Interim Results

Parity Group PLC 12 September 2007 Parity Group PLC Interim results for the six months ended 30 June 2007 Parity Group plc, the UK IT Services Company, is pleased to announce interim results for the six months ended 30th June 2007. Financial Highlights: • Revenue from continuing operations up 15% to £84M (H1 2006: £73M) • Adjusted operating profit from continuing operations* £2.0M (H1 2006: £234k), with both Resources and Solutions strong contributors • Profit before tax from continuing operations of £1.1M (H1 2006: loss of £1.3M) • Profit before tax of £1.25M (H1 2006: £469k) and earnings per share of 1.44p (H1 2006: 3.13p) • Net debt of £9.3M (31 December 2006: £5.7M) with movement mainly due to working capital timing. * Adjusted operating profit excludes share-based compensation charge of £0.3M (H1 2006 £10k credit) and exceptional items in H1 2006 of £0.6M. Operational Highlights: • 60% growth in revenue in Solutions, and very good margin recovery, with margins at 9% • 9% revenue growth in Resources, with investment in new business areas • Continued margin improvement in Training, due to cost savings and mix changes • Modest investment made in infrastructure, recruitment and service offers • Continuing operational improvement and refocusing the business on higher margin and growth market opportunities. Commenting on the results Alwyn Welch, Chief Executive, said: 'We are very pleased with the continued improvement in our business. We have been aggressively moving our sales focus and investing in higher margin revenue opportunities, especially in Resources and Training. Much of the expected margin benefit has yet to come, but we have managed to deliver a strong overall profit improvement whilst making these necessary changes. 'Solutions delivered a very good result, demonstrating our ability to win and deliver fixed price projects, combined with continued attention to overhead costs across the business. Overall an encouraging set of results, justifying the confidence placed in our recovery by shareholders, clients, and staff alike.' Enquiries: Parity Group PLC Alwyn Welch, Chief Executive Officer 020 8543 5353 Ian Ketchin, Finance Director The Hogarth Partnership John Olsen/Sarah Richardson 020 7357 9477 Notes to editors: Parity Group PLC is a UK-focused IT services company, operating via three core business units - Parity Resources, Parity Solutions and Parity Training. Parity Resources is a leading IT recruitment specialist, with over 30 years experience in providing permanent and contract technology staff, temporary staff and managed recruitment services across all markets. Parity Solutions specialises in providing IT, Projects and Consulting, using leading edge technologies and drawing upon the depth of experience of its consultants in Programme and Project Management. Parity Training is one of the UK's leading Management and IT training providers. In addition to a comprehensive schedule of public courses, Parity delivers tailored learning solutions and customised programmes for major clients. Parity is listed on the London Stock Exchange, with a ticker of PTY.LN. Chief Executive's Review Introduction For the third consecutive period, the results in the first half of 2007 have shown good overall improvement and the Group has continued to make solid progress. Trading was in line with market expectations, and represented strong improvement over the same period in 2006. Solutions in particular grew at a very good rate, although sequential growth from the second half of last year is a more meaningful measure, and is now performing within our target operating margin range, of 8-10%. Project delivery continues well, both with established large clients such as Northern Ireland Electricity, but also in newer clients, for example, the new Commission for Equality & Human Rights ('CEHR'), utilising Microsoft Sharepoint 2007. We have also made good progress in extending and growing established clients, such as BAT and the Cabinet Office. Training also made good profit progress, which has been achieved mainly through changing the revenue mix, and focusing on project and service management. We have turned around the performance of Training, to produce a third profitable period after several years of large losses. Revenue in our core focus areas of project, programme and service management grew by 30%, and we invested in new products in areas such as ITIL3. We added new large clients such as Barclays Bank to the more established, and renewed relationships such as HBOS. Whilst Resources grew over H1 2006, we invested in newer higher margin markets, and this held back absolute profitability. As in Training, we are focussing on higher margin contracts and we started to see the revenue and margin