TIDMPTY
RNS Number : 0245N
Parity Group PLC
20 September 2019
PARITY GROUP PLC
INTERIM RESULTS FOR THE SIX MONTHS TO 30 JUNE 2019
20 September 2019
Parity Group plc ("Parity" or the "Group" or the "Company"), the
data and technology focussed professional services business,
announces its half year results for the six months ended 30 June
2019.
Headlines:
-- Phase 1 of a comprehensive transformation programme,
commenced in March under new CEO, completed
-- Annualised gross operating costs reduced by GBP2.08m, a
higher than anticipated gross cost saving, including a net
headcount reduction of 35%
-- After GBP0.93m investment in the transformation programme,
net annualised cost savings of GBP1.15m achieved
-- Investment in the transformation program:
o Following the appointment of the new Head of Consultancy
division, Antonio Acuña MBE, a new Commercial Director, Christopher
Jones, and Head of Learning and Development, Dianne Martin, have
been appointed
o The new Parity brand and associated marketing campaigns have
been launched since the half year end
o Commenced an evaluation of Artificial Intelligence and
technological advancement opportunities in the recruitment
market
-- Board anticipates making a modest level of adjusted pre-tax profit for the full year 2019
-- Continuing difficult market conditions in the traditional UK
recruitment market including loss of major Scottish Government
contract announced in March 2019 only partially offset by recent
wins in Consultancy business
o New initial consultancy retainer contract just signed with
Compass Group plc
o Two new contract wins with the Department of Education
o New contract with BAT
-- Continued positive cash flow from operating activities(3) of
GBP0.08m despite GBP0.41m outflow in relation to restructuring
costs
-- Period on period reduction in net debt(3) to GBP1.2m (30 June
2018: GBP1.9m, 31 December 2018: GBP1.1m)
-- GBP10m credit facility with current provider extended on
improved terms for a further two years until May 2021.
Six months ended 30 June 2019
Six months Six months
to to
30.06.19 30.06.18 Incr./
(Unaudited) (Unaudited) (Decr.)
GBP'000 GBP'000 %
-------------------------------------------- ------------- ------------- ----------
Revenue 44,514 43,220 3%
Adjusted profit before tax(1) 203 847 (76%)
(Loss)/profit before tax(2) (541) 847 -
Net cash flow from operating activities(3) 77 (238) -
Net debt(3) 1,174 1,891 (38%)
1. On a Continuing basis, before non-recurring items
2. On a Continuing basis
3. Pre the adoption of IFRS 16
John Conoley, Non-Executive Chairman of Parity Group plc,
said:
"The period we are reporting on includes the first four months
under our new Chief Executive, Matthew Bayfield, who was appointed
in February 2019. He and the senior management team have moved
quickly to restructure the business, executing the plan set out
earlier in the year.
"The Board is confident in reaching a modest level of adjusted
profitability for the year, which will be a significant achievement
by the management team given the extent of the transformation being
undertaken and following the loss of the very large legacy contract
with the Scottish Govt in Q1. The precise year end achievement will
depend on the timing and mix of contracts closed in the remainder
of the year."
Matthew Bayfield, Chief Executive, said:
"Due to changing client demand we are moving Parity's focus from
a single line of business dependent upon relatively low margin
recruitment revenues into a multi-line business built around
consultancy, learning and development and strategic recruitment in
the data world.
"The restructuring programme that we embarked upon earlier in
the year has gone deeper into the organisation and has had to be
more comprehensive than we originally anticipated. This more
comprehensive transformation programme has had an expected impact
on our short term gross revenue, however we are seeing the first
signs that the plan will deliver higher margins and robust
profitability in the medium term.
"A new senior team has been recruited which is focussed on
higher margin opportunities and new service lines. The second phase
of our transformation plan is about taking the new Parity business
model to market with a renewed marketing and communications
focus.
"Whilst we still have a long way to go, we have a clear vision,
a good plan and the support of our clients in what we are setting
out to achieve, which is helping us develop a growing pipeline of
new revenue opportunities. In the last few months we have signed
new contracts with, amongst others, the Department of Education,
BAT and The Crown Commercial Service and are delighted to report
today a new retainer consultancy relationship with Compass
Group."
For further information, contact:
Matthew Bayfield
CEO 020 8543
Roger Antony GFD Parity Group plc 5353
David Beck Donhead Consultants 07836 293383
Mike Coe
Chris Savidge WH Ireland 01179 453470
This announcement contains certain statements that are or may be
forward-looking with respect to the financial condition, results or
operations and business of Parity Group plc. By their nature
forward-looking statements involve risk and uncertainty because
they relate to events and depend on circumstances that will occur
in the future. There are a number of factors that could cause
actual results and developments to differ materially from those
expressed or implied by such forward-looking statements. These
factors include, but are not limited to (i) adverse changes to the
current outlook for the UK IT recruitment and solutions market,
(ii) adverse changes in tax laws and regulations, (iii) the risks
associated with the introduction of new products and services, (iv)
pricing and product initiatives of competitors, (v) changes in
technology or consumer demand, (vi) the termination or delay of key
contracts and (vii) volatility in financial markets.
Overview:
Due to changing client demand we are moving Parity's focus from
a single line of business dependent upon relatively low margin
recruitment revenues into a multi-line business built around
consultancy, learning and development and strategic recruitment in
the data world.
