Parity Regulatory News (PTY)

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO THE SAME WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

Parity Group plc

("Parity" or the "Company")

Notice of General Meeting

to propose the Cancellation of Listing on the Official List, Application for Admission to AIM and Proposed Placing of 25,925,926 new Ordinary Shares at 27 pence per share

The Board of Parity is pleased to announce that it will post a circular to shareholders convening a General Meeting ("GM") to be held at the offices of Pinsent Masons LLP, 30 Crown Place, London, EC2A 4ES at 10.00 a.m. on 5 June 2013 at which it will seek shareholder approval, amongst other things, for the proposed cancellation of admission to the premium segment of the Official List and to trading on the London Stock Exchange's main market for listed securities ("Delisting") and details its intention to apply for admission to trading on AIM ("Admission") .

In conjunction with the proposal to seek Shareholder approval for the Delisting and Admission of the Ordinary Shares to trading on AIM, the Board is also proposing to raise £7 million (before expenses) by way of a placing of 25,925,926 new Ordinary Shares at a price of 27 pence per New Ordinary Share representing a 23.4 per cent. discount to the Closing Price of 35.25 pence per Ordinary Share on 16 May 2013 (being the latest practicable date prior to the announcement of the Placing).

The Listing Rules require that if a company wishes to cancel its listing on the Official List then it must seek the approval of not less than 75 per cent. of its shareholders in a general meeting voting in person or by proxy. Accordingly, a special resolution is being proposed at the General Meeting to authorise the Board to cancel the listing of the Ordinary Shares on the Official List and to remove such Ordinary Shares from trading on the Main Market and to apply for admission of the Ordinary Shares (including the Placing Shares) to trading on AIM.

The Resolutions are inter-conditional, therefore, if any of the Resolutions are not passed the Delisting, Admission and Placing will not proceed. The Placing is conditional, inter alia, on the passing by the Shareholders of the Resolutions at the General Meeting, including a special resolution which will give the Directors the required authority to disapply statutory pre-emption rights in respect of the allotment of the Placing Shares. Subject to all relevant conditions being satisfied (or, if applicable, waived), it is expected that the Ordinary Shares (including the Placing Shares) will be admitted to trading on AIM on or around 5 July 2013.

The net proceeds of the Placing will enable the Company to initiate its acquisition strategy in the digital media market to seek to become a significant early mover in the new creative technology sector of this market, as set out in previous announcements to shareholders. Further details of the reasons for the Placing and use of proceeds are set out below.

The circular will be posted shortly, following which it will be available on the Company's website at www.parity.net and will be submitted to the National Storage Mechanism where it will be available at www.morningstar.co.uk/uk/nsm.

Background of the Delisting, Admission and Placing

The Board believes that a move to AIM will provide a market and environment more suited to the Company's current size and strategic intent to enhance shareholder value by organic growth and acquisitive activity in the digital media market. It will also simplify the on-going administrative and regulatory requirements of the Company. The Delisting and Admission will offer greater flexibility to the Company, particularly with regard to corporate transactions, and should therefore enable the Company to execute certain transactions more quickly and cost effectively when compared to the requirements of the Official List. Given the Company's strategy, the Board believes that the move is likely to be of significant benefit to the Company going forward.

AIM will provide Shareholders with a market on which to potentially trade their Ordinary Shares whilst providing the Company with continued access to equity capital, including the ability to improve future liquidity for the benefit of all Shareholders.

If the Resolutions are not approved by Shareholders the Company intends to continue to execute its stated strategy in the digital media market at a much slower pace with individual acquisitions funded separately through equity issues proposed separately to Shareholders for approval. The process will be more difficult due to the lesser competitive position of the Company when seeking to agree acquisitive deals; compared to operating with an AIM quotation and the available cash resources which approval of the Resolutions and completion of the Placing would provide. The Board believes that this would significantly slow the rate at which the Company can deliver enhanced value to shareholders.

Background to the Placing

The Board's strategic mission remains the significant improvement of shareholder value by focussing on the Group's two key future growth areas - its established professional staff development, selection and placing business known as Parity Professionals; and the creation of a significant creative technology business in the digital media market, which is increasingly underpinned by the rapid pace of relevant digital technology. The Company's Systems and Inition businesses form the basis of the new business known as Parity Digital Solutions.