impact of this during this period. New business was written with over 50 new clients, mainly smaller and higher margin contracts. In particular, we recruited an SAP focussed team that has now achieved some significant early wins. Overall the Group achieved 15% revenue growth, and delivered a solid profit from continuing operations. Sequential revenue progression over H2 2006 was flat, due to our focus on higher margin business in Resources, and the exiting of two large low margin contracts, in line with this strategy. Group adjusted operating profit from continuing operations (stated before share based compensation charge of £0.3M) was £2.0M compared to £234k in H1 2006 (stated before share based compensation credit of £10k and exceptional charge of £0.6M), and Group profit before tax from continuing operations was £1.1M compared to a loss in H1 2006 of £1.3M. A profit before tax of £164k was made from discontinued operations, leading to a Group profit before tax of £1.25M (H1 2006: £0.5M). Business Focus and Strategy Since mid 2005, Parity has been focused on returning its operations to profitable growth. We have streamlined our geographic focus to the UK and Ireland, and after disposal of operations outside of this region, our business has focused on organic growth. The mid-term operational objective remains to achieve above market growth rates, and to deliver above median operating margins. Margin improvement is being achieved through overhead cost control as well as focusing on higher margin revenue streams. We have started to invest modestly in the infrastructure of our operations and the people in our business, both to improve efficiency of operation and to be able to attract and retain the key staff who are critical for our continued growth. Management Team and Board of Directors We made two significant changes to the Board during this period. Firstly we recruited Ian Ketchin as Group Finance Director. Ian has a background with Ernst & Young and most recently as Finance Director of MSB, and has rapidly demonstrated the benefits of his experience across the Group. At the end of June we also welcomed Lord Roger Freeman as Non-Executive Chairman of the Group. He brings the benefit of a long and successful track record in business and politics. John Hughes, Executive Chairman since May 2005, has stepped down to become Deputy Chairman as planned. People The people who work for Parity, whether employees, associates or contractors, form the key element of the service we deliver to our clients. I would like to thank all our staff for their continued hard work, and the critical part that they play in the operation of the Parity Group. We have continued the process of improving the way we manage our people and this, combined with our improved business performance, has helped us improve staff retention in the first half of 2007. For the first time in several years we grew our staff numbers, recruiting 80 people in the period, to deliver the new business we have been winning. Cash Flow and Net Debt The movement in net borrowings during the period was £3.6M, of which £1.1M was capital expenditure (mainly facilities property fit out and IT), £0.4M was for exceptional items recorded in prior periods, £0.5M was pension fund related and £0.6M is held as a performance bond on a large contract. Working capital increased by £3.3M, mainly in Resources, due to receivables from two large clients and other payment timing issues, but also due to cash required to fund revenue growth. Net Debt as a result increased to £9.3M (December 2006: £5.7M). Subsequent to the half year end collections have continued to be a focus and good progress has been made. Continuing reduction of our level of indebtedness remains a priority. Tax The tax charge for continuing operations for the period was £663k (H1 2006 £81k credit), but with no cash outflow, on a Group profit on continuing operations of £1.1M. The tax charge represents an effective tax rate of 61% compared to the UK statutory rate of 30%. The main reason for this variance is that the new UK Corporation Tax rate from April 2008 will be 28% and the resulting reduction in the Group's deferred tax asset has been charged in the period. Discontinued Operations and Exceptional Items We continue to work actively to complete closure of the residual elements of discontinued operations in the USA and continental Europe, with an objective of closing all legal entities as soon as practicable. We received a payment of £130k from a fully provided bad debt in Switzerland during the period. No exceptional charges were made during the period, but work continues to dispose of surplus properties in the UK. Dividend No interim dividend is proposed in respect of the year ending 31st December 