PTY.L Regulatory News (PTY)

PARITY GROUP PLC

TRADING UPDATE

Parity Group plc ("Parity" or the "Company"), the data and technology focussed professional services business, provides an update on the publication of its 2019 full year results and a trading update.  

The Board of Parity is mindful of the recent requests from the FCA and the Financial Reporting Council for companies to delay the reporting of their financial results and following consultation with its auditors, the Board has decided to postpone the announcement of its annual results for the year ended 31 December 2019, which the Company had intended to announce today, 31 March 2020. Whilst Parity's audit process for the 2019 full year results is substantially complete, the finalisation of the audit process is currently being delayed by issues related to COVID-19. We will continue to follow the regulator guidance, whilst completing the final steps of our audit, in preparation for a new release date.

The information in relation to the Company's performance in 2019 remains as reported on 14 January 2020, namely that;

"Trading during the second half of 2019 has been as anticipated and expectations for full year adjusted profit before tax remain unchanged.

Cash collections were exceptionally strong during December 2019. As a result, the Group now expects to show a net positive cash position at the year end. At the 31 December 2018 the Group had a net debt position of £1.1m."

Trading in 2020 and outlook

With COVID-19 becoming a global pandemic in March 2020, the Board has been closely monitoring the outlook for the Company. Significant uncertainties as to the severity and length of the pandemic make it impossible, at this time, to accurately forecast trading in the current financial year. However the Company has undertaken measures to protect itself from a potential downturn in revenues which, combined with significant cost savings already achieved in 2019 of a gross annualised £3.3m, will help shield the business from a downturn. Since the year end we have instigated further organisational design and process mapping work that will deliver additional savings in 2020.

In addition, and in direct response to the COVID-19 pandemic:

· Management have agreed an across the board 20% reduction in salaries with all Directors and staff for the three months starting 1 April 2020.

· We are conducting a daily review of COVID-19 impacts with clients and contractors to assess supply and demand in as close to real time as possible. This review process is designed to give us the advanced warning required to be able to manage impacts on our business and to help clients fill potential gaps in their workforces.

Parity's business is heavily weighted towards the public sector, which accounted for approximately 70% of revenues in 2019. We are already seeing signs that Government expenditure will be more resilient as much of it is aligned to the provision of key public services. However due to the ongoing uncertainty caused by COVID-19, Parity expects there will be an impact on revenues for the current year, the exact extent of this impact remains impossible to quantify at this stage.

Parity remains well capitalised, with net cash at 31 December 2019, and a £10m existing credit facility providing a comfortable level of headroom through asset based lending. The government's VAT deferral measures will provide an additional useful help to cash flow in the current year. The Board remains confident that Parity has sufficient access to cash to enable it to trade its way through this period of global uncertainty.

The Board will continue to closely monitor all expenditure over the near term, to ensure the Company effectively manages its cost base and cash reserves in line with a quickly evolving situation.

Certain information contained in this announcement would have constituted inside information (as defined by Article 7 of Regulation (EU) No 596/2014) ("MAR") prior to its release as part of this announcement and is disclosed in accordance with the Company's obligations under Article 17 of MAR.

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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.