As previously disclosed in the Company's preliminary financial results for the year ended 31 December 2012, the Board has set in motion an internal de-centralisation to separate the Company into these two distinct business divisions - Parity Professionals and Parity Digital Solutions. The Board believes that the revised internal structure will be more efficient and will enable further cost savings, as well as allowing a clearer focused strategy for each division. As part of the delineation of the divisions internally, on 7 March 2013 Stephen Whyte was appointed to the Board as Chief Executive Officer of Parity Digital Solutions. Stephen has extensive knowledge of, and over 25 years' experience in, the marketing services, digital media and creative industry sectors, both in the UK and internationally.

With the acquisition and subsequent integration of 3D specialist Inition in May 2012 the Company made its first move into the growing market for digital technology skills in the media world which contributed revenue of £1,892,000, a contribution of £258,000 and a profit before tax of £214,000 to the Group results from the date of acquisition to 31 December 2012. Since that time the Board has continued to progress its acquisition strategy in a determined, and careful manner and believes that it has now, following a detailed review of the sector, identified a number of significant acquisition opportunities in the UK digital media market.

The Company has engaged Results International to facilitate the identification of potential acquisition targets. The targets are separated into three market areas:-

a) content production;

b) brand strategy and data analytics; and

c) internet-related services such as website and App development, mobile and social media.

The Company has used as guidance for its current acquisition search the ranges of net revenues of approximately £5 million to £15 million and approximately £0.5 million to £2 million of EBITDA.

The Board believes that there is a significant gap in the digital media services market for an integrated mid-size business which can provide brands with strategic, creative and analytics services underpinned by the latest digital technology. Within its Parity Digital Solutions division, the Board believes that the proceeds from the Placing will allow the Company to begin to create a competitive proposition in the UK, with the aim of offering an integrated digital marketing services solution.

The Directors believe that the proposed move to AIM will improve the Company's competitive negotiating position with acquisition counterparties and enable the Company to move more quickly in effecting acquisitions, mitigate execution risk for vendors and to reduce its transaction costs. As the Company's Ordinary Shares are currently listed on the premium segment of the Official List, the Company is subject to a number of regulatory requirements which would not apply were the Delisting and Admission to occur. These regulatory requirements include obligations in respect of significant transactions under Chapter 10 of the Listing Rules, obligations regarding the form and content of circulars to be sent to Shareholders under Chapter 13 of the Listing Rules and the obligation to produce a prospectus where shares are being admitted to a regulated market and an exemption is not available.

Significantly, the Company's proposed move to AIM would enable the Company to execute acquisitions in line with its strategy without seeking Shareholder approval for the acquisition provided that the acquisition did not exceed 100% in any of the relevant class tests, or result in a fundamental change in the Company's business, board or voting control, and thereby constitute a reverse takeover under Rule 14 of the AIM Rules for Companies. By contrast, Shareholder approval would be required in the event that a proposed acquisition exceeds 25% in any of the relevant class tests set out in Chapter 10 of the Listing Rules.

The Company's Chairman has nearly 35 years experience in the software and information technology sector having created two listed companies in this professional services area which have achieved in their time FTSE 250 status. The Company has been providing professional services in the information technology field for over twenty years. Over the time it has carried out successful projects in consultancy, training, systems integration and the provision of IT skills and project staff. The Company believes that its management's experience in the professional technology services field is highly applicable to the new internet-enabled digital marketing field which increasingly depends on the development of technology solutions. There is management and technology skill overlap, and the customers are both public service and large corporates in both fields.

The Board expects that the consideration for any acquisition will be by way of a cash payment or a mixture of cash and shares in the Company. The Placing proceeds will allow the Company to be competitive, offering timely completion of one or more deals at sensible prices and reasonable cost, to Shareholders' benefit. The Board has indicated that this is a pivotal year for the new strategy and believe that the Placing proceeds and Admission to AIM will enable the Company to progress expeditiously with its acquisitive activity.

