TIDMPTY
RNS Number : 4877Z
Parity Group PLC
16 May 2023
PARITY GROUP PLC
FINAL RESULTS FOR THE YEARED 31 DECEMBER 2022
16 May 2023
Parity Group plc ("Parity" or the "Group"), the data and
technology focused professional services business, announces its
full year results for the year ended 31 December 2022.
Headlines
In 2022, we completed the transformation of the business,
refocusing on its core recruitment strengths. We have delivered a
significantly improved operating performance despite the expected
reduction in net fee income during the year and have rebuilt a
highly motivated, lean and, capable team that is supported by a
flexible and scalable infrastructure.
-- Significantly improved operating performance with Adjusted
EBITDA of GBP0.4m vs GBP0.1m in the prior year.
-- Net Fee Income for 2022 of GBP3.5m compared to GBP4.1m in 2021.
-- Break even at adjusted operating profit level compared to a GBP0.3m loss in the prior year.
-- Other income in FY2022 of GBP1m from the sale and licence
back of the Parity trademarks in the UK and EU.
-- As a result of the refocus back to recruitment, historic
goodwill associated with consulting activities acquired in 1999 was
impaired with a GBP2m charge.
-- As a result of the goodwill impairment charge Loss before tax
for 2022 was GBP1.3m compared to GBP1.1m in 2021.
Key Financials
Key financials for 2022
GBP million 2022 2021
------------------------------------- ------- ------
Revenue 40.6 47.0
Net Fee Income 3.5 4.1
Adjusted EBITDA (1) 0.4 0.1
Adjusted Operating loss (2) (0.0) (0.3)
Loss before tax (1.3) (1.1)
Net debt (GBPmillion) 3 (2.3) (1.2)
Notes
1 - Adjusted EBITDA is calculated as Operating
profit excluding Amortisation and Depreciation,
share based payments and non underlying items
2 - Adjusted operating loss
is calculated as Operating
loss excluding non underlying
items
3 - Net debt represents cash and cash
equivalents less loans and borrowings
and excluding leases
Mark Braund, Executive Chairman of Parity Group plc, said:
"2022 has seen us complete the shift back to focus on
recruitment and reshape the organisation, ensuring that we have a
structure that is both efficient and scalable. In amongst all the
change, we have continued to invest in our teams and develop our
staff, cementing our culture and a much-improved focus on what we
are 'great' at.
The additional funding from the sale of the trademark has given
us scope to make investments in new business areas to drive
longer-term sustainable profit and growth.
In 2023 we are looking to build on the investments we have and
continue to make in new business areas and will also explore other
opportunities to support the long term development of the business
and shareholder value."
Contacts
Parity Group plc Tel: + 44 (0) 20 8171
1729
Mark Braund, Executive Chairman www.parity.net
Mike Johns, Chief Financial Officer
Allenby Capital Limited (Nominated Adviser Tel: +44 (0) 20 3328
and Broker) 5656
David Hart / Dan Dearden-Williams (Corporate
Finance)
Tony Quirke (Sales and Corporate Broking)
Chairman's Statement
During 2022, we successfully rebuilt the recruitment business
platform within Parity .
Previously diverted resource and funds have been refocused into
the core business. We have replaced a lack of focus, over-weight
management costs and rigid overheads with a highly motivated, fit
for purpose team that trains and develops its own talent through
the Parity Academy and has a clear cultural identity. This has been
married to scalable infrastructure capable of flexing to the needs
of the refocused business repositioning the Group back to its core,
as a high-quality technology recruitment business.
The business team is led by Izzy (Isobel) Brown, our Director of
Recruitment Business. She has created an organisation that delivers
great service to both clients and contractors.
Supporting the team, we build and maintain talent pools of key
in demand skills enabling us to meet client needs quickly and
efficiently producing strong conversions and fill rates.
With our platform in place we are now tackling the next
challenge to address the historic long-term decline in the top line
revenue. The underlying driver of the fall in contract recruitment
revenue over the last three years was the redirection of resource
and funding away from the recruitment business, leaving it
vulnerable and less effective. The most significant business loss
was the Scottish interims framework in 2019 (worth circa
GBP30m/year at its peak). Covid, and decisions by previous
management that decimated the old recruitment team, have to date
impacted the ability of the business to replace this lost
revenue.
In addition to rebuilding the capabilities of the recruitment
team, we made changes to the business, reducing expenditure and
ensuring we have a flexible delivery model. This, along with the
injection of funds from the sale and licence back of the Parity
trademark in December 2022, enables us to make focused investment
in key areas to support growth.
With a team and cost base capable of being leveraged, we now
focus on adding to the top-line to drive profitability. We see the
following as key areas of focus:
-- Continued demand for the critical and highly skilled
resources we deliver to our clients, with public sector an
important segment of our business. The government announced in Q4
of 2022 that as part of their strategy to bring down public
spending from 2025 it will be looking for technology investment to
deliver efficiencies upon which they can reduce costs. As a
supplier of the critical skills these technology investments need,
we believe this will create an opportunity for us to deploy into
new areas on critical projects, with one of our key areas for
growth being the targeting of new clients within the existing
frameworks where we have a strong track record of operating.
-- We also have long-term relationships with key clients in the
private sector and have proven capability to deliver at scale to
commercially orientated businesses. We are now investing in new
business development focused on taking the in-demand talent pools
we have curated out to new clients.
-- We established in 2022 a small permanent recruitment team
with a mix of experienced permanent recruiters and graduates from
our academy training programme. The team has started to build
momentum and we are focusing business development resource to
further develop the pipeline and conversion to revenue in 2023.
Together, these three areas are where we are focusing our time,
effort and resource in 2023.
As mentioned previously, we had the opportunity to realise the
value we held in owning the Parity trademark in the UK and EU,
selling ownership of the trademarks to a third party that also
holds business interests using the Parity name in a different
sector. As part of the transaction, we have secured our perpetual
right to continue to use the Parity name in the same way that we
have always done and in the markets in which we operate. For the
sale we have received GBP950k in cash and the perpetual right to
use the Parity name with no future cost.
This is an important injection of cash for us to facilitate
investment in 2023 in new business and at a time when fundraising
in the markets has been challenged by the recent economic
turmoil.
Having started this report with a focus on our colleagues, I
will end on the same. Utilising capacity from the sale of the
trademark has enabled us to keep pace with the market and address
the costs of living crisis with a pay increase of 6% for our
staff.
We have a strong and talented team at Parity, their commitment,
ambition and integrity make for a great place to work and a solid
foundation from which to grow. On behalf of the Board, I wish to
thank them.
2023 is a year in which we will be working hard to maximise the
opportunity to build shareholder value, leveraging the recruitment
platform we have created and our position within the key markets in
which we operate.
Operational and Financial Review
The Group has identified and defined alternative performance
measures (APMs) for net fee income, NFI margin, adjusted EBITDA,
adjusted operating loss, adjusted loss before tax, net debt, debtor
days and creditor days. These are the key measures the Directors
use to assess the group's underlying operational and financial
performance. The APMs are fully explained and where appropriate
reconciled to IFRS line items in note 1 to the Group Consolidated
Financial Statements.
2022 Overview
-- Private sector revenue up by 25% year on year to GBP18m.
-- Public sector revenue declined to GBP22.6m in the year,
pushing overall revenue down by 13% year on year.
-- Net Fee Income for 2022 of GBP3.5m compared to GBP4.1m in 2021.
-- Adjusted EBITDA(1) for 2022 of GBP0.4m vs GBP0.1m in the prior year.
-- Significant improvement in operating performance in 2022 with
break even at Adjusted Operating profit (2) level compared to a
GBP0.3m loss in the prior year.
-- Other income in 2022 of GBP1m from the sale and licence back
of the Parity trademarks in the UK and EU.
-- Impairment of GBP2.0m of historic goodwill that dates back to
1999 and relates to non-core activities.
-- Profit before Tax and before the goodwill impairment for 2022
was GBP0.6m vs loss of GBP1.1m in the prior year.
-- After including the goodwill impairment, the reported Loss
before Tax for FY2022 was GBP1.3m vs a loss of GBP1.1m in the prior
year.
Performance highlights
for 2022
2022 2021
Adjusted Adjusted Variance
1 Reported 1 Reported 2
Revenue (GBP million) 40.6 40.6 47.0 47.0 -14%
Net Fee Income (GBP million) 3.5 3.5 4.1 4.1 -15%
EBITDA (GBP million) 3 0.4 1.3 0.1 (0.4) 300%
Operating loss (GBP million) (0.0) (1.0) (0.3) (0.8) -100%
Loss before tax (GBP million) (0.3) (1.3) (0.6) (1.1) -50%
Basic loss per share (pence) (0.67) (1.66) (0.08) (0.62)
Net debt (GBPmillion) 4 (2.3) (2.3) (1.2) (1.2)
Notes
1 - Excludes from the Income Statement
the impact of non-underlying items
identified in note 6
2 - Variance compares 2022 adjusted
against 2021 adjusted to provide
a consistent view of performance
3 - EBITDA is calculated as Operating
profit excluding Amortisation and
Depreciation and share based payments
4 - Net debt represents cash and
cash equivalents less loans and
borrowings and excluding leases
The financial performance in 2022, as illustrated by the key
performance indicators included in the table above and set out in
the Directors' report, reflects a year of adjustment for the Group
and ends with a business model now focused solely on generating its
income from recruitment and related services.
During 2022, the last consultancy and legacy managed services
contracts were completed and the final costs associated with these
revenue streams removed. Contract recruitment revenue has declined
since 2019 when the Scottish interims framework was lost, the
impact of which has taken three years to unwind. 2022 saw the
business deepen relationships with its key clients, growing revenue
across the largest private sector and public sector clients. New
clients have been added in both the public and private sectors and
whilst only contributing modest revenues in 2022 there is an
ambition to develop these accounts in 2023 alongside further new
clients.
2022 has benefited from the full year impact of the decisions
made in 2021 to realign and redistribute costs, adding to client
facing resources whilst reducing corporate overheads. This along
with the elimination of GBP0.8m of costs associated with non-core
activities has kept operating costs low and despite the decline in
revenue and NFI in 2022 the business has delivered a break-even
position at adjusted operating profit.
The Group continues to utilise the asset-based lending facility
provided by Leumi ABL and has recently extended the term of the
facility to October 2025. During 2022, the Group has seen an
increase in finance costs associated with its borrowing as a result
of the rapid increase in interest rates and a delay in payment
(since resolved) from a key client in the last quarter of 2022.
With interest rates unlikely to fall significantly in 2023, the
group has increased its focus and resource applied to finding
efficiencies in existing working capital management.
Beyond the operating business, the Group continues to have
responsibility for a legacy defined benefit pension scheme to which
the Group is currently obligated to contribute approximately
GBP0.3m per annum.
With the contraction in the business over the last few years and
the cash outflows to service the legacy pension and maintain the
overhead required for the Group's AIM listing, Parity has had
limited funds to invest for growth. In 2023, the proceeds from the
sale of the UK and EU 'Parity' trademarks will give the Group scope
to make investments that support growth. Alongside these
investments the directors will seek to identify further options to
fund growth and mitigate the cash outflows not directly associated
with delivering recruitment services.
With the last of the consulting and managed service projects
concluded in the year, the Group has written off the remaining
GBP2m of goodwill acquired in 1999 that relates to consulting
activities.
Excluding this non-cash adjustment for goodwill impairment, the
Group would have reported GBP0.6m profit before tax.
Revenue and net fee income
Growth in private sector revenue to GBP18m was a highlight of
the year with both the addition of new clients and growth in the
largest client. Towards the end of last year this client put a
temporary pause on new assignments whilst it reconsidered planned
projects in light of the economic conditions. However since the
start of 2023, the client has recommenced recruitment creating
further opportunity for the coming year. 2022 saw the business add
eight new clients, between them generating modest revenues for the
year but with active account management these are targets to grow
in 2023.
Public sector revenue of GBP22.6m in 2022 was GBP10m lower than
2021. The largest contributor to the fall in public sector was from
Scottish government with the residual run off from Scottish
interims booked in 2021 not being replaced in 2022. In addition,
projects with two clients within central government came to a
conclusion in 2022, one as a result of a change framework and the
other where budgetary constraints forced changes to project
priorities. During the year, the Group took on six new NHS clients
and although revenues are not yet significant the challenges and
changes in the NHS and technology investments present opportunities
for 2023.
Net Fee income for 2022 of GBP3.5m was 15% lower than 2021. Net
fee income as a % of revenue for 2022 of 8.5% remains broadly in
line with the prior year although between public and private
sectors the change in mix of clients has had an impact on
margins.
The conclusion of non-core consulting and legacy managed service
engagements and switch to exclusively recruitment services has
resulted in NFI margin for the private sector falling from 8.3% to
7.8%. However direct costs (included in operating costs)
attributable to the consulting and managed service activities have
been eliminated, offsetting the NFI margin impact at EBITDA
level.
