in the data and change management sectors of the
market, where the Group has been developing a presence.
The sectors Parity is targeting remain resilient to the
disruption in the wider economy and provide the business with the
opportunity to capitalise on the investment it is making in people
during H2 2021, leveraging its heritage to re-establish growth in a
business with strong demand and in which Parity is considered a
quality brand.
Alongside traditional contract recruitment, Parity aims to
extend its value-added services, including managed services and
statement of work, to new and existing clients, an area of growing
significance as clients seek to mitigate the increasing complexity
of compliance and administration of contract resources, an area
where Parity has a strong reputation and is rebuilding
capacity.
Parity expect the investment being made in frontline resources
to have a positive impact in Q4 2021 and to drive growth and a
return to profitability in 2022.
Financial review
H1 2021 has seen an increase in market activity and with the
pandemic restrictions slowly easing during the period it has
created both opportunity and risk for Parity. The increasing
activity in the market has coincided with unplanned staff attrition
and underinvestment in the core recruitment solutions business,
thereby contributing to a decline in revenue for the period.
Last year (2020) was a year of continued transformation, which,
during the height of the pandemic saw the Group streamline
back-office functions and invest in new systems. This has reduced
costs and increased the ability of the business to adapt to
changing business conditions.
In 2020 the pandemic created uncertainty, and whilst Parity
retained employees without furlough, it shrank resources and
reduced costs materially. Although activity was depressed, the
Group's primary public sector market remained stable; this helped
the business to maximise its financial performance during 2020
despite a reduction in top line revenue.
Following management changes in June 2021 the Group has made the
decision to focus on and reinvest in Parity's core business of
recruitment solutions; targeting in-demand skills in the data and
change management sectors of the market, where the Group has been
developing a presence.
External contribution
During H1, optimism that the worst of the pandemic may be over
has seen an 11% increase in job opportunities within contract
recruitment compared with H2 2020 and many of our key clients
seeking to add to or start new projects. In addition, as businesses
started to hire new staff the number of permanent job opportunities
rose dramatically in Q1 of 2021.
Despite the backdrop of increased activity in recruitment the
Group has seen a decline in total external contribution for the
period to GBP2.3m (H1 2020: GBP2.9m, FY 2020: GBP5.6m) with key
service lines down.
Recruitment
As noted previously the decision by the business to preserve
cash and limit risk during the height of the pandemic in 2020 was a
key driver behind the lack of investment in frontline revenue
generating resources. This combined with higher-than-expected staff
turnover during H1 2021 has meant that the business has been
under-resourced in client and contractor facing roles. The impact
has been:
-- A focus on maintaining and developing key clients, resulting
in growth during the period from 3 of our top 5 clients.
-- 17% of new job opportunities were not actively managed due to resourcing shortages.
-- Less engagement with contractors and an increase in early
terminations during the period (contracts ending before the
contracted end date) by more than 40% compared with the H2
2020.
-- Higher attrition in the long tail of clients (those with less than 5 active contractors).
-- A lack of resource to actively manage permanent recruitment opportunities.
A clear plan of action has since been put in place to address
these challenges, with some immediate improvements beginning to
materialise.
Consulting and Managed Services
Managed services during the period has been in line with
expectations but limited to core contracted services. Historically
(before 2020) core managed services would have been supplemented by
additional client projects. Having seen these disappear during the
pandemic, H1 2021 has seen a revival of discussions on incremental
statements of work but none of these projects have contributed to
H1 2021.
Growing the consultancy pipeline and revenue had been a key
objective for the business in H1 2021. Q1 provided a positive start
with a small number of discrete projects, discussed with clients,
and nurtured during the pandemic, being started during the period.
The Group has been unable to productise its consulting propositions
and as a consequence pipeline development has been slow. With long
lead times and no significant projects closed in Q2 of H1 2021,
revenue and external contribution fell short of our
expectations.
Result before tax
Despite the lower external contribution in the period, the Group
has delivered an adjusted EBITDA of GBP251k (H1 2020: GBP567k, FY
2020: GBP1,056k). Partially offsetting the fall in external
contribution was a reduction in back-office costs by GBP250k
(versus H1 2020). This was a direct result of the restructuring
during 2020 of back-office functions, reducing headcount and
implementing new systems and processes.
During the period the business incurred GBP400k of
non-underlying costs, the majority of which relates to changes in
management (H1 2020: GBP444k, FY 2020: GBP447k).