The restructuring programme that we embarked upon earlier in the
year has gone deeper into the organisation and has had to be more
comprehensive than we originally anticipated. This more
comprehensive transformation programme has had an impact on our
short term profitability however we can see the first signs that
the plan will deliver in the medium term.
A new senior team has been recruited who are focussed on higher
margin opportunities and new service lines. The second phase of our
transformation plan is about taking the new Parity business model
to market with a renewed marketing and communications focus.
Whilst we still have a long way to go, we have a clear vision, a
good plan and the support of our clients in what we are setting out
to achieve, which is helping us develop a growing pipeline of new
revenue opportunities. In the last few months we have signed new
contracts with amongst others the Department of Education, BAT and
The Crown Commercial Service and are delighted to report today a
new retainer consultancy relationship with Compass Group.
About us:
45 years of trusted relationships with our clients
Parity provides expertise that delivers positive growth
for our clients through realising the true value of their
data. We are passionate about empowering business and
government to make better commercial decisions based
on reliable data.
Specifically, we advise on data and we provide access
to skills either as a managed service, through resourcing
in the contract and permanent market, or as part of a
learning and development programme.
Our work comes from a mix of long-term contracts with
public and private sector organisations as well as expanded
projects with existing clients as a result of strong
relationships and a track record of high client satisfaction.
Around 60 staff work in our offices in Belfast, Edinburgh,
London and Manchester and we had, during H1 2019, over
1,000 associates supporting clients around the UK and
Ireland.
OUR STRATEGIC GOAL OUR FINANCIAL GOAL OUR OPERATING MODEL
To equip clients with To grow margin and Applying an account
the talent, skills net profitability. management approach
and advice necessary to ensure clients can
to make bold data-led choose the right mix
business decisions of our support in consulting,
confidently. resourcing, and learning
and development.
OUR PURPOSE OUR MISSION OUR VISION
We are the trusted We provide expertise To build the world's
partner of data driven that delivers positive most dynamic community
transformation. growth for clients of data experts, enabling
through realising the our clients to realise
true value of their their vision.
data.
Transformation to deliver growth
New Operating Model
Since the appointment of Matthew Bayfield as Chief Executive in
February this year the Group has adopted a new and more client
focused operating model. Clients are now offered a suite of
integrated services through a single account management structure.
Working with our clients we identify their needs and design a
solution that can encompass consultancy, learning and development
or strategic recruitment, or any combination of the three. We have
put this client centric account management at the heart of our
business to improve the quality of our client relationships and to
ensure our clients are able to access the full range of services
that Parity can offer them.
The success of this new model will be judged on the depth of our
client relationships and our ability to help our clients realise
the value of their data and make better commercial decisions based
on reliable data. When successfully in place the new model will
also transform the profitability of Parity as we will have moved
from low margin and increasingly commoditised recruitment into,
data focused consultancy, learning and development and strategic
recruitment for data people; service lines that attract
significantly higher margins.
Investment in New Strategic Hires
Critical to the success of our new model is the quality of our
people and especially the leaders of each of our service lines. We
have invested in new team members who will work together as part of
a new executive operating board to oversee the implementation of
our new model and complete the transformation of the business. We
have recently completed this process with the appointment of a new
Head of Learning and Development and a Commercial Director.
Senior hires made in the last six months as part of the
transformation programme have been as follows:
-- Antonio Acuña MBE appointed as Head of Consulting in April
-- Dianne Martin appointed as Head of Learning and Development in August
-- Chris Jones appointed as Commercial Director in September
-- Shaun O'Hara engaged as People Officer, focussed on Transformation
Investment in Branding and New Website
As we move to a new way of working and the transformation of our
business it has been important to refresh and update the Parity
brand which had not seen any significant investment for over ten
years.
In July we launched our new identity which reflects the new
integrated offering. Our new website went live at the same time
with a fresh look and modern feel, we have unified Parity's web
presence to reflect the integrated offering and increase both
client and candidate interaction.
The new brand is central to the second phase of our
transformation as we initiate a new marketing strategy to support
growth and generate leads via the website.
Aligning our Cost Base
A further critical element of our transformation plan has been
to align our cost base to our new operating model, both reducing
overall costs and moving costs into account management and the
three service lines that support the model. We have achieved a
gross annualised saving of GBP2.08m (GBP1.15m net of investments)
and a net reduction of 35% in our headcount.
As part of the review of our cost base we have been able to move
resources away from low margin commoditised recruitment to higher
margin work, and redeployed resource to improve the consistency of
our client relationships. Whilst the net 35% reduction in headcount
relates predominately to a reduction in recruitment sales staff,
the annualised savings figure also includes reductions in general
and administration, IT and property costs. There were one off costs
of the restructuring of GBP0.74m in the first half.
Financial Review
Revenue
Group revenues were up by 3% or GBP1.3m year on year. Lower
margin recruitment revenues were up by 7% or GBP2.8m reflecting
higher contractor volumes which averaged 1,021 in H1 2019 (H1 2018:
953 contractors). Whilst there was an increase in the year on year
average, we saw a downward trajectory over H1 with the number of
contractors on billing decreasing from 995 to 913 over the six
months. The reduction was due in part to the expected run off of
contractors under the Scottish Government framework which we
announced in March 2019, and also as a result of challenging
trading conditions in the UK recruitment market.
