Final Results
Parity Group PLC
14 March 2002
Thursday 14 March 2002 - Embargoed for 7.01 a.m.
PARITY GROUP PLC
Preliminary Results
Parity Group plc, the IT services group, announces its preliminary results for
the year ended 31 December 2001.
Key features for the year ended 31 December 2001
• Group turnover £246.9m (2000: £269.2m)
• Group profit before tax £3.3m (2000: £13.9m)*
• Restructuring programme reduces overheads by £7.5m on an annualised
basis
• Net exceptional costs of £5.2m
• Loss on ordinary activities after exceptional costs, goodwill and
taxation £3.1m (2000: profit £8.4m)
• Basic earnings per share 1.71p (2000: 6.30p)*
• Final dividend unchanged at 1.57p
* excluding exceptional costs and goodwill amortisation
Contract wins announced today
• HBOS - provision of fully managed training service for up to 60,000
people
• British American Tobacco - extension of applications management contract
• ICI - long-term support agreement for management of global procurement
portal
• Total revenues of £15-20m expected from these contracts over a three
year period
Divisional highlights
Business Solutions and Training
• Steady improvement in utilisation through 2001
• Mainland Europe business returned to profit
• Strategic contract wins with a number of key clients including
Cendant, ICI, Food Standards Agency and others
• Consignia IS/IT Supplier of the Year
• Training taking market share through quality and innovation, wins
first outsourcing contracts
Resourcing Solutions
• UK revenues grown by 3.9%
• Won 29 new Preferred Supplier Agreements, with win rate increasing
from 20% to 33% in 2001
• Top ten clients now account for 41% of UK revenues
• New database and billing technology bringing clients closer and
driving down costs
• Mainland Europe business returned to profit
Parity US
• 59% of revenues now delivered through Preferred Supplier Agreements
• Business has remained profitable, through strong management
• New Solutions wins provide strong platform for growth in 2002
• Profitable throughout 2001
Commenting on the results, Parity Group Chairman Bill Cockburn, said:
'Overall, the Group's strategy is working well. We are delivering the right
service offerings to our key clients in our target markets. While market
conditions remain difficult, we believe the new focus and competitive strengths
of Parity will enable it to take market share in its key accounts and add new
customers through its reputation for quality and its ability to add real value
through technology.'
Enquiries:
Parity Group plc
Ian Miller, Group Chief Executive Telephone: 020 7776 8000
Alison Leyshon, Group Finance Director
Financial Dynamics Telephone: 020 7831 3113
Giles Sanderson
Harriet Keen
Notes to the Editor
About Parity Group plc
Parity Group is a leading provider of IT services, technology staff, training
and human capital management solutions operating from 50 offices across the UK,
Mainland Europe and the USA. It comprises three key areas:-
Business Solutions develops and optimises systems with the next generation of
technologies. With a focus on maximising return, its consultants offer expertise
in interactive commerce, customer relationship management, website development,
security, applications management and training across a range of vertical
sectors.
Resourcing Solutions is a professional services supplier providing permanent and
interim technology staff including outplacement support. It advises companies on
how to optimise the deployment and utilisation of staff and skills. It also
supplies technology and consultancy to maximise the effectiveness with which its
customers use external suppliers and internal resources.
Training delivers bespoke and public scheduled courses in technology, management
and business skills at eleven training centres nationwide and at customer sites.
Blending traditional training with e-learning, it provides services that range
from complete vendor management to fully outsourced training and development.
Customers across the Group include AT&T, CSFB, HP, IBM, JP Morgan Chase, Shell,
WorldCom and in the UK, Barclaycard, British Aerospace, BT, Consignia, Food
Standards Agency, Lloyds TSB and Scottish Power.
Group Overview and Results
Turnover and Profits
In an exceptionally challenging year for the IT Services sector, Group revenues
were £246.9m (2000: £269.2m), a decrease of 8% on prior year. Profit before
goodwill amortisation, exceptional items and taxation fell to £3.3m (2000:
£13.9m), including losses totalling £1.5m generated by Business Solutions and
Resourcing Solutions in Mainland Europe. Actions taken as part of the
restructuring programme restored these businesses to profit in the last quarter
of the year and all parts of the Group were operating profitably by the year
end. After exceptional costs, goodwill amortisation and taxation the Group
reported a loss of £3.1m.
