TIDMPTY
RNS Number : 4504J
Parity Group PLC
27 April 2022
PARITY GROUP PLC
FINAL RESULTS FOR THE YEARED 31 DECEMBER 2021
27 April 2022
Parity Group plc ("Parity" or the "Group"), the data and
technology focused professional services business, announces its
full year results for the year ended 31 December 2021.
Headlines
2021 has been a year of two halves with a management change
mid-year to refocus the business on its heritage and strength in
recruitment, rebuilding capability to take advantage of growing
market opportunities.
-- The management structure has been streamlined, creating a
much simpler, balanced organisation with clear lines of
accountability and unlocking cost to invest in key customer-facing
areas.
-- The recruitment operation has been rebuilt, is highly
motivated and operating well, delivering strong conversion rate
performance.
-- Improvements in customer relationship management and customer
satisfaction has begun to reverse previous declines in share of
customer-wallet. Amongst early signs of success with the refocused
strategy is a material increase in revenue at three of the Group's
top five customers and 'exclusivity' arrangements with two
others.
-- An academy has been set up to develop talent inhouse, this has already delivered success.
-- The overall cost base of the Group has been reduced and is significantly more scalable.
-- Adjusted EBITDA for 2021 of GBP0.1m.
-- The defined benefit pension scheme surplus increased from GBP0.2m to GBP1.9m.
Key Financials
Financial highlights for 2021
GBP million 2021 2020
--------------------------------------------- ------- ------
Revenue 47.0 57.8
Net Fee Income 4.1 5.6
Adjusted EBITDA (1) 0.1 1.1
Operating (loss)/profit before
non underlying items (0.3) 0.5
Loss before tax (1.1) (0.3)
Net (debt)/cash (GBPmillion) (2) (1.2) 0.2
Defined benefit pension surplus
(GBP million) 1.9 0.2
Notes:
1 - Adjusted to exclude non underlying
items
2 - Net (debt)/cash represents cash and cash equivalents
less loans and borrowings and excluding leases
Mark Braund, Executive Chairman of Parity Group plc, said:
"2021 has been a year of two halves, the first continuing the
pursuit of a strategy that failed to ignite, the second reclaiming
the original purpose of the Parity business, that of being a
trusted and successful provider of recruitment solutions.
Step-change improvements to back-office processes and systems
alongside the re-building of a capable and scalable recruitment
solutions team places us in a strong position to benefit from the
continuing demand for digital transformation. As organisations
adapt to new ways of doing business, we are supplying our clients
with the talented and experienced people that make this change
possible.
The response from colleagues has been tremendous; their
inspiration, enthusiasm and hard work has helped us rapidly refocus
the business and, combined with strong demand in Parity's core
markets, I believe we can re-establish growth and profitability in
the near to medium term"
Investor presentation
Mark Braund and Mike Johns will provide a live presentation
relating to Full year results to 31 December 2021 via the Investor
Meet Company platform on 4th May 2022 at 11:00am BST.
The presentation is open to all existing and potential
shareholders. Questions can be submitted pre-event via your
Investor Meet Company dashboard up until 9am the day before the
meeting or at any time during the live presentation.
Investors can sign up to Investor Meet Company for free and add
to meet Parity Group plc via:
https://www.investormeetcompany.com/parity-group-plc/register-investor
Investors who already follow Parity Group plc on the Investor
Meet Company platform will automatically be invited.
Contacts
Parity Group PLC www.parity.net
Mark Braund, Executive Chairman
Mike Johns, CFO + 44 (0) 20 8171 1729
finnCap Ltd (Nomad & Broker) https://www.finncap.com/
Jonny Franklin-Adams / Simon
Hicks / Fergus Sullivan +44 (0) 20 7220 0500
This announcement contains certain statements that are or may be
forward-looking with respect to the financial condition, results or
operations and business of Parity Group plc. By their nature
forward-looking statements involve risk and uncertainty because
they relate to events and depend on circumstances that will occur
in the future. There are a number of factors that could cause
actual results and developments to differ materially from those
expressed or implied by such forward-looking statements. These
factors include, but are not limited to (i) adverse changes to the
current outlook for the UK IT recruitment and solutions market,
(ii) adverse changes in tax laws and regulations, (iii) the risks
associated with the introduction of new products and services, (iv)
pricing and product initiatives of competitors, (v) changes in
technology or consumer demand, (vi) the termination or delay of key
contracts and (vii) volatility in financial markets.