Consultancy revenues were down by GBP1.55m or 30% due to the
inclusion of revenues from the significant MoD contract in the
comparative period. The MoD contract ran until August 2018 but was
not renewed. Consultancy revenues in H1 2019 included GBP0.2m from
new higher margin data consultancy work.
Selling Contribution
External contribution margin for recruitment was GBP3.9m at a
margin of 9.6% (H1 2018: GBP3.8m at 10.1%) and for consultancy was
GBP0.8m at a margin of 21% (H1 2018: GBP1.4m at 27%). Group selling
contribution to overheads was GBP2.4m (H1 2018: GBP2.8m) down by
14% or GBP0.4m due to the sales mix between recruitment and
consultancy.
Result Before Tax
The Group reported a loss before tax for the six months of
GBP0.5m (H1 2018: profit of GBP0.8m) and an adjusted profit before
tax (excluding non-recurring items) of GBP0.2m (H1 2018: GBP0.8m).
Non-recurring items were GBP0.7m (H1 2018: GBPnil) and reflect the
charge for specific restructuring costs. The restructuring costs
primarily related to the headcount reduction, but also included
onerous property lease costs in respect of office relocations.
Cash and Net Debt
Free cash flow from operating activities, pre the adoption of
IFRS 16, was an inflow of GBP0.1m (H1 2018: outflow of GBP0.2m) and
was after an outflow of GBP0.4m in respect of restructuring costs.
We achieved a further improvement in debtor days to 16 days (H1
2018: 20 days).
Net debt, pre the adoption of IFRS 16, at the end of June was
GBP1.2m (30 June 2018: GBP1.9m; 31 December 2018: GBP1.1m). During
the period we finalised renewal of our credit facility with PNC who
have acted as the Company's lenders since 2010. The GBP10m facility
is subject to a minimum period of two years, expiring May 2021,
with an improved discount rate of 2.00% + base (previously 2.35% +
base).
Defined Benefit Pension
The final salary pension scheme deficit was GBP1.1m at 30 June
2019 (30 June 2018: GBP0.9m; 31 December 2018 GBP1.9m). The deficit
has reduced by GBP0.8m since the 2018 year end despite a fall in
discount rates. The improvement was partly due to an increase in
the value of scheme investments and partly as a result of actions
taken by the Board and the Trustees to reduce scheme risk.
The results of the triennial review as at 5 April 2018 were
agreed during the period. As part of the agreement, minimum
contributions to the scheme will remain at similar levels to
contributions made in 2018 at GBP0.3m per year.
Outlook
Trading conditions in the UK recruitment market continue to be
extremely challenging, which supports the Board's view of the need
to change the Parity business model. To that end we have
implemented the first phase of a transformation programme that we
believe will improve the medium-term profitability of the
business.
We are encouraged by the recently announced contract wins and
renewals, and our growing pipeline in higher margin service lines,
but recognise that it will take time for the benefits of our change
programme to translate into improved financial returns. The Board
anticipate making a modest level of adjusted pre-tax profit in the
full year 2019. The precise year end achievement will depend on the
timing and mix of contracts closed in the remainder of the
year.
We remain excited by the scale of opportunity in the data
market. The second half will see further progress with the
transformation plan as we take the new Parity offer to our clients
with enhanced marketing and client communications. We look forward
with increasing confidence to 2020 now that we have the right
people and the right plan in place. The next phase of the
investment programme will include an evaluation of technology
opportunities for competitive advantage and operational
efficiency.
Consolidated condensed income statement
For the six months ended 30 June 2019
Six months Year
to 30.06.19 to 31.12.18
Six months
to 30.06.18
(Unaudited) (Unaudited) (Audited)
Non-recurring Non-recurring
Before items After Before items After
non-recurring (note non-recurring non-recurring (note non-recurring
items 4) items items 4) items
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ------- -------------- -------------- -------------- ------------ -------------- -------------- --------------
Continuing operations 2,
Revenue 3 44,514 - 44,514 43,220 86,112 - 86,112
Employee benefit
costs (2,906) (500) (3,406) (3,098) (5,976) (299) (6,275)
Depreciation,
amortisation and
impairment (410) (174) (584) (112) (194) - (194)
All other operating
expenses (40,784) (70) (40,854) (38,984) (78,724) (196) (78,920)
-------------------------- ------- -------------- -------------- -------------- ------------ -------------- -------------- --------------
Total operating
expenses (44,100) (744) (44,844) (42,194) (84,894) (495) (85,389)
-------------------------- ------- -------------- -------------- -------------- ------------ -------------- -------------- --------------
Operating profit/(loss) 414 (744) (330) 1,026 1,218 (495) 723
Finance costs 5 (211) - (211) (179) (365) - (365)
-------------------------- ------- -------------- -------------- -------------- ------------ -------------- -------------- --------------
Profit/(loss)
before tax 203 (744) (541) 847 853 (495) 358
Tax (charge)/credit 7 (71) 135 64 (88) (16) 79 63
-------------------------- ------- -------------- -------------- -------------- ------------ -------------- -------------- --------------
Profit/(loss)
for the period
from continuing
operations 132 (609) (477) 759 837 (416) 421
-------------------------- ------- -------------- -------------- -------------- ------------ -------------- -------------- --------------