Following the appointment of Ian Miller as Chief Executive in March 2001, a new
strategy was developed which reflected the change in market conditions. The aim
now is to achieve sustained and profitable growth by focusing the Group on clear
value propositions directed at specific market segments and reducing the cost
base to improve competitiveness. This has been underpinned by a new approach to
marketing, sales and relationship management with our key clients. A vital
element of this strategy is the selling of larger, longer-term contracts to
produce more predictable and sustainable revenue streams.
There is an impressive new team of senior executives leading the implementation
of this strategy and delivering strong and positive direction to the individual
Business Units and to the Group. It is highly incentivised to work together and
to grow the business to generate shareholder value.
Exceptional Costs
During the year the Group incurred an exceptional charge of £5.2m made up of a
restructuring charge of £6.6m and exceptional bad debts of £0.5m, offset by an
exceptional gain of £1.9m on the settlement of a long-standing litigation action
taken by Parity.
The Group underwent an extensive restructuring programme during the year. The
programme, which was started in the first half of the year, was aimed at
eliminating unnecessary activities, increasing utilisation, implementing new IT
systems and generally rebasing fixed costs in line with revenues. The
restructuring programme will result in savings of at least £7.5m on an
annualised basis, ahead of expectations set in November.
The total value of the bad debt charge for the year is in line with that
reported at the half year. Some recovery of bad debts was achieved in the
second half but a further write off in respect of a subsidiary of Swissair left
the total exceptional bad debt charge almost unchanged at the year end.
Taxation
The effective tax rate for the Group for 2001 was 21.1% (2000: 32.0%) based on
profit before goodwill amortisation and exceptional items. The decrease in the
effective rate was the result of a tax credit of £0.3m in respect of prior
period adjustments and the release of a deferred tax provision of £0.4m in
respect of withholding tax on overseas undistributed reserves which, following
the payment of dividends by overseas subsidiaries in the first half of the year,
was no longer required. These credits offset the increase in the effective tax
rate caused by the fact that only limited relief was available for trading
losses incurred in Mainland Europe in the year. The exceptional costs gave rise
to a tax credit of £0.9m, again with restricted relief for those costs incurred
in Mainland Europe. The tax benefit of all of these unrelieved losses will be
available in future years.
Dividend
The Board is recommending a final dividend for the year of 1.57p. The total
dividends for the year are therefore unchanged at 2.50p per share. The final
dividend will be payable on 1 July 2002 to all shareholders on the register at
the close of business on 5 April 2002.
Acquisitions
During the year the Group acquired Prime Selection Limited ('Prime'), a City
based recruitment company, for £5.9m, giving rise to goodwill of £5.5m. This
acquisition has strengthened the position of Resourcing Solutions UK in the
financial services, media and legal sectors. Prime was fully integrated into
the Resourcing Solutions operating division in the first half of 2001 and its
results cannot be separately identified.
The Directors have reviewed the total value of goodwill carried in the balance
sheet and are of the opinion that there has been no impairment to the carrying
value and that the amortisation periods for the individual components continue
to be appropriate.
Cash Flow and Net Debt
Trading activities before exceptional items generated a cash inflow of £10.1m
(2000: £15.3m) including a cash inflow of £3.0m from working capital. The
management of working capital has been a key focus in 2001 and a number of
actions were taken to maximise cash generation, including measures taken in
Resourcing Solutions UK to reduce the length of the credit cycle between payment
of contractors and receipts from customers. This will have a significant
positive impact on working capital when the UK staffing market picks up.
The net cash outflow from exceptional items was £1.2m. Further cash costs
relating to the restructuring programme will be incurred in 2002 but these have
been fully provided for in 2001. The acquisition of Prime in January 2001
resulted in a cash outflow of £2.5m, including the funding an overdraft of £0.6m
acquired with the business, with the balance of the purchase consideration being
funded by the issue of £4.0m of loan notes.
At year end the Group had net debt of £12.7m (2000: £2.2m) a decrease of £0.6m
compared to the position at the half year despite the payment of £3.8m of
dividends in the second half, leaving headroom of £14.7m against the Group's
total banking facilities.