The Company has conditionally raised gross proceeds of £7 million through the Placing of 25,925,926 new Ordinary Shares with new and existing institutional investors. In addition, the Company has received strong indications of support for its acquisition strategy in the digital marketing field going forwards from a number of these and other potential investors. The Placing would raise approximately £6.5 million for the Company, net of expenses.

Use of Proceeds

The net proceeds of the Placing will be used by the Company to fund one or more acquisitions by the Company, or members of its Group, of companies or businesses engaged in the digital media sector and to integrate the operations of such businesses within the Group. The Company has currently identified several targets which are at various stages of discussion. The net proceeds of the Placing will enable the Company to offer cash as part, or all, of the consideration to be paid under any such acquisition.

In particular, the net proceeds of the Placing will be used:

·; to pay, in whole or part, consideration in cash for one or more acquisitions £5.3 million

·; for the general working capital requirements of businesses acquired £1.0 million

·; to pay individual transaction costs for the proposed acquisitions £0.2 million

Details of the Delisting, Admission and Placing

In order to effect the Delisting, Admission and Placing, the Company will require, inter alia, Shareholder approval of the Resolutions at the General Meeting. The Resolutions, which will be set out in the Notice of the General Meeting in the circular, will authorise the Board to: (i) cancel the listing of Ordinary Shares on the Official List, remove such Ordinary Shares from trading on the Main Market and to apply for admission of the Ordinary Shares to trading on AIM; (ii) allot the Placing Shares and disapply statutory pre-emption rights in respect of that allotment; and (iii) in accordance with the Listing Rules, issue the Placing Shares at a price of 27 pence per new Ordinary Share, being a discount of more than 10 per cent. to the Closing Price of 35.25 pence on 16 May 2013 (being the latest practicable date prior to the announcement of the Placing).

Conditional on the Resolutions being approved at the General Meeting and the Placing Agreement not having been terminated in accordance with its terms, the Company will apply to cancel the listing of Ordinary Shares on the Official List and to trading on the Main Market and give 20 Business Days' notice of its intention to seek admission to trading on AIM under AIM's streamlined process for companies that have had their securities traded on an AIM Designated Market (which includes the Official List). Conditional on the Resolutions being approved at the General Meeting and Admission taking place, the Company will issue the Placing Shares.

It is anticipated that the last day of dealings in the Ordinary Shares on the Main Market will be 4 July 2013. Cancellation of the listing of Ordinary Shares on the Official List will take effect at 8.00 a.m. on 5 July 2013, being not less than 20 Business Days from the passing of the Resolutions. Admission is expected to take place, and dealings in Ordinary Shares (including the Placing Shares) are expected to commence on AIM, at 8.00 a.m. on 5 July 2013.

As the Ordinary Shares are currently listed on the premium segment of the Official List, the AIM Rules do not require an admission document to be published by the Company in connection with the Company's admission to trading on AIM. However, subject to the passing of the Resolutions at the General Meeting, the Company will publish an announcement which complies with the requirements of Schedule One to the AIM Rules comprising information required to be disclosed by companies transferring their securities from the Official List, as an AIM Designated Market, to AIM.

Information on the Placing

The Company has conditionally raised gross proceeds of £7 million by way of a placing of 25,925,926 new Ordinary Shares at the Placing Price. The Placing Shares represent 34.52 per cent. of the Company's issued share capital as at 16 May 2013 (being the latest practicable date prior to the publication of this announcement). The Placing Shares will represent approximately 25.66 per cent. of the enlarged issued share capital of the Company. The Placing Price represents a discount of 23.4 per cent. to the Closing Price of 35.25 pence per Ordinary Share as at 16 May 2013 (being the latest practicable date prior to the announcement of the Placing). The Placing Price has been set by the Directors following their assessment of market conditions and following a "book-building" exercise, which is a mechanism through which investor support for a fundraising is ascertained. The Directors believe that the discount to the Closing Price of 35.25 pence per Ordinary Share on 16 May 2013 is necessary to enable the Company to successfully complete the Placing at a level which will enable it to continue to pursue its strategy as described in the circular and, accordingly, believe such discount is in the best interests of Shareholders.