Discontinued operations
Loss from discontinued
operations after
tax 6 - - - (388) (381) - (381)
-------------------------- ------- -------------- -------------- -------------- ------------ -------------- -------------- --------------
Profit/(loss)
for the period
attributable to
owners of the
parent 132 (609) (477) 371 456 (416) 40
-------------------------- ------- -------------- -------------- -------------- ------------ -------------- -------------- --------------
(Loss)/earnings per share - Continuing
operations
Basic (loss)/earnings 8 (0.47p) 0.74p 0.41p
per share
Diluted (loss)/earnings 8 (0.47p) 0.73p 0.41p
per share
(Loss)/earnings per share - Continuing
and discontinued operations
Basic (loss)/earnings 8 (0.47p) 0.36p 0.04p
per share
Diluted (loss)/earnings 8 (0.47p) 0.36p 0.04p
per share
-------------------------- ------- -------------- -------------- -------------- ------------ -------------- -------------- --------------
Consolidated condensed statement of comprehensive income
For the six months ended 30 June 2019
Six months Six months Year
to 30.06.19 to 30.06.18 to 31.12.18
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
------------------------------------------- -------------- ------------- -------------
(Loss)/profit for the period (477) 371 40
Other comprehensive income
Items that may be reclassified to profit
or loss
Exchange differences on translation
of foreign operations - - (3)
Items that will never be reclassified
to profit or loss
Remeasurement of defined benefit pension
scheme 857 124 (1,005)
Deferred taxation on remeasurement of
defined benefit pension scheme (146) (21) 171
------------------------------------------- -------------- ------------- -------------
Other comprehensive income/(expense)
for the period after tax 711 103 (837)
------------------------------------------- -------------- ------------- -------------
Total comprehensive income/(expense)
for the period attributable to owners
of the parent 234 474 (797)
------------------------------------------- -------------- ------------- -------------
Consolidated condensed statement of changes in equity
For the six months ended 30 June 2019
Six months to 30 June 2019 (Unaudited)
Share Capital
Share premium redemption Other Retained
capital reserve reserve reserves earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- --------- --------- ------------ ---------- ---------- ---------
At 31 December 2018 2,053 33,244 14,319 34,560 (77,612) 6,564
Adoption of IFRS 16
(note 1) - - - - 6 6
-------------------------- --------- --------- ------------ ---------- ---------- ---------
Revised at 1 January
2019 2,053 33,244 14,319 34,560 (77,606) 6,570
Share options - value
of employee services - - - - 116 116
-------------------------- --------- --------- ------------ ---------- ---------- ---------
Transactions with owners - - - - 116 116
-------------------------- --------- --------- ------------ ---------- ---------- ---------
Loss for the period - - - - (477) (477)
Other comprehensive
income for the period
after tax - - - - 711 711
At 30 June 2019 2,053 33,244 14,319 34,560 (77,256) 6,920
-------------------------- --------- --------- ------------ ---------- ---------- ---------
Six months to 30 June 2018 (Unaudited)
Share Capital
Share premium redemption Other Retained
capital reserve reserve reserves earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- --------- --------- ------------ ---------- ---------- ---------
At 1 January 2018 2,043 33,211 14,319 44,160 (86,544) 7,189
Issue of new ordinary
shares 10 33 - - - 43
Share options - value
of employee services - - - - 27 27
-------------------------- --------- --------- ------------ ---------- ---------- ---------
Transactions with owners 10 33 - - 27 70
-------------------------- --------- --------- ------------ ---------- ---------- ---------
Profit for the period - - - - 371 371
Other comprehensive
income for the period
after tax - - - - 103 103
At 30 June 2018 2,053 33,244 14,319 44,160 (86,043) 7,733
-------------------------- --------- --------- ------------ ---------- ---------- ---------
Year to 31 December 2018 (Audited)
Share Capital
Share premium redemption Other Retained
capital reserve reserve reserves earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- --------- --------- ------------ ---------- ---------- ---------
At 1 January 2018 2,043 33,211 14,319 44,160 (86,544) 7,189
Issue of new ordinary
shares 10 33 - - - 43
Share options - value
of employee services - - - - 129 129
---------------------------- --------- --------- ------------ ---------- ---------- ---------
Transactions with owners 10 33 - - 129 172
---------------------------- --------- --------- ------------ ---------- ---------- ---------
Profit for the year - - - - 40 40
Other comprehensive
expense for the year
after tax - - - - (837) (837)
Reallocation of impairment
charge - - - (9,600) 9,600 -
---------------------------- --------- --------- ------------ ---------- ---------- ---------
At 31 December 2018 2,053 33,244 14,319 34,560 (77,612) 6,564
---------------------------- --------- --------- ------------ ---------- ---------- ---------
Consolidated condensed statement of financial position
As at 30 June 2019
As at As at As at
30.06.19 30.06.18 31.12.18
(Unaudited) (Unaudited) (Audited)
Notes GBP'000 GBP'000 GBP'000
------------------------------- ------ ------------- ------------- -----------
Assets
Non-current assets
Goodwill 4,594 4,594 4,594
Other intangible assets 93 139 86
Property, plant and equipment 92 61 69