Divisional Performance
Profit before
Year to 31 December Turnover (£m) tax (£m) RoS %
2001 2000 2001 2000 2001 2000
Business Solutions & Training 65.2 76.9 2.6 7.9 4.1 10.2
Resourcing Solutions
UK 97.4 93.8 3.4 4.2 3.5 4.5
Mainland Europe 47.4 50.2 (0.6) 1.5 (1.3) 2.9
Parity US 36.9 48.3 2.6 4.9 7.0 10.1
Central costs and net interest (4.7) (4.6)
Group before goodwill and 246.9 269.2 3.3 13.9 1.3 5.2
exceptional items
Goodwill amortisation (1.4) (1.1)
Exceptional items (5.2) -
Parity Group plc (3.3) 12.8
Operational Review
Business Solutions Europe
The business environment in the UK and Benelux remained difficult, as clients
faced the slowing economy and IT budgets were constrained to save costs.
Utilisation started at low levels, then steadily improved through the year, to
reach satisfactory performance by the last quarter. The merging of several UK
offices and the creation of a single office for all three lines of business in
The Netherlands, reduced overhead costs considerably.
Following the implementation of the recommendations that emerged from the
strategic review, this Business Unit has now moved from selling a range of
technical skills to providing genuine business solutions that deliver clear
bottom-line benefits to clients. It is particularly satisfying that virtually
all of the largest contracts won in the second half were for these added value
solutions with our major clients.
The focus on our larger, blue chip clients again produced positive results in
the second half, with good project wins with ICI, the Food Standards Agency and
Cendant in the UK and Postbank in Benelux, among others. Partly as a result of
this new focus, revenue from Business Solutions Europe's top ten clients grew by
15% compared with the previous year. Furthermore, 60% of these revenues in 2001
were earned under either long-term contracts or framework agreements.
A highlight of the year was the award as top IT/IS supplier to Consignia, our
largest client, on the basis of quality, service, innovation and cost. Over the
last year, Parity has successfully delivered over 70 projects for Consignia,
covering all phases of the IT life cycle. The largest of these was the Post
Office's 'Your Guide', a new touch-screen kiosk technology currently being
piloted at Post Offices in Leicestershire and Rutland. This prestigious award
confirms Parity's own market research that its reputation among its clients
continues to be exemplary.
Training Europe
More emphasis is now being given to the value of Parity's Training business unit
in our portfolio, as it expands its range of services to include training
outsource contracts. Operating in the UK and Mainland Europe, Training had a
very strong year. Revenue grew by 7% in a contracting market by taking market
share from competitors. Technical skills courses showed little or no growth
over the previous year, reflecting the downturn in the IT sector, while
management training expanded considerably.
Investment in new courses continued throughout 2001, with 50 new individual
programmes introduced during the year to bring the total to over 350. In
addition to classroom-based training, the Training business unit offers a range
of bespoke services where specific solutions are tailored to a client's business
needs. Examples of such projects included an extensive project management
course for the Department of Works and Pensions, a desktop migration programme
for 950 staff at HM Treasury and a Microsoft skills development programme for
the American National Can Company.
However, in many ways the most innovative projects during the year were in the
new area of 'integrated learning'. One example was a programme for a central
government agency, which comprised a mixture of on-line teaching and coaching
together with classroom training. Another was the 'Web Wise Women' project,
carried out jointly with BT, to help women who had taken a career break to
return to work. 20 delegates took the 26 week course, using a blend of
classroom, distance learning and work experience of which 18 graduated
successfully and now have jobs.
Resourcing Solutions Europe
This business unit, which covers both the UK and Mainland Europe, provides
interim staffing and Human Capital Management solutions to third parties and to
its sister companies in the Group. It ended the year with numbers on billing
down around 16% - a very commendable performance in the toughest staffing market
for a decade. Margins were under pressure but strong action on costs produced a
robust level of profitability in the UK. The losses sustained in Mainland
Europe in the first half of 2001 were tackled by a restructuring programme that
returned the business to profit in the last quarter.
In Mainland Europe, offices in Amsterdam and Rotterdam were closed and the
business relocated to a facility near Utrecht. That office is shared with the
Business Solutions and Training Units, which also share support costs. As part
of the same restructuring programme, our office in Stuttgart was closed, and its
business transferred to the regional office in Munich. The programme is now
complete, with only the closure of our Winnersh (UK) and Neuchatel (Switzerland)
offices being carried into the first quarter of 2002 for operational reasons.
