WHI First Light: Parity Group (PTY) - Positive update, P&L inline, cash encouraging
Parity this morning reports that it has exited 2019 positively, with H2 trading as expected, suggesting a marginal profit at the PBTA level. Cash collections were exceptionally strong in December, resulting in a positive year-end net cash position – hence significantly better than our £1m net debt forecast. The company had previously highlighted progress with its new model, which is designed to generate an increased proportion of higher margin work and meaningful new potential to target major markets in the data services and data analytics markets. With the company both investing to grow and taking out costs (headcount reduced 35%, £2.2m+ cost-savings), the strong outcome on cash (>£1m ahead of our expectations) further underpins the change programme and the future growth trajectory, again positive.
14 Jan 20
Comprehensive change, new potential, multi-billion $ markets
PTY is a brand leader in specialist consulting and strategic recruitment linked to data services. As a leading player in its field, the company is now seizing the opportunity to grow profits by lifting its high-value data service activities as a share of the mix. Recent H1 results reflected the significant transition that PTY is going through, while also heralding better numbers further down the line as the mix moves towards higher value services (also helped by success in removing a net £1.2m costs). Complementary activities directly linked to the core data focus are being developed. So far in this process, the company has seen a bigger reorganisation programme than originally anticipated – but has also highlighted the extra potential that this is generating. The company’s target market of data services is estimated at $10bn-plus and growing rapidly, while early signs from PTY’s change programme indicate the potential for meaningful client acquisition, with new clients such as Compass reflecting the opportunity for the business to scale up substantially. The recent announcement of Heads of Terms reached with a partner, Integumen plc, in delivering intelligent data management systems, is potentially a major step forward (to be finalised by 18/12).
09 Dec 19
Transformation programme underway, modest profits but clear vision
H1 results from PTY this morning include the first months of the company’s transformation programme, which was initiated by new CEO Matthew Bayfield in February. Removal of a net £1.2m costs is a big win for the company at this stage in its development, while cost reductions have also paid for vital strategic investment. The new strategic model provides for a range of complementary activies (consulting, learning, development and strategic recruitment) focused on the world of data and supported by a single sales / marketing force. PTY retains a meaningful brand and is known as a leading expert in its field. Broader and deeper than originally anticipated, the restructuring of the business has thrown up opportunites while having the anticpated short-term impact on the business which is reflected in our forecasts; and the first signs of success are apparent with the focus on higher margin activities driven by a new team.
20 Sep 19
Inline FY18A results from PTY this morning have been well-flagged by the company, which saw strong H1 results, but delays in H2 which impacted second half numbers. That said, the business has set in place strong new foundations for growth, led by a new CEO, who is expected to build on earlier stages of the turnaround. Moving to a strategic model which unites the different delivery streams of the company, and supported by a single sales / marketing force, investment in growth is expected to pay dividends in the future. With a strong brand and recognised expertise as a calling card, the company is well-placed to deliver in the substantial and rapidly growing data analytics market, has made new hires, including a new leader for consultancy services with a strong pedigree, and is rolling out a low-risk but margin-enhancing new organisational model.
16 Apr 19
PTY has updated the market this morning, disclosing the termination of its contract to supply staff to the Scottish government. The contract supplied sizeable revenues but little in the way of profits, because of the low margins on this kind of recruitment work. The termination does not affect existing placements – PTY will continue to benefit from these; however it will no longer be working on new placements for this client.
29 Mar 19
This morning’s announcement from PTY is a forceful reminder of the long-term experience and skills which the company is able to bring to bear on complex, sensitive and major developments for its clients. A two-year contract valued at c.£2.25m p.a., we believe this reflects both the company’s capability in partnering with the client’s existing inhouse digital team and the focus of the business as an integrated operator with both a Consultancy activity and its “Professionals” recruitment side.
26 Feb 19
This morning’s update from PTY indicates new moves to generate increased growth and efficiency; and unveils a new CEO, who will build on the stages of the turnaround that have already been achieved. Last year is reported to be in line with expectations set in November – there are no changes in our FY 2018E forecasts. However the group sees significant opportunities in the data propositions that the business harbours, and is set to lift investment in the coming year in personnel, branding and technology. This will lead to FY 2019E numbers being reduced, but the investment will contribute to a sharp focus which is expected to benefit the company subsequently. With a recognised brand, and a strong IT and data culture, we expect further opportunities to emerge for the company in a growing market.
05 Feb 19
H2 growth held back – initiatives underway
Today’s update from PTY highlights initiatives underway to generate long-term profitable growth going forward and to retain the focus on the higher margin Consultancy Services (CS) business. However in terms of the current year, the announcement discloses disappointing news on contract delays. Notably the sizeable contract which the company highlighted as problematic when it reported H1 results in September has seen continued delays, and is not expected to contribute in the current year. In combination with similar but unrelated issues, a break-even result is now expected in H2, causing us to pull our forecasts back for the current year and FY2019E. Restructuring and cost-cutting are expected to contribute to the coming year, when increased CS sales should also aid recovery. Notwithstanding this, FY2019E forecasts are also downgraded to take account of the challenges which have been seen in H2-2018E.
02 Nov 18
Caledonia Mining (CMCL) – Corporate – Blanket mine resource update | Jersey Oil & Gas (JOG) – Corporate – Interims | Parity Group (PTY) – Corporate – Inline H1’s generate double digit profit growth; drivers strong | Modern Water (MWG) – Corporate – Interims – progress continues; FY expectations unchanged Petards (PEG) – Corporate – Interim results illustrate a good performance and strong visibility | WEY Education (WEY) – Corporate – Nigerian strategy taking shape
PTY CMCL JOG MWG PEG WEY
20 Sep 18
Data-driven; new wins and market-leading appointments
Focussing on data solutions and IT project delivery consultancy, plus the supply of staff for these areas, PTY recently succeeded in divesting the non-core Inition business, a further reflection of the group’s enhanced focus. Following on from this, last week’s AGM update provided more indications that the management team has a meaningful strategy for taking this business forward, and that the plan is working. The core approach is to grow the Consultancy Services business, which is a beneficiary of growth in the data market. The recent update highlights further wins, including in the health sector, where PTY has for a long time had a strong position. GDPR has turned out to be if anything, more of an opportunity than a risk for PTY. On the Professionals front, the major Primark contract recently announced is now underway, and there have been other noteworthy wins with household name clients. For the present, there is no change to our estimates, though we note the highlighted potential to pay dividends, not yet in our forecasts. The bid pipeline remains strong. Our fair value assessment (+34%) remains unchanged.
30 May 18
Last year, Venture Capital Trusts raised the second-highest amount since their launch in 1995, according to the Association of Investment Companies. This is good news for smaller companies seeking growth finance. Changes to pension regulations mean that VCTs are expected to continue to attract investors. Individual qualifying companies can receive up to £10m from VCT investors.
PTY KEYS NBI MPM BOO W7L
01 May 18
Disposal completes emerging focus
Friday’s announcement that the PTY has succeeded in selling its non-core Inition business leaves a clean, simplified and well-focused business in which the company is progressively raising the higher value share. The divestment effectively removes a last distraction and is the culmination of a much broader long-term process led by new management over the past eighteen months. As the recent results revealed, the double digit margin Consultancy Services (CS) division, which is dedicated to providing data solutions and delivering IT projects for PTY’s clients, now accounts for a third of the group’s EBITDA, and is well supported by the other ongoing business, the Professionals division. FY-17 results were strongly ahead YoY as well as a touch ahead of expectations, leading to EPS upgrades. With this loss-making business disposed of, and following a good set of FY results, we view the prospects for the re-focussed group as positive.