Right-of-use assets 1 710 - -
Deferred tax assets 1,071 810 1,153
------------------------------- ------ ------------- ------------- -----------
Total non-current assets 6,560 5,604 5,902
------------------------------- ------ ------------- ------------- -----------
Current assets
Trade and other receivables 11,063 13,279 12,018
Cash and cash equivalents 5,152 5,461 5,829
Total current assets 16,215 18,740 17,847
------------------------------- ------ ------------- ------------- -----------
Total assets 22,775 24,344 23,749
------------------------------- ------ ------------- ------------- -----------
Liabilities
Current liabilities
Loans and borrowings (6,326) (7,364) (6,919)
Lease liabilities 1 (625) - -
Trade and other payables (7,365) (8,324) (8,261)
Provisions (168) - (43)
Total current liabilities (14,484) (15,688) (15,223)
------------------------------- ------ ------------- ------------- -----------
Non-current liabilities
Loans and borrowings - (2) -
Lease liabilities 1 (256) - -
Provisions (20) (19) (20)
Retirement benefit liability 9 (1,095) (902) (1,942)
Total non-current liabilities (1,371) (923) (1,962)
------------------------------- ------ ------------- ------------- -----------
Total liabilities (15,855) (16,611) (17,185)
------------------------------- ------ ------------- ------------- -----------
Net assets 6,920 7,733 6,564
------------------------------- ------ ------------- ------------- -----------
Shareholders' equity
Called up share capital 2,053 2,053 2,053
Share premium account 33,244 33,244 33,244
Capital redemption reserve 14,319 14,319 14,319
Other reserves 34,560 44,160 34,560
Retained earnings (77,256) (86,043) (77,612)
------------------------------- ------ ------------- ------------- -----------
Total shareholders' equity 6,920 7,733 6,564
------------------------------- ------ ------------- ------------- -----------
Consolidated condensed statement of cash flows
For the six months ended 30 June 2019
Six months Six months Year
to 30.06.19 to 30.06.18 to 31.12.18
(Unaudited) (Unaudited) (Audited)
Notes GBP'000 GBP'000 GBP'000
-------------------------------------- ------- -------------- ------------- -------------
Cash flows from operating activities
(Loss)/profit for the period (477) 371 40
Adjustments for:
Net finance expense 5 211 179 365
Share-based payment expense 116 27 129
Income tax credit 7 (64) (85) (236)
Amortisation of intangible assets 35 99 165
Depreciation of property, plant
and equipment 20 37 53
Depreciation and impairment 529 - -
of right-to-use assets
Loss on disposal of discontinued
operation 6 - 312 306
-------------------------------------- ------- -------------- ------------- -------------
370 940 822
Working capital movements
Decrease/(increase) in trade
and other receivables 955 (958) 204
Decrease in trade and other
payables (896) (96) (141)
Increase in provisions 125 1 45
Payments to retirement benefit
plan 9 (103) (125) (326)
-------------------------------------- ------- -------------- ------------- -------------
Net cash flow from/(used in)
operating activities 451 (238) 604
-------------------------------------- ------- -------------- ------------- -------------
Investing activities
Purchase of intangible assets (42) - (14)
Purchase of property, plant
and equipment (43) (11) (35)
Net proceeds from disposal of
subsidiary 6 - 14 114
-------------------------------------- ------- -------------- ------------- -------------
Net cash flow (used in)/from
investing activities (85) 3 65
-------------------------------------- ------- -------------- ------------- -------------
Financing activities
Issue of ordinary shares - 43 43
(Repayment)/drawdown of finance
facility (585) 771 330
Principal repayment of lease
liabilities 1 (374) - -
Interest paid 5 (84) (86) (181)
-------------------------------------- ------- -------------- ------------- -------------
Net cash (used in)/from financing
activities (1,043) 728 192
-------------------------------------- ------- -------------- ------------- -------------
Net (decrease)/increase in cash
and cash equivalents (677) 493 861
-------------------------------------- ------- -------------- ------------- -------------
Cash and cash equivalents at the beginning
of the period 5,829 4,968 4,968
----------------------------------------------- -------------- ------------- -------------
Cash and cash equivalents at the end
of the period 5,152 5,461 5,829
----------------------------------------------- -------------- ------------- -------------
Notes to the interim results
1 Accounting policies
Basis of preparation
The condensed interim financial statements comprise the
unaudited results for the six months to 30 June 2019 and 30 June
2018 and the audited results for the year ended 31 December 2018.
The financial information for the year ended 31 December 2018
herein does not constitute the full statutory accounts for that
period. The Annual Report and Financial Statements for 2018 have
been filed with the Registrar of Companies. The Independent
Auditor's Report on the Annual Report and Financial Statements for
2018 was unqualified and did not contain a statement under 498(2)
or 498(3) of the Companies Act 2006.
The condensed financial statements for the period ended 30 June
2019 have been prepared in accordance with the Disclosure and
Transparency Rules of the Financial Services Authority and with IAS
34 'Interim Financial Reporting' as adopted by the European Union.
The information in these condensed financial statements does not
include all the information and disclosures made in the annual
financial statements.