None of these closures affects our ability to support clients in the countries
in which we operate but they have a substantial effect on reducing overheads and
increasing operating efficiency. Parity is now the number two provider of IT
contract staff in Mainland Europe.
The focus on key accounts produced a number of major contract wins in 2001. In
addition to the 15 Preferred Supplier Agreements ('PSA') mentioned in the
interim report, further long-term contracts and PSAs were won during the second
half including AT&T, AXA, BT, Debis, HP, Royal Bank of Scotland, Scottish
Parliament, Shell and Unilever among others. The Division's win rate on PSA
bids improved from 20% to 33% during the year. Overall, revenues from the top
ten UK clients grew by 3% year on year and now account for 41% of total
revenues.
Resourcing Solutions Europe has also extended its service offerings into higher
value-added areas such as Human Capital Management ('HCM') to improve margins
and increase the proportion of business under long-term contract. While this
activity did not produce substantial revenues or profits in 2001, new
partnerships with Personic Inc. and RecruitASP have produced a strong sales
pipeline in government and commercial organisations for 2002.
Parity US
The US business unit offers all three of Parity's services - resourcing
solutions, business solutions and training - mainly to the Finance and
Manufacturing sectors. This division has maintained profitability throughout
2001, despite seeing revenue reduce due to the recession there. Turnover was
down 24% in a severely depressed market but margins were maintained by very
tight control of costs.
Even in these tough market conditions, the US business unit actually increased
business with over 30% of its blue chip clients. Furthermore, the new
Group-wide focus on winning long-term contracts also paid dividends in the US,
with Preferred Supplier Agreements now accounting for 59% of revenues.
Strongest growth was in the Communications sector, up over 40%, helped by a
major Help Desk outsourcing contract from Lucent Technologies and contract gains
with Tyco, a leading telecoms company in Bermuda. Though our traditionally
strong Finance sector was badly hit by the downturn, robust and long-standing
client relationships helped keep the reduction in revenues to 7%.
Highlights of the year included good growth in the energy sector, with Shell a
major new client, together with increasing inroads into the Healthcare sector,
where we implemented Baxter's Quality Tracking System into its factories in
North Carolina and Mexico. Consultancy work with leading hospitals and
insurance companies also grew strongly on the back of new US Government
regulations. By continuing to focus on long-term contracts and relationships
with our largest clients, as well as expanding into higher growth industry
sectors, we are confident that Parity US is well positioned for growth when
markets return.
Contract Wins
The Group has today separately announced three significant contract wins.
Details of these wins are summarised below:
• HBOS - Training will provide a fully managed training service for up
to 60,000 people, with a contract duration of 2-3 years.
• British American Tobacco - Business Solutions has secured an extension
to its existing contract to provide applications support services for a number
of IT systems as well as the provision of IT consultancy services.
• ICI - Business Solutions designed and built a scaleable web-based
global procurement portal for ICI. This portal will now be supported and
developed by Parity under a long-term partnership.
Together, these wins are worth between £15m and £20m over three years for
Business Solutions and Training. They highlight the success of the Group's
strategy of going after longer-term outsourcing contracts with blue-chip
clients. Further, they provide evidence of the Group's reputation for quality
and ability to add value. Both British American Tobacco and ICI are existing
customers of the Group.
Employees
We are very grateful to our staff for their enthusiasm and professionalism which
has helped Parity maintain its reputation for innovation and quality throughout
what has been a challenging year for the Group.
Current Trading and Prospects
Overall, the Group's strategy is working well. We are delivering the right
service offerings to our key clients in our target markets. The lower cost base
has given us an increased ability to compete and grow. The sales pipeline is
strong and the Group is well positioned to get back onto the growth curve.
While market conditions remain difficult, we believe the new focus and
competitive strengths of Parity will enable it to take market share in its key
accounts and add new customers through its reputation for quality and its
ability to add real value through technology.
