Wednesday, 23 July 2008

Parity sells Training arm to Xpertise

Xpertise has bought Parity Training Ltd for £4.8m cash. Xpertise has placed 3.25m shares at 70p to raise £2.3m. Parity Training had revenues of £18.6m and operating profits of £570K in the year to 30th Dec 07. Parity's house brokers Arbuthnot Securities - commented "We believe that this is an excellent price, given its relatively low profitability".

Parity will be focused on its two main divisions, Resources and Solutions. “These businesses have traded in line with management's expectations. Resources has continued to see strong demand with gross margin rates continuing to improve over the same period in the prior year. In addition, Resources has performed strongly in the public sector through the Catalist framework, having grown its public sector revenue by over 10%. in the year to date, driven by 28 new public client wins this year including the Land Registry and the Ministry of Defence”
Solutions, has seen some delays in the first quarter of 2008 but has recently seen some improvement as illustrated by the five year extension to the framework agreement with the Charity Commission.

Parity shares have rebounded (they had halved YTD) – up 13% as I write – as the long anticipated sale was a relief. Arbuthnot commented "Given the low market cap and the significant reduction in net debt, we believe that Parity looks extremely undervalued. The revised earnings are now derived from a higher quality and more focused group".

Not only did I recently give you my views on this sector in IT resourcing – What’s up? But Parity’s CEO – Alwyn Welch – gave us the benefit of his views on the market. Well worth reading in the context of today’s announcement.

As I have oft said, it isn’t 2008 results from the ITSAs that really worry me – it’s 2009.

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