Parity Group plc (“Parity” or the “Group” or the “Company”), the data and technology focussed professional services business, announces its half year results for the six months ended 30 June 2019.
Headlines:
· Phase 1 of a comprehensive transformation programme, commenced in March under new CEO, completed
· Annualised gross operating costs reduced by £2.08m, a higher than anticipated gross cost saving, including a net headcount reduction of 35%
· After £0.93m investment in the transformation programme, net annualised cost savings of £1.15m achieved
· Investment in the transformation program:
o Following the appointment of the new Head of Consultancy division, Antonio Acuña MBE, a new Commercial Director, Christopher Jones, and Head of Learning and Development, Dianne Martin, have been appointed
o The new Parity brand and associated marketing campaigns have been launched since the half year end
o Commenced an evaluation of Artificial Intelligence and technological advancement opportunities in the recruitment market
· Board anticipates making a modest level of adjusted pre-tax profit for the full year 2019
· Continuing difficult market conditions in the traditional UK recruitment market including loss of major Scottish Government contract announced in March 2019 only partially offset by recent wins in Consultancy business
o New initial consultancy retainer contract just signed with Compass Group plc
o Two new contract wins with the Department of Education
o New contract with BAT
· Continued positive cash flow from operating activities(3) of £0.08m despite £0.41m outflow in relation to restructuring costs
· Period on period reduction in net debt(3) to £1.2m (30 June 2018: £1.9m, 31 December 2018: £1.1m)
· £10m credit facility with current provider extended on improved terms for a further two years until May 2021.
Six months ended 30 June 2019
Six months to 30.06.19 (Unaudited) £’000 | Six months to 30.06.18 (Unaudited) £’000 |
Incr./ (Decr.) % | |
Revenue | 44,514 | 43,220 | 3% |
Adjusted profit before tax(1) | 203 | 847 | (76%) |
(Loss)/profit before tax(2) | (541) | 847 | – |
Net cash flow from operating activities(3) | 77 | (238) | – |
Net debt(3) | 1,174 | 1,891 | (38%) |
1. On a Continuing basis, before non-recurring items
2. On a Continuing basis
3. Pre the adoption of IFRS 16
John Conoley, Non-Executive Chairman of Parity Group plc, said:
“The period we are reporting on includes the first four months under our new Chief Executive, Matthew Bayfield, who was appointed in February 2019. He and the senior management team have moved quickly to restructure the business, executing the plan set out earlier in the year.
“The Board is confident in reaching a modest level of adjusted profitability for the year, which will be a significant achievement by the management team given the extent of the transformation being undertaken and following the loss of the very large legacy contract with the Scottish Govt in Q1. The precise year end achievement will depend on the timing and mix of contracts closed in the remainder of the year.”
Matthew Bayfield, Chief Executive, said:
“Due to changing client demand we are moving Parity’s focus from a single line of business dependent upon relatively low margin recruitment revenues into a multi-line business built around consultancy, learning and development and strategic recruitment in the data world.
“The restructuring programme that we embarked upon earlier in the year has gone deeper into the organisation and has had to be more comprehensive than we originally anticipated. This more comprehensive transformation programme has had an expected impact on our short term gross revenue, however we are seeing the first signs that the plan will deliver higher margins and robust profitability in the medium term.
“A new senior team has been recruited which is focussed on higher margin opportunities and new service lines. The second phase of our transformation plan is about taking the new Parity business model to market with a renewed marketing and communications focus.
“Whilst we still have a long way to go, we have a clear vision, a good plan and the support of our clients in what we are setting out to achieve, which is helping us develop a growing pipeline of new revenue opportunities. In the last few months we have signed new contracts with, amongst others, the Department of Education, BAT and The Crown Commercial Service and are delighted to report today a new retainer consultancy relationship with Compass Group.”
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