Chairman's Statement
Parity is a people business. At its core, the Company has a
strong heritage and brand, recognised for its strengths in engaging
and placing talented professionals to carry out important work in
both the public and commercial sectors.
Over the last few years the business had lost sight of these
strengths as it pursued a strategy in a different direction.
Unfortunately, this did not deliver the performance expected.
A change in key management in June 2021 led to a review of
opportunities for the business. The decision was made to refocus on
Parity's core competence in recruitment solutions, where its brand
and reputation is strong and where market activity provides a
wealth of opportunities for value and growth.
As a result, 2021 became a year of two halves, the first
continuing the pursuit of a strategy that failed to ignite, the
second reclaiming the original purpose of the Parity business, that
of being a trusted and successful provider of recruitment
solutions.
As a supplier of critical and in demand IT and data skills we
have continued to meet the needs of existing clients during the
year and have had notable successes in the second half of 2021,
growing 3 of our largest accounts, one of which has more than
doubled in size over the last 18-months. We are suppliers on the
UK's key public sector frameworks for IT and Data resources and see
an opportunity in 2022 to grow this further.
High employee turnover over the previous three years and the
impact of working remotely from home during the pandemic has meant
that a key focus for us during the second half of 2021 has been
rebuilding employee morale and motivation.
We have made rapid progress creating a new culture within the
business that will enable us to foster growth and development. We
have established an academy structure around our core recruitment
team to develop our own talent and this is already adding value
with a second cohort joining the academy in January 2022. As a
business we seek to offer opportunities for all and are proud of
our diverse and inclusive workforce. Whilst we strive for more, we
are proud of the fact that we have a gender balanced workforce.
Parity is now smaller than it has been historically, however
changes in back-office processes and systems alongside the
re-building of a capable and scalable recruitment solutions team
places us in a strong position to benefit from the continuing
demand for digital transformation. As businesses adapt to new ways
of doing business post Covid, we are supplying our clients with the
talented and experienced people that make this change possible.
Over the last three years the Group has actively transformed
itself into highly flexible business, its cloud infrastructure and
digital backbone combined with a hybrid working environment enable
the business to adapt and scale to meet future opportunities and
challenges. Alongside this we have put in place a new three-year
asset based lending facility in 2021 with Leumi ABL that will
provide support and flexibility as we grow the business.
People, remain critical to the success of most if not all,
commercial and public service activities. As technology advances,
talent is relied on to define and architect solutions, integrate
and implement components, manage change and continuously develop
advances that deliver improvements to the way things work.
This all takes place in a market where the best talent is
demanding more flexibility whilst the ecosystem demands greater
productivity. Demand for talent to support this ever-changing
environment continues unabated. It is into this environment Parity
has strong foundations to acquire and provide solutions that
deliver value.
As we chart our path forwards, we are excited by the
opportunity.
We end as we start, our business is all about people and the
changes over the last six to nine months have only been made
possible by our talented and committed teams in Edinburgh and
London. On behalf of my colleagues, I wish to thank the whole team
at Parity for their work so far, we have more to do, however the
base from which we move forward is now solid.
Operational and Financial Review
Overview
-- During 2021 the business continued to develop key
relationships with growth in 3 of top 5 client accounts.
-- The refocus of investment to support the development and
growth of the core recruitment business has been delivered in 2021
without increasing costs.
-- As a result the Group recorded a modest Adjusted EBITDA
profit of GBP0.1m for 2021 (2020: GBP1.1m).
-- The Group maintains its strong cash collection with a DSO of
17 days (2020: 14 days) and no bad debts.
-- During 2021 the Group replaced its previous asset based
lending facility (ABL) with a new 3 year debt facility provided by
Leumi ABL, increasing funding flexibility across both billed and
unbilled assets.
-- As a consequence of the changes to the business in 2021 the
Group made increased use of its ABL facility and at 31 December
2021 the net debt was GBP1.2m (2020: net cash of GBP0.2m).
-- The defined benefit pension scheme surplus has increased
significantly during 2021 to GBP1.9m.