Group Profit and Loss Account
for the year ended 31 December 2001
Before
exceptional Exceptional Unaudited Audited
items items 2001 2000
Notes £'000 £'000 £'000 £'000
Turnover 2 246,930 - 246,930 269,228
Operating costs before goodwill
amortisation
and exceptional items
(242,789) (5,157) (247,946) (254,971)
Goodwill amortisation (1,369) - (1,369) (1,078)
Operating costs (244,158) (5,157) (249,315) (256,049)
Operating profit (loss) 2,772 (5,157) (2,385) 13,179
Net interest payable (880) - (880) (369)
Profit (loss) on ordinary activities
before goodwill amortisation and
taxation 3,261 (5,157) (1,896) 13,888
Goodwill amortisation (1,369) - (1,369) (1,078)
Profit (loss) on ordinary activities
before taxation 2 1,892 (5,157) (3,265) 12,810
Taxation (charge) credit on profit
(loss) on ordinary activities (687) 858 171 (4,440)
Profit (loss) on ordinary activities
after taxation 1,205 (4,299) (3,094) 8,370
Dividends (3,778) - (3,778) (3,763)
Retained (loss) profit for the
financial year 7 (2,573) (4,299) (6,872) 4,607
(Loss) earnings per ordinary share
- Basic (2.05p) 5.58p
- Diluted (2.03p) 5.53p
Earnings per ordinary share before
goodwill amortisation and exceptional
items
- Basic 1.71p 6.30p
- Diluted 1.68p 6.25p
Group Balance Sheet
at 31 December 2001
Unaudited Audited
2001 2000
Notes £'000 £'000
FIXED ASSETS
Intangible assets 24,380 20,266
Tangible assets 6,589 6,283
Investments 5,867 5,138
36,836 31,687
CURRENT ASSETS
Debtors 45,733 53,568
Cash at bank and in hand 5,948 4,078
51,681 57,646
CREDITORS: amounts falling due within one year
Variable rate loan notes payable (4,014) (778)
Other creditors (33,307) (44,554)
(37,321) (45,332)
NET CURRENT ASSETS 14,360 12,314
TOTAL ASSETS LESS CURRENT LIABILITIES 51,196 44,001
CREDITORS: amounts falling due after more than one year (12,000) -
PROVISIONS FOR LIABILITIES AND CHARGES (2,620) (698)
NET ASSETS 36,576 43,303
CAPITAL AND RESERVES
Called up share capital 7,694 7,675
Shares to be issued - 22
Capital redemption reserve 50 50
Share premium account 3,701 3,440
Other reserves 35,320 35,308
Profit and loss account (10,189) (3,192)
EQUITY SHAREHOLDERS' FUNDS 7 36,576 43,303
Group Cash Flow Statement
for the year ended 31 December 2001
Unaudited Audited
2001 2000
Total Total
Notes £'000 £'000
NET CASH FLOW FROM OPERATING ACTIVITIES
BEFORE EXCEPTIONAL ITEMS 5 10,067 15,345
Exceptional items (1,182) (244)
NET CASH FLOW FROM OPERATING ACTIVITIES 8,885 15,101
NET CASH OUTFLOW FROM RETURNS ON INVESTMENTS AND SERVICING OF FINANCE (779) (376)
TAXATION PAID (4,607) (5,903)
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Purchase of tangible assets (3,230) (2,716)
Sale of tangible assets 92 79
Purchase of own shares by ESOP - (3,710)
Cash received by ESOP on exercise of options - 82
Purchase of other investments (729) -
NET CASH OUTFLOW FROM CAPITAL (3,867) (6,265)
EXPENDITURE AND FINANCIAL INVESTMENT
NET CASH OUTFLOW FROM ACQUISITIONS AND DISPOSALS (2,496) -
EQUITY DIVIDENDS PAID (3,760) (3,793)
NET CASH OUTFLOW BEFORE FINANCING (6,624) (1,236)
NET CASH INFLOW (OUTFLOW) FROM FINANCING 7,941 (6,332)
INCREASE (DECREASE) IN CASH IN THE PERIOD 6 1,317 (7,568)
Reconciliation of net cash flow to movement in net debt
£'000
Increase in cash in the period 1,317
Exchange movements (13)
Loan notes repaid 750
Increase in borrowings under variable rate credit facilities (8,492)
Loan notes issued on acquisition of Prime Selection Limited (3,986)
Movement in net debt in the period (10,424)
Net debt at 1 January 2001 (2,250)
Net debt at 31 December 2001 (12,674)
Reconciliation of Movements in Shareholders' Funds
for the year ended 31 December 2001
Unaudited Audited
2001 2000
Total Total
Notes £'000 £'000
(Loss) profit for the year attributable to shareholders (3,094) 8,370
Dividends (3,778) (3,763)
Retained earnings (6,872) 4,607
Other recognised (losses) gains (46) 426
Share options exercised 63 15
Shares issued to QUEST 137 505