The public sector margin has increased from 8.6% to 9.3% year on
year as a result of change in mix and concentration of clients
against a reduced revenue.
Operating costs
The Group has benefited in 2022 from the cost realignment
undertaken in 2021 and decisions to cease non-core activities. The
elimination of costs associated with legacy managed service and
consulting produced a net saving in 2022 of GBP0.6m. A further
GBP0.1m net savings are attributable to lower management costs year
on year.
GBP million
2022 2021 Var
Employee benefit costs 2.0 2.7 (0.7)
Depreciation and amortisation 0.4 0.4 0.0
All other operating
costs 1.1 1.2 (0.1)
----- ----- ------
Total 3.5 4.3 (0.8)
----- ----- ------
Depreciation and amortisation
In accordance with IFRS 16, the results are presented with lease
assets and liabilities recognised in the Group's Statement of
Financial Position, where the Group is the lessee.
Non-underlying items
The Board measures the performance of the Group after excluding
costs (and income) that would not be incurred during the normal
operation of the business and classify these exceptional costs
under the category of non-underlying items. During the year, there
were three items classified within non underlying items.
-- GBP23k of costs associated with the end of a legacy managed service contract.
-- GBP950k of income from the sale and licence back of the UK and EU Parity trademarks.
-- With the cessation of non-recruitment activities in 2022,
goodwill associated with consulting activities that was acquired in
1999 was impaired with a GBP1,952k impairment charge booked in
2022.
Further analysis of the non-underlying items is provided in note
6.
Taxation
A tax charge of GBP0.4m was calculated for the year (2021:
GBP0.5m credit). The charge arises primarily as a result of the
reduction in the defined benefit scheme surplus and an adjustment
to deferred tax losses recognised.
Earnings per share and dividend
The basic loss per share from continuing operations was 1.66
pence (2021: loss of 0.62 pence per share).
The Board does not propose a dividend for 2022 (2021: nil).
Statement of financial position
Trade and other receivables
Trade receivables of GBP2.7m at the end of 2022 (2021: GBP2.1m)
were GBP0.6m higher than the prior year. At the year end, debtor
days were 25 (2021: 16).
Both the increases in trade receivables and debtor days are
primarily attributable to a single key client whose outstanding
debtor balance at the end of the year had increased by GBP0.6m but
crucially had GBP1.4m overdue at the year-end compared with only
GBP0.2m at the end of 2021.
Both the increase in the overall balance and the ageing of the
key client debt was caused by a failure in the client's internal
approval processes that was not resolved until after the end of the
year. All outstanding amounts have now been fully paid by the
client, and its account is back into line with normal business
trading.
Within other receivables, the Group had a net recoverable VAT
amount from HMRC of GBP0.5m (net VAT payable in at the end of 2021
of GBP0.1m). The VAT debtor has arisen as a result of increased
remote working by UK base contractors (who charge VAT) on projects
for clients outside the UK (to which no VAT is charged).
Trade and other payables
Trade and other payables decreased during the year by GBP0.3m to
GBP3.3m (2021: GBP3.6m) due to the impact of reduced contractor
numbers and no VAT creditor.
The Group's creditors are dominated by amounts due and payable
to contractors which are settled promptly, either weekly or monthly
and this means that creditor days remain stable. At the year end,
creditor days were 23 days (2021: 23 days).
Loans and borrowings
Loans and borrowings represent the Group's debt under its
asset-based lending ("ABL") facility. This is a working capital
facility and linked to the same cycle as trade receivables. The
facility is with Leumi ABL and has been in place since April 2021.
In April 2023, the Group extended the duration of the facility with
Leumi ABL. The original agreement was due to end in April 2024, but
this has been extended to October 2025.
Cash flow and net debt
Net cash outflow in the year (excluding any adjustment for
IFRS16) was a total of GBP1.1m.
-- The core operations of the business (excluding the impact of
timing differences) were cash neutral in 2022 with declines in
income from clients offset by a lower cost base following the
realignment in 2021. In addition to the core operations the
business has a commitment to continue to fund the defined benefit
pension scheme and pay ongoing expenses and this accounted for an
outflow of GBP0.3m. Financing costs representing the interest
charges on drawdowns under the Leumi ABL facility were GBP0.2m in
the year.
-- Timing differences as a result of the delayed settlement of
overdue debtors by a key client and the net receivable due from
HMRC accounted for a GBP1.4m cash outflow in the period. Both of
these timing differences have unwound since the end of the year
with the key client settling in full all outstanding debts and the
receipt of the VAT repayment and move to monthly VAT submissions to
reduce the impact of VAT on working capital.
-- One off costs in the period were to complete the development
of the management information platform for the business and
settlement of termination costs incurred in 2021. Offsetting these
costs was the receipt at the end of the year of GBP1m from the sale
and licence back of the trademark.
Removing the one off and significant timing variances from the
cashflow reduces the net cash outflow for the business to GBP0.5m
for 2022, equivalent to the cost of funding the historical defined
benefit pension scheme commitments and the costs of debt
financing.
Defined benefit pension surplus
Despite the volatility in the equity and bond markets during the
latter parts of 2022 the defined pension scheme remains net
positive with a calculated GBP1.3m surplus as at 31(st) December
2022 (2021: GBP1.9m surplus). Of the GBP0.7m reduction in the
calculated surplus value, it is estimated that between GBP0.2m and
GBP0.3m is attributable to losses incurred as a result of the
volatility in the gilt markets in October 2022 and calls made by
LDI funds during that period. The balance reflects performance of
assets invested against measured liabilities of the scheme.
Having benefited from investment gains over the previous three
years to deliver a surplus, the Trustees adjusted the investment
strategy in 2021 to reduce exposure to historically more volatile
equity markets and to invest in assets that closely mirror the
scheme liabilities with the intention of locking in the gains.
Despite the turmoil in markets in the last quarter of 2022, this
strategy has ensured that the majority of recent years gains have
been maintained.
During 2022, the Group paid GBP0.3m contributions to the scheme
and the directors continue to explore opportunities, including a
future buy out of the scheme, that would enable the group to
eliminate the cash contributions it currently makes to the
scheme.
Consolidated Income Statement for the year ended 31 December
2022
2022 2021
Notes GBP'000 GBP'000
------------------------------------------------- -------- ----------- ----------
Revenue 3 40,648 46,962
Contractor costs (37,184) (42,882)
------------------------------------------------- -------- ----------- ----------
Net Fee Income 3,464 4,080
------------------------------------------------- -------- ----------- ----------
Other operating income 4 950 -
Operating costs 5 (5,443) (4,902)
------------------------------------------------- -------- ----------- ----------
Operating loss (1,029) (822)
------------------------------------------------- -------- ----------- ----------
Analysed as:
Underlying operating loss before non-underlying
items (4) (269)
Non-underlying costs 6 (1,975) (553)
Non underlying income 6 950 -
------------------------------------------------- -------- ----------- ----------
Operating loss (1,029) (822)
------------------------------------------------- -------- ----------- ----------
Finance costs 8 (310) (281)
------------------------------------------------- -------- ----------- ----------
Loss before tax (1,339) (1,103)
------------------------------------------------- -------- ----------- ----------
Analysed as:
Adjusted (loss) before tax(1) (314) (550)
Non-underlying costs 6 (1,975) (553)
Non underlying income 6 950 -
Loss before tax 6 (1,339) (1,103)
-------- -----------
Tax (charge)/ credit 10 (376) 467
------------------------------------------------- -------- ----------- ----------
Loss for the year attributable to owners
of the parent (1,715) (636)
------------------------------------------------- -------- ----------- ----------
Loss per share
Basic 11 (1.66p) (0.62p)
Diluted 11 (1.66p) (0.62p)
------------------------------------------------- -------- ----------- ----------
All activities comprise continuing operations.
(1) Adjusted profit/(loss) before tax is a non-IFRS alternative
performance measure, defined as profit/(loss) before tax and
non-underlying items.
Consolidated Statement of Comprehensive Income for the year
ended 31 December 2022
2022 2021
Notes GBP'000 GBP'000
------------------------------------------------- -------- --------- ---------
Loss for the year (1,715) (636)
Other comprehensive income
Items that will never be reclassified to profit
or loss
Remeasurement of defined benefit pension scheme 23 (841) 1,620
Deferred taxation on remeasurement of defined
pension scheme 16 290 (567)
Other comprehensive (loss)/ income for the
year after tax (551) 1,053
------------------------------------------------- -------- --------- ---------
Total comprehensive (loss)/ income for the
year attributable to owners of the parent (2,266) 417
------------------------------------------------- -------- --------- ---------
Statements of Changes in Equity for the year ended 31 December
2022
Share Capital
Share premium redemption Other Retained
capital reserve reserve reserves earnings Total
Consolidated GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- --------- ---------- ------------ ---------- ---------- ---------
At 1 January 2021 2,053 33,244 14,319 34,560 (77,537) 6,639
--------------------------- --------- ---------- ------------ ---------- ---------- ---------
Share issues in the year 9 26 - - - 35
Share options - value
of employee services - - - - (64) (64)
--------------------------- --------- ---------- ------------ ---------- ---------- ---------
Transactions with owners 9 26 - - (64) (29)
--------------------------- --------- ---------- ------------ ---------- ---------- ---------
Loss for the year - - - - (636) (636)
Remeasurement of defined
benefit pension scheme - - - - 1,620 1,620
Deferred taxation on
remeasurement of defined
pension scheme - - - - (567) (567)
--------------------------- --------- ---------- ------------ ---------- ---------- ---------
At 31 December 2021 2,062 33,270 14,319 34,560 (77,184) 7,027
--------------------------- --------- ---------- ------------ ---------- ---------- ---------
Share options - value
of employee services - - - - 50 50
--------------------------- --------- ---------- ------------ ---------- ---------- ---------
Transactions with owners - - - - 50 50
--------------------------- --------- ---------- ------------ ---------- ---------- ---------
Loss for the year - - - - (1,715) (1,715)
Remeasurement of defined
benefit pension scheme - - - - (841) (841)
Deferred taxation on
remeasurement of defined
pension scheme - - - - 290 290
--------------------------- --------- ---------- ------------ ---------- ---------- ---------
At 31 December 2022 2,062 33,270 14,319 34,560 (79,400) 4,811
--------------------------- --------- ---------- ------------ ---------- ---------- ---------
Statements of Financial Position as at 31 December 2022
Company number 3539413 Consolidated
----------------------
2022 2021
Notes GBP'000 GBP'000
------------------------------- -------- --------- ---------
Assets
Non-current assets
Goodwill 12 2,642 4,594
Other intangible assets 13 188 84
Property, plant and equipment 14 10 15
Right-of-use assets 15 174 149
Trade and other receivables 17 - 29
Deferred tax assets 16 521 528
Retirement benefit asset 23 1,269 1,939
Total non-current assets 4,804 7,338
------------------------------- -------- --------- ---------
Current assets
Trade and other receivables 17 5,909 4,768
Cash and cash equivalents 2,053 1,121
Total current assets 7,962 5,889
------------------------------- -------- --------- ---------
Total assets 12,766 13,227
------------------------------- -------- --------- ---------
Liabilities
Current liabilities
Loans and borrowings 18 (4,356) (2,279)
Lease liabilities 15 (203) (242)
Trade and other payables 19 (3,340) (3,608)
Total current liabilities (7,899) (6,129)
------------------------------- -------- --------- ---------
Non-current liabilities
Lease liabilities 15 (14) (29)
Provisions 20 (42) (42)
Total non-current liabilities (56) (71)
------------------------------- --------
Total liabilities (7,955) (6,200)
------------------------------- -------- --------- ---------
Net assets 4,811 7,027
------------------------------- -------- --------- ---------
Shareholders' equity
Called up share capital 24 2,062 2,062
Share premium reserve 22 33,270 33,270
Capital redemption reserve 22 14,319 14,319
Other reserves 22 34,560 34,560
Retained earnings 22 (79,400) (77,184)
------------------------------- --------
Total shareholders' equity 4,811 7,027
------------------------------- -------- --------- ---------
Statements of Cash Flows for the year ended 31 December 2022
Consolidated
-----------------------
2022 2021
Notes GBP'000 GBP'000
------------------------------------------ ------ ---------- -----------
Operating activities
(Loss)/profit for the year (1,715) (636)
Adjustments for:
Net finance expense/(income) 8 310 281
Share-based payment expense/(credit) 9 50 (64)
Income tax charge/ (credit) 10 376 (467)
Amortisation of intangible assets 13 3 3
Shares issued in lieu of Directors
fees 22 - 35
Depreciation of property, plant
and equipment 14 10 12
Depreciation and impairment of
right-of-use assets 15 346 414
Loss on write down of lease assets 15 - 31
Provision for impairment of investment 28 - -
in subsidiaries
Impairment of goodwill 12 1,952 -
1,332 (391)
Working capital movements
(Increase)/decrease in trade and
other receivables 17 (1,112) 1,352
(Decrease)/increase in trade and
other payables 19 (343) (1,249)
(Decrease) in provisions 20 - (139)
Payments to retirement benefit
plan 23 (331) (322)
------------------------------------------ ------ ---------- -----------
Net cash flows used in operating
activities (454) (749)
------------------------------------------ ------ ---------- -----------
Investing activities
Purchase of property, plant and
equipment 14 (5) (4)
Development of intangible assets 13 (109) (81)
Net cash flows used in investing
activities (114) (85)
------------------------------------------ ------ ---------- -----------
Financing activities
Drawdown/(repayment) of finance
facility 18 2,077 (662)
Principal repayment of lease liabilities 15 (433) (490)
Movements on intercompany funding - -
Interest paid 8 (144) (65)
------------------------------------------ ------ ---------- -----------
Net cash flows from/(used in)
financing activities 1,500 (1,217)
------------------------------------------ ------ ---------- -----------
Net increase/(decrease) in cash
and cash equivalents 932 (2,051)
------------------------------------------ ------ ---------- -----------
Cash and cash equivalents at
the beginning of the year 1,121 3,172
------------------------------------------ ------ ---------- -----------
Cash and cash equivalents at
the end of the year 2,053 1,121
------------------------------------------ ------ ---------- -----------
Notes to the Financial Statements for the year ended 31 December
2022
1 Accounting policies
Basis of preparation
Parity Group plc (the "Company") is a company incorporated and
domiciled in the UK.
