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AIMprospector

Reinvented recruiter improving fast Parity Group is a recruitment company that joined AIM from the main market in 2013. The company is one year into a significant restructure. There has been massive upheaval at board level since the appointment of Alan Rommel as CEO in August of last year. September 2015 saw Michael Aspinall take the role of Group FD and two founder directors stepped down in November 2015.

stock was beginning to look untradeable Mr Aspinall then left the group in April 2016 and was replaced by Roger Antony, an internal hire. A new nonexecutive director was appointed in September of this year. In October, it was announced that the Group Chairman would depart “in the next few months” and another nonexecutive left. It may appear that no-one wishes to work alongside Mr Rommel. However, the share price graph of recent years suggests a failing company in desperate need of massive change. Shareholders may be telling themselves that “the new lot cannot do a worse job than the last”. The Parity board was clearly failing and with a declining market capitalisation, the stock was beginning

business refocussed on Parity Professionals www.aimprospector.co.uk

to look untradeable to serious investors. On assuming leadership, Mr Rommel announced a £1m costcutting exercise. Ambitions to acquire businesses operating in the digital communications space were scrapped as the business refocussed on Parity Professionals, a division dedicated to ensuring that client staff are “sourced, developed and informed in today’s dynamic decision making environment.” Mr Rommel’s first set of full year results showed Group revenues of £84.5m and positive cash flow for the first time in five years. The group reported net debts of £7.4m, ahead of the £6.6m reported at the end of 2014. Parity reported trading across two divisions in 2015, Parity Professionals (recruitment) and Parity Consultancy Solutions, an IT consultancy providing Business Intelligence solutions. In 2015, Parity Professionals delivered £78.2m of revenues and a “divisional contribution” of £2.3m. The consultancy operation was vastly more profitable (likely skewed by the fact that much of the recruitment division revenues will be pass-through i.e. contractor pay), reporting a contribution of £0.8m from £6.7m of revenues. Management’s plan is to deliver growth by assisting businesses with

consultancy division was 17% ahead significant management and staffing strategy (via consultancy operations) and then to provide the people to facilitate via the traditional recruitment operations. This strategy appears to be working. Results for the first six months of 2016 showed all the headline figures moving in the right direction and an extension of banking facilities out to 2018. Parity Professionals enjoyed a 15% increase in revenues and the consultancy division was 17% ahead, where a significant contract with the Ministry of Defence was extended. It will be a long way back for Parity but newsflow demonstrates that the recovery is underway. Parity Group (LON:PTY) FOR Momentum in recovery Winning contracts AGAINST Small scale operations Significant debt Market cap Bid:offer P/E (forecast) Yield (forecast) 52week low:high

£10m 9.25p:9.75p 10.1 0% 6.8p:15p

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November 2016 AIM Prospector  
November 2016 AIM Prospector  

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