2007 (2006: final dividend £nil; interim dividend £nil). Market Conditions and Outlook The overall markets in which Parity operates continue to show modest growth, and the skills areas in which we now focus remain in good demand. Recent volatility in financial markets, and a focus on spending efficiency in Government have not materially impacted our business outlook. In both Training and Resources our plans are to continue to invest in changing our mix of services to improve both absolute profit and profit margins. In Solutions we will continue to focus on growing our fee and service based revenues, and lower-margin subcontracted revenue will become of less importance. Our objective is to build a stronger, larger scale Solutions business based around fees work delivered by our own staff and associates. The Group continues to have as its near-term operational objectives profit improvement through a focus on higher margin services and tight cost control. We will continue to invest prudently to achieve these goals. We have now delivered several periods of operational improvement. Although work remains to achieve our target profit goals, we are well positioned to continue along the path of sustained performance improvement. Alwyn Welch Chief Executive Financial summary Six months Six months Year ended to 30.6.07 to 30.6.06 31.12.06 (unaudited) (unaudited) (audited) £'000 £'000 £'000 ------------------------------------------------------------------------------ Revenue from continuing operations 83,930 73,018 156,845 Operating profit from continuing operations before exceptional items 1,741 244 1,377 Operating profit (loss) from continuing operations 1,741 (356) 777 Profit (loss) before taxation from continuing operations 1,086 (1,317) (774) Profit for the period 546 557 833 Net debt (see note 10) (9,306) (4,812) (5,659) Equity shareholders' funds 12,013 11,099 11,029 ------------------------------------------------------------------------------ Pence Pence Pence ------------------------------------------------------------------------------ Earnings per share Basic 1.44 3.13 2.99 Diluted 1.37 3.13 2.99 Earnings (loss) per share from continuing operations Basic 1.12 (6.95) (3.49) Diluted 1.06 (6.95) (3.49) ------------------------------------------------------------------------------ Divisional performance - continuing operations Six months to Six months to Year to 30.06.07 30.06.06 31.12.06 (unaudited) (unaudited) (audited) Profit Profit (loss) Profit (loss) before before before Revenue taxation Revenue taxation Revenue taxation £'000 £'000 £'000 £'000 £'000 £'000 ----------------------------------------------------------------------------------- Solutions 16,164 1,462 10,058 73 23,922 778 Training 9,228 350 9,223 94 18,406 308 Resources 58,538 1,191 53,737 1,401 114,517 2,710 ----------------------------------------------------------------------------------- Operating profit before central costs and exceptional items 3,003 1,568 3,796 Central costs (1,262) (1,324) (2,419) ----------------------------------------------------------------------------------- Operating profit before exceptional items 1,741 244 1,377 Net finance costs (655) (961) (1,551) ----------------------------------------------------------------------------------- Profit (loss) before tax and exceptional items 1,086 (717) (174) Exceptional costs - (600) (600) ----------------------------------------------------------------------------------- 83,930 1,086 73,018 (1,317) 156,845 (774) ----------------------------------------------------------------------------------- Geographical performance - continuing operations Six months to Six months to Year to 30.06.07 30.06.06 31.12.06 (unaudited) (unaudited) (audited) Operating Operating Operating profit profit profit before before before central costs central costs central costs and and and exceptional exceptional exceptional Revenue items Revenue items Revenue items £'000 £'000 £'000 £'000 £'000 £'000 ---------------------------------------------------------------------------------------- United Kingdom 83,623 3,003 72,743 1,568 156,171 3,796 Ireland 307 - 275 - 674 - ---------------------------------------------------------------------------------------- 83,930 3,003 73,018 1,568 156,845 3,796 ---------------------------------------------------------------------------------------- Consolidated income statement For the six months ended 30 June 2007 Six months to Six months to Year to 30.06.07 30.06.06 31.12.06 (unaudited) (unaudited) (audited) Notes £'000 £'000 £'000 ------------------------------------------------------------------------------ Continuing operations 2 83,930 73,018 156,845 Revenue ------------------------------------------------------------------------------ Employee benefit