After the inclusion of non-underlying items, the Group posted a
loss before tax for H1 2021 of GBP491k (H1 2020: GBP383k, FY 2020:
GBP325k).
Cash & net debt
Net debt, excluding adjustments for IFRS 16 lease liabilities,
as at 30 June 2021 was GBP1.11m (30 June 2020: net cash of
GBP0.65m, 31 December 2020: net cash of GBP0.23m).
The Group continues to utilise part of its GBP9m debt facility
secured against billed and unbilled receivables to manage both
intra month and inter month movements in working capital. In April
2021 the Group transferred its ABL facility from PNC to Leumi ABL,
giving it greater flexibility and lower borrowing costs. The new
facility with Leumi ABL runs for an initial period of 3 years until
April 2024.
During H1 2020 the Group maintained a significant headroom on
the facility and as at 30 June 2021 the headroom on the facility
was GBP2.1m.
Net debt has increased during H1 2021, the largest component of
which is an increase in debtor days. Debtor days, which have been
exceptionally low over the last 18 months have increased slightly
during the period from 14 as at 30 December 2020 to 21 as at 30
June 2021. Despite the increase in debtor days conversion of income
to cash remains strong and there have been no bad debts realised
during the period.
Defined benefit pension
The final salary pension scheme surplus was GBP1.3m at 30 June
2021 (30 June 2020: deficit of GBP0.5m; 31 December 2020: surplus
of GBP0.2m). The continuing growth in the surplus during the first
half was primarily due to a positive performance from the scheme's
growth assets.
During the period the Group made GBP161k of contributions to the
pension scheme, this includes GBP72k of costs associated with the
administration of the scheme.
Outlook
Although the Group has seen a further decline in revenue and
external contribution, there is an expectation that in Parity's
core areas of data, technology and change management, the increase
in market activity will be sustained. Parity is on a mission to
rapidly rebuild capacity to deliver growth by positioning itself
strategically to build long-term value.
Refocusing on the core recruitment solutions business has
provided the Group with a clear and achievable goal. The response
from the team has been tremendous; their enthusiasm and hard work
is already beginning to show through and with a much lower and more
flexible cost base across all business functions, as confidence
returns, we will add further scale.
With the existing debt line, flexible cost base, a strong set of
core clients, a refocus on contract recruitment and further
investment in front line resources being made in Q3 and Q4, along
with a general rise in the market, the directors believe that the
business is well placed to stabilise in H2 and be in a position to
generate growth and return to profit in FY 2022.
Consolidated condensed income statement
For the six months ended 30 June 2021
Six months Six months Year
to 30.06.21 to 30.06.20 to 31.12.20
(Unaudited) (Unaudited) (Audited)
Notes GBP'000 GBP'000 GBP'000
---------------------------------------- ------- -------------- ------------- -------------
Revenue 3 25,998 29,949 57,827
Contractor costs (23,676) (27,086) (52,266)
---------------------------------------- ------- -------------- ------------- -------------
External contribution 2,322 2,863 5,561
---------------------------------------- ------- -------------- ------------- -------------
Operating costs before non-underlying
items (2,304) (2,617) (5,091)
---------------------------------------- ------- -------------- ------------- -------------
Operating profit before non-underlying
items 18 246 470
---------------------------------------- ------- -------------- ------------- -------------
Non-underlying items 4 (400) (444) (447)
---------------------------------------- ------- -------------- ------------- -------------
Operating (loss)/profit (382) (198) 23
---------------------------------------- ------- -------------- ------------- -------------
Analysed as:
Adjusted EBITDA(1) 251 567 1,056
Depreciation and amortisation (233) (321) (586)
Non-underlying items 4 (400) (444) (447)
---------------------------------------- ------- -------------- ------------- -------------
Finance costs 5 (109) (185) (348)
---------------------------------------- ------- -------------- ------------- -------------
Loss before tax (491) (383) (325)
---------------------------------------- ------- -------------- ------------- -------------
Analysed as:
Adjusted (loss)/profit before tax(1) (91) 61 122
Non-underlying items 4 (400) (444) (447)
---------------------------------------- ------- -------------- ------------- -------------
Tax (charge)/credit 6 (34) 95 (145)
---------------------------------------- ------- -------------- ------------- -------------
Loss for the period attributable
to owners of the parent (525) (288) (470)
---------------------------------------- ------- -------------- ------------- -------------
Loss per share
Basic 7 (0.51p) (0.28p) (0.46p)
Diluted 7 (0.51p) (0.28p) (0.46p)
--------------- ---- --------- --------- ---------
All activities comprise continuing operations.
(1) Adjusted EBITDA and adjusted profit/loss before tax are
non-IFRS alternative performance measures, defined in Note 1 of the
notes to the interim results.
Consolidated condensed statement of comprehensive income
For the six months ended 30 June 2021
Six months Six months Year
to 30.06.21 to 30.06.20 to 31.12.20
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
------------------------------------------- -------------- ------------- -------------
Loss for the period (525) (288) (470)
Other comprehensive income
Items that will never be reclassified
to profit or loss
Remeasurement of defined benefit pension
scheme 985 400 1,041
Deferred taxation on remeasurement
of defined benefit pension scheme (187) (76) (198)
------------------------------------------- -------------- ------------- -------------
Other comprehensive income for the
period after tax 798 324 843
------------------------------------------- -------------- ------------- -------------
Total comprehensive income for the
period attributable to owners of the
parent 273 36 373
------------------------------------------- -------------- ------------- -------------
Consolidated condensed statement of changes in equity
For the six months ended 30 June 2021
Six months to 30.06.21 (Unaudited)
Share Capital
Share premium redemption Other Retained
capital reserve reserve reserves earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- --------- --------- ------------ ---------- ---------- ---------
At 1 January 2021 2,053 33,244 14,319 34,560 (77,290) 6,886
Share options - value of
employee services - - - - (59) (59)
---------------------------- --------- --------- ------------ ---------- ---------- ---------
Transactions with owners - - - - (59) (59)
---------------------------- --------- --------- ------------ ---------- ---------- ---------
Loss for the period - - - - (525) (525)
Other comprehensive income
for the period - - - - 798 798
At 30 June 2021 2,053 33,244 14,319 34,560 (77,076) 7,100
---------------------------- --------- --------- ------------ ---------- ---------- ---------
Six months to 30.06.20 (Unaudited)
Share Capital
Share premium redemption Other Retained
capital reserve reserve reserves earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- --------- --------- ------------ ---------- ---------- ---------
Revised at 1 January 2020 2,053 33,244 14,319 34,560 (77,753) 6,423
Share options - value of
employee services - - - - 43 43
---------------------------- --------- --------- ------------ ---------- ---------- ---------
Transactions with owners - - - - 43 43
---------------------------- --------- --------- ------------ ---------- ---------- ---------
Loss for the period - - - - (288) (288)
Other comprehensive income
for the period - - - - 324 324
At 30 June 2020 2,053 33,244 14,319 34,560 (77,674) 6,502
---------------------------- --------- --------- ------------ ---------- ---------- ---------
Year to 31.12.20 (Audited)
Share Capital
Share premium redemption Other Retained
capital reserve reserve reserves earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- --------- --------- ------------ ---------- ---------- ---------
At 1 January 2020 2,053 33,244 14,319 34,560 (77,753) 6,423
Share options - value of
employee services - - - - 90 90
---------------------------- --------- --------- ------------ ---------- ---------- ---------
Transactions with owners - - - - 90 90
---------------------------- --------- --------- ------------ ---------- ---------- ---------
Loss for the year - - - - (470) (470)
Other comprehensive income
for the year - - - - 843 843
At 31 December 2020 2,053 33,244 14,319 34,560 (77,290) 6,886
---------------------------- --------- --------- ------------ ---------- ---------- ---------
Consolidated condensed statement of financial position
As at 30 June 2021
As at As at As at
30.06.21 30.06.20 31.12.20
(Unaudited) (Unaudited) (Audited)
Notes GBP'000 GBP'000 GBP'000
------------------------------- ------ ------------- ------------- -----------
Assets
Non-current assets
Goodwill 4,594 4,594 4,594
Other intangible assets 4 17 6
Property, plant and equipment 17 34 23
Right-of-use assets 76 387 247
Trade and other receivables 58 115 87
Deferred tax assets 405 990 627
Retirement benefit asset 8 1,280 - 208
------------------------------- ------ ------------- ------------- -----------
Total non-current assets 6,434 6,137 5,792
------------------------------- ------ ------------- ------------- -----------
Current assets
Trade and other receivables 7,733 5,603 6,062
Cash and cash equivalents 904 3,705 3,172
Total current assets 8,637 9,308 9,234
------------------------------- ------ ------------- ------------- -----------
Total assets 15,071 15,445 15,026
------------------------------- ------ ------------- ------------- -----------
Liabilities
Current liabilities
Loans and borrowings (2,016) (3,051) (2,941)
Lease liabilities (147) (597) (321)
Trade and other payables (5,648) (4,539) (4,610)
Provisions (40) (122) (139)
Total current liabilities (7,851) (8,309) (8,011)
------------------------------- ------ ------------- ------------- -----------
Non-current liabilities
Lease liabilities (78) (115) (87)
Provisions (42) (22) (42)
Retirement benefit liability 8 - (497) -
Total non-current liabilities (120) (634) (129)
------------------------------- ------ ------------- ------------- -----------
Total liabilities (7,971) (8,943) (8,140)
------------------------------- ------ ------------- ------------- -----------
Net assets 7,100 6,502 6,886
------------------------------- ------ ------------- ------------- -----------
Shareholders' equity
Called up share capital 2,053 2,053 2,053
Share premium account 33,244 33,244 33,244
Capital redemption reserve 14,319 14,319 14,319
Other reserves 34,560 34,560 34,560
Retained earnings (77,076) (77,674) (77,290)
------------------------------- ------ ------------- ------------- -----------
Total shareholders' equity 7,100 6,502 6,886
------------------------------- ------ ------------- ------------- -----------
Consolidated condensed statement of cash flows
For the six months ended 30 June 2021
Six months Six months Year
to 30.06.21 to 30.06.20 to 31.12.20
(Unaudited) (Unaudited) (Audited)
Notes GBP'000 GBP'000 GBP'000
-------------------------------------- ------- -------------- ------------- -------------
Cash flows from operating activities
Loss for the period (525) (288) (470)
Adjustments for:
Net finance expense 5 109 185 348
Share-based payment expense (59) 43 90
Income tax charge/(credit) 6 34 (95) 145
Amortisation of intangible assets 2 15 26
Depreciation of property, plant
and equipment 6 9 20
Depreciation and impairment
of right-to-use assets 225 300 540
Lease liability credit - (11) (21)
(208) 158 678
Working capital movements
(Increase)/decrease in trade
and other receivables (1,642) 1,194 764
Increase/(decrease) in trade
and other payables 1,038 (1,473) (1,402)
Decrease in provisions (99) (201) (165)
Payments to retirement benefit
plan 8 (161) (135) (325)
-------------------------------------- ------- -------------- ------------- -------------
Net cash flow used in operating
activities (1,072) (457) (450)
-------------------------------------- ------- -------------- ------------- -------------
Investing activities
Net cash flow used in investing - - -
activities
-------------------------------------- ------- -------------- ------------- -------------
Financing activities
(Repayment)/drawdown of finance
facility (925) 332 222
Principal repayment of lease
liabilities (238) (249) (649)
Interest paid 5 (33) (37) (67)
-------------------------------------- ------- -------------- ------------- -------------
Net cash (used in)/from financing
activities (1,196) 46 (494)
-------------------------------------- ------- -------------- ------------- -------------
Net decrease in cash and cash
equivalents (2,268) (411) (944)
-------------------------------------- ------- -------------- ------------- -------------
Cash and cash equivalents at the beginning
of the period 3,172 4,116 4,116
----------------------------------------------- -------------- ------------- -------------
Cash and cash equivalents at the end
of the period 904 3,705 3,172
----------------------------------------------- -------------- ------------- -------------
Notes to the interim results
1 Accounting policies
Basis of preparation
The condensed interim financial statements comprise the
unaudited results for the six months to 30 June 2021 and 30 June
2020 and the audited results for the year ended 31 December 2020.
The financial information for the year ended 31 December 2020
herein does not constitute the full statutory accounts for that
period. The 2020 Annual Report and Accounts have been filed with
the Registrar of Companies. The Independent Auditor's Report on the
Annual Report and Financial Statements for 2020 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
2021 have been prepared in accordance with the Disclosure and
Transparency Rules of the Financial Services Authority and with IAS
34 'Interim Financial Reporting'. The information in these
condensed financial statements does not include all the information
and disclosures made in the annual financial statements.