23 Apr 18
Allenby Capital HCM Update 16.04.18
Hays plc (HAS.L, 182p/£2,639m) Q3 trading update to March 2018 (12.04.18) | Hydrogen Group plc (HYDG.L, 36.5p/£12.2m) Final results to 31 December 2018 (10.04.18) | PageGroup plc (PAGE.L, 537p/£1,755m) Q1 trading update to 31 March 2018 (11.04.18) | Parity Group plc (PTY.L, 11.1p/£11.3m) Final results to 31 December 2018 (10.04.18) | Robert Walters plc (RWA.L, 699p/£528m) Q1 trading update to 31 March 2018 (10.04.18)
PTY HAS HYDG PAGE RWA
16 Apr 18
Strong results reflecting successful shift towards data management
PTY’s results today provide further evidence for the success of new management over the past 18-24 months in shifting the business mix towards higher margin activities. The double digit margin Consultancy Services (CS) division, which provides clients with data management solutions, grew profits by close to 30% and lifted its share of EBITDA to a third, while building a strong order book. It was encouraging last month to see a major win in the Professionals business (Primark) together with the MoD, BAT and Education and Skills Funding extensions (annual) in CS, with the result that the higher margin business sees well over half its revenue covered in FY2018A three months in to the year. Results are slightly ahead of expectation and we are modestly increasing EPS forecasts; in any case we view this morning’s announcement as representing an excellent outcome for a business with numerous opportunities in the hands of a fully engaged team.
10 Apr 18
Encouraging wins following on from positive update / upgrades
With PTY’s profits having grown substantially over the past three years under new management, the Primark Stores contract announced today is the first major Managed Service Provider (MSP) win since this process started, and goes to show again how the company is increasingly achieving traction with significant and prestigious household name clients. It is encouraging at the same time to see the extensions in PTY’s MoD, BAT and Education and Skills Funding contracts, all of which add increased visibility to future revenues - notably >£5m on an annual basis being ascribed to three major contract extensions, plus a further £20-25m over three years on the Professionals front for the MSP. There is no change in numbers today, but we are a mere 2-3 weeks from the company’s final results announcement scheduled for 10th April. With the increasing complexity and spend in the digital space for PTY’s client-base, we see many more future opportunities.
22 Mar 18
HCM Update 02.01.18 (EMR.L; PTY.L; RWA.L; SVCA.L; STHR.L) RM
Empresaria Group plc (EMR.L, 90p/£44.1m) Initiation of share buy backs (13.12.17) | Parity Group plc (PTY.L, 9.375p/£9.6m) Full year trading update to 31.12.17 (13.12.17) | Robert Walters plc (RWA.L, 592p/£446m) Trading update to 30.11.17 (12.12.17) | Servoca plc (SVCA.L, 23p/£28.3m) Preliminary results to 30.09.17 (12.12.17) | SThree plc (STHR.L, 368p/£479m) Full year trading update to 30.11.17 (15.12.17)
PTY EMR RWA STEM SVCA
02 Jan 18
HCM UPDATE - (EMR.L, HVN.L, HYDG.L,KLN.L, NAK.L, PTY.L)
Empresaria Group plc (EMR.L, 134p/£65.7m) Appointment of COO | Harvey Nash Group plc (HVN.L, 87.125p/£64m) Acquisition of Crimson Limited | Hydrogen Group plc (HYDG.L, 31.5p/£10.4m) Interim results to 30 June 2017 | The Kellan Group plc (KLN.L, 0.65p/£2.2m) Purchase of Secured Fixed Rate Loan Notes | Nakama Group plc (NAK.L, 1.675p/£2.0m) Resignation of CEO | Parity Group plc (PTY.L, 10.25p/£10.5m) Interim Results | SThree plc (STHR.L, 337p/£437m) Q3 Trading Update
PTY EMR HVN HYDG KLN NAK STEM
18 Sep 17
HCM WEEKLY UPDATE - 24.07.17
Empresaria Group plc (EMR.L, 151p/£74m) H1 Trading Update to 30 June 2017 | FDM Group plc (FDM.L, 915p/£984m) H1 Results to 30 June 2017 | Gattaca plc (GATC.L, 303p/£94m) Full year Trading Update to 31 July | Impellam Group plc (IPEL.L, 648p/£326m) H1 Results to 30 June 2017 | Nakama Group plc (NAK.L, 1.5p/£1.8m) Full Year Results to 31 March 2017 | Parity Group plc (PTY.L, 10.25p/£10.4m) H1 Trading Update to 30 June 2017 | Robert Walters plc (RWA.L, 473p/£352m) H1 Results to 30 June 2017 | Staffline Group plc (STAF.L, 1,211p/£337m) H1 results to 30 June 2017 | SThree plc (STHR.L, 328p/£421m) H1 results to 31 May 2017
PTY EMR FDM GATC IPEL NAK RWA STAF STEM
24 Jul 17