interim results to 30 june 2018 - parity · 2019. 7. 24. · • exit from final legacy non-core...

DRIVING CHANGE PEOPLE LED TECHNOLOGY ENABLED

Interim Results to 30 June 2018

Alan Rommel - Chief Executive OfficerRoger Antony - Group Finance Director September 2018

DRIVING CHANGE PEOPLE LED TECHNOLOGY ENABLED 2


HighlightsEncouraging Growth in Higher Margin Consultancy Services

• PCS revenue up 31%, now 35% of Group contribution• Profit before tax up 25% to £0.85m• Increased operating margin to 2.4% with investment

Align, Grow and Invest • Demonstrable synergies with increase in intra-

company revenues (£3.5m vs £1.7m H1 2017)• Major frameworks secured• Exit from final legacy non-core business, Inition

Refresh the Consultancy proposition • Appointment of Data Consultancy MD and marketing

expertise• Client centric proposition combining analytics

expertise with ability to scale consultancy at pace

3

Operational

Financial

Strategic


Financial Review

4


Key Financial Highlights H1 2018Consultancy Services’ growth drives Group PBT improvement

Consultancy revenues

up 31%

£5.1m(H1 17: £3.9m)

£0.85m(H1 17: £0.68m)

5

Profit before tax(from Continuing

Operations)

up 25%

Operating Profit(from Continuing

Operations)

up 12%

£1.0m(H1 17: £0.9m)


Consultancy Services H1 18£000

H1 17 £000

Revenues 5,142 3,927

Divisional Contribution 618 546

Divisional Contribution Margin 12.0% 13.9%

Parity Consultancy Services (“PCS”)

• Revenue up 31% - growth from “Outcome Managed Service” contracts

• Investment and use of contractors provide opportunity to increase the margin

Professionals H1 18£000

H1 17 £000

Revenues 41,573 40,713

Divisional Contribution 1,136 1,132

Divisional Contribution Margin 2.7% 2.8%

Parity Professionals

• Average contractors: 953 (H1 17: 962) recovered from IR35 impact in 2017

• Permanent fees up 16%: £366k (H1 17: £315k)

• Measured investment in sales headcount

Divisional Contribution MixGroup

• Growth in Consultancy Services further enhances divisional contribution mix

6

Divisional ResultsFurther progress in rebalancing the Group


H1 18£000

H1 17 £000

%

Revenue * 43,220 42,915 +1%

Divisional contribution 1,754 1,678

Central Costs & depreciation (728) (759)

Operating Profit 1,026 919 +12%

Finance costs net of income (179) (235)

Profit before tax 847 684 +25%

Tax charge (88) (56)

Profit from continuing

operations 759 628 +21%

• Central costs – reduced despite additional compliance fees, with strong cost controls maintained

• Finance costs – reduction due to improvement in net debt H1 18 on H1 17

• Tax charge – effective tax rate 10% (H1 17: 8%)

Continuing Group Income StatementFocussed strategy increasing Group profitability

7

* excludes inter-segment revenues £3.5m (H1 17: £1.7m)


Jun 18£000

Dec 17£000

Intangible assets 4,733 4,821

Tangible assets 61 78

Deferred tax 810 919

Working capital 4,936 3,666

DB pension liability (902) (1,059)

Net debt (1,905) (1,632)

Assets held for sale - 396

Net assets 7,733 7,189

Summarised Balance SheetImproved financial position

Significant movements:

• Working capital – increase predominately due to increase in contractor volumes during H1.

• Debtors days - remain at an excellent level at 30 June: 20 (31.12.17: 18 days, excl. Inition).

• Pension deficit – increase in discount rate reduces IAS 19 deficit to below £1m.

• Net debt – 0.8 x annualised EBITDA

• Assets held for sale – Inition - final legacy of previous strategy – disposal in April 18.

8


Cash Flow BridgeSmall increase in net debt due to working capital movement

9

DRIVING CHANGE PEOPLE LED TECHNOLOGY ENABLED 10

Revenues and Frameworks

• High level of repeat business• 38 new clients across the business, 23 in the Private Sector


Operating Review


Helping clients to make the best use of information to drive advantage

• Deliver data analysis to achieve business goals

• Guide the development of data strategy, and optimise systemsarchitecture

• Deliver data applications for clients to access data using our internal capability and the best available talent in the market

12

Parity Consultancy Services (“PCS”)

Revenues Up

31%

Improves Group

marginsTrust

Engagement


Helping clients recruit professionals to support IT and business change programmes

• Deep knowledge of skill verticals

• Detailed understanding of industry sectors

• Passion and commitment through unrivalled relationships and exceptional service

13

Parity Professionals (“PP”)

Perm Fees up

16%

Contract Placements

up 9.5%Scale

Market Intelligence


INCREASING STRUGGLE

FOR SINGLE ‘TRUTH’