Both the parent company financial statements and the Group
financial statements have been prepared and approved by the
Directors in accordance with company law and UK adopted
international accounting standards. On publishing the parent
company financial statements here together with the Group financial
statements, the Company is taking advantage of the exemption in
Section 408 of the Companies Act 2006 not to present its individual
income statement and related notes that form a part of these
approved financial statements. Financial Information is presented
in GBP'000.
The principal accounting policies adopted in the preparation of
the financial statements are set out below. The policies have been
consistently applied to all the years presented unless otherwise
stated.
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the Directors' Report (Review of business and future
developments). The financial position of the Group, its cash flows,
liquidity position and borrowing facilities are described in the
Operational and Financial Review and in note 21 to the financial
statements. Note 21 also includes the Group's objectives for
managing capital.
As outlined in note 21, the Group meets its day to day working
capital requirements through an asset-based finance facility. The
facility contains certain financial covenants which have been met
throughout the period.
The financial statements have been prepared on a going concern
basis. Discussion of the key risks to the Group is included within
Principal Risks and Uncertainties . As part of their assessment of
going concern the Directors have reviewed the Group's cash flow
forecasts for the period to 31 December 2024 and considered
scenarios that reflect reasonably possible changes in trading
performance. The scenarios model both changes to existing business
and lower expectations from new business initiatives as set out
below:
-- The loss of a significant client that would result in a drop
in contractor numbers by up to 15%. This models the periodic risk
the business is exposed to when frameworks and key client contracts
are up for renewal.
-- Lower income from permanent recruitment.
-- The development of new business initiatives within contract
recruitment takes longer than planned resulting in a delay in
income from these new business lines.
The directors have considered these changes both individually
and as part of a scenario that combines multiple adverse changes in
trading.
Under each scenario the directors have identified mitigating
actions and the timelines under which those actions would need to
be taken to reduce the financial impact of the lower trading
expectations and continue to meet its obligations under the
existing financing agreement with Leumi.
In addition to the opportunity to delay or curtail investment
costs associated with new business initiatives the directors, as a
result of actions taken by the Group over the last 3 years to
resize and restructure the operations of the business, are also
able to reduce costs within the existing business operations if
trading conditions change and can do so without significant
delay.
Basis of consolidation
The consolidated financial statements comprise the financial statements
of the Company and its subsidiaries as at 31 December 2022. Subsidiaries
are entities controlled by the Group. Control exists when the Group
has:
* existing rights that give it the ability to direct
the relevant activities that significantly affect the
subsidiary's returns; and
* exposure, or rights, to variable returns from its
involvement with the subsidiary; and
* the ability to use its power over the subsidiary to
affect the amount of the Group's returns.
The acquisition date is the date on which control is transferred
to the acquirer. The financial statements of subsidiaries are included
in the consolidated financial statements from the date that control
commences until the date that control ceases.
The financial statements of the subsidiaries are prepared for the
same reporting period as the parent company, using consistent accounting
policies. All intra-group balances, transactions, unrealised gains
and losses resulting from intra-group transactions and dividends
are eliminated in full.
In accordance with Section 408 of the Companies Act 2006, the Company
has not presented its own income statement or statement of comprehensive
income. The loss for the year dealt with in the accounts of the
Company was GBP7,231,000 (2021: profit of GBP700,000).
Business combinations
The acquisition of subsidiaries is accounted for using the purchase
method. The related costs of acquisition other than those associated
with the issue of debt or equity securities, are recognised in the
profit and loss as incurred. The acquiree's identifiable assets
and liabilities and contingent liabilities that meet the conditions
for recognition under IFRS 3 'Business Combinations' are recognised
at their fair value at the acquisition date.
Accounting policies: new standards, amendments and
interpretations effective and adopted by the Group
There are no other standards, amendments or interpretations effective
this year which have a significant impact on these financial statements.
Accounting policies: new standards, amendments and interpretations
that are not yet effective and have not been adopted early by the
Group
At the date of authorisation of these financial statements, several
new, but not yet effective, standards, amendments to existing standards
and interpretations have been published. None of these have been
adopted early by the Group. New standards, amendments and interpretations
not adopted in the current year have not been disclosed as they
are not expected to have a material impact on the Group.
Measurement convention
The financial statements are prepared on the historical cost basis.
Non-current assets are stated at the lower of previous carrying
amount and fair value less costs to sell.
Alternative performance measures
In the reporting of its financial performance, the Group uses certain
measures that are not defined under IFRS, the Generally Accepted
Accounting Principles ("GAAP") under which the Group reports. The
Directors believe that these non-GAAP measures assists with the
understanding of the performance of the business. These non-GAAP
measures are not a substitute, or superior to, any IFRS measures
of performance but they have been included as the Directors consider
them to be an important means of comparing performance year-on-year
and they include key measures used within the business for assessing
performance.
Net fee income
Net fee income represents revenue less cost of sales and consist
of the margin earned on the placement of contractors, the fees earned
on permanent recruitment and the revenue less the cost of third
party contractors for managed service and consultancy work.
NFI margin is the net fee income expressed as a percentage of revenue.
Both net fee income and NFI margin are metrics commonly used by
businesses delivering recruitment services to measure the element
of revenue that is attributable to the recruitment based services
that the group provides to clients. The Directors consider that
net fee income and NFI margin are important measurements used by
the Board to evaluate the performance of the Group.
Non-underlying items
The presentation of the alternative performance measure of adjusted
EBITDA, adjusted operating loss and adjusted loss before tax excludes
non-underlying items. The Directors consider that an underlying
profit measure better illustrates the underlying performance of
the Group and allows a more meaningful comparison of performance
across periods. Items are classified as non-underlying by nature
of their magnitude, incidence or unpredictable nature and their
separate identification results in a calculation of an underlying
profit measure that is consistent with that reviewed by the Board
in their monitoring of the performance of the Group. Events which
may give rise to the classification of items as non-underlying include
gains or losses on the disposal of a business, the proceeds from
the sale of assets outside of normal trading activities, restructuring
of a business, transaction costs, litigation and similar settlements,
asset impairments and onerous contracts.
Adjusted EBITDA
Operating profit before non-underlying items and before the deduction
of depreciation, amortisation changes and shared based payments.
This is considered a useful measure, commonly accepted and widely
used when evaluation business performance and used by the Directors
to evaluate performance of the Group and its subsidiaries. Adjusted EBITDA
(GBP 000's) 2022 2021
Operating loss (1,029) (822)
Add back:
Adjustment for amortisation & depreciation 360 460
Adjustment for goodwill impairment 1,952 -
-------- ------
EBITDA 1,283 (362)
Adjustment for share based payment charge/(income) 50 (64)
Add back Non underlying items:
Income from trademark sale (950) -
Non underlying costs 23 553
-------- ------
Adjusted EBITDA 406 127
-------- ------
Adjusted operating loss is equal to operating loss before non-underlying
items. Adjusted Operating loss
(GBP 000's) 2022 2021
Operating loss (1,029) (822)
Add back non underlying items:
goodwill impairment 1,952 0
income from trademark sale (950) 0
non underlying costs 23 553
-------- ------
Adjusted Operating loss (4) (269)
-------- ------
Adjusted loss before tax is calculated as loss before tax and before
non-underlying items Adjusted net loss before tax
(GBP 000's) 2022 2021
Net loss before tax (1,339) (1,103)
Add back non underlying items:
goodwill impairment 1,952 0
income from trademark sale (950) 0
non underlying costs 23 553
-------- --------
Adjusted net loss before tax (314) (550)
-------- --------
Net profit/(loss) before tax and before goodwill
impairment 613 (1,103)
Net debt
Net debt is the amount of bank debt less available cash balances
and is regarded as a useful measure of the level of external debt
utilised by the Group to fund its operations. Net debt is also presented
on a pre-IFRS 16 basis which excludes lease liabilities.
Debtor days
Debtor days or DSO is calculated as the year-end balance on trade
receivables / total revenue *365. Debtor days is regarded as a useful
measure of the efficiency of the business in collecting debts owed
to it by clients.
Creditor days
Creditor days are calculated as the year-end balance of trade payables
/ (contractor costs + operating expenses -employee benefit costs)
*365. Credit days are a useful measure of the efficiency with which
the business pays amounts it owes to suppliers.
Revenue recognition
The Group generates revenue principally through the provision of
recruitment and consultancy services.
To determine whether to recognise revenue, the Group follows a five-step
process:
1. Identifying the contract with the customer;
2. Identifying the performance obligations;
3. Determining the transaction price;
4. Allocating the transaction price to the performance obligations;
and
5. Recognising revenue when and as performance obligations are satisfied.
Revenue is recognised either at a point in time or over time, when
the group satisfies performance obligations by transferring promised
services to its customers. Revenue is measured at the transaction
price, being the amount of consideration to which it is expected
to be entitled in exchange for services to a customer, net of refund
liabilities and value added tax.
Revenue for the provision of recruitment services
The performance obligation is the provision of temporary or permanent
workers to customers. For temporary workers, the performance obligations
are satisfied over time as the customer receives the benefit of
the temporary worker, in line with time worked by the temporary
worker at pre-determined rates. For permanent workers, the performance
obligation is measured at a point in time, which is at the point
that the permanent worker commences employment, as before this time
the Group does not create or enhance an asset for the customer and
there is no enforceable right to payment until then. Refund liabilities
related to permanent workers are calculated based on a probabilistic
estimate using historic refund levels.
The Group presents revenues gross of the costs of the temporary
workers where it acts as principal under IFRS 15 and net of the
costs of temporary workers where it acts as agent. The Group acts
as principal in the large majority of its contracts, where it has
the primary responsibility for fulfilling the promise to supply
a worker to a customer and has control over that supply. The Group
acts as agent where it does not have such control.
Revenue for the provision of consultancy services
Performance obligations on consultancy services contracts are satisfied
over time if the service creates an asset that the customer controls
and the Group has an enforceable right to payment. Revenue is measured
using an input measure, such as days worked as a proportion of total
days to be worked, towards the satisfaction of an obligation.
In obtaining some contracts, the Group may incur a number of
incremental costs, such as commissions paid to sales staff. As the
amortisation period of these costs, if capitalised, would be less
than one year, the Group makes use of the practical expedient in
IFRS 15 and expenses them as incurred.
Other operating income
Other income comprises income received by the Group for the sale
of assets that it owns that are not considered to be related to
its normal trading activity or classified as financing income.
On 30(th) December 2022 the Group sold the rights to the trademarks
registered by group companies in the 'Parity' name for a consideration
of GBP950,000. This represents the sale of an asset owned by the
Group and is a one-off transaction that is not considered part
of the normal trading activities of the group.
Financing income and expenses
Financing expenses comprise interest payable and finance leases
recognised in profit or loss using the effective interest method,
unwinding of the discount on the retirement benefit scheme liabilities,
and net foreign exchange losses that are recognised in the income
statement (see foreign currencies accounting policy). Financing
income comprises the expected return on the retirement benefit
scheme assets, interest receivable on funds invested, dividend
income, and net foreign exchange gains.
Interest income and interest payable is recognised in profit or
loss as it accrues, using the effective interest method. Dividend
income is recognised in the income statement on the date the entity's
right to receive payments is established. Foreign currency gains
and losses are reported on a net basis.
Taxation
Tax on the profit or loss for the year comprises current and
deferred tax. Tax is recognised in the income statement except
to the extent that it relates to items recognised directly in
equity, in which case it is recognised in equity or in other
comprehensive income.