costs (10,391) (10,975) (20,672) Depreciation (170) (303) (569) All other operating expenses (71,628) (62,096) (134,827) ------------------------------------------------------------------------------ Total operating expenses (82,189) (73,374) (156,068) ------------------------------------------------------------------------------ ------------------------------------------------------------------------------ Operating profit before exceptional items 2 1,741 244 1,377 Exceptional items 3 - (600) (600) ------------------------------------------------------------------------------ Operating profit (loss) 2 1,741 (356) 777 Finance income 4 15 - 7 Finance costs 5 (670) (961) (1,558) ------------------------------------------------------------------------------ Profit (loss) before tax 1,086 (1,317) (774) Tax 6 (663) 81 (197) ------------------------------------------------------------------------------ Profit (loss) for the period from continuing operations 423 (1,236) (971) ------------------------------------------------------------------------------ Discontinued operations Profit for the period from discontinued operations 7 123 1,793 1,804 ------------------------------------------------------------------------------ Profit for the period attributable to equity 11 546 557 833 shareholders ------------------------------------------------------------------------------ ------------------------------------------------------------------------------ Earnings per share Basic 8 1.44p 3.13p 2.99p Diluted 8 1.37p 3.13p 2.99p Earnings (loss) per share from continuing operations Basic 8 1.12p (6.95p) (3.49p) Diluted 8 1.06p (6.95p) (3.49p) ------------------------------------------------------------------------------ Consolidated balance sheet As at 30 June 2007 Notes As at As at As at 30.06.07 30.06.06 31.12.06 (unaudited) (unaudited) (audited) £'000 £'000 £'000 ------------------------------------------------------------------------------ Non-current assets Goodwill 7,116 7,116 7,116 Property, plant and equipment 1,544 697 615 Available for sale financial - 30 - assets Deferred tax assets 4,269 5,160 5,102 ------------------------------------------------------------------------------ 12,929 13,003 12,833 ------------------------------------------------------------------------------ Current assets Work in progress 776 1,146 998 Trade and other receivables 42,301 34,572 39,494 Cash and cash equivalents 1,014 1,785 736 ------------------------------------------------------------------------------ 44,091 37,503 41,228 ------------------------------------------------------------------------------ ------------------------------------------------------------------------------ Total assets 57,020 50,506 54,061 ------------------------------------------------------------------------------ Current liabilities Financial liabilities (10,320) (2,086) (6,394) Trade and other payables (27,664) (24,092) (28,687) Current tax liabilities (72) (252) (201) Provisions (986) (1,743) (677) ------------------------------------------------------------------------------ (39,042) (28,173) (35,959) ------------------------------------------------------------------------------ Non-current liabilities Financial liabilities - (4,511) (1) Provisions (1,647) (2,103) (2,369) Retirement benefit liability (4,318) (4,620) (4,703) ------------------------------------------------------------------------------ (5,965) (11,234) (7,073) ------------------------------------------------------------------------------ ------------------------------------------------------------------------------ Total liabilities (45,007) (39,407) (43,032) ------------------------------------------------------------------------------ ------------------------------------------------------------------------------ Net assets 12,013 11,099 11,029 ------------------------------------------------------------------------------ Shareholders' equity Called up share capital 11 15,078 15,075 15,075 Share premium account 11 20,086 20,055 20,020 Other reserves 11 44,160 44,160 44,160 Retained earnings 11 (67,311) (68,191) (68,226) ------------------------------------------------------------------------------ Total shareholders' equity 11 12,013 11,099 11,029 ------------------------------------------------------------------------------ Consolidated statement of recognised income and expense For the six months ended 30 June 2007 Notes Six months to Six months to Year to 30.06.07 30.06.06 31.12.06 (unaudited) (unaudited) (audited) £'000 £'000 £'000 ------------------------------------------------------------------------------ Exchange differences on translation of foreign operations 78 8 152 Actuarial losses on defined benefit pension schemes - - (762) Deferred taxation on items taken directly