On Admission, existing Shareholders will suffer an immediate dilution of 25.66 per cent. of their interests in the Company as a result of the Placing.

In connection with the Placing, the Company has entered into the Placing Agreement pursuant to which N+1 Singer agreed, in accordance with its terms, to use reasonable endeavours to place the Placing Shares with certain institutional and other investors. As part of the Placing, each of Paul Davies, Group Chief Executive, and Philip Swinstead, Non-Executive Chairman, have subscribed for 555,556 and 925,926 Placing Shares, respectively. Immediately following Admission, their holdings are expected to respectively represent 1.26 per cent. and 12.97 per cent. of the issued Ordinary Share capital of the Company. In total, following Admission, the Directors are expected to hold Ordinary Shares representing 20.70 per cent. of the issued Ordinary Share capital of the Company.

The Placing is conditional, inter alia, on:

·; the passing of the Resolutions;

·; the conditions in the Placing Agreement being satisfied or (if applicable) waived and the Placing Agreement not having been terminated in accordance with its terms prior to Admission; and

·; Admission becoming effective by no later than 8.00 a.m. on 5 July 2013 (or such later time and/or date, being no later than 8.00 a.m. on 31 July 2013 as the Company and N+1 Singer may agree).

The Placing Agreement contains customary warranties given by the Company to N+1 Singer as to matters relating to the Group and its business and a customary indemnity given by the Company to N+1 Singer in respect of liabilities arising out of or in connection with the Placing. N+1 Singer is entitled to terminate the Placing Agreement in certain circumstances prior to Admission including circumstances where any of the warranties are found not to be true or accurate or were misleading in any respect or the occurrence of certain force majeure events.

The Placing Shares will be issued credited as fully paid and will rank in full for all dividends and other distributions declared, made or paid after the admission of the Placing Shares in respect of Ordinary Shares and will otherwise rank on admission of the Placing Shares pari passu in all respects with the existing Ordinary Shares. The Placing Shares are not being made available to the public and are not being offered or sold in any jurisdiction where it would be unlawful to do so.

Application will be made to the London Stock Exchange for the Ordinary Shares (including the Placing Shares) to be admitted to trading on AIM. On the assumption that, inter alia, the Resolutions are passed, it is expected that Admission of the Ordinary Shares (including the Placing Shares) will become effective on or around 5 July 2013.

General Meeting

The Resolutions to be proposed at the General Meeting are as follows:

1. as an ordinary resolution, to authorise the Directors to allot the Placing Shares;

2. as an ordinary resolution, to authorise the Directors to allot the Placing Shares at a price of 27 pence per new Ordinary Share representing a 23.4 per cent. discount to the Closing Price of 35.25 pence on 16 May 2013 (being the latest practicable date prior to the announcement of the Placing) for the purpose of the Listing Rules;

3. as a special resolution, to authorise the Directors under section 571 of the Act, to allot the Placing Shares pursuant to the Placing on a non-pre-emptive basis; and

4. as a special resolution, to authorise the Directors to cancel the listing of the Ordinary Shares on the Official List and to remove such Ordinary Shares from trading on the London Stock Exchange's Main Market and to apply for admission of the Ordinary Shares to trading on AIM.

Summary

The Board believes that the Resolutions are in the best interests of the Company and Shareholders as a whole. Accordingly, the Board unanimously recommends that Shareholders vote in favour of the Resolutions to be proposed at the General Meeting, as the Directors intend to do in respect of their own beneficial holdings amounting, in aggregate, to 19,428,588 Ordinary Shares and representing approximately 25.87 per cent. of the Company's current issued share capital.

Once posted, a copy of the Circular will be available on the Company's website at www.parity.net. Unless otherwise defined in this announcement, all defined terms used in this announcement shall have the meaning ascribed to them in the Circular.

For further enquiries, please contact:

A copy of this announcement will be published on Parity's website at www.parity.net. For the avoidance of doubt, neither the content of the Company's website nor the content of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement nor, unless previously published by means of a recognised information service, should by such content by relied upon in reaching a decision as to whether or not to acquire, continue to hold, or dispose of securities in the Company.

DEFINITIONS

The following definitions apply throughout this announcement unless the context requires otherwise: