PTY.L Share News (PTY)

LONDON (Alliance News) - IT services company Parity Group PLC Tuesday said it expects a better second half and a "significant improvement in 2016", as it posted a swing to a pretax loss for the first half of 2015.

Parity had been planning to undertake a series of acquisitions through what it called its 'digital acquisition initiative', funded through equity issues and potential disposals. However, it was unable to secure the required funding, which it attributed in part to "small-cap market conditions", and as a result had to close this initiative and instead focus on its core business, IT recruitment firm Parity Professionals.

It has reorganised its business to reflect this shift, and has begun a GBP1 million cost-cutting exercise which it said will be fully effective by the end of 2015.

The company reported a pretax loss of GBP890,000 for the half year to end-June, swung from a pretax profit of GBP310,000 a year before, as revenue fell to GBP41.2 million from GBP48.3 million. Parity attributed the fall in revenue to the loss of a framework agreement towards the end of 2014 in its Resources business.

Parity expects to reported earnings before interest, tax, depreciation, amortisation, share based charges and non-recurring items for 2015 in line with 2014, with a second half improved on the same period the previous year, and to be cash generative by the year end, helped by a gradually reducing cost base and "certain delayed projects that we expect to be placed in the second half".

"The carefully controlled but rapid change of direction means that we expect a better second half to 2015 than last year and significant improvement in 2016. We expect to be cash generative by the end of 2015," said Chairman Philip Swinstead in a statement.

"We are all committed to increasing shareholder value through Parity Professionals, which is enjoying good sales success in the second half of this year," Swinstead added.

Shares in Parity were up 1.6% at 8.00 pence Tuesday morning.

By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews

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