The condensed financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRS)
in a manner consistent with the accounting policies set out in the
Group financial statements for the year ended 31 December 2020.
Going concern
The interim financial statements have been prepared on a going
concern basis. The Directors have reviewed the Group's cash flow
forecasts for the period to 31 December 2022, taking account of
reasonably possible changes in trading performance, including
potential downsides from the ongoing impact of Covid-19. Downside
sensitivities have included reduced levels of new business and in
these scenarios, headroom under the Group's financing facility
meets the Group's funding requirements.
Financial instruments
Unless otherwise indicated, the carrying amounts of the Group's
financial assets and liabilities are a reasonable approximation of
their fair values.
Alternative performance measures
The Group uses certain alternative performance measures to
report its results as stated before non-underlying items. These are
non-IFRS alternative performance measures which the Directors
consider can assist with an understanding of the underlying
performance of the Group and comparison of performance across
periods. They are not a substitute for and are not superior to any
IFRS measure.
Non-underlying items
The presentation of the alternative performance measures of
adjusted EBITDA and adjusted profit/loss before tax excludes
non-underlying items. The Directors consider that an underlying
profit measure can assist with an understanding of the underlying
performance of the Group and comparison of performance across
periods. Items are classified as non-underlying by nature of their
magnitude, incidence or unpredictable nature and their separate
identification results in a calculation of an underlying profit
measure that is consistent with that reviewed by the Board in their
monitoring of the performance of the Group. Events which may give
rise to the classification of items as non-underlying include gains
or losses on the disposal of a business, restructuring of a
business, transaction costs, litigation and similar settlements,
asset impairments and onerous contracts.
Adjusted profit/loss before tax is defined as profit/loss before
tax and non-underlying items.
Adjusted EBITDA is defined as operating profit before finance
costs, tax, depreciation, amortisation and non-underlying
items.
Accounting policies: new standards, amendments and
interpretations
At the date of authorisation of these interim financial
statements, several new, but not yet effective, standards,
amendments to existing standards and interpretations have been
published. None of these have been adopted early by the Group. New
standards, amendments and interpretations not adopted in the
current year have not been disclosed as they are not expected to
have a material impact on the Group.
2 Segmental information
The basis by which the Group is organised and its operating
model is structured is by customer sectors, being the public sector
and the private sector. The reporting of financial information
presented to the Chief Operating Decision Maker, being the Group
board of directors, is consistent with these reporting segments. As
these reporting segments are supported by a combined back office,
there is no allocation of overheads.
Six months to 30.06.21 (Unaudited)
Public sector Private Total
sector
GBP'000 GBP'000 GBP'000
Revenue 18,700 7,298 25,998
Contractor costs (17,034) (6,642) (23,676)
------------------------------------ ---------------- ---------- ---------
External contribution 1,666 656 2,322
------------------------------------ ---------------- ---------- ---------
Six months to 30.06.20 (Unaudited)
Public sector Private Total
sector
GBP'000 GBP'000 GBP'000
Revenue 22,297 7,652 29,949
Contractor costs (20,328) (6,758) (27,086)
------------------------------------ ---------------- ---------- ---------
External contribution 1,969 894 2,863
------------------------------------ ---------------- ---------- ---------
Year to 31.12.20 (Audited)
Public sector Private Total
sector
GBP'000 GBP'000 GBP'000
Revenue 43,283 14,544 57,827
Contractor costs (39,405) (12,861) (52,266)
---------------------------- ---------------- ---------- ---------
External contribution 3,878 1,683 5,561
---------------------------- ---------------- ---------- ---------
3 Revenue
The Group's revenue disaggregated by pattern of revenue
recognition is as follows:
Six months Six months Year to
to 30.06.21 to 30.06.20 31.12.20
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
--------------------------------- ------------- ------------- -----------
Services transferred over time 25,981 29,934 57,790
Services transferred at a point
in time 17 15 37
Revenue 25,998 29,949 57,827
--------------------------------- ------------- ------------- -----------
The Group's revenue disaggregated by primary geographical market
is as follows:
Six months Six months Year to
to 30.06.21 to 30.06.20 31.12.20
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
---------------- ---- ------------- ------------- -----------
United Kingdom 22,707 28,665 55,235
European Union 3,291 1,269 2,577
Other - 15 15
Revenue 25,998 29,949 57,827
---------------------- ------------- ------------- -----------
4 Non-underlying items
Six months Six months Year to
to to 31.12.20
30.06.21 30.06.20 (Audited)
(Unaudited) (Unaudited) GBP'000
GBP'000 GBP'000
------------------------------ ------------- ------------- -----------
Restructuring
- Costs related to employees 366 352 370
- Costs related to premises 34 3 (11)
- Other costs - 89 88
400 444 447
------------------------------ ------------- ------------- -----------
Items are classified as non-underlying by nature of their
magnitude, incidence or unpredictable nature and their separate
identification results in a calculation of an underlying profit
measure that is consistent with that reviewed by the Board in their
monitoring of the performance of the Group. In previous periods,
the Group's results separately presented non-recurring items as a
separate section of the income statement. The directors consider
that all items classified as non-recurring in previous periods are
non-underlying and have reclassified these costs as such.
