Parity Regulatory News (PTY)

Parity Group plc

Trading Update

Parity Group plc (AIM: PTY), the UK information and marketing communications technology group, announces the following pre-closing trading update.

Trading

The Board is pleased to report that, notwithstanding slower growth than expected at Parity Professionals and the restructuring of Golden Square, the Board expects *EBTIDA for the year ending 31 December 2014 to be in line with current market expectations.

Parity Professionals Division

Parity Professionals, under Executive Chairman Paul Davies, has grown revenue and profits this year. The division has continued to automate its processes across both its business units with both Cloud and internal IT solutions.

The talent management business has renewed two major graduate selection and development contracts and continues to grow its customer base particularly in the Food and Education sectors. A new range of training courses is also under development.

The long established IT staff agency business has seen margin pressure due to certain customers appointing gatekeepers for temporary staff contracts. In response, sales efforts are being re-focused on alternative areas which, whilst improving margins, has reduced short-term contractor growth.

SuperCommunications Division

The SuperCommunications division, under Executive Chairman Andy Law, targets the high growth market resulting from the need for brands to transform their operations in order to compete in today's fast growing e-commerce technology world.

The Golden Square content production and post-production business was acquired from administration in April at below fixed asset value, and restructured over the last six months. A reduced core business has now exited from its main office premises on which the lease assignment was not taken, and moved to an existing smaller office. As expected there were non-recurring restructuring costs for Golden Square, which are expected to be around £0.6m; mostly comprising employee and property related costs.

The cornerstone Business Transformation advisory business has already completed the initial phase of a significant project for a major online insurance brand in the key focus area of "business transformation through data-led technology", and is in discussion with several other brands. Significant IT solutions contracts have also been won in recent months.

Our Content Production business now comprises Inition and Golden Square. A wide range of experiential projects has been delivered by Inition including a flying wing installation to Dubai last week. The highly successful TopShop Oculus Rift experience at London Fashion Week has led to a range of new such VR opportunities.

A new Business Development unit has been created this year; researching acquisition opportunities and taking ideas and solutions developed by Content Production and exploiting them where there is an exciting product-based market opportunity. A number of implementation projects have already been won based on an augmented reality property visualization product, including one in the US through the newly appointed San Francisco agent.

Research & Development

The re-orientation of Inition towards a new scalable product strategy required an R&D investment this year by SuperCommunications of around £0.4 million. Development projects are ongoing, based on initial client orders for custom solutions, to ensure that real demand exists. The first product offering is in augmented reality for commercial property, stadium and shopping mall pre-visualization. Both R&D and customer projects are also ongoing in the exciting new field of immersive virtual reality using smartphone-linked 3D Goggles and experiential "flying wing" installations.

The Groupseer marketing search engine, being developed with Royal Holloway University, will complete development of its first test implementation this year. Market research in the first half of 2015 on live volume data will indicate the scale of the market opportunity for this innovative technology.

Board Appointment

As announced on 28 November 2014, the Board was pleased to welcome the Executive Chairman of SuperCommunications, Andy Law, as a main Board director.

Andy joined us in February 2014 to lead our digital marketing initiative. He has created the division with its unique strategic offering, bringing the key parts together and leading its management team.

Andy has held senior management positions in various international advertising agencies. In the 1990s he created St Lukes - a new style of agency which is credited with changing advertising industry methodology. More recently he has consulted with the top management of a number of global brands, written successful business books and chaired conferences including global leader forums at Davos.

Future Prospects

This extremely busy period, particularly in SuperCommunications, reflects the Board's clear target to enter next year with both divisions having the strategy, management, skills and momentum to produce a significantly improved financial performance for shareholders.

Parity Professionals is integrating its two businesses into one service offering, and is developing a new strategic approach, targeted at improving its growth opportunity in the coming years.

SuperCommunications is now very well positioned to generate growth from its core business transformation skills, content production and latest technology product offerings. It will be important to further increase both IT and e-commerce consultancy skills in the near term to meet expected demands. Partnerships are being forged with high quality niche businesses in relevant skill areas.

The Board looks forward to 2015 with confidence and is focused on delivering significant profitable growth in both divisions, and cash generation, to justify the investments made by loyal shareholders, staff and directors in recent years.

* EBITDA is before share-based payments and non-recurring items.

Parity Group PLC 0845 873 0790

Philip Swinstead, Chairman

Alastair Woolley, Finance Director

MHP Communications 020 3128 8100

John Olsen

Investec Bank PLC 020 7597 5970

Andrew Pinder

Patrick Robb

Dominic Emery