The condensed financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRS)
as adopted by the EU in a manner consistent with the accounting
policies set out in the Group financial statements for the year
ended 31 December 2018, with the exception of new standards,
amendments and interpretations effective as of 1 January 2019 as
detailed below. IFRS are subject to amendment and interpretation by
the International Accounting Standards Board (IASB) and there is an
ongoing process of review and endorsement by the European
Commission. Any standards, amendments or interpretations that have
been issued but not yet effective have not been adopted early by
the Group.
Going concern
The directors are satisfied that the Group has sufficient
resources to continue in operational existence for the foreseeable
future. Accordingly, they continue to adopt the going concern basis
in preparing these financial statements.
Financial instruments
Unless otherwise indicated, the carrying amounts of the Group's
financial assets and liabilities are a reasonable approximation of
their fair values.
Accounting policies: new standards, amendments and
interpretations
IFRS 16 'Leases'
The Group adopted IFRS 16 from 1 January 2019, replacing IAS 17
'Leases' and related interpretations. This represents a change in
accounting for lease arrangements in which the Group acts as lessee
whereby operating leases previously treated solely through profit
and loss are to be recorded in the statement of financial position
in the form of a right-of-use asset and a lease liability, subject
to exemptions for low value and short-term leases. The nature of
the costs changes from operating expenses to predominantly
depreciation with an interest expense on the lease liability. The
Group has been impacted by IFRS 16 on its leases for property.
In accordance with the transition provisions of IFRS 16,
comparative information has not been restated, with the cumulative
effect of initially applying the standard recognised as an
adjustment to retained earnings at 1 January 2019. Lease
liabilities previously assessed as operating leases have been
measured on 1 January 2019 at the present value of the remaining
lease payments, discounted using the Group's incremental borrowing
rate at that date of 3.10%. Associated right-of-use assets have
been measured at amounts equal to the lease liabilities, adjusted
for any prepaid or accrued lease payments.
The Group has applied practical expedients permitted by IFRS 16,
including relying on previous assessments on whether leases are
onerous as an alternative to performing an impairment review and
excluding initial direct costs for the measurement of right-of-use
assets at 1 January 2019.
1 Accounting policies (continued)
Application resulted in the recognition of total lease
liabilities of GBP1,060,000 and right-of-use assets of
GBP1,066,000, with an adjustment to retained earnings of GBP6,000.
At 30 June 2019 the difference between the lease liabilities and
right-of-use assets mainly relates to an impairment to the
right-of-use assets. Depreciation on right-of-use assets for the
six months to 30 June 2019 was GBP355,000.
The amounts recognised in relation to right-of-use assets and
lease liabilities at the interim balance sheet date are as
follows:
(Unaudited)
GBP'000
-------------------------------------------------------- ------------
Lease liabilities
Operating lease commitments disclosed at 31 December
2018 1,132
Not recognised within the scope of IFRS 16 (39)
Effect of discounting using incremental borrowing rate (33)
-------------------------------------------------------- ------------
Recognised on application of IFRS 16 on 1 January 2019 1,060
Other finance leases at 1 January 2019 8
Additions 173
Interest expense 14
Principal repayment (374)
-------------------------------------------------------- ------------
At 30 June 2019 881
-------------------------------------------------------- ------------
Right-of-use assets
Recognised on application of IFRS 16 on 1 January 2019 1,066
Additions 173
Depreciation (355)
Impairment (note 4) (174)
At 30 June 2019 710
-------------------------------------------------------- ------------
2 Segmental information
During the period, the Group initiated a strategic
reorganisation such that reporting of financial information to the
Chief Operating Decision Maker (the Group Board) by operating
segments changed. The Group currently has three operating segments,
being Recruitment (previously Parity Professionals), Consultancy
(previously Parity Consultancy Services) and, since 2019, Learning
& Development. The three service lines are supported by a
single sales, marketing and back office function. Accordingly,
internal overheads are not allocated to service lines. In
accordance with IFRS 8 'Operating Segments', segmental information
from prior periods has been restated.