Performance highlights
for 2021
2021 2020
Adjusted Adjusted Variance
1 Reported 1 Reported 2
Revenue (GBP million) 47.0 47.0 57.8 57.8 -19%
Net Fee Income (GBP
million) 4.1 4.1 5.6 5.6 -27%
========= ========= =========
EBITDA (GBP million)
3 0.1 (0.4) 1.1 0.7 -89%
========= ========= =========
Operating (loss)/profit
(GBP million) (0.3) (0.8) 0.5 0.0 -157%
========= ========= =========
(Loss)/profit before
tax (GBP million) (0.6) (1.1) 0.1 (0.3) -552%
========= ========= =========
Basic earnings per share
(pence) (0.08) (0.62) (0.02) (0.46)
========= ========= =========
Net (debt)/cash (GBPmillion)
4 (1.2) (1.2) 0.2 0.2
========= ========= =========
Notes
1 - Excludes from the Income Statement the impact
of non-underlying items of GBP0.5m in 2021 (2020:
GBP0.4m)
2 - Variance compares 2021 adjusted against
2020 adjusted to provide a consistent view
of performance
3 - EBITDA is calculated as Operating profit
excluding Amortisation and Depreciation and share
based payments
4 - Net cash represents cash and cash equivalents
less loans and borrowings and excluding
leases
The financial performance in 2021 reflects the challenging year
for the Group.
Whilst our strong position in the public sector helped cushion
the impact of Covid in 2020, the return of the market and
contractor mobility/churn in particular, exposed the lack of depth
in the recruitment team and the business was unable to take
advantage of the increasingly buoyant recruitment market during
2021. This has had a significant impact upon performance in
2021.
To address this, investment in H2 2021 was redirected to
rebuilding the recruitment capability. A reallocation of resource
from non-core activities to support client facing recruitment along
with a streamlining of the extended management team meant that this
was achieved without an increase in operating costs (non-underlying
costs excluded). This close management of costs within the Group
has enabled the Group to deliver a modest Adjusted EBITDA for 2021
despite the fall in Net Fee Income.
Revenue
Year on year revenue has declined by 19% to GBP47m, driven by a
fall in contract recruitment revenue that makes up 97% of total
revenue.
The impact of an under resourced recruitment team and lack of
additional capacity to pursue new business has been a year on year
fall in the number of contractors by 20%. This decline in
contractor numbers has in part been offset by an increase in
average billing rates by 8% during the year, reaching GBP504/day in
December 2021.
This increase is attributable to two factors:
-- Over the last 2 years the business has been increasingly
focusing its contract recruitment on higher value IT resources.
-- The increased enforcement of IR35 legislation and potential
for large penalties has prompted many organisations to take a
conservative approach to IR35 assessments. The impact of this is an
increase in roles deemed to be inside IR35. To attract candidates,
clients are in most cases having to increase rates to offset the
increased tax burden a contractor faces if inside IR35.
Non recruitment revenues totalled GBP1.3m in 2021 (2020:
GBP1.6m).
Net Fee Income
Total Net Fee Income was GBP4.1m in 2021, a fall of GBP1.5m
(27%) over 2020. Of this GBP0.3m is attributable non-recruitment
Net Fee Income and the remaining GBP1.2m is a direct consequence of
the lower Contract Recruitment Net Fee income, of GBP3.4m (2020:
GBP4.6m).
Lower contractor numbers in 2021 account for GBP1.1m of the drop
in Contract Recruitment Net Fee Income. In parallel with the
reduction in contractors the underlying % margin has fallen from
8.2% to 7.4% resulting in a GBP0.4m reduction in Net Fee Income.
This margin dilution reflects the impact of the under resourced
recruitment team who were successfully able to support and grow
large key accounts but unable to manage and pursue smaller higher
margin accounts. These two adverse variances are partially tempered
by the increase in billing rate during the year which has flowed
through to Net Fee income, adding GBP0.3m.
With the new recruitment team in place there is now resourcing
to cover all accounts and with a renewed focus on engaging with
contractors there will be a push to win back higher margin business
in 2022.
Segmental performance
As noted previously, the key driver of the lower revenue and net
fee income has been a fall in contractor numbers. This has had an
impact on both public and private sector income streams with a lack
of capacity in the recruitment team during the first three quarters
of the year limiting the ability to manage beyond key accounts.
In the public sector specifically, this has resulted in a
decline in net fee income by 27%, driven by the loss of contractors
in the first three quarters. The slight drop in % margin reflects
the loss of some smaller, higher margin accounts.
Private sector has maintained revenue in line with the prior
year at GBP14.5m as a result of strong growth in a key account
during the year that has offset lower contractor numbers elsewhere
and the impact of the failure to establish a sustainable and
scalable consultancy division.
Net fee income for private sector has dropped by GBP0.5m with
growth from the key account adding GBP0.2m to net fee income but
insufficient to offset a fall of GBP0.4m due to lower contractor
numbers in smaller accounts where margins are higher. Additionally,
the failure to generate new consulting opportunities was
responsible for a further GBP0.2m of the drop in Net fee
income.