Current tax is the expected tax payable or receivable on the
taxable income or loss for the year, using tax rates enacted
or substantively enacted at the balance sheet date, and any adjustment
to tax payable in respect of previous years.
Deferred tax is provided on temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. The following
temporary differences are not provided for: the initial recognition
of goodwill; the initial recognition of assets or liabilities
that affect neither accounting nor taxable profit other than
in a business combination, and differences relating to investments
in subsidiaries to the extent that they will probably not reverse
in the foreseeable future. The amount of deferred tax provided
is based on the expected manner of realisation or settlement
of the carrying amount of assets and liabilities, using tax rates
enacted or substantively enacted at the balance sheet date.
A deferred tax asset for deductible temporary differences is
not recognised unless it is probable that there will be taxable
profits in the foreseeable future against which the deferred
tax asset can be utilised. A deferred tax asset for unused tax
losses carried forward is recognised on the same basis as for
deductible temporary differences. However, the existence of the
unused tax losses is strong evidence that future taxable profit
may not be available. Therefore, when an entity has a history
of recent losses, the entity recognises a deferred tax asset
arising from unused tax losses only to the extent that there
is convincing evidence that sufficient taxable profit will be
available against which the unused tax losses can be utilised.
Foreign currencies
Company
Transactions in foreign currencies are recorded at the rate ruling
at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies are retranslated at the rate
of exchange ruling at the balance sheet date. All differences
are taken to the income statement.
Non-monetary assets and liabilities that are measured in terms
of historical cost in a foreign currency are translated using
the exchange rate at the date of the transaction. Non-monetary
assets and liabilities denominated in foreign currencies that
are stated at fair value are retranslated to the functional currency
at foreign exchange rates ruling at the dates the fair value
was determined.
Group
On consolidation, the results of overseas operations are translated
into sterling at rates approximating to those ruling when the
transactions took place. All assets and liabilities of overseas
operations are translated at the rate ruling at the reporting
date. Exchange differences arising on translating the opening
net assets at opening rate and the results of overseas operations
at actual rate are recognised in other comprehensive income.
On disposal of a foreign operation, the cumulative exchange differences
recognised in other comprehensive income relating to that operation
up to the date of disposal are transferred to the consolidated
income statement as part of the profit or loss on disposal.
Segmental reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the Chief Operating Decision Maker.
The Chief Operating Decision Maker are the executive directors
on the Group Board.
Intangible assets
Goodwill
Goodwill represents the excess of the cost of acquisition of
a business combination over the Group's share of the fair value
of identifiable net assets of the business acquired.
After initial recognition, goodwill is stated at cost less any
accumulated impairment losses. Goodwill is allocated to cash-generating
units and is not amortised but is tested annually for impairment.
In respect of equity accounted investees, the carrying amount
of goodwill is included in the carrying amount of the investment
in the investee.
Gains and losses on disposal of a business include the carrying
amount of goodwill relating to the business sold in determining
the gain or loss on disposal, except for goodwill arising on
business combinations on or before 31 December 1997 which has
been deducted from shareholders' equity and remains indefinitely
in shareholders' equity.
Software
The carrying amount of software is its cost less any accumulated
amortisation and provision for impairment. Software is amortised
on a straight-line basis over its expected useful economic life
of three to seven years.
Property, plant and equipment
Property, plant and equipment are stated at cost, net of depreciation
and provision for impairment.
Depreciation is provided on all property, plant and equipment
at rates calculated to write off the cost less estimated residual
value of each asset on a straight-line basis over its expected
useful economic life, as follows:
Leasehold improvements The lesser of the asset life and the
remaining length of the lease
Office equipment Between 3 and 5 years
The carrying value of property, plant and equipment is reviewed
for impairment if events or changes in circumstances indicate
the carrying value may not be recoverable.
Impairment of non-financial assets (excluding deferred tax assets)
An impairment loss is recognised for the amount by which the
asset's carrying amount exceeds its recoverable amount, the latter
being the higher of the fair value less costs to sell associated
with the cash generating unit (CGU) and its value in use. Value
in use calculations are performed using cash flow projections
for the CGU to which the goodwill relates, discounted at a pre-tax
rate which reflects the asset specific risks and the time value
of money.
Impairment losses are recognised in profit or loss. Impairment
losses recognised in respect of CGUs are allocated first to reduce
the carrying amount of any goodwill allocated to the units, and
then to reduce the carrying amounts of the other assets in the
unit (group of units) on a pro rata basis.
Goodwill is tested for impairment at each reporting date. The
carrying value of other intangible assets and property, plant
and equipment is reviewed for impairment if events or changes
in circumstances indicate the carrying value may not be recoverable.
For the purpose of impairment testing, assets that cannot be
tested individually are grouped together into the smallest group
of assets that generates cash inflows from continuing use that
are largely independent of the cash inflows of other assets or
groups of assets, being the cash generating unit. The goodwill
acquired in a business combination, for the purpose of impairment
testing, is allocated to CGUs. Subject to an operating segment
ceiling test, for the purposes of goodwill impairment testing,
CGUs to which goodwill has been allocated are aggregated so that
the level at which impairment is tested reflects the lowest level
at which goodwill is monitored for internal reporting purposes.
Goodwill acquired in a business combination is allocated to groups
of CGUs that are expected to benefit from the synergies of the
combination.
An impairment loss in respect of goodwill is not reversed. In
respect of other assets, impairment losses recognised in prior
periods are assessed at each reporting date for any indications
that the loss has decreased or no longer exists. An impairment
loss is reversed if there has been a change in the estimates
used to determine the recoverable amount. An impairment loss
is reversed only to the extent that the asset's carrying amount
does not exceed the carrying amount that would have been determined,
net of depreciation or amortisation, if no impairment loss had
been recognised.
Cash and cash equivalents
Cash and short-term deposits in the consolidated balance sheet
compromise cash at bank and in hand and short-term deposits with
the original maturity of three months or less. For the purpose
of the consolidated cash flow statement, cash and cash equivalents
consist of cash and short-term deposits as defined above. Amounts
drawn down from the asset-based lending facility with Leumi are
shown within loans and borrowings on the consolidated balance
sheet.
Financial instruments
Financial assets and liabilities are recognised when the Group
becomes a party to the contractual provisions of the financial
instrument. Financial assets are derecognised when the contractual
rights to the cash flows expire or when substantially all the
risks and rewards are transferred. A financial liability is derecognised
when it is extinguished, discharged, cancelled or expires.
Except for trade receivables that do not contain a significant
financing component and are measured at the transaction price
in accordance with IFRS 15, all financial assets are initially
measured at fair value adjusted for transaction costs. Financial
assets, other than those designated and effective as hedging
instruments, are classified as either amortised cost, fair value
through profit or loss (FVTPL) or fair value through other comprehensive
income (FVOCI). In the periods presented, the Group has no financial
assets categorised as FVTPL or FVOCI.
The Group's financial assets include cash and cash equivalents
and trade and other receivables. After initial recognition, these
are measured at amortised cost using the effective interest method.
All income and expenses relating to financial assets that are
recognised in profit or loss are presented within finance costs,
except for impairment of trade receivables which is presented
within operating expenses. Unless otherwise indicated, the carrying
amounts of the Group's financial assets are a reasonable approximation
of their fair values.
Impairment provisions are recognised using the expected credit
loss model. Measurement of expected credit losses is determined
by a probability-weighted estimate of credit losses over the
expected life of the financial instrument. The Group makes use
of a simplified approach for trade and other receivables and
contract assets and records impairment as a lifetime expected
credit loss, being the expected shortfalls in contractual cash
flows, considering the potential for default. The Group uses
its historical experience, external indicators and forward-looking
information to calculate the expected credit losses.
Cash and cash equivalents in the statement of financial position
comprise cash at bank and in hand, short term deposits and other
short term liquid investments. In the statement of cash flows,
cash and cash equivalents comprise cash and cash equivalents,
net of bank overdrafts.
The Group's financial liabilities include bank borrowings, finance
leases and trade and other payables. Financial liabilities are
initially measured at fair value and subsequently measured at
amortised cost using the effective interest method. All interest
related charges that are reported in profit and loss are presented
within net finance expenses. In the periods presented, the Group
has no financial liabilities categorised as FVTPL. Unless otherwise
indicated, the carrying amounts of the Group's financial liabilities
are a reasonable approximation of their fair values.
Amounts recoverable on contracts and accrued income
Amounts recoverable on contracts which are expected to benefit
performance and be recoverable over the life of the contracts are
recognised in the statement of financial position within trade
and other receivables and charged to the income statement over
the life of the contract so as to match costs with revenues.
Amounts recoverable on contracts are stated at the net sales value
of work done less amounts received as progress payments on account.
Where progress payments exceed the sales value of work done, they
are included in payables as payments in advance.
Accrued income primarily arises where temporary workers have provided
their services but approved timesheets are outstanding. As such,
the amount incurred and margin earned thereon has yet to be invoiced
onto the client. In making an accrual for time worked by contractors
at the balance sheet date, management make an estimate of the time
worked based on knowledge of the contracts in place, the number
of working days outstanding and experience adjustments from prior
periods.
Leased assets
At the commencement of a lease, the Group recognises a right-of-use
asset and a lease liability. The right-of-use asset is measured
at cost, comprising the initial measurement of the lease liability,
any initial direct costs incurred, an estimate of any restoration
costs and any lease payments made in advance of the lease commencement
date, net of any incentives received. The lease liability is measured
at the present value of the minimum lease payments discounted using
the rate implicit in the lease, or if that cannot be determined,
which is generally the case for the leases in the Group, the Group's
incremental borrowing rate is used. Lease payments to be made under
lease extensions are included when the option to extend is reasonably
certain to be taken up. Subsequent to initial measurement, the
liability will be reduced for payments made and increased for interest.
It is remeasured to reflect any reassessment or modification.
Expected lives of right-of-use assets are determined by reference
to the lease term and depreciated over the lease term on a straight-line
basis.
Provisions
A provision is recognised when the Group has a present legal or
constructive obligation as a result of a past event, that can be
reliably measured and it is probable that an outflow of economic
benefits will be required to settle the obligation. Provisions
are determined by discounting the expected future cash flows at
a pre-tax rate that reflects risks specific to the liability.
From time to time the Group faces the potential of legal action
in respect of employment or other contracts. In such situations,
where it is probable that a payment will be required to settle
the action, provision is made for the Group's best estimate of
the outcome.
Where leasehold properties are surplus to requirements, provisions
are made for the best estimates of the unavoidable net future costs.
Provisions for dilapidation charges that will crystallise at the
end of the period of occupancy are provided for in full on non-serviced
properties.
Pensions
The Group operates a small number of retirement benefit schemes.
With the exception of the 'Parity Retirement Benefit Plan', all
of the schemes are defined contribution plans and the assets are
held in separate, independently administered funds. The Group's
contributions to defined contribution plans are charged to the
income statement in the period to which the services are rendered
by the employees, and the Group has no further obligation to pay
further amounts.
The 'Parity Retirement Benefit Plan' is a defined benefit pension
fund with assets held separately from the Group. This fund has
been closed to new members since 1995 and with effect from 1 January
2005 was also closed to future service accrual.
A defined benefit plan is a post-employment benefit plan other
than a defined contribution plan. The Group's net obligation in
respect of defined benefit pension plans is calculated by estimating
the amount of future benefit that employees have earned in return
for their service in the current and prior periods; that benefit
is discounted to determine its present value, and the fair value
of any plan assets at bid price, and any unrecognised past service
costs are deducted. The liability discount rate is the yield at
the balance sheet date on AA credit rated bonds denominated in
the currency of, and having maturity dates approximating to, the
terms of the Group's obligations. The calculation is performed
by a qualified actuary using the projected unit credit method.
When the calculation results in a benefit to the Group, the recognised
asset is limited to the present value of benefits available in
the form of any future refunds from the plan, reductions in future
contributions to the plan or on settlement of the plan and takes
into account the adverse effect of any minimum funding requirements.
Share capital
Financial instruments issued by the Group are treated as equity
only to the extent that they meet the following two conditions:
(a) they include no contractual obligations upon the company (or
Group as the case may be) to deliver cash or other financial assets
or to exchange financial assets or financial liabilities with another
party under conditions that are potentially unfavourable to the
company (or Group); and
(b) where the instrument will or may be settled in the company's
own equity instruments, it is either a non-derivative that includes
no obligation to deliver a variable number of the company's own
equity instruments or is a derivative that will be settled by the
company's exchanging a fixed amount of cash or other financial assets
for a fixed number of its own equity instruments.
To the extent that this definition is not met, the proceeds of issue
are classified as a financial liability. Where the instrument so
classified takes the legal form of the company's own shares, the
amounts presented in these financial statements for called up share
capital and share premium account exclude amounts in relation to
those shares.
For the purposes of the disclosures given in note 21, the Group
considers its capital to comprise its cash and cash equivalents,
its asset-based bank borrowings, and its equity attributable to
equity holders, comprising issued capital, reserves and retained
earnings, as disclosed in the statement of changes in equity.