Six months to 30 June 2019
(Unaudited) Learning
Recruitment Consultancy & Development Total
Continuing operations GBP'000 GBP'000 GBP'000 GBP'000
Gross revenue from external
customers 40,920 3,594 - 44,514
Contractor costs (36,973) - - (36,973)
--------------------------------------- -------------- -------------- ---------------- ---------
Net revenue 3,947 3,594 - 7,541
Sub-contracted direct costs - (2,843) - (2,843)
--------------------------------------- -------------- -------------- ---------------- ---------
External contribution 3,947 751 - 4,698
Internal sales and delivery
costs (2,266)
--------------------------------------- -------------- -------------- ---------------- ---------
Contribution 2,432
Group and shared service
costs (1,492)
Depreciation and amortisation (410)
Share-based payment (116)
Operating profit before non-recurring
items 414
Finance costs (211)
--------------------------------------- -------------- -------------- ---------------- ---------
Adjusted profit before tax 203
Non-recurring items (744)
--------------------------------------- -------------- -------------- ---------------- ---------
Loss before tax (541)
--------------------------------------- -------------- -------------- ---------------- ---------
2 Segmental information (continued)
Six months to 30 June 2018 (Unaudited,
Restated) Recruitment Consultancy Total
Continuing operations GBP'000 GBP'000 GBP'000
Gross revenue from external customers 38,078 5,142 43,220
Contractor costs (34,230) - (34,230)
---------------------------------------- -------------- -------------- ---------
Net revenue 3,848 5,142 8,990
Sub-contracted direct costs - (3,756) (3,756)
---------------------------------------- -------------- -------------- ---------
External contribution 3,848 1,386 5,234
Internal sales and delivery costs (2,448)
---------------------------------------- -------------- -------------- ---------
Contribution 2,786
Group and shared service costs (1,621)
Depreciation and amortisation (112)
Share-based payment (27)
Operating profit before non-recurring
items 1,026
Finance costs (179)
---------------------------------------- -------------- -------------- ---------
Adjusted profit before tax 847
Non-recurring items -
---------------------------------------- -------------- -------------- ---------
Profit before tax 847
---------------------------------------- -------------- -------------- ---------
Year to 31 December 2018 (Audited,
Restated) Recruitment Consultancy Total
Continuing operations GBP'000 GBP'000 GBP'000
Gross revenue from external customers 77,616 8,496 86,112
Contractor costs (69,935) - (69,935)
---------------------------------------- -------------- -------------- ---------
Net revenue 7,681 8,496 16,177
Sub-contracted direct costs - (6,500) (6,500)
---------------------------------------- -------------- -------------- ---------
External contribution 7,681 1,996 9,677
Internal sales and delivery costs (5,034)
---------------------------------------- -------------- -------------- ---------
Contribution 4,643
Group and shared service costs (3,102)
Depreciation and amortisation (194)
Share-based payment (129)
Operating profit before non-recurring
items 1,218
Finance costs (365)
---------------------------------------- -------------- -------------- ---------
Adjusted profit before tax 853
Non-recurring items (495)
---------------------------------------- -------------- -------------- ---------
Profit before tax 358
---------------------------------------- -------------- -------------- ---------
All segment assets and liabilities are based in the UK.
3 Revenue
The Group's revenue from external customers disaggregated by
pattern of revenue recognition is as follows:
Six months to Six months to Year to 31.12.18
30.06.19 (Unaudited) 30.06.18 (Unaudited) (Audited)
Recruitment Consultancy Recruitment Consultancy Recruitment Consultancy
Continuing operations GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- ------------ ------------ ------------ ------------ ------------ ------------
Services transferred
over time 40,602 3,594 37,712 5,142 76,978 8,496
Services transferred
at a point in time 318 - 366 - 638 -
Revenue from external
customers 40,920 3,594 38,078 5,142 77,616 8,496
------------------------- ------------ ------------ ------------ ------------ ------------ ------------
3 Revenue (continued)
The Group's revenue from external customers disaggregated by
primary geographical market is as follows:
Six months to Six months to Year to 31.12.18
30.06.19 (Unaudited) 30.06.18 (Unaudited) (Audited)
Recruitment Consultancy Recruitment Consultancy Recruitment Consultancy
Continuing operations GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- ------------ ------------ ------------ ------------ ------------ ------------
UK 39,590 3,594 37,889 5,142 76,033 8,496
Rest of EU 1,330 - 189 - 1,583 -
Revenue from external
customers 40,920 3,594 38,078 5,142 77,616 8,496
------------------------- ------------ ------------ ------------ ------------ ------------ ------------
4 Non-recurring items
Six months Six months Year to
to to 31.12.18
30.06.19 30.06.18 (Audited)
(Unaudited) (Unaudited) GBP'000
Continuing operations GBP'000 GBP'000
--------------------------------------- ------------- ------------- -----------
Restructuring
- Employee benefit costs 500 - 279
- Impairment of right-of-use assets 174 - -
- Other operating costs 70 - 122
Legal costs - - 74
Past service cost for defined benefit
pension scheme - - 20
--------------------------------------- ------------- ------------- -----------
744 - 495
--------------------------------------- ------------- ------------- -----------
Non-recurring items during 2019 included:
-- Costs related to the restructuring of the Group, aligning the
organisation to its refocused strategy. Costs include employee
termination payments, impairments to right-of-use assets and
provisions for costs from vacated property, and fees for related
professional services
The impairment of right-of-use assets of GBP174,000 relates to
the Group's vacated office premises and is equal to the difference
between the carrying value of the assets and the expected
recoverable amount from subletting from the premises. Further
onerous costs in respect of the premises are included within
provisions.
Non-recurring items during 2018 included:
-- Costs related to restructuring of the Parity Consultancy
Services division. Costs include employee termination payments,
fees for professional services and costs of changes in management
structure
-- Legal costs for professional services fees in respect of one-off cases
-- Past service cost for the Group's defined benefit pension
scheme in respect of GMP equalisation
5 Finance costs
Six months Six months Year to
to to 31.12.18
30.06.19 30.06.18 (Audited)
(Unaudited) (Unaudited) GBP'000
GBP'000 GBP'000
--------------------------------------- ------------- ------------- -----------
Interest expense on lease liabilities 14 - -
Interest expense on other financial
liabilities 84 86 181
Net finance costs in respect of
post-retirement benefits 113 93 184
Total finance costs 211 179 365
--------------------------------------- ------------- ------------- -----------
The interest expense on other financial liabilities represents
interest paid on the Group's asset-based financing facilities.
6 Discontinued operations
In April 2018 the Group sold Inition Limited. As such, Inition
Limited's operating result for the comparative periods, as well as
the loss on disposal of Inition Limited is presented as
discontinued.
