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UK – Parity Group H1 revenue up slightly but swings into loss

20 September 2019

Specialist technology staffing company Parity Group (PTY: LSE) reported revenue for the six months ending 30 June 2019 of £44.5 million, an increase of 3% compared with £43.2 million during the same period last year. 

Parity Group reported revenue and profits from continuing operations as below.

(£ millions) H1 2019 H1 2018 Change
Revenue 44.5 43.2 3%
Adjusted Profit Before Tax 0.2 0.8 -76%
Profit Before Tax -0.5 0.8 25%

The group said that it swung to pre-tax loss in the first half as it booked high restructuring costs and lost a major Scottish government contract. It also cited continuing difficult market conditions in the traditional UK recruitment market.

In February 2019, Parity appointed Matthew Bayfield as CEO.

The group said that the first phase of a comprehensive transformation programme, started in March under Bayfield, was completed.

John Conoley, Non-Executive Chairman of Parity Group plc, commented, "The period we are reporting on includes the first four months under our new CEO, 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.”

Matthew Bayfield, Chief Executive, commented, "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 strategic reorganisation included a change in operating segments. The group currently has three operating segments, being Recruitment (previously Parity Professionals), Consultancy (previously Parity Consultancy Services) and, since 2019, Learning & Development.

(£ millions) H1 2019 H1 2018 Change
Recruitment 40.9 38.1 7%
Consultancy 3.6 5.1 -30%
Learning & Development 0 0 N/A

Consultancy revenues were down by 30% due to the inclusion of revenues from the significant Ministry of Defence contract in the comparative period. The contract ran until August 2018 but was not renewed.

During the period, Parity signed new contracts with Compass Group, Department for Education, Crown Commercial Service and British America Tobacco.

“We are encouraged by the recently announced contract wins and renewals, and our growing pipeline in higher margin service lines, but recognise that it will take time for the benefits of our change programme to translate into improved financial returns,” the group stated.

The Board said it is confident in reaching a modest level of adjusted profitability for the year.

Parity added that the next phase of the investment programme will include an evaluation of technology opportunities for competitive advantage and operational efficiency

As of last trade, Parity Group traded at £7.07, down 8.77% on the day and 15.90% above the 52 week low of £6.10 set on 2 Nov 2018. Based on its current share price the company has a market value of £7.95 million.


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