Shares issued to vendors (9) 938
Shares to be issued to vendors - (1,964)
Net (decrease) increase in shareholders' funds (6,727) 4,527
Equity shareholders' funds at start of year 43,303 38,776
Equity shareholders' funds at end of year 7 36,576 43,303
Statement of Total Recognised Gains and Losses
for the year ended 31 December 2001
Unaudited Audited
2001 2000
Total Total
£'000 £'000
(Loss) profit for the year attributable to shareholders (3,094) 8,370
Currency translation differences on foreign currency net investments (46) 426
Total recognised losses and gains for the year (3,140) 8,796
1. BASIS OF PREPARATION
The financial information for the year ended 31 December 2001 does not
constitute the full statutory accounts for the year, which have not yet been
delivered to the Registrar of Companies. The auditors have not made any report
on the full statutory accounts. The Annual Report will be posted to
shareholders in April 2002.
The results for the year ended 31 December 2000 are an extract from the
Company's statutory accounts for that year. Those statutory accounts have been
reported on by the Company's auditors and delivered to the Registrar of
Companies. The report of the auditors was unqualified and did not contain a
statement under Section 237(2) or (3) of the Companies Act 1985.
Basis of Consolidation
The consolidated financial statements incorporate the results of Parity Group
plc and its subsidiary undertakings drawn up to 31 December each year.
2. SEGMENTAL ANALYSIS
The Group provides information technology services through its Business
Solutions, Resourcing Solutions and Parity US business segments.
2001 2000
Profit (loss) Profit (loss)
before Net before Net
Turnover Taxation assets Turnover Taxation assets
£'000 £'000 £'000 £'000 £'000 £'000
Business Solutions*
United Kingdom 59,413 3,490 4,179 69,666 7,984 5,191
Mainland Europe 5,763 (850) 703 7,187 (123) 1,127
65,176 2,640 4,882 76,853 7,861 6,318
Resourcing Solutions
United Kingdom 97,463 3,439 8,898 93,838 4,205 6,693
Mainland Europe 47,418 (628) 3,947 50,205 1,478 7,206
144,881 2,811 12,845 144,043 5,683 13,899
Parity US 36,873 2,573 2,993 48,332 4,863 5,730
Operating total
before central costs 246,930 8,024 20,720 269,228 18,407 25,947
Central costs including
net interest payable (4,763) (4,519)
Non-operating assets
and liabilities
including net debt (8,524) (2,910)
Before goodwill and
exceptional items 3,261 12,196 13,888 23,037
Goodwill (1,369) 24,380 (1,078) 20,266
Exceptional items (5,157) - - -
246,930 (3,265) 36,576 269,228 12,810 43,303
* includes Training
There is no material difference between turnover and profit by origin and by
destination.
Turnover for Resourcing Solutions in the UK as shown above excludes
£1,016,000 (2000: £2,050,000) of inter-segmental turnover.
3. EARNINGS PER ORDINARY SHARE
The calculation of basic and diluted earnings per ordinary share is based on the
following:
2001 2000
Earnings per share Earnings per share
Earnings Basic Diluted Earnings Basic Diluted
£'000 pence pence £'000 pence pence
Earnings per
ordinary share (3,094) (2.05) (2.03) 8,370 5.58 5.53
Exceptional items 4,299 2.85 2.81 - - -
Goodwill
amortisation
1,369 0.91 0.90 1,078 0.72 0.72
Earnings per
ordinary share
before goodwill
amortisation and
exceptional items 2,574 1.71 1.68 9,448 6.30 6.25
The weighted average number of ordinary shares used in the calculation of basic
and diluted earnings per share is as follows:
2001 2000
Average Average
Number Number
i) Basic weighted average number of shares in issue 153,691,485 152,743,963
Adjustment for shares held by ESOP (2,756,238) (2,756,238)
150,935,247 149,987,725
ii)Dilutive weighted average number of shares in issue 153,691,485 152,743,963
Adjustment for share options 1,785,392 1,237,587
Adjustment for shares held by ESOP (2,756,238) (2,756,238)
152,720,639 151,225,312
The number of ordinary shares in issue at 31 December 2001 was
153,882,905 (2000: 153,500,578).