to equity - - 229 ------------------------------------------------------------------------------ Net income (expense) recognised directly in equity 11 78 8 (381) Profit for the period 11 546 557 833 ------------------------------------------------------------------------------ Total recognised income for the period 624 565 452 ------------------------------------------------------------------------------ Consolidated cash flow statement For the six months ended 30 June 2007 ------------------------------------------------------------------------------ Notes Six months to Six months to Year to 30.06.07 30.06.06 31.12.06 (unaudited) (unaudited) (audited) £'000 £'000 £'000 ------------------------------------------------------------------------------ Cash flows from operating activities Cash used in operations 9 (2,374) (4,256) (4,508) Interest received 15 - 11 Interest paid (270) (615) (872) ------------------------------------------------------------------------------ Net cash used in operations (2,629) (4,871) (5,369) ------------------------------------------------------------------------------ Cash flows from investing activities Purchase of property, plant and equipment (1,099) (74) (272) Proceeds from sale of subsidiary undertakings - 4,649 4,649 Proceeds from disposal of available for sale assets - - 71 ------------------------------------------------------------------------------ Net cash (used in) from investing activities (1,099) 4,575 4,448 ------------------------------------------------------------------------------ Cash flows from financing activities Net cash from issue of ordinary shares 69 14,634 14,599 Cash outflow in respect of repayment of bank borrowing - (16,824) (20,176) Net movement on invoice discounting 10 4,916 574 4,804 Payment of capital element of finance leases 10 (10) (9) (19) ------------------------------------------------------------------------------ Net cash from (used in) financing activities 4,975 (1,625) (792) ------------------------------------------------------------------------------ Net increase (decrease) in cash and cash equivalents 10 1,247 (1,921) (1,713) Cash and cash equivalents at beginning of the period (260) 1,738 1,738 Net foreign exchange difference 10 12 (98) (285) ------------------------------------------------------------------------------ Cash and cash equivalents at end of the period 999 (281) (260) ------------------------------------------------------------------------------ Cash and cash equivalents consist of: - Cash 1,014 1,785 736 - Overdrafts (15) (2,066) (996) ------------------------------------------------------------------------------ 999 (281) (260) ------------------------------------------------------------------------------ For the purposes of the cash flow statement, cash and cash equivalents are net of overdrafts. These overdrafts are excluded from the definition of cash and cash equivalents in the balance sheet. Notes to the interim results -------------------------------------------------------------------------------- 1 Basis of preparation The financial information comprises the unaudited results for the six months to 30 June 2007 and 30 June 2006 and the audited results for the twelve months ended 31 December 2006. The results for the twelve months ended 31 December 2006 included in this report do not constitute statutory accounts for the purpose of section 240 of the Companies Act 1985. A copy of the statutory accounts for the twelve months ended 31 December 2006 has been delivered to the Registrar of Companies. An unqualified report on the statutory accounts for the twelve months ended 31 December 2006 has been made by the auditors and they did not contain a statement under section 237 (2)-(3) of the Companies Act 1985, or include a reference to any matters to which the auditors wished to draw attention by way of emphasis without qualifying their report. Accounting policies This interim report has been prepared on the basis of the accounting policies set out in the group financial statements for the twelve months ended 31 December 2006 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 2007. 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. 