8th Feb 2006 07:01
Parity Group PLC08 February 2006 8 February 2006 Parity Group plc ("Parity" or the "Group") Parity announces that on 7 February 2006 it received notification that DominickCompany AG ("Dominick Company"), a Swiss based private bank which provides arange of private and investment banking services, and Dominion Holdings Limited("Dominion"), a Swiss based investment company, are now the beneficial ownersof, respectively, 12,738,936 and 55,000,000 Parity shares representing 4.4% and19.1% of Parity's issued share capital. These interests have arisen as a resultof the non repayment of financial facilities made available by Dominick Companyto one of its customers to acquire these shares and Dominick Company exercisingits right to take ownership of the shares itself. Dominion subsequentlyacquired 55,000,000 Parity shares from Dominick Company at a price of 6.75 penceper Parity share and is also interested in the 12,738,936 Parity sharesbeneficially owned by Dominick Company by virtue of put and call options. The Board of Parity welcomes Dominick Company and Dominion as shareholders ofParity. Parity has met with the advisers to Dominick Company and Dominion who haveconfirmed that Dominick Company and Dominion are supportive of the currentmanagement of Parity. As previously announced, Parity will be progressingdiscussions with Dominick Company, Dominion and other shareholders over thecoming weeks in relation to the strengthening of Parity's balance sheet equity,referred to in its announcement of 9 December 2005. As at 31 December 2005,Parity's net debt amounted to approximately £20.5 million, an increase from£15.5 million reported as at 30 June 2005. The increase in debt levels is dueto the on-going effect of previously announced restructuring measures includingcontinuing payments for surplus property, which are only now starting to bemitigated by the sub-leases signed, the delay in the sale of the French andGerman businesses and associated working capital growth and the fact thatproceeds from the US disposal will be received over a 15 month period.Additionally, as expected, the on-going losses in the period resulted in anoperating cash outflow in the second half of 2005. While the sale of the USbusiness in November 2005 and the sale of the French and German businesses inJanuary 2006 will reduce Group net debt by approximately £5.5 million during2006, the continuing cash impact of the 2005 restructuring charges and workingcapital investment will partially offset this, as will the anticipatedsettlement of one of the Group's major supply agreements, which will be treatedas an exceptional in 2005. This latter change of supplier is now complete andwill have a strongly positive effect on both the P&L and cashflow in futureperiods. In summary, to grow the business going forward, the Group's balancesheet equity must be strengthened. In a separate announcement released today, Parity is delighted to announce theappointment of Alwyn Welch as Chief Executive. With over 25 years experience inthe technology sector with leading sector companies such as Unisys, Cap Geminiand Logica, he will have full day to day responsibility for the running of thebusiness, working alongside Executive Chairman, John Hughes. This strengthening of the leadership team marks the end of a period of majorreorganisation, a challenging but necessary task that was required to achievethe previously stated objectives of returning the Group to profitability anddelivering a more robust performance in the future. While it is clearly stillearly in 2006, we have the objective of achieving breakeven at the pre-tax levelduring the year, after taking into account the service costs of our projecteddebt levels and charges under IFRS relating to pensions and incentivisation.The proposed strengthening of the balance sheet equity will place the Group in astrong position to grow the business from the rationalised base. In the light of the notification, the Board of Parity continues to seekclarification from Spearhead in relation to its intentions pursuant to itsannouncement on 9 January 2006. Enquiries:Financial Dynamics - 020 7831 3113Giles SandersonHarriet KeenCass Helstrip This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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