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UK — Parity reports loss before tax of 362,000 Pounds

28 August 2009

Parity Group plc (PTY:LSE), the IT recruitment and consulting specialists, report revenues for the first six months of 2009 of 62.8 million Pounds down from 66.3 million Pounds for the same period in 2008. Operating profits fell to 366,000 Pounds from 735,000 Pounds in 2008. Loss before tax from continuing operations after exceptional charges of 129,000 Pounds was -362,000 Pounds compared to a profit before tax of 35,000 Pounds in 2008.

Parity operates via two core business units: Parity Resources, the recruitment specialists and Parity Solutions the projects and consulting firm.

Parity Resources revenues declined by 4% to 52.6 million Pounds (H1 2008: 54.6 million Pounds) as contractor volumes reduced slowly throughout the period. Operating profit was 1.4 million Pounds, a margin of 2.6% (H1 2008 2.6%). Contractor margins were squeezed to 8.8% (H1 2008: 9.4%) but SG&A costs were kept under tight control at 6.2% of revenue (or 3.27 million Pounds), compared to 7.1% (or 3.88 million Pounds) in H1 2008.

Parity Solutions generated revenues of 10.2 million Pounds (H1 2008 11.7 million Pounds). Gross margin at 2.3 million Pounds (H1 2008 2.6 million Pounds) improved compared to the second half of 2008 (2.2 million Pounds). SG&A costs increased to 2.2 million Pounds (H1 2008 1.95 million Pounds), and operating profit before one-off costs was 74,000 Pounds. 200,000 Pounds of one-off redundancy costs were incurred for reduced overhead costs.

Alwyn Welch, Parity Chief Executive said "we are continuing to experience difficult trading conditions due to the severity of the recession. Demand for skills in our areas of focus in Resources has held well, whilst the discretionary nature of much of Solutions' business means that market has continued to see extended procurement cycles, project delays and cancellations."

"Competitive pressures are inevitably increasing, with several of Parity Resources competitors now focussing more strongly on the attractive public sector market. However our long track record of delivery provides us with a good defence in this market. "

"Parity Solutions is seeing the larger, European or Global, systems integrators bidding for our typical size of project and discounting to be competitive. Our two most important systems integration project wins with new clients this year have been achieved in competition with these larger players. This bears out our continuing strategy of basing our offering on technical strength rather than on price."

"We expect market conditions to remain difficult during the remainder of this year and the first half of 2010. We will therefore continue to manage with care, balancing the need to retain and motivate our staff and to invest in sales capacity to compete, with the need to be prudent, which has so far delivered a resilient performance in Parity Resources and an improving situation in Parity Solutions."


In early trading Parity shares were unchanged at 24 pence.


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