LARGE SYSTEMS SLOW TO CHANGE

DATA INTEGRITY A REAL ISSUE

14

NETWORK CAPACITY A

CONSTRAINT ON DATA

MANAGEMENT

DATA STORAGE

COSTS CONTINUE

TO FALL

PRIVACY AN ENDURING CONCERN

CONTINUING IT SKILLS

SHORTAGES

AI ATTRACTING

GROWING INTEREST

“WAIT & SEE”

APPROACH TO

BLOCKCHAIN

USE OF DATA

INSIGHTS LIMITED BY

USER EDUCATION

Our Observations


Strategic Focus

• Blending the understanding of analytics and technology with

• Ability to deploy people with best skills available

• People led, free from lock-in to exclusive technologies • Strong focus on relationships, building higher margins

and repeat revenues

• Focused on profitable growth in every part of the business• Controlled central costs • Creating an operation that is responsive to the evolving

data market and the need for flexible talent

15

Management

Focus

Service


• Strengthened data expertise and marketing capability

• Strong and stable platform for growth with flexible access to world-class skills

• Invest to move up the value chain with consultancy supporting group margin improvement

• Increase penetration and brand awareness in niche recruitment markets

16

Outlook and Summary

Strategy

Structure


• Short-term client-side delay on one large contract but rest of the Group performing in line with expectations

• Expect a stronger second half, in line with traditional seasonality and expectations for the year as a whole

17

Outlook and Summary

Confidence

CurrentTrading

• Growth in both businesses, targeting PCS growth to 50% of group contribution over time to improve group profitability, leveraging additional revenues and ensuring scalability for consistent growth


Appendix18


John Conoley

Non-executive Chairman and Chairman of the Nominations Committee and member of the Remuneration and Audit Committees

John Conoley joined the Board as Group non-executive Chairman on 27th April 2017, and is Chairman of the Nominations Committee. John Conoley brings over 30 years IT industry knowledge and significant executive and non-executive Board level experience of AIM listed technology software and services businesses. John’s current roles include eServGlobal, the innovative mobile financial services plc, where he has served as both Non-Executive Director and is currently Executive Chairman. He previously served as CEO of London listed Psion PLC, and as a Non-executive Director of NetDimensions, the talent management technology platform.

David Firth

Non-executive Director and Chairman of the Remuneration and Audit Committees and member of the Nominations Committee

David Firth was appointed to the Board as a non-executive Director on the 14 September 2016, and is Chairman of the Remuneration and Audit Committees. David was previously the Finance Director of Penna Consulting plc for over 16 years and has a wealth of experience in the people management and consultancy markets. Prior to that, David has held senior finance positions in public companies across a number of sectors including financial markets, recruitment, IT services, motor retailing and advertising. He was a member of the finance team at Parity for the period 1993 to 1999 and served as its Group Finance Director from 1995.

Alan Rommel

Chief Executive Officer

Alan Rommel is the Chief Executive Officer of Parity and was appointed to the Board on 12 August 2015. Alan joined Parity following completion of his degree in Economics and Business Studies from the University of Sheffield. He has over 20 years recruitment experience and a solid understanding of the industry, having spent 5 years as MD of Parity Resources before promotion in 2013 to CEO of Parity Professionals. In addition to holding a number of senior posts within the Parity Group, Alan was elected to the APSCo (The Association of Professional Staffing Companies) Executive Committee for 3 terms covering the period 2010 – 2014.

Roger Antony

Group Finance Director

Roger Antony, Group Financial Director, was appointed to the board on 22 April 2016. Roger had been with Parity for over 18 years prior to his appointment, holding the position of Group Financial Controller since 2006, and prior to that the role of Financial Controller for the International Resources Division. Roger joined the Group after qualifying as an accountant in 1997, and previously held managerial roles within a variety of listed entity finance departments. He has a thorough understanding, and experience, of the IT Services sector.

19

Board Members


(20th September 2018)

Total number of shares in issue:102,624,020 2p Ordinary Shares

Percentage of shares not in public hands is 11.72%

20

Key Shareholders

Shareholder Name Amount % Holding

Helium Rising Stars Fund 11,412,851 11.12%

Timothy Watts 8,750,000 8.53%

Barclays Wealth 7,969,662 7.77%

David Courtley 6,566,031 6.40%

Interactive Investor 5,861,684 5.71%

Citrine Investments 5,558,766 5.42%

Canaccord Genuity (Hargreave Hale) 5,000,110 4.87%

Hargreaves Lansdown 4,735,471 4.61%

Dominion Holdings 4,400,000 4.29%

Killik Asset Mgt 3,830,421 3.73%

Equiniti Financial Services 3,629,740 3.54%

Redmayne Bentley 3,529,697 3.44%

Brewin Dolphin 3,519,627 3.43%

interim results to 30 june 2018 - parity · 2019. 7. 24. · • exit from final legacy non-core...

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