Parity Group PLC Trading Update (1160G)
November 02 2018 - 3:00AM
UK Regulatory
TIDMPTY
RNS Number : 1160G
Parity Group PLC
02 November 2018
Parity Group PLC
2 November 2018
Parity Group plc ("Parity" or the "Group")
Trading Update
Parity (AIM:PTY), the technology focussed consultancy and
staffing business, today provides the following update on trading
in respect of the year ended 31 December 2018.
Overview
At the time of the interim results announcement in September, we
reported that despite a growth in the Parity Consultancy Services
("PCS") revenues in the first half, trading in the second half was
constrained by a delay in the extension on a large contract in this
business. This contract remains delayed and at the point of writing
it is anticipated that scope will be reduced if approved. We have
consciously invested in the data strategy for the long-term benefit
of the PCS business, but have also been impacted by project delays
and reduced scope on some of the traditionally higher margin
project delivery contracts with fixed costs. It is now apparent
that profit for the full year will fall short of expectations, and
despite progress in Group revenues, the Board believes that
adjusted profit before tax(1) will now be around breakeven for the
second half.
Revenues in the Parity Professionals (staffing) business
continue to build, supported by our programme of investment which
creates a strong platform for both contract and permanent
sales.
A number of initiatives are underway as part of a review to
ensure the group continues to grow longer-term profits after our
return to profitable growth 3 years ago. The senior management team
intends to continue its measured investment for the longer-term
strategic benefits of the business. There are early signs of
success with some initial higher margin data consultancy projects
and additional managed project wins in the Professionals
business.
In light of the pressures, the Board has initiated the following
actions:
-- Restructure of the PCS division to focus on new Data consultancy opportunities.
-- Increased alignment of the Professionals business in Data
using the depth of knowledge to support marketing activities and to
deliver 'best in class' capability for our clients whilst reducing
exposure to significant bench costs whilst we grow.
-- A review of project profitability and staff utilisation with
cost reduction activities undertaken which will benefit 2019.
-- A re-prioritisation of the pipeline and relationship
management process to ensure appropriate engagement on fewer but
more likely and more profitable projects, developing a greater
in-house knowledge that will support future work.
As a result of the initiative we expect to incur non-recurring
costs of approximately GBP300k-400k comprising the costs of
restructuring the PCS division, and to a lesser extent, some
one-off legal fees incurred.
Working capital and net debt remain consistent with the progress
made in the last three years, and it is expected that our net debt
position at the year end will have improved from the half-year.
Outlook
The investments we have made to build capacity in the
Professionals business are supporting revenue growth and will
enable greater alignment of the Group moving forwards. The actions
taken in the short-term to restructure the Consultancy business
make us more targeted and relevant to client needs, and give us
greater confidence in the long-term prospects for the Group in the
Data market. Together, this strengthens our portfolio of services
and reduces our exposure to individual client decisions, enabling
greater agility, more focussed marketing activities and improved
consumer confidence in our capabilities.
Notes
(1) Adjusted profit before tax represents Profit before tax from
Continuing Operations prior to non-recurring items
Contacts:
Parity Group PLC www.parity.net
Alan Rommel, CEO 0208 543 5353
Roger Antony, GFD
WH Ireland Limited www.whirelandcb.com
Mike Coe / Chris Savidge +44 (0) 117 945 3470
MHP Communications Parity@mhpc.com
Katie Hunt / Kelsey Traynor +44 (0)203 128 8100
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END
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