2 Segmental analysis The Group is organised into three primary business segments: Solutions, Training and Resources. Six months to Six months to Year to 30.06.07 30.06.06 31.12.06 (unaudited) (unaudited) (audited) £'000 £'000 £'000 ------------------------------------------------------------------------------ Revenue - continuing operations Solutions 16,164 10,058 23,922 Training 9,228 9,223 18,406 Resources 58,538 53,737 114,517 ------------------------------------------------------------------------------ 83,930 73,018 156,845 ------------------------------------------------------------------------------ ------------------------------------------------------------------------------ Revenue - discontinued operations Resources - 3,369 3,380 ------------------------------------------------------------------------------ Operating result before Exceptional items Operating result after exceptional items exceptional items Six Six Six Six Six Six months months Year months months Year months months Year to to to to to to to to to 30.06.07 30.06.06 31.12.06 30.06.07 30.06.06 31.12.06 30.06.07 30.06.06 31.12.06 (unaudited) (unaudited) (audited) (unaudited) (unaudited) (audited) (unaudited) (unaudited) (audited) £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 ---------------------------------------------------------------------------------------------------------------------- Continuing operations 1,462 73 778 - - - 1,462 73 778 Solutions Training 350 94 308 - - - 350 94 308 Resources 1,191 1,401 2,710 - - - 1,191 1,401 2,710 ---------------------------------------------------------------------------------------------------------------------- 3,003 1,568 3,796 - - - 3,003 1,568 3,796 Central (1,262) (1,324) (2,419) - (600) (600) (1,262) (1,924) (3,019) costs ---------------------------------------------------------------------------------------------------------------------- 1,741 244 1,377 - (600) (600) 1,741 (356) 777 ---------------------------------------------------------------------------------------------------------------------- Notes continued -------------------------------------------------------------------------------- 3 Exceptional items Six months to Six months to Year to 30.06.07 30.06.06 31.12.06 (unaudited) (unaudited) (audited) £'000 £'000 £'000 ------------------------------------------------------------------------------ Continuing operations Property restructuring - (600) (600) ------------------------------------------------------------------------------ Total exceptional items from continuing operations - (600) (600) ------------------------------------------------------------------------------ Six months to Six months to Year to 30.06.07 30.06.06 31.12.06 (unaudited) (unaudited) (audited) £'000 £'000 £'000 ------------------------------------------------------------------------------ Discontinued operations Disposal of subsidiary undertakings - 2,046 2,170 ------------------------------------------------------------------------------ Total exceptional items from discontinued operations - 2,046 2,170 ------------------------------------------------------------------------------ 4 Finance income Six months to Six months to Year to 30.06.07 30.06.06 31.12.06 (unaudited) (unaudited) (audited) £'000 £'000 £'000 ------------------------------------------------------------------------------ Bank interest receivable 15 - 7 ------------------------------------------------------------------------------ Total finance income 15 - 7 ------------------------------------------------------------------------------ 5 Finance costs Six months to Six months to Year to 30.06.07 30.06.06 31.12.06 (unaudited) (unaudited) (audited) £'000 £'000 £'000 ------------------------------------------------------------------------------ Bank interest payable 270 595 872 Post retirement benefits 400 346 686 Other interest payable - 20 - ------------------------------------------------------------------------------ Total finance costs 670 961 1,558 ------------------------------------------------------------------------------ Notes continued -------------------------------------------------------------------------------- 6 Tax Six months to Six months to Year to 30.06.07 30.06.06 31.12.06 (unaudited) (unaudited) (audited) £'000 £'000 £'000 ------------------------------------------------------------------------------ Current tax (129) (88) (109) Deferred tax 833 - 214 ------------------------------------------------------------------------------ Total tax charge (credit) 704 (88) 105 ------------------------------------------------------------------------------ Six months to Six months to Year to 30.06.07 30.06.06 31.12.06 (unaudited) (unaudited) (audited) £'000 £'000 £'000 ------------------------------------------------------------------------------ Continuing operations 663 (81) 197 Discontinued operations 41 (7) (92) ------------------------------------------------------------------------------ Total tax charge (credit) 704 (88) 105 ------------------------------------------------------------------------------ The tax charge (credit) above includes a £nil tax credit for the six months ended 30 June 2007 in respect of exceptional items (£180,000 tax credit for the six months ended 30 June 2006 and for the year ended 31 December 2006). The UK corporation tax rate will change from 30% to 28% from April 2008. This has reduced the group's deferred tax assets by £307,000 as at 30 June 2007. 7 Discontinued operations Six months to Six months to Year to 30.06.07 30.06.06 31.12.06 (unaudited) (unaudited) (audited) £'000 £'000 £'000 ------------------------------------------------------------------------------ Pre-tax profit (loss) from discontinued operations 164 (391) (458) ------------------------------------------------------------------------------ Gain on disposal of US subsidiary net assets - 131 131 Gain on disposal of European subsidiary net assets - 2,046 2,039 Taxation (41) 7 92 ------------------------------------------------------------------------------ Total 123 1,793 1,804 ------------------------------------------------------------------------------ 8 Earnings per share The calculation of the earnings per share is based on a profit after taxation of £546,000 (30 June 2006: £557,000, 31 December 2006: £833,000). The calculation of the earnings (loss) per share from continuing operations (see Financial Summary) is based on a profit after taxation of £423,000 (30 June 2006: £1,236,000 loss, 31 December 2006: £971,000 loss). Earnings per share on discontinued Six months to Six months to Year to operations 30.06.07 30.06.06 31.12.06 (unaudited) (unaudited) (audited) ------------------------------------------------------------------------------ Basic 0.32p 10.08p 6.48p Diluted 0.31p 10.08p 6.48p ------------------------------------------------------------------------------ Notes continued -------------------------------------------------------------------------------- 8 Earnings per share continued The weighted average number of shares used in the calculation of the basic and diluted earnings per share are as follows: Six months to Six months to Year to 30.06.07 30.06.06 31.12.06 (unaudited) (unaudited) (audited) £'000 £'000 £'000 ------------------------------------------------------------------------------ Basic Weighted average number of fully paid ordinary shares in issue during the period 37,914,549 16,925,330 27,454,632 Weighted average number held by ESOP trust (43,143) (50,822) (46,950) Adjustment for the effect of the issue of new shares under the exercise of rights - 906,200 449,376 ------------------------------------------------------------------------------ Adjusted weighted average number of fully paid ordinary shares in issue during the period 37,871,406 17,780,708 27,857,058 ------------------------------------------------------------------------------ Dilutive Weighted average number of fully paid ordinary shares in issue during the period 37,914,549 16,925,330 27,454,632 Dilutive effect of potential ordinary shares 2,085,822 - - Weighted average number held by ESOP trust (43,143) (50,822) (46,950) Adjustment for the effect of the issue of new shares under the exercise of rights - 906,200 449,376 ------------------------------------------------------------------------------ Adjusted diluted weighted average number of fully paid ordinary shares in issue during the period 39,957,228 17,780,708 27,857,058 ------------------------------------------------------------------------------ Number of issued ordinary shares at the end of the period 37,926,546 37,812,260 37,812,260 ------------------------------------------------------------------------------ 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, less those shares held by the ESOP Trust. Diluted earnings per share is calculated on the same basis as the basic earnings per share with a further adjustment to the weighted average number of fully paid ordinary shares to reflect the effect of all potentially dilutive ordinary shares. The Group has one class of potentially dilutive ordinary shares being those share options granted to employees where the exercise price is less than the average market price of the Company's ordinary shares during the period. There were no dilutive potential ordinary shares in issue for the six months ended 30 June 2006 or the year ended 31 December 2006 because the group made losses on continuing activities. Notes continued -------------------------------------------------------------------------------- 9 Reconciliation of profit (loss) after tax to net cash flow Continuing operations Six months to Six months to Year to 30.06.07 30.06.06 31.12.06 (unaudited) (unaudited) (audited) £'000 £'000 £'000 ------------------------------------------------------------------------------ Net profit (loss) for the period 423 (1,236) (971) Adjustments for: Tax 663 (81) 197 Depreciation 170 303 569 Equity settled share based payments 291 (10) 68 Loss on disposal of tangible fixed assets - 62 76 Profit on disposal of available for sale assets - - (41) Interest income (15) - (7) Interest