Parity Group publishes trade update
The board of Parity Group has announced an update on trading ahead of its financial year end.
The group's profitability has continued to improve. As a result, adjusted EBITDA1 for the year ending 31 December 2013 is now expected to exceed £2.5 million, an increase of over 80% on the previous year.
As previously disclosed, the board had set in motion an internal decentralisation to divide the group into two distinct business divisions - Parity Professionals and Parity Digital.
The board have now confirmed that this reorganisation is complete and the two businesses, each with a chief operating officer, will be reported as separate divisions in the group's 2013 results for the year ending 31 December 2013.
The Parity Professionals division predominantly comprises the IT staff agency Parity Resources which has continued to expand the number of contractors to approximately 950. The division's small Talent Management group has successfully won business this year but has seen some delays in the call-off of these training services due to stretched educational budgets.
The Parity Digital division contains Inition, a pioneering creative 3D technology company, and a Systems business, providing business intelligence and web portal solutions.
Trading in the Parity Digital division has been very positive this year with Inition making significant progress in its financial performance. Prior to its acquisition by the group, operating profit to 31 March 2012 was £0.065m.
The terms of the acquisition included an earnout target of generating £0.3m operating profit for the year ended 31 March 2013 which was achieved and this year it has continued to improve its performance towards its second earnout target of £0.5m operating profit for the year to 31 March 2014. The Systems business' revenues remain stable with good profit margins.
Following the establishment of the two separate divisions the board intends to move forward on its strategic plan for the Parity Digital division. The success of the acquisition of Inition in May 2012, the first acquisition for this division, has caused the board to refine its strategic plan and it is now focused on expanding its creative technology hub selling to brands, government and the marketing services industry. A strategy group oversees the implementation of this plan including the continuing evaluation of acquisition prospects, the funding options for these and other opportunities to further enhance group earnings through maximising operational efficiencies.
The board indicates progress on the group's underlying operating profitability at the adjusted EBITDA1 level. It has reported that, notwithstanding the delays currently being experienced in the Talent Management business, the group's profitability has continued to improve on the already strong results announced for the first half of the financial year. Adjusted EBITDA1 for the year ending 31 December 2013 is now expected to exceed £2.5 million, representing an increase of over 80% on the previous year.
Looking to 2014, the board expects its Parity Professionals business to continue good growth as the economic recovery progresses, and Inition to make further progress within its own high-growth market. It will continue to seek to drive further shareholder value and looks forward to reporting on its updated strategic plans and their implementation over the next two years.
1 "adjusted EBITDA" being the statutory measure from continuing operations, prior to non-recurring items, strategic initiative costs, acquisition costs and share based compensation.