Parity Group PLC – Trading Update
Parity (AIM:PTY), the data and technology focussed professional services business, announces that it has been advised that a framework contract for the placement of staff it has with the Scottish government is not being renewed. The Company will continue to generate revenue from the existing placements it has made under the framework contract for the next two financial years but will not make any new placements.
The impact on Parity’s financial performance will be principally at the revenue level; while this legacy type of contract has been significant in revenue terms it has provided relatively low levels of margin, the loss of which will be offset by costs savings mainly related to serving this specific contract during the period of contract run off.
Therefore the Company does not expect a material impact on profits and continues to expect to meet current market expectations for profit performance in the current financial year. The exact impact on revenues from the loss of this contract is hard to quantify but with revenues in the wider Group running slightly ahead of management expectations, the Company estimates that its revenues for the year as a whole are likely to be around 10 per cent lower than current market expectations. In the longer term the end of this contract will improve the Group’s net margin performance albeit from a lower level of revenue, consistent with the longer term direction of travel for Parity PLC.
Parity will provide further detail of its future strategic direction under its recently appointed CEO, Matthew Bayfield, when it announces its preliminary results on 16th April 2019.