4. DIVIDENDS
The Directors have proposed a final dividend of 1.57p (2000: 1.57p)
per ordinary share, payable on 1 July 2002 to shareholders on the register at
the close of business on 5 April 2002.
5. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW
2001 2000
£'000 £'000
Operating profit before exceptional items 2,772 13,179
Depreciation of tangible assets 2,908 2,529
Amortisation of intangible assets 1,369 1,078
Gain on issue of own shares held by ESOP to option holders - (13)
Loss (profit) on disposal of tangible assets 37 (13)
Decrease in debtors 12,349 3,771
Decrease in creditors (11,638) (5,020)
Increase (decrease) in provisions 2,270 (166)
Net cash flow from operating activities before exceptional items 10,067 15,345
6. ANALYSIS OF NET DEBT
Group At Other At
1 January Cash non-cash Exchange 31 December
2001 Flow changes Movements 2001
£'000 £'000 £'000 £'000 £'000
Cash at bank and in
hand 4,078 1,923 - (53) 5,948
Overdrafts (2,042) (606) - 40 (2,608)
2,036 1,317 - (13) 3,340
Variable rate credit
facilities (3,508) (8,492) - - (12,000)
Variable rate loan
notes (778) 750 (3,986) - (4,014)
(2,250) (6,425) (3,986) (13) (12,674)
7. EQUITY SHAREHOLDERS' FUNDS
Group Ordinary Shares Capital Profit &
share to be redemption Share Other loss
capital issued reserve premium reserves account Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Shareholders'
funds as at 1
January 2001 7,675 22 50 3,440 35,308 (3,192) 43,303
Share
options exercised 6 - - 57 - - 63
Shares
issued to QUEST 12 - - 204 - (79) 137
Shares
issued to vendors 1 (22) - 12 - (9)
Retained
profit for the year - - - - - (6,872) (6,872)
Exchange
adjustments - - - - - (46) (46)
Shareholders' funds as
at 31 December 2001 7,694 - 50 3,701 35,320 (10,189) 36,576
8. PENSION SCHEMES
The Group operates a number of pension schemes. With the exception of the
scheme described below all of the schemes are defined contribution plans and the
assets are held in separate, independently administered funds.
In March 1995 the Group established the Parity Retirement Benefit Plan, renamed
as the Parity Group Retirement Benefit Plan ('The Parity Scheme') following the
Scheme of Arrangement in 1999, in order to facilitate the continuance of pension
entitlements for staff transferring from other schemes following acquisitions in
1994. This is a defined benefit scheme and has been closed to new members since
1995.
A new accounting standard, FRS 17, on retirement benefits was introduced in the
year and must be fully implemented for the year ending 31 December 2003. FRS 17
requires major changes to be made to the way in which the Group's defined
benefit pension scheme is accounted for. The most significant change is to
require the assets and liabilities of the pension scheme to be incorporated into
the Group's balance sheet, which will inevitably lead to greater volatility in
the level of net assets as investment values rise and fall. Under the
transitional arrangements the Group is required to disclose the consolidated net
assets and profit and loss reserve that would have been disclosed under FRS 17
had the standard been fully implemented in the year. These disclosures, which
are based on full actuarial valuation carried out as at 5 April 2001 by a
qualified actuary, are summarised below:
8. PENSION SCHEMES continued
£'000
Total market value of scheme assets 6,386
Present value of scheme liabilities (8,330)
Deficit in the scheme (1,944)
Related deferred tax asset 583
Net pension liability (1,361)
If the above amounts had been recognised in the financial statements, the
Group's net assets and profit and loss reserve at 31 December 2001 would be as
follows:
£'000
Net assets excluding pension liability 36,576
Net pension liability (1,361)
Net assets including pension liability 35,215
Profit and loss reserve excluding pension liability (10,189)
Pension reserve (1,361)
Profit and loss reserve including pension reserve (11,550)
This information is provided by RNS
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