Financial guarantee contracts
Where Group companies enter into financial guarantee contracts
and guarantee the indebtedness of other companies within the Group,
the company considers these to be insurance arrangements and
accounts for them as such. In this respect, the company does not
recognise liabilities under the contracts until it becomes probable
that any Group company will be required to make a payment under the
guarantee.
Share-based payment transactions
Share-based payment arrangements in which the Group and Company
receives goods or services as consideration for its own equity instruments
are accounted for as equity-settled share-based payment transactions,
regardless of how the equity instruments are obtained by the Group
and Company.
The grant date fair value of share-based payment awards granted
to employees is recognised as an employee expense, with a corresponding
increase in equity, over the period that the employees become unconditionally
entitled to the awards. The fair value of the options granted is
measured using an option valuation model, taking into account the
terms and conditions upon which the options were granted. The amount
recognised as an expense is adjusted to reflect the actual number
of awards for which the related service and non-market vesting conditions
are expected to be met, such that the amount ultimately recognised
as an expense is based on the number of awards that do meet the
related service and non-market performance conditions at the vesting
date. For share-based payment awards with non-vesting conditions,
the grant date fair value of the share-based payment is measured
to reflect such conditions and there is no true-up for differences
between expected and actual outcomes.
Where the terms and conditions of options are modified before they
vest, the increase in the fair value of the options, measured immediately
before and after the modification, is also charged to the income
statement over the remaining vesting period.
Significant management judgements in applying accounting policies
and estimation uncertainty
When preparing the financial statements, management make a number
of judgements, estimates and assumptions about the recognition
and measurement of assets, liabilities, income and expenses. The
following are the judgements made by management in applying the
accounting policies of the Group and the estimates that have the
most significant effect on the financial statements.
Significant management judgements
Revenue recognition
The main area of judgement in revenue recognition relates to the
determination of whether the Group acts as principal or agent in
its contractual arrangements for the provision of temporary workers
to customers. The factors considered by management to result in
recognition of revenue as principal include that the Group:
* has a direct relationship with the worker and is
responsible for paying the worker;
* has the primary responsibility for organising the
service engagements and fulfilling the promise to
supply a worker to a customer; and
* the Group has control over the supply of the worker.
Estimation uncertainty
Retirement benefit liability
The costs, assets and liabilities of the defined benefit scheme
operated by the Group are determined using methods relying on actuarial
estimates and assumptions. Details of the key assumptions and sensitivities
on those assumptions are set out in note 23. The Group takes advice
from independent actuaries relating to the appropriateness of the
assumptions. Changes in the assumptions used may have a material
effect on the income statement and the statement of financial position
within the next year.
Investments in subsidiaries
The Company reviews its investment in subsidiaries to test for
impairment. The recoverable amounts are determined using discounted
future cash flows of the relevant subsidiaries. In performing these
tests, assumptions are made in respect of future growth rates and
the discount rate to be applied to the future cash flows, as set
out in note 28. Changes in the assumptions used may have a material
effect on the income statement and statement of financial position
within the next year.
2 Segmental information
Factors that management used to identify the Group's reporting
segments
In accordance with IFRS 8 'Operating Segments' the Group's management
structure, and the reporting of financial information to the Chief
Operating Decision Maker (the executive directors on the Board),
have been used as the basis to define reporting segments.
Description of the types of services from which each reportable
segment derives its revenues
During the period the Group derived revenue from two operating
segments relating to customer sectors, being the public sector
and private sector. The reporting of financial information presented
to the chief operating decision maker, being the Group board of
directors, is consistent with these reporting segments. These reporting
segments are supported by a combined back office and therefore
there is no allocation of overheads between sectors.
The accounting policies of the operating segments are the same
as those described in the summary of significant accounting policies.
Public Private Total
sector sector 2022
2022 2022
GBP'000 GBP'000 GBP'000
Revenue 22,616 18,032 40,648
Contractor costs (20,530) (16,654) (37,184)
------------------ --------- --------- ---------
Net fee income 2,086 1,378 3,464
------------------ --------- --------- ---------
Public sector Private Total
2021 sector 2021
2021
GBP'000 GBP'000 GBP'000
Revenue 32,544 14,418 46,962
Contractor costs (29,691) (13,191) (42,882)
------------------ -------------- --------- ---------
Net fee income 2,853 1,227 4,080
------------------ -------------- --------- ---------
No items below net fee income are allocated to segments. All
assets and liabilities are based in the UK and are not split by
operating segment.
3 Revenue
All of the Group's revenue derives from contracts with
customers. Trade receivables, amounts recoverable on contracts and
accrued income as presented in note 17 arise from contracts with
customers. Changes to the Group's contract assets are attributable
solely to the satisfaction of performance obligations.
The Group's revenue disaggregated by pattern of revenue
recognition is as follows:
2022 2021
GBP'000 GBP'000
------------------------------------------ --------- ---------
Services transferred over time 40,484 46,934
Services transferred at a point in time 164 28
------------------------------------------ --------- ---------
Revenue 40,648 46,962
------------------------------------------ --------- ---------
The Group's revenue disaggregated by primary geographical market
is as follows:
2022 2021
GBP'000 GBP'000
----------------- --------- ---------
United Kingdom 37,946 43,967
European Union 2,702 2,994
Other - 1
----------------- --------- ---------
Revenue 40,648 46,962
----------------- --------- ---------
The largest single customer in the public sector contributed 22%
or GBP5.0m to public sector revenue (2021: 26% or GBP8.2m). The
largest single customer in the private sector contributed 79% or
GBP14.3m to private sector revenue (2021: 79% or GBP11.7m).
4 Other operating income
2022 2021
GBP'000 GBP'000
Sale and licence back of Parity trademark in UK 950 -
& EU
------------------------------------------------ --------- ---------
On 30(th) December 2022 the Group sold the rights to the
trademarks registered by group companies in the 'Parity' name for a
consideration of GBP950,000. As part of the transaction the Group
has a perpetual licence to continue to use the trademarks in all
the sectors that it currently operates and has operated in the
past.
5 Operating expenses
Consolidated
--------------------
2022 2021
GBP'000 GBP'000
------------------------------------------- ---- --- --------- ---------
Employee benefit costs
- wages and salaries 1,741 2,818
- social security costs 195 316
- other pension costs 74 86
- Equity settled share-based payment
charge 50 (64)
------------------------------------------------------ --------- ---------
2,060 3,156
---------------------------------------------------- --------- ---------
Depreciation, amortisation and impairment
Amortisation of intangible assets -
software 3 3
Depreciation of owned property, plant
and equipment 10 12
Depreciation of right-of-use assets 346 414
Impairment of right-of-use assets - 31
Goodwill impairment charge (note 12) 1,952 -
------------------------------------------------------ --------- ---------
2,311 460
---------------------------------------------------- --------- ---------
All other operating expenses
Occupancy costs 37 43
IT costs 163 236
Net exchange (gain)/loss 9 15
Other operating costs 863 992
------------------------------------------------------ --------- ---------
1,072 1,286
---------------------------------------------------- --------- ---------
Total operating expenses 5,443 4,902
------------------------------------------------------ --------- ---------
During the year the Group obtained the following services from
the Group's auditors:
Grant Thornton
UK LLP
2022 2021
Consolidated GBP'000 GBP'000
--------------------------------------------------- --------- ---------
Fees payable to the auditor of the Group's annual
financial statements 118 15
Fees payable to the Group's auditor for other - -
services
The audit of the Company's subsidiaries pursuant
to legislation - 67
--------------------------------------------------- --------- ---------
Total 118 82
Tax compliance 24 17
Other services 3 -
--------------------------------------------------- --------- ---------
Total fees 145 99
--------------------------------------------------- --------- ---------
All other services have been performed in the UK.
6 Non-underlying items
2022 2021
GBP'000 GBP'000
--------------------------------------------- --------- ---------
Restructuring costs included in operating
expenses (note 5)
* Costs related to employees 23 502
* Costs related to premises - 31
* Other costs - 20
---------------------------------------------- --------- ---------
23 553
Goodwill impairment charge (note 12) 1,952 -
--------------------------------------------- --------- ---------
Non-underlying costs 1,975 553
Income from sale and licence back of Parity (950) -
trademark in UK & EU (note 4)
--------------------------------------------- --------- ---------
Total non-underlying items 1,025 553
---------------------------------------------- --------- ---------
Items are classified as non-underlying by nature of their
magnitude, incidence or unpredictable nature and their separate
identification results in a calculation of an underlying profit
measure that is consistent with that reviewed by the Board in their
monitoring of the performance of the Group.
Non-underlying items during 2022 include costs related to
payments made to employees engaged in the termination of the BAT
managed service contract.
7 Average staff numbers
The average number of staff employed by the Group during the
year was as follows:
2022 2021
Number Number
------- -------- --------
Group 37 38
-------- -------- --------
The total above includes 4 (2021: 4) employees of the
Company.
At 31 December 2022, the Group had 35 employees (2021: 35).
8 Finance costs
2022 2021
GBP'000 GBP'000
------------------------------------------------- --------- ---------
Interest expense on financial liabilities 143 65
Interest expense on lease liabilities 9 8
Interest income on lease assets (2) (3)
Net finance costs in respect of post-retirement
benefits 160 211
--------------------------------------------------- --------- ---------
310 281
------------------------------------------------- --------- ---------
The interest expense on financial liabilities represents
interest paid on the Group's asset-based financing facilities. A 1%
increase in the base rate would have increased annual borrowing
costs by approximately GBP39,000 (2021: GBP25,000).
9 Share-based payments
The Group operates several share-based reward schemes for
employees:
-- HMRC approved schemes for Executive Directors and senior staff; and
-- an unapproved scheme for Executive Directors and senior staff.
Until May 2021 the Group operated a Save As You Earn Scheme,
this was closed for all new participants in May 2021 and current
participants were granted six months to either purchase shares at
the exercise price of 10 pence per share or to withdraw their funds
from the scheme. As at the end of 2021 all funds were withdrawn and
the Save As You Earn Scheme was closed.
Under the approved and unapproved schemes, options vest if the
share price averages a target price for a defined period (either 5
consecutive days or 30 consecutive day) over a three-year period
from the date of grant. Options lapse if the individual leaves the
Group, except under certain circumstances such as leaving by reason
of redundancy, when the options lapse 12 months after the leaving
date.
All employee options have a maximum term of ten years from the
date of grant. The total share-based remuneration recognised in the
income statement was an expense of GBP50,000 (2021: income of
GBP64,000). Share-based remuneration relating to key management
personnel is disclosed in note 26.
2022 2021
Weighted Weighted
average exercise 2022 average exercise 2021
price (p) Number price (p) Number
-------------------------- ------------------ ---------- ------------------ ------------
Outstanding at beginning
of the year 7 8,010,000 9 11,919,040
Granted during the year - - 7 6,000,000
Exercised during the - - - -
year
Lapsed during the year - - (9) (9,909,040)
-------------------------- ------------------ ---------- ------------------ ------------
Outstanding at the end
of the year 7 8,010,000 7 8,010,000
-------------------------- ------------------ ---------- ------------------ ------------
The exercise price of options and warrants outstanding at the
end of the year and their weighted average contractual life fell
within the following ranges:
2022 2021
Weighted Weighted
average contractual 2021 average contractual
2022 life (years) 2022 Exercise life (years) 2021
Exercise Number price (p) Number
price (p)
------------ ----------------------- ------------ -------------- ----------------------- -------------
7-11 8 8,000,000 7-11 9 8,000,000
11-17 - - 11-17 - -
17-28 - 10,000 17-28 1 10,000
8,010,000 8,010,000
------------ ----------------------- ------------ -------------- ----------------------- -------------
Of the total number of options and warrants outstanding at the
end of the year 10,000 (2021: 10,000) had vested and were
exercisable at the end of the year. The weighted average exercise
price of those options was 26 pence (2021: 26 pence).
No options or warrants were exercised during the year (2021:
none).
No options or warrants were granted during the year (2021:
6,000,000). The weighted average fair value of options and warrants
granted in 2021 was 1 pence.
The following information is relevant in determining the fair
value of options or warrants granted during the year under
equity-settled share-based remuneration schemes operated by the
Group. There are no cash-settled schemes.
2022 2021
Option valuation model N/a Stochastic
Weighted average share price at grant date
(p) N/a 7
Weighted average exercise price (p) N/a 7
Weighted average contractual life (years) N/a 10
Weighted average expected life (years) N/a 5
Expected volatility N/a 47.7-48.0%
Weighted average risk-free rate N/a 0.61%
Expected dividend growth rate N/a 0%
----------------------------------------------- --------- ------------
The volatility assumption is calculated as the historic
volatility of the share price over a 5 year period prior to grant
date.
Share options issued to defined benefit pension scheme
In December 2010 the Group issued 1,000,000 share options in
Parity Group plc to the pension scheme at an exercise price of 9
pence per share. These options may be exercised at the discretion
of the Trustees; they vested on grant and have no expiry date. Any
gain on exercise is to be used to reduce the scheme deficit. These
options were valued using the stochastic method. The share price on
the grant date was 15.75 pence. Whilst the options do not have an
expiry date, for valuation purposes it was assumed that the
expected life of the options is 8 years. The expected volatility is
64.2% and the average risk-free rate assumed was 3.4%.
10 Taxation
2022 2021
GBP'000 GBP'000
--------------------------------------------- ---- --- --------- ---------
Current tax
Current tax on profit for the year 75 -
Total current tax expense 75 -
--------------------------------------------- ---- --- --------- ---------
Deferred tax
Accelerated capital allowances 52 (2)
Recognition of deferred tax asset on past
trading losses 290 (678)
Origination and reversal of other temporary
differences - 98
Adjustments in respect of prior periods (41) 115
Change in corporation tax rate - -
-------------------------------------------------------- --------- ---------
Total deferred tax charge 301 (467)
-------------------------------------------------------- --------- ---------
Tax charge 376 (467)
-------------------------------------------------------- --------- ---------
The adjustment in respect of prior periods of GBP41,000 (2021:
GBP115,000) largely relates to decisions to claim or disclaim
capital allowances.
Trade and other payables includes an accrual for GBP75,000
representing the current tax on profits for 2022 (2021: nil)
The Group's profits for this accounting period are subject to
tax at a rate of 19% (2021: 19%).
The reasons for the difference between the actual tax credit for
the year and the standard rate of corporation tax in the UK applied
to profit for the year are as follows:
2022 2021
GBP'000 GBP'000
Loss before tax (1,339) (1,103)
----------------------------------------------------------- -------- --------
Expected tax credit based on the standard rate
of UK
corporation tax of 19% (2021: 19%) (254) (210)
Expenses not allowable for tax purposes 8 -
Adjustments in respect of prior periods (41) 115
Tax losses not recognised 259 253
Tax losses recognised - (678)
Goodwill impairment not allowable 371 -
Change in corporation tax rate 40 33
Other (7) 20
----------------------------------------------------------- -------- --------
Tax charge 376 (467)
----------------------------------------------------------- -------- --------
Tax on each component of other comprehensive income is as
follows:
2022 2021
Before After Before After
tax Tax tax tax Tax tax
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- --------- ---------- --------- --------- ---------- ---------
Remeasurement of defined benefit
pension scheme (841) 290 (551) 1,620 (567) 1,053
---------------------------------- --------- ---------- --------- --------- ---------- ---------
11 Earnings per ordinary share
Basic earnings per share is calculated by dividing the basic
earnings for the year by the weighted average number of fully paid
ordinary shares in issue during the year.
Diluted earnings per share is calculated on the same basis as
the basic earnings per share with a further adjustment to the
weighted average number of fully paid ordinary shares to reflect
the effect of all dilutive potential ordinary shares.
Weighted Weighted
average average
number Loss number
of per of Loss
Loss shares share Loss shares per share
2022 2022 2022 2021 2021 2021
GBP'000 '000 Pence GBP'000 '000 Pence
---------------------------- ------------ --------- -------- ---------- --------- --------------
Basic (1,715) 103,075 (1.66) (636) 102,854 (0.62)
Effect of dilutive options - - - - - -
Diluted (1,715) 103,075 (1.66) (636) 102,854 (0.62)
As at 31 December 2022 the number of ordinary shares in issue
was 103,075,633 (2021: 103,075,633). There were 8,010,000 options
that had a potential dilutive effect in 2022 (2021: 8,010,000).
12 Goodwill
The carrying amount of goodwill is allocated to the Group's two
separate continuing cash generating units (CGUs), being Parity
Professionals Limited and Parity Consultancy Services Limited.
Carrying amounts are as follows:
Parity Consultancy
Parity Professionals Services
Limited Limited Total
GBP'000 GBP'000 GBP'000
------------------------------- ----------------------- ------------------- ----------
Carrying value
Balance at 1 January 2021 and
31 December 2021 2,642 1,952 4,594
------------------------------- ----------------------- ------------------- ----------
Impairment charge - (1,952) (1,952)
------------------------------- ----------------------- ------------------- ----------
Balance at 31 December 2022 2,642 - 2,642
------------------------------- ----------------------- ------------------- ----------
Goodwill was tested for impairment in accordance with IAS 36 at
the year end and an impairment charge of GBP1,952,000 was
recognised to reflect the cessation during 2022 of the consultancy
activities undertaken by Parity Consultancy Services Limited to
which the goodwill from historic acquisitions related.
The recoverable amounts of the CGUs are based on value in use
calculations using the pre-tax cash flows based on forecasts
approved by management for 2023. Years from 2024 to 2028 are based
on the forecast for 2023 projected forward at expected growth
rates, with growth of 2% assumed beyond these years which is line
with the long-term growth rates for the United Kingdom. This
approach is considered prudent based on current expectations of the
2023 long-term growth rate.
Major assumptions are as follows:
Parity Professionals Parity Consultancy
Limited Services Limited
% %
2022
Discount rate 17.2 n/a
Forecast revenue growth 4-27 n/a
Operating margin 2022 1 n/a
Operating margin 2023 onward 1.4-4.4 n/a
2021
Discount rate 11.5 11.5
Forecast revenue growth 5.0-11.5 11.3-14.9
Operating margin 2021 3.3 14.0
Operating margin 2022 onward 4.8-5.8 14.7-15.3
Discount rates are based on the Group's weighted average cost of
capital.
Forecast revenue growth rates are based on past experience and
future expectations of economic conditions. Growth for the Parity
Professionals Limited CGU is assumed to be higher than the
long-term growth rate for the UK economy due to the following
factors:
-- There is focused investment in growing new clients and
service lines that leverage high value talent pools created by the
Group in servicing its existing clients;
-- The business plans to invest in additional headcount to
support key areas of new business within recruitment and permanent
recruitment; and
-- Market indicators and recent engagements with clients support
the increased demand for high skilled IT and data professionals and
help underwrite the growth forecasts.
A 10% movement in the value of any of the underlying assumptions
used in the discounted cash flow forecasts would not lead to the
carrying value of goodwill being materially in excess of its
recoverable amount.
13 Other intangible assets
Software Intellectual Total
property
2022 2021 2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- -------- -------- -------- -------- -------- --------
Consolidated
Cost
At 1 January 408 408 81 - 489 408
Additions - - 107 81 107 81
At 31 December 408 408 188 81 596 489
--------------------- -------- -------- -------- -------- -------- --------
Accumulated amortisation
At 1 January 405 402 - - 405 402
Charge for the year 3 3 - - 3 3
At 31 December 408 405 - - 408 405
--------------------- -------- -------- -------- -------- -------- --------
Net book value - 3 188 81 188 84
--------------------- -------- -------- -------- -------- -------- --------
In 2021 and 2022 the Group made an investment in the development
of a data warehouse to support the ongoing business operations. The
additions to Intellectual Property represent the costs associated
with building the data warehouse and creating the data asset within
the data warehouse. This development was completed at the end of
December 2022.
As at 31 December 2022, the Group had no capital commitments
contracted for but not provided for the purchase of intangible
assets (2021: GBPnil).
14 Property, plant and equipment
Office equipment Total
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- ---------- --------- -------- --------
Consolidated
Cost
At 1 January 208 204 208 204
Additions 5 4 5 4
At 31 December 213 208 213 208
----------------------------------- ---------- --------- -------- --------
Accumulated depreciation
At 1 January 193 181 193 181
Charge for the year 10 12 10 12
At 31 December 203 193 203 193
----------------------------------- ---------- --------- -------- --------
Net book value 10 15 10 15
----------------------------------- ---------- --------- -------- --------
As at 31 December 2022, the Group had no capital commitments contracted
for but not provided for the purchase of property, plant and equipment
(2021: GBPnil).
15 Leases
The Group holds leases for its main office premises. Each lease
is reflected on the balance sheet as a right-of-use asset and a
lease liability unless exempt. The statement of financial position
includes the following amounts in relation to leases where the
Group is a lessee:
2022 2021
GBP'000 GBP'000
--------------------- --------- ---------
Right-of-use assets
Buildings 174 149
IT equipment - -
--------------------- --------- ---------
174 149
--------------------- --------- ---------
Lease liabilities
Current 203 242
Non-current 14 29
----------------------- --------- ---------
217 271
--------------------- --------- ---------
Additions to right-of-use assets during the year were GBP370,000
(2021: GBP345,000). The total cash outflow for lease liabilities
during the year was GBP434,000 (2021: GBP490,000).
Amounts recognised in profit or loss in respect of the above
leases are as follows:
2022 2021
GBP'000 GBP'000
-------------------------------------------- --------- ---------
Depreciation charge on right-of-use assets
* Buildings 346 414
- -
* IT equipment
Impairment charge on right-of-use-assets
* Buildings - 31
---------------------------------------------- --------- ---------
Total depreciation and impairment charge
on right-of-use assets 346 445
---------------------------------------------- --------- ---------
Rent concession - -
-------------------------------------------- --------- ---------
Interest expense included in finance costs 9 8
---------------------------------------------- --------- ---------
Future minimum lease payments at 31 December 2022 were as
follows:
Minimum Present
payments Interest value
2022 2022 2022
GBP'000 GBP'000 GBP'000
--------------------------- --------- --------- --------
Less than one year 203 0 203
Between one and two years 14 0 14
217 0 217
--------------------------- --------- --------- --------
At 31 December 2022, the Group was committed to GBPnil (2021:
GBPnil) of future lease payments in respect of leases not yet
commenced.
All leases held during 2022 were accounted for under IFRS
16.
16 Deferred taxation
Consolidated
------------------
2022 2021
GBP'000 GBP'000
----------------------------------------------------- -------- --------
At 1 January 528 627
Recognised in other comprehensive income
Remeasurement of defined benefit pension scheme 290 (567)
Recognised in the income statement
Adjustments in relation to prior periods (41) (115)
Recognition of deferred tax asset for prior trading
losses (294) 678
Capital allowances in excess of depreciation 52 2
Other short-term timing differences (14) (97)
At 31 December 521 528
----------------------------------------------------- -------- --------
The deferred asset of GBP521,000 (2021: GBP528,000)
comprises:
Consolidated
--------------------
2022 2021
GBP'000 GBP'000
---------------------------------------------- --------- ---------
Depreciation in excess of capital allowances 511 520
Other short-term timing differences 10 8
Trading losses 444 678
Retirement benefit asset (444) (678)
---------------------------------------------- --------- ---------
521 528
---------------------------------------------- --------- ---------
A deferred tax asset for unused tax losses carried forward is
normally recognised on the same basis as for deductible temporary
differences. However, the existence of the unused tax losses is
itself strong evidence that future taxable profit may not be
available. Therefore, when an entity has a history of recent
losses, the entity recognises a deferred tax asset arising from
unused tax losses only to the extent that there is convincing
evidence that sufficient taxable profit will be available against
which the unused tax losses can be utilised.
The Directors believe that the deferred tax asset recognised is
recoverable based on the future earning potential of the Group and
the individual subsidiaries. The forecasts for Parity Professionals
Limited support the unwinding of the deferred tax asset.
At the balance sheet date, the Directors also considered whether
recognising a deferred tax asset in Parity Consultancy Services
Limited was appropriate. This company has a calculated surplus on
its defined benefit pension scheme as at the balance sheet date of
GBP1,269,000. With a statutory tax rate of 35% levied on surplus
pension payments paid to employers there is a potential deferred
tax liability for 2022 of GBP444,000 (2021: GBP678,000). Parity
Consultancy Services Limited currently has a deferred tax asset of
GBP240,000 (2021: GBP272,000) which can be offset against the
deferred tax liability to be unwound on the defined benefit
scheme.
The Group has unrecognised carried forward tax losses of
GBP32,912,000 (2021: GBP32,679,000). The Group has unrecognised
capital losses carried forward of GBP282,441,000 (2021:
GBP282,441,000). These losses may be carried forward
indefinitely.
17 Trade and other receivables
Consolidated
-----------------------
2022 2021
GBP'000 GBP'000
------------------------------- ----------- ----------
Amounts falling due within
one year:
Trade receivables 2,746 2,116
Accrued income 2,283 2,435
Amounts owed by subsidiary - -
undertakings
Other receivables 592 75
Prepayments 288 142
-------------------------------
5,909 4,768
------------------------------- ----------- ----------
Amounts falling due after one
year:
Amounts owed by subsidiary - -
undertakings
Other receivables - 29
------------------------------- ----------- ----------
- 29
Total 5,909 4,797
------------------------------- ----------- ----------
The fair values of trade and other receivables are not
considered to differ from the values set out above.
GBP2,746,000 (2021: GBP2,116,000) of the Group's trade
receivables and GBP2,283,000 (2021: GBP2,435,000) of the total of
the Group's accrued income and amounts recoverable on contracts,
are pledged as collateral for the asset-based borrowings. These
borrowings fluctuate daily and at 31 December 2022 totalled
GBP4,356,000 (2021: GBP2,279,000).
The movement in accrued revenue on contracts during the period
is shown below:
Contract Assets
--------------------
2022 2021
GBP'000 GBP'000
------------------------------------------ --------- ---------
At 1 January 2,435 3,591
Billed and cash received during the year (2,435) (3,591)
Amounts accrued at year end 2,283 2,435
------------------------------------------ --------- ---------
At 31 December 2,283 2,435
------------------------------------------ --------- ---------
The Group records impairment losses on its trade receivables
separately from gross receivables. Factors considered in making
provisions for receivables include the ability of the customer to
settle the debt, the age of the debt and any other circumstance
particular to the transaction that may impact recoverability.
The balance of impaired losses for the Group at 31 December 2022
was GBPnil (2021: GBPnil). All debts at 31 December 2022 are
considered to be recoverable.
A review of and simplification of the group structure is
underway that will result in a consolidation and netting of amounts
due to and from subsidiary undertakings and as a result all amounts
due to and from subsidiary undertakings are considered as
current.
As at 31 December 2022 trade receivables of GBP2,244,000 (2021:
GBP523,000) were past due but not impaired and relate to customers
where there is no evidence of unwillingness or of an inability to
settle the debt. Included within the past due amount is
GBP1,479,000 due from a single client, the full amount of which has
since been paid by the client. The ageing of Group trade
receivables is as follows:
2022 2021
Gross Impaired Total Gross Impaired Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- --------- --------- --------- --------- --------- ---------
Not past due 502 - 502 1,593 - 1,593
31-60 days and past
due 757 - 757 310 - 310
61-90 days 1,165 - 1,165 131 - 131
>90 days 322 - 322 82 - 82
--------------------- --------- --------- --------- --------- --------- ---------
Total 2,746 - 2,746 2,116 - 2,116
--------------------- --------- --------- --------- --------- --------- ---------
The Group applies the IFRS9 simplified approach to measuring
expected credit losses which use a lifetime expected loss allowance
for all trade receivables and the credit loss is not material.
Other receivables in the Group were not past due and not
impaired.
18 Loans & borrowings
Consolidated
--------------------
2022 2021
GBP'000 GBP'000
------------------------------------------------ --------- ---------
Current
Bank and other borrowings due within one year
or on demand:
Asset-based financing facility 4,356 2,279
Other borrowings - -
------------------------------------------------ --------- ---------
Total 4,356 2,279
------------------------------------------------ --------- ---------
Changes in liabilities from financing activities
Loans and borrowings
GBP000
-------------------------------------------------- ---------------------
Balance at 1 January 2022 2,279
New borrowings 2,077
Balance at 31 December 2022 4,356
-------------------------------------------------- ---------------------
Further details of the Group's banking facilities are given in
note 21.
19 Trade and other payables
Consolidated
-------------------------
2022 2021
GBP'000 GBP'000
--------------------------------------------------- ------------ -----------
Amounts falling due within one year:
Payments in advance - 11
Trade payables 2,368 2,494
Amounts due to subsidiary undertakings - -
Other tax and social security payables 296 367
Other payables and accruals 676 736
---------------------------------------------------
Total 3,340 3,608
--------------------------------------------------- ------------ -----------
The fair value of trade and other payables has not been separately
disclosed as, due to their short duration, the Directors consider
the carrying amounts recognised in the statement of financial position
to be a reasonable approximation of their fair value.
A review of and simplification of the group structure is underway
that will result in a consolidation and netting of amounts due
to and from subsidiary undertakings and as a result all amounts
due to and from subsidiary undertakings are considered as current
liabilities.
20 Provisions
Leasehold
Consolidated dilapidations
GBP'000
------------------------------------- ----------------
At 31 December 2021 and 31 December
2022 42
------------------------------------- ----------------
Due within one year -
Due after one year 42
Total 42
------------------------------------- ----------------
Leasehold dilapidations
Leasehold dilapidations relate to the estimated cost of returning
leasehold properties to their original state at the end of the
lease in accordance with the lease terms. Dilapidation charges
that will crystallise at the end of the period of occupancy are
provided for in full on all properties. Based on current lease
expiry dates it is estimated these provisions will be settled over
a period of one to three years. The main uncertainty relates to
the estimation of the costs that will be incurred at the end of
the lease.
21 Financial instruments - risk management
The Group is exposed to risks that arise from its use of financial
instruments. This note describes the Group's objectives, policies
and processes for managing those risks and the methods used to
measure them. Further quantitative information in respect of these
risks is presented throughout these financial statements.
There have been no substantive changes in the Group's exposure
to financial instrument risks and the methods used to measure them
from previous periods unless otherwise stated in this note.
Principal financial instruments
The principal financial instruments used by the Group, from
which financial instrument risk arises, are trade receivables, cash
and cash equivalents, trade and other payables and bank
borrowings.
A summary of the amortised cost by category of the financial
instruments held by the Group is provided below:
Amortised
cost
Consolidated GBP'000
----------------------------------------- ----------
As 31 December 2022
Financial assets
Cash and cash equivalents 2,053
Trade and other short-term receivables 5,080
------------------------------------------ ----------
7,133
----------------------------------------- ----------
Financial liabilities
Borrowings 4,356
Lease liabilities 217
Trade and other short-term payables 3,044
------------------------------------------ ----------
7,617
----------------------------------------- ----------
As 31 December 2021
Financial assets
Non-current trade and other receivables 29
Cash and cash equivalents 1,121
Trade and other short-term receivables 4,626
------------------------------------------ ----------
5,776
----------------------------------------- ----------
Financial liabilities
Asset-based financing facility 2,279
Lease liabilities 272
Trade and other short-term payables 3,597
------------------------------------------ ----------
6,148
----------------------------------------- ----------
Fair values of financial instruments
The fair values of all of the Group's and the Company's
financial instruments are the same as their carrying values.
General objectives, policies and processes - risk management
The Group is exposed through its operations to the following
financial instrument risks: credit risk; liquidity risk; interest
rate risk; and foreign currency risk.
The policy for managing these risks is set by the Board
following recommendations from the Chief Financial Officer. The
overall objective of the Board is to set policies that seek to
reduce risk as far as possible without unduly affecting the Group's
competitiveness and flexibility. The policy for each of the above
risks is described in more detail below.
Credit risk
Credit risk arises from the Group's trade and other receivables.
It is the risk that the counterparty fails to discharge their obligation
in respect of the instrument.
The Group is mainly exposed to credit risk from credit sales. It
is Group policy to assess the credit risk of new customers before
entering contracts. Such credit ratings are then factored into
the credit assessment process to determine the appropriate credit
limit for each customer. The Group does not collect collateral
to mitigate credit risk.
The Group operates primarily in the UK with 93% of generated revenues
from the UK (2021: 94%). Approximately 56% (2021: 69%) of the Group's
turnover is derived from the public sector. The largest customer
balance represents 35% (2021: 27%) of the trade receivables balance.
Quantitative disclosures of the credit risk exposure in relation
to financial assets are set out below. Further disclosures
regarding trade and other receivables, which are neither past due
nor impaired, are provided in note 17.
2022 2021
Carrying Maximum Carrying Maximum
value exposure value exposure
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- --------- ---------- --------- ----------
Financial assets
Cash and cash equivalents 2,053 2,053 1,121 1,121
Trade and other receivables 5,080 5,080 4,655 4,655
-----------------------------
7,133 7,133 5,776 5,776
----------------------------- --------- ---------- --------- ----------
Interest rate risk
Interest rate risk is the risk that the fair value or future cash
flows of a financial instrument will fluctuate because of changes
in interest rates.
It is Group policy that all external Group borrowings are drawn
down on the asset-based financing facilities arranged with our bankers
which bear a floating rate of interest based on the Leumi base rate.
Borrowings against the asset-based financing facilities are typically
drawn or repaid on a daily basis in order to minimise borrowings
and interest costs and transaction charges. Although the Board accepts
that this policy neither protects the Group entirely from the risk
of paying rates in excess of current market rates, nor eliminates
the cash flow risk associated with interest payments, it considers
that it achieves an appropriate balance of these risks.
Throughout 2022 the Group's variable rate borrowings were denominated
in Sterling and Euro. Interest costs on borrowings from the asset-based
financing facility with Leumi ABL in 2022 were charged at 2.0% above
base rate (2021: 2.0%) for the borrowing against the billed receivable
and 2.9% for borrowings against the unbilled receivable (2021: 2.9%).
The Leumi facility has an initial 3 year term of commitment that
has recently been extended until October 2025, although amounts
are repayable upon demand under certain circumstances such as default.
If interest rates on borrowings had been 1% higher/lower throughout
the year with all other variables held constant, the loss after
tax for the year would have been approximately GBP39,000 higher/lower
(2021: GBP25,000) and net assets GBP39,000 lower/higher (2021: GBP25,000).
The Directors consider a 2% change in base rates is the maximum
likely change over the next year, being the period to the next point
at which these disclosures are expected to be made.
Foreign exchange risk
Foreign currency risk is the risk that the fair value or future
cash flows of a financial instrument will fluctuate because of changes
in foreign exchange rates.
The Group no longer has any active overseas operations but does
retain certain overseas subsidiaries that are not trading. The Group's
net assets arising from overseas operations are exposed to currency
risk resulting in gains or losses on retranslation into sterling.
The asset exposure is mainly in respect of intercompany balances.
The Group does not hedge its net investment in overseas operations
as it does not consider that the potential financial impact of such
hedging techniques warrants the reduction in volatility in consolidated
net assets.
The business has limited transactions in foreign currency. The hedging
of individual contracts is considered on a case by case basis. Owing
to the small value and volume of such contracts no hedging transactions
were entered in 2022 or 2021.
During 2014, the underlying denomination of a large intercompany
balance between the Company and one of the Group's inactive overseas
subsidiaries was revised, whereby the denomination of the loan was
revised from Sterling to Euros and thus subject to exchange rate
fluctuations in the books of the Company. In 2022 the Company recorded
a translation loss of GBP1,568,000 (2021: gain of GBP1,965,000).
As at 31 December 2022, the loan balance due by the Company, translated
into Sterling, was GBP30,426,000 (2021: GBP28,066,000).
The currency profile of the Group's net financial assets was as
follows:
Functional currency of individual entity
Sterling Euro Total
2022 2021 2022 2021 2022 2021
Net foreign currency financial GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
assets
---------------------------------- --------- --------- ----------- --------- --------- -----------
Sterling - - (2,548) (2,462) (2,548) (2,462)
Euro (30,073) (27,279) - - (30,073) (27,279)
US Dollar - 4 - - - 4
----------------------------------
Total net exposure (30,073) (27,275) (2,548) (2,462) (32,621) (29,737)
---------------------------------- --------- --------- ----------- --------- --------- -----------
Sensitivity analysis - Group
If the exchange rate between Sterling and the Euro had been 10%
higher/lower at the balance sheet date, with all other variables
held constant, the effect on equity for the year would have been
approximately GBP3,007,000 higher/lower (2021: GBP2,728,000). A 10%
fluctuation in any other currency exchange rate would not have a
significant impact on profit and loss, nor equity.
Liquidity risk
Liquidity risk arises from the Group's management of working
capital and the finance charges on its borrowings under its
asset-based financing arrangements. It is the risk that the Group
will encounter difficulty in meeting its financial obligations as
they fall due.
The liquidity of each Group entity is managed centrally, with daily
transfers to operating entities to maintain a pre-determined cash
balance. Normal supplier terms range from 2 weeks to 30 days. The
level of the Group facility is approved periodically by the Board
and negotiated with the Group's current bankers. At the reporting
date, cash flow projections were considered by the Board and the
Group is forecast to have sufficient funds and available funding
facilities to meet its obligations as they fall due.
The following table sets out the contractual maturities
(representing undiscounted contractual cash flows) of financial
liabilities:
Consolidated Between
Up to 1 month Over
At 31 December 2022 1 month and 1 1 year Total
GBP'000 year GBP'000 GBP'000
GBP'000
-------------------------- ---------- --------- ---------- ----------
Trade and other payables 3,340 - - 3,340
Lease liabilities 203 14 - 217
Borrowings 4,356 - - 4,356
-------------------------- ---------- --------- ---------- ----------
Total 7,899 14 - 7,899
-------------------------- ---------- --------- ---------- ----------
Between
Up to 1 month Over
At 31 December 2021 1 month and 1 1 year Total
GBP'000 year GBP'000 GBP'000
GBP'000
-------------------------- ---------- --------- ---------- ----------
Trade and other payables 3,597 - - 3,597
Lease liabilities 243 29 - 272
Borrowings 2,279 - - 2,279
-------------------------- ---------- --------- ---------- ----------
Total 6,119 29 - 6,148
-------------------------- ---------- --------- ---------- ----------
More detail on trade and other payables is given in note 19.
Capital disclosures
The capital structure of the Group consists of cash and cash
equivalents, equity attributable to equity holders, and asset-based
financing. There is no other long-term external debt, except for
lease liabilities which are explained more fully in note 15.
During 2022 the Group used an asset-based finance facility with
Leumi ABL which is still being utilised. The facility enables the
Group to borrow against both trade debt and accrued income and the
current Leumi facility provides for borrowing of up to GBP9.0m
depending on the availability of appropriate assets as
security.
The Group's and Company's objectives when maintaining capital
are:
-- to safeguard the entity's ability to continue as a going
concern, so that it can continue to provide returns for
shareholders and benefits for other stakeholders; and
-- to provide an adequate return to shareholders by pricing
products and services commensurately with the level of risk.
The Group's net debt position is as follows:
2022 2021
Consolidated GBP'000 GBP'000
----------------------------------- --------- ---------
Cash and cash equivalents 2,053 1,121
Asset-based borrowings (4,356) (2,279)
Net debt before lease liabilities (2,303) (1,158)
Lease liabilities (217) (272)
Net debt (2,520) (1,430)
----------------------------------- --------- ---------
The Board regularly reviews the adequacy of resources available
and considers the options available to increase them. The
asset-based borrowing facility contains certain externally imposed
financial covenants which have been met throughout the period.
The Company does not currently have distributable reserves
available for dividend payments. A capital reconstruction will be
necessary to create reserves available for distribution. The Board
will keep possible capital reconstruction options under review.
22 Reserves
The Board is not proposing a dividend for the year (2021: nil
pence per share).
The following describes the nature and purpose of each reserve
within shareholders' equity:
Share capital
Share capital consists of ordinary share capital and previously
consisted of deferred share capital.
Ordinary share capital
Share capital is the amount subscribed for ordinary shares at
nominal value. During 2022, no new ordinary shares were issued
(2021: 451,613). No share options were exercised during the year
(2021: none).
Share premium reserve
Share premium is the amount subscribed for share capital in
excess of nominal value. During 2022 no new ordinary shares were
issued (2021: 451,613 at a premium of 5.75p per share).
Capital redemption reserve
A capital redemption reserve of GBP14,319,000 was created during
2017 when the Directors resolved to cancel the deferred shares of
Parity Group plc.
Other reserves
Other reserves of the Group relate principally to a reserve
created following a change of the Group's ultimate parent and a
corresponding Scheme of Arrangement in July 1999, and a reserve
created following the reorganisation of the Group's capital
structure in 2002 that resulted in the Company increasing its
investment in subsidiary undertakings.
Retained earnings
Retained earnings represent the cumulative net gains and losses
recognised in the income statement.
23 Pension commitments
The Group operates a small number of pension schemes. With the
exception of the Parity Group Retirement Benefits Plan, all of the
schemes are defined contribution plans and the assets are held in
separately administered funds. Contributions to defined
contribution schemes during the year were GBP74,000 (2021:
GBP86,000).
Defined benefit plan
In March 1995, the Group established the Parity Retirement
Benefits Plan, renamed as the Parity Group Retirement Benefits Plan
("the Plan"), following a Scheme of Arrangement in 1999, in order
to facilitate the continuance of pension entitlements for staff
transferring from other schemes following acquisitions in 1994. The
Plan is governed by the Trustees of the plan and is administered by
Cartwright Group Limited in accordance with the Trust Deed and
Rules, solely for the benefit of its members and other
beneficiaries. The Trustees comprise an independent Chairman, one
member representative and one employer representative. It is a
funded defined benefit scheme and has been closed to new members
since 1995. With effect from 1 January 2005 this scheme was also
closed to future service accrual and future contributions paid into
money purchase arrangements.
The weighted average liability duration is approximately 10
years (2021: 13 years) and can be attributed to the scheme members
as follows:
Weighted
Number average liability
of members duration
(years)
------------------- ------------- -------------------
Pensioner members 62 9.9
Deferred members 5 13.8
------------------- ------------- -------------------
Total 67 10
------------------- ------------- -------------------
There was one retirement during the year (2021: none). There was
a reduction by one member during the year (2021: reduction of two
members).
The Plan is funded by the Group based on the triennial actuarial
valuation of the scheme's technical provisions. The actuarial
valuation is subject to more prudent assumptions than the
accounting valuation under IAS 19. Contribution levels were revised
in September 2022. Contributions of GBP13,574 per month, increasing
in line with the increase in RPI in the 12 months ended in the
previous September, are to be paid, with the first increase in
January 2023. The final contribution will be in October 2024. There
will also be contributions to meet the scheme's running costs based
on a budget agreed between the trustees of the scheme and the
Group. For the year total contributions including contributions to
running costs were GBP331k (2021: GBP322k) Funding requirements are
formally set out in the Statement of Funding Principles, Schedule
of Contributions and Recovery Plan agreed between the Trustees and
the Group.
The valuation for IAS 19 has been provided by Cartwright Group
Limited, a company that specialises in providing actuarial
services, as at 31 December 2022.
Principal actuarial assumptions
2022 2021
----------------------------------------- --------- ---------
Rate of increase of pensions in payment 3.6-3.9% 3.8-4.0%
Discount rate 4.8% 1.9%
Retail price inflation 3.2% 3.6%
Consumer price inflation 2.2% 2.6%
----------------------------------------- --------- ---------
The assumption for future investment returns is 1.8% (2021:
2.0%).
The underlying mortality assumption used is in accordance with
the standard table known as S1PA_H, S1PA or S1PA_L mortality,
dependent on the size of each member's pension, using the CMI_2021
projection based on year of birth with a long-term rate of
improvement of 1.25% p.a. (2021: CMI_2020 and 1.25% p.a.). This
results in the following life expectancies:
-- Male aged 65 at 31 December 2022 has a life expectancy of 86.5 years (2021: 86.4 years)
-- Female aged 65 at 31 December 2022 has a life expectancy of 88.8 years (2021: 88.8 years)
Guaranteed Minimum Payment ("GMP") equalisation
During 2018 the High Court of Justice in England made judgement
in a case relating to GMP equalisation. The court held that
pensions earned between 1990 and 1997 must be equalised between men
and women for the effect of GMPs. Most sections of the Group's
scheme were unaffected since they were opted in to the Second State
Pension, with just one section opted out. The actuary estimates
that the impact to the scheme will be to increase liabilities by
between GBP10,000 and GBP30,000. Accordingly, an adjustment is
recorded in these accounts to increase the scheme deficit by
GBP20,000 (2021: GBP20,000), first recognised as a past service
cost recognised in the income statement for the year ended 31
December 2018.
Reconciliation to consolidated statement of financial
position
2022 2021
GBP'000 GBP'000
------------------------------------- --------- ---------
Fair value of plan assets 16,734 24,478
Present value of funded obligations (15,465) (22,539)
------------------------------------- --------- ---------
At the end of the year 1,269 1,939
------------------------------------- --------- ---------
Reconciliation of plan assets
2022 2021
GBP'000 GBP'000
------------------------------------ --------- ---------
At the beginning of the year 24,478 25,143
Expected return 455 320
Contribution by Group 331 322
Benefits paid (978) (964)
Expenses met by scheme (196) (213)
Actuarial loss (7,356) (130)
------------------------------------ --------- ---------
Plan assets at the end of the year 16,734 24,478
------------------------------------ --------- ---------
Contributions to the scheme included GBPnil of additional
payments (2021: GBPnil). The actuarial loss on plan assets relates
to the fall in value of the scheme's investments reflecting
uncertainty in global equity markets experienced in 2022.
Composition of plan assets
2022 2021
GBP'000 GBP'000
-------------------------------------------- --------- ---------
Diversified growth funds - Quoted 16,607 24,308
Liability driven investment funds - Quoted - -
Options in Parity Group plc 96 96
Cash 31 74
-------------------------------------------- --------- ---------
Total plan assets 16,734 24,478
-------------------------------------------- --------- ---------
Reconciliation of plan liabilities
2022 2021
GBP'000 GBP'000
----------------------------------------- --------- ---------
At the beginning of the year 22,539 24,935
Interest cost 419 318
Benefits paid (978) (964)
Actuarial gain (6,515) (1,750)
----------------------------------------- --------- ---------
Plan liabilities at the end of the year 15,465 22,539
----------------------------------------- --------- ---------
Amounts recognised in the consolidated income statement
2022 2021
GBP'000 GBP'000
------------------------------------------------- --------- ---------
Included in finance costs
Expected return on plan assets, net of expenses 259 107
Unwinding of discount on plan liabilities
(interest cost) (419) (318)
------------------------------------------------- --------- ---------
Net finance costs in respect of post-retirement
benefits (160) (211)
------------------------------------------------- --------- ---------
Amounts recognised in the consolidated statement of
comprehensive income
2022 2021
GBP'000 GBP'000
------------------------------------------ --------- ---------
Actuarial loss on plan assets (7,356) (130)
Actuarial gain on plan liabilities 6,515 1,750
------------------------------------------ --------- ---------
Remeasurement of defined benefit pension
scheme (841) 1,620
------------------------------------------ --------- ---------
The asset recognised under this scheme is not limited under
IFRIC 14 as the Group has an unconditional right to realise the
economic benefit of these assets during the life of the plan or
when the plan is settled.
Defined benefit obligation trends
2022 2021 2020 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- --------- --------- --------- --------- ---------
Plan assets 16,734 24,478 25,143 22,670 20,099
Plan liabilities (15,465) (22,539) (24,935) (23,562) (22,041)
--------------------------- --------- --------- --------- --------- ---------
Surplus/(deficit) 1,269 1,939 208 (892) (1,942)
--------------------------- --------- --------- --------- --------- ---------
Experience adjustments on
assets (7,356) (130) 2,943 2,761 (1,586)
--------------------------- --------- --------- --------- --------- ---------
(30.0%) (0.5%) 13.3% 13.9% (7.3%)
--------------------------- --------- --------- --------- --------- ---------
Experience adjustments on
liabilities 6,515 1,750 (1,902) (1,830) 581
--------------------------- --------- --------- --------- --------- ---------
28.9% 7.2% (8.3%) (8.4%) 2.6%
--------------------------- --------- --------- --------- --------- ---------
Sensitivity analysis
Increase/
(decrease)
Liabilities Assets Surplus/(deficit) in surplus
Effect of change in GBP'000 GBP'000 GBP'000 GBP'000
assumptions
------------------------- -------------- --------- -------------------- ------------
No change 15,465 16,734 1,269 -
0.25% rise in discount
rate 14,955 16,734 1,779 510
0.25% fall in discount
rate 15,975 16,734 759 (510)
0.25% rise in inflation 15,527 16,734 1,207 (62)
0.25% fall in inflation 15,403 16,734 1,331 62
------------------------- -------------- --------- -------------------- ------------
24 Share capital
Authorised share capital
Ordinary shares 2p
each
2022 2022
Number GBP'000
----------------------------------------- ------------ --------
Authorised at 1 January and 31 December 409,044,603 8,181
----------------------------------------- ------------ --------
Issued share capital
Ordinary shares 2p
each
2022 2022
Number GBP'000
-------------------------------------- ------------ --------
Issued and fully paid at 1 January 103,075,633 2,062
Shares issued during the year - -
-------------------------------------- ------------ --------
Issued and fully paid at 31 December 103,075,633 2,062
-------------------------------------- ------------ --------
25 Contingencies
In the normal course of business, the Group is exposed to the
risk of claims in respect of contracts where the customer or
supplier is dissatisfied with the performance, pricing and/or
completion of the contracted service or product. Such claims are
normally resolved by a combination of negotiation, further work by
Parity or the supplier, and/or monetary settlement without formal
legal process being necessary. Occasionally, such claims progress
into legal action. At the present time the Group management
believes the resolution of any known claims or legal proceedings
will not have a material further impact on the financial position
of the Group.
26 Key management remuneration
Key management comprises the Group's Board of Directors, along
with the Director, Recruitment Business. The total remuneration
received by key management for 2022 was GBP574,000 (2021:
GBP1,118,000). Remuneration comprises emoluments received, pension
contributions, share-based payment charges and compensation for
loss of office. Remuneration of the Board of Directors, including
that of the highest paid Director Michael Johns, is disclosed in
detail within the remuneration report.
2022 2021
GBP'000 GBP'000
--------------------------------- --------- ---------
Short-term employee benefits 503 843
Post-employment benefits 21 32
Compensation for loss of office - 308
Share-based payments (note 9) 50 (65)
--------------------------------- --------- ---------
574 1,118
--------------------------------- --------- ---------
27 Related party transactions
Consolidated
During the year the Group continued to use the marketing
services of CRM Squad. The Executive Chairman Mark Braund is an
owner and Director of CRM Squad. The total value of services
received from CRM squad in 2022 is GBP66,530. (2021:
GBP12,180).
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END
FR EANSSFFDDEFA
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