The fall in net fee income as a % of revenue between 2020 and
2021 reflects a change in revenue mix, with a fall in high % margin
consulting income being replaced by lower margin contract
recruitment.
Selling and Administration Costs
2021 was a year of two halves for expenditure, H1 2021 began
with the business making further investments in management and new
business capability to support the continual development of
non-recruitment activities. Following the change in management in
June 2021 investment shifted towards recruitment, rebuilding the
capacity in the team during H2 2022 to take advantage of future
opportunities in the market.
Resources engaged in non-core activities were reduced during H2
2021 and the management team streamlined to facilitate the
investment in additional recruitment resources. This created
GBP1.1m (Annualised) of capacity to re-invest in recruitment and
new business resources.
In addition to hiring experienced recruitment professionals,
investment has also been made into long term development of
employees with the creation of an academy structure focused on
developing talent in house. The first cohort through the academy
are already thriving and second intake started in January 2022,
this structure will support the Group's organic growth and
profitability in future years.
Operating costs before non-underlying
items
H2
vs
GBP million H1 H2 FY21 H1
------ ------ ------ ------
Selling & Administration
expenses (2.1) (1.9) (4.0) -9.1%
Share-based payment
charges 0.0 0.1 0.1 n/a
Depreciation & amortisation (0.2) (0.3) (0.5) 14.6%
Total (2.3) (2.1) (4.4) -9.5%
Selling and Administration costs for H2 2021 were 9% lower than
H1 2021, this variance is primarily the result of the switch from
non-core activities into core recruitment and gives the Group scope
to invest further in 2022. Against prior year, Selling and
Administration costs are 10% lower.
Depreciation and amortisation
In accordance with IFRS 16, the 2021 results are presented with
lease assets and liabilities recognised in the Group's Statement of
Financial Position, where the Group is the lessee.
Non-underlying items
The Board measures the performance of the Group after excluding
costs (and income) that would not be incurred during the normal
operation of the business and classify these exceptional costs
under the category of non-underlying items. With the change in
management in June 2021 and subsequent refocus around the
recruitment business the non-underlying costs incurred in 2021
total GBP0.6m (2020: GBP0.4m) and relate almost entirely to the
costs of departing employees. A detailed analysis of the
non-underlying items is provided in note 5.
Taxation
The tax income on profit before tax was GBP0.47m (2020: charge
of GBP0.15m), mainly representing a deferred tax adjustment in
respect of recognition of tax losses that were not recognised
previously. The Group did not provide for corporation tax payable
in 2021 due to the utilisation of Group relief and the availability
of carried forward deductible timing differences and tax
losses.
Earnings per share and dividend
The basic loss per share from continuing operations was 0.62
pence (2020: loss of 0.46 pence per share). The Group's results for
both 2021 and 2020 were impacted by restructuring costs.
The Board does not propose a dividend for 2021 (2020: nil).
Statement of financial position
Trade and other receivables
The Group continues to maintain its strong performance on trade
debtors, keeping a close relationship with clients to ensure both
prompt payment and quick resolution of any issues, this approach
has both maintained low debtor days and also ensured that the
business has no bad debt. Group debtor days (calculated on billings
on a countback basis) at the end of the year were 17 days (2020: 14
days).
Overall trade and other receivables decreased during the year to
GBP4.8m (2020: GBP6.1m), the main driver being the reduction in
contractor numbers.
Trade and other payables
Trade and other payables decreased during the year by GBP1.3m to
GBP3.6m (2020: GBP4.9m). Of this, key variances were GBP0.6m
decrease attributable to the reduction in contractor numbers and a
further GBP0.3m to the payment of VAT deferred in 2020 under the
Covid-19 VAT deferral scheme.
At the year end, creditor days were 23 days (2020: 23 days).
Loans and borrowings
Loans and borrowings represent the Group's debt under its
asset-based lending ("ABL") facility. This is a working capital
facility and linked to the same cycle as trade receivables. In
April 2021 the Group switched its ABL facility from PNC to Leumi
ABL. As a result of this switch the amount that can be borrowed
against billed and unbilled receivables increased and borrowing
costs reduced because the Group will only pay fees on amounts it
borrows (under the previous PNC facility the Group were charged a
1% fee for any unutilised facility). The facility in place with
Leumi ABL is for a minimum of 3 years giving the Group the support
it needs to optimise its working capital requirements.
In 2021 the average borrowings were GBP2.5m (2020: GBP1.6m) and
the Group only borrowed more than GBP3 million for 79 days during
the year (2020: 29 days).