Non-underlying items during 2021 include costs related to the
restructuring of the Board, including director termination payments
and fees for professional services, along with an impairment to a
right-of-use asset as a result of early vacation of an office
premises.
5 Finance costs
Six months Six months Year to
to to 31.12.20
30.06.21 30.06.20 (Audited)
(Unaudited) (Unaudited) GBP'000
GBP'000 GBP'000
--------------------------------------- ------------- ------------- -----------
Interest expense on financial
liabilities 33 37 67
Interest expense on lease liabilities 4 10 19
Interest income on lease assets (2) (2) (4)
Net finance costs in respect of
post-retirement benefits 74 140 266
109 185 348
--------------------------------------- ------------- ------------- -----------
The interest expense on financial liabilities represents
interest paid on the Group's asset-based financing facilities.
6 Taxation
Six months Six months Year to
to to 31.12.20
30.06.21 30.06.20 (Audited)
(Unaudited) (Unaudited) GBP'000
GBP'000 GBP'000
------------------------------------ ------------- ------------- -----------
Recognised in the income statement
Current tax charge - - -
Deferred tax charge/(credit) 34 (95) 145
------------------------------------ ------------- ------------- -----------
Total tax charge/(credit) 34 (95) 145
------------------------------------ ------------- ------------- -----------
Recognised in other comprehensive
income
Deferred tax charge 187 76 198
------------------------------------ ------------- ------------- -----------
7 Earnings per ordinary 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 30.06.21 Six months to 30.06.20 Year to 31.12.20
(Unaudited) (Unaudited) (Audited)
------------------- ------------------------------- ------------------------------- -------------------------------
Weighted Weighted Weighted
average average average
number Loss number Loss number Loss
Loss of per Loss of per Loss of per
GBP'000 shares share GBP'000 shares share GBP'000 shares share
000's Pence 000's Pence 000's Pence
------------------- ---------- --------- -------- ---------- --------- -------- ---------- --------- --------
Basic loss
per share (525) 102,624 (0.51) (288) 102,624 (0.28) (470) 102,624 (0.46)
Effect of dilutive - - - - - - - - -
options
Diluted loss
per share (525) 102,624 (0.51) (288) 102,624 (0.28) (470) 102,624 (0.46)
As at 30 June 2021 the number of ordinary shares in issue was
102,624,020 (30 June 2020 and 31 December 2020: 102,624,020).
8 Pension commitments
The Group provides employee benefits under various arrangements,
through defined benefit and defined contribution pension plans, the
details of which are disclosed in the 2020 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 April
2018.
The following estimates have been applied to the IAS 19
valuation:
30.06.21 30.06.20 31.12.20
--------------------------------- --------- --------- ---------
Rate of increase in pensions in 3.7-4.0% 3.6-3.9% 3.6-3.9%
payment
Discount rate 1.8% 1.5% 1.3%
Retail price inflation 3.4% 3.1% 3.2%
Consumer price inflation 2.4% 2.1% 2.2%
--------------------------------- --------- --------- ---------
The surplus has increased by GBP1.1m since 31 December 2020. The
improvement was partly due to a fall in the value of scheme
liabilities and partly as a result of actions taken by the board
and the Trustees to reduce scheme risk.
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.
There were no other related party transactions during the period
(2020: none).
10 Events after the reporting period
There are no events after the reporting period not reflected in
the interim financial statements.
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';
-- 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 profit 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
Mark Braund
Executive Chairman
22 September 2021
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END
IR UAOBRAVUKUAR
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