7 Taxation
Six months Six months Year to
to to 31.12.18
30.06.19 30.06.18 (Audited)
(Unaudited) (Unaudited) GBP'000
Continuing operations GBP'000 GBP'000
------------------------------------ ------------- ------------- -----------
Recognised in the income statement
Current tax charge - - -
Deferred tax (credit)/charge (64) 88 (63)
------------------------------------ ------------- ------------- -----------
Total tax (credit)/charge (64) 88 (63)
------------------------------------ ------------- ------------- -----------
Recognised in other comprehensive
income
Deferred tax charge/(credit) 146 21 (171)
------------------------------------ ------------- ------------- -----------
8 Earnings per ordinary share
Basic earnings per share is calculated by dividing the basic
earnings for the period by the weighted average number of fully
paid ordinary shares in issue during the period. 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.
Six months to 30.06.2019 Six months to 30.06.2018 Year to 31.12.2018
(Unaudited) (Unaudited, restated) (Audited)
----------------- ------------------------------ ------------------------------------ ------------------------------------
Weighted Weighted Weighted
average average Earnings/ average Earnings/
number Loss Earnings/ number (loss) Earnings/ number (loss)
Loss of per (loss) of per (loss) of per
GBP'000 shares share GBP'000 shares share GBP'000 shares share
000's Pence 000's Pence 000's Pence
----------------- --------- --------- -------- ----------- --------- ------------ ----------- --------- ------------
Continuing operations
Basic
(loss)/earnings
per share (477) 102,624 (0.47) 759 102,302 0.74 421 102,464 0.41
Effect of
dilutive
options - - - - 1,412 - - 1,126 -
Diluted
(loss)/earnings
per share (477) 102,624 (0.47) 759 103,714 0.73 421 103,590 0.41
Discontinued operations
Basic loss per
share - - - (388) 102,302 (0.38) (381) 102,464 (0.37)
Effect of - - - - - - - - -
dilutive
options
Diluted earnings
per share - - - (388) 102,302 (0.38) (381) 102,464 (0.37)
Continuing and discontinued operations
Basic
(loss)/earnings
per share (477) 102,624 (0.47) 371 102,302 0.36 40 102,464 0.04
Effect of
dilutive
options - - - - 1,412 - - 1,126 -
Diluted
(loss)/earnings
per share (477) 102,624 (0.47) 371 103,714 0.36 40 103,590 0.04
----------------- --------- --------- -------- ----------- --------- ------------ ----------- --------- ------------
As at 30 June 2019 the number of ordinary shares in issue was
102,624,020 (30 June 2018 and 31 December 2018: 102,624,020).
9 Pension commitments
The Group provides employee benefits under various arrangements,
through defined benefit and defined contribution pension plans, the
details of which are disclosed in the 2018 Annual Report and
Accounts. At the interim balance sheet date, the major assumptions
used in assessing the defined benefit pension scheme liability have
been reviewed and updated based on a roll-forward of the last
formal actuarial valuation, which was carried out as at 5 April
2018.
The following changes in estimate have been applied to the IAS
19 valuation as at 30 June 2019:
30.06.19 30.06.18 31.12.18
----------------------------------------- --------- --------- ---------
Rate of increase in pensions in payment 3.7-3.9% 3.7-3.9% 3.7-4.0%
Discount rate 2.3% 2.7% 2.8%
Retail price inflation 3.3% 3.2% 3.4%
Consumer price inflation 2.3% 2.2% 2.4%
----------------------------------------- --------- --------- ---------
The deficit has reduced by GBP0.8m since the 2018 year end
despite a fall in discount rates. The improvement was partly due to
an increase in the value of scheme investments and partly as a
result of actions taken by the board and the Trustees to reduce
scheme risk.
10 Related party transactions
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are
therefore not disclosed in this note.
There were no other related party transactions during the period
(2018: none).
11 Events after the reporting period
There are no events after the reporting period not reflected in
the interim financial statements.
Statement of Directors' responsibilities
The Directors confirm, to the best of their knowledge:
-- The condensed set of financial statements has been prepared
in accordance with IAS 34 'Interim Financial Reporting', as adopted
by the European Union;
-- The interim management report includes a fair review of the
information required by DTR 4.2.7R of the Disclosure and
Transparency Rules of the United Kingdom's Financial Services
Authority, being an indication of important events that have
occurred during the first six months of the financial year and
their impact on the condensed set of financial statements, and a
description of the principal risks and uncertainties for the
remaining six months of the year, and gives a true and fair view of
the assets, liabilities, financial position and profit for the
period of the Group; and
-- The interim management report includes a fair review of the
information required by DTR 4.2.8R of the Disclosure and
Transparency Rules of the United Kingdom's Financial Services
Authority, being a disclosure of related party transactions and
changes therein since the previous annual report.
By order of the Board
John Conoley
Non-Executive Chairman
20 September 2019
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR CKCDPPBKDBCD
(END) Dow Jones Newswires
September 20, 2019 02:00 ET (06:00 GMT)
Partway (LSE:PTY)
Gráfica de Acción Histórica
De Mar 2024 a Abr 2024
Partway (LSE:PTY)
Gráfica de Acción Histórica
De Abr 2023 a Abr 2024