Cash flow and net debt
Net cash outflow in the year (excluding IFRS16 adj) was GBP1.4m.
Of this, GBP0.2m related to ongoing operating activities and a
further GBP0.4m the impact of the non-underlying costs. In
addition, the Group incurred GBP0.1m of capital expenditure for the
development of a data warehouse to provide business intelligence to
the Group. The balance of the cash outflow is made up of primarily
of pension costs of GBP0.3m (included within the FY21 finance costs
of GBP0.4m) and the repayment of GBP0.3m of VAT deferred under the
government Covid scheme.
Defined benefit pension surplus
Solid investment management of the Defined Benefit pension
scheme assets has further increased the surplus from GBP0.2m at the
beginning of the year to GBP1.9m at the end of 2021. Whilst
financial markets are currently volatile based on world events and
there is always potential for surplus position to change, the
strength of the scheme's assets, is now sufficient for the Group
and Trustees to target, over the medium term, a buyout of the
scheme.
During 2021 the Group paid GBP0.3m contributions to the
scheme.
Consolidated Income Statement for the year ended 31 December
2021
2021 2020
Notes GBP'000 GBP'000
----------------------------------------------- -------- ---------- ----------
Revenue 3 46,962 57,827
Contractor costs (42,882) (52,266)
----------------------------------------------- -------- ---------- ----------
Net Fee Income 4,080 5,561
----------------------------------------------- -------- ---------- ----------
Operating costs before non-underlying
items 4 (4,349) (5,091)
----------------------------------------------- -------- ---------- ----------
Operating (loss)/profit before non-underlying
items (269) 470
----------------------------------------------- -------- ---------- ----------
Non-underlying items 5 (553) (447)
----------------------------------------------- -------- ---------- ----------
Operating (loss)/profit (822) 23
----------------------------------------------- -------- ---------- ----------
Finance costs 7 (281) (348)
----------------------------------------------- -------- ---------- ----------
Loss before tax (1,103) (325)
----------------------------------------------- -------- ---------- ----------
Analysed as:
Adjusted (loss)/profit before tax(1) (550) 122
Non-underlying items 5 (553) (447)
----------------------------------------------- -------- ---------- ----------
Tax credit/ (charge) 9 467 (145)
----------------------------------------------- -------- ---------- ----------
Loss for the year attributable to owners
of the parent (636) (470)
----------------------------------------------- -------- ---------- ----------
Loss per share
Basic 10 (0.62p) (0.46p)
Diluted 10 (0.62p) (0.46p)
----------------------------------------------- -------- ---------- ----------
All activities comprise continuing operations.
(1) Adjusted (loss)/profit before tax is a non-IFRS alternative
performance measure, defined as (loss)/profit before tax and
non-underlying items.
Consolidated Statement of Comprehensive Income for the year
ended 31 December 2021
2021 2020
Notes GBP'000 GBP'000
------------------------------------------------------ -------- --------- ---------
Loss for the year (636) (470)
Other comprehensive income
Items that will never be reclassified to profit
or loss
Remeasurement of defined benefit pension scheme 22 1,620 1,041
Deferred taxation on remeasurement of defined
pension scheme 15 (567) (198)
Other comprehensive income for the year after
tax 1,053 843
------------------------------------------------------ -------- --------- ---------
Total comprehensive income for the year attributable
to owners of the parent 417 373
------------------------------------------------------ -------- --------- ---------
Statements of Changes in Equity for the year ended 31 December
2021
Share Capital
Share premium redemption Other Retained
capital reserve reserve reserves earnings Total
Consolidated GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- --------- ---------- ------------ ---------- ---------- ---------
At 1 January 2020 (reported) 2,053 33,244 14,319 34,560 (77,753) 6,423
Effect of correction
of material misstatement
(Note 28) - - - - (247) (247)
-------------------------------- --------- ---------- ------------ ---------- ---------- ---------
At 1 January 2020 (restated) 2,053 33,244 14,319 34,560 (78,000) 6,176
-------------------------------- --------- ---------- ------------ ---------- ---------- ---------
Share options - value
of employee services - - - - 90 90
-------------------------------- --------- ---------- ------------ ---------- ---------- ---------
Transactions with owners - - - - 90 90
-------------------------------- --------- ---------- ------------ ---------- ---------- ---------
Loss for the year - - - - (470) (470)
Remeasurement of defined
benefit pension scheme - - - - 1,041 1,041
Deferred taxation on
remeasurement of defined
pension scheme taken
directly to equity - - - - (198) (