expense 670 961 1,558 Changes in working capital Decrease in work in progress 222 177 325 (Increase) decrease in trade and other (2,279) 806 (3,836) receivables Decrease in trade and other payables (602) (2,070) (437) Decrease in provisions (379) (1) (580) Change in retirement benefit (785) (112) (1,402) liability Transfer of funds to client guarantee account (see below) (600) - - ------------------------------------------------------------------------------ Cash used in continuing operations (2,221) (1,201) (4,481) ------------------------------------------------------------------------------ Discontinued operations ------------------------------------------------------------------------------ Net profit for the period 123 1,793 1,804 Adjustments for: Tax 41 (7) (92) Loss on disposal of tangible fixed assets - 26 - Profit on disposal of discontinued operations - (2,046) (2,170) Interest income - - (4) Interest expense - - - Changes in working capital (Increase) decrease in trade and other receivables 93 764 2,111 Increase (decrease) in trade and other payables (376) (3,585) (1,455) Decrease in provisions (34) - (221) ------------------------------------------------------------------------------ Cash from (used in) discontinued operations (153) (3,055) (27) ------------------------------------------------------------------------------ ------------------------------------------------------------------------------ Total net cash flow from operating activities (2,374) (4,256) (4,508) ------------------------------------------------------------------------------ Cash generated from operations includes cash outflows relating to exceptional items recorded in prior years of £368,000 (30 June 2006: outflow of £1,371,000; 31 December 2007: outflow of £3,535,000). During the six months ended 30 June 2007, the group transferred £600,000 to a separate 'guarantee' bank account as part of the terms of a business contract. For the duration of the contract these funds are ring-fenced and unavailable for the Group's use and may not be classified as cash or cash equivalents under IAS 7, but are included in other debtors. On successful performance and completion of the services under the contract, these funds will revert to the Group and again be available for use. It is expected that these funds will be returned before 31 December 2007. Notes continued -------------------------------------------------------------------------------- 10 Consolidated reconciliation of net cash flow to movement in net borrowings Six months to Six months to 30.06.07 30.06.06 (unaudited) (unaudited) £'000 £'000 ------------------------------------------------------------------------------ Increase in cash in the period from cashflows 266 145 Decrease in overdrafts in the period from cashflows 981 (2,066) Exchange movements 12 (98) Increase/(decrease) in drawings on invoice financing facilities and bank borrowings (4,916) 16,250 Repayment of obligations under finance leases 10 9 ------------------------------------------------------------------------------ Movement in net borrowings in the period (3,647) 14,240 Net borrowings at 1 January 2007 (5,659) (19,052) ------------------------------------------------------------------------------ Net borrowings at 30 June 2007 (9,306) (4,812) ------------------------------------------------------------------------------ 11 Movement on capital and reserves ------------------------------------------------------------------------------- Share Share Deferred premium Other Retained capital Shares reserve reserves earnings Total £'000 £'000 £'000 £'000 £'000 £'000 ------------------------------------------------------------------------------- At 1 January 2007 756 14,319 20,020 44,160 (68,226) 11,029 Net profit for the period - - - - 546 546 Issue of new shares 3 - 66 - - 69 Share options - value of employee services - - - - 291 291 Net income recognised directly in equity - - - - 78 78 ------------------------------------------------------------------------------- At 30 June 2007 759 14,319 20,086 44,160 (67,311) 12,013 ------------------------------------------------------------------------------- 12 Post retirement benefits The Group provides employee benefits under various arrangements, including through a defined benefit and defined contribution pension plans, the details of which are disclosed in the 2006 Annual Report and Accounts. At the interim balance sheet date, the assets and liabilities of the defined benefit plan have been updated from the latest actuarial valuation and no material differences were identified. This information is provided by RNS The company news service from the London Stock Exchange

Companies

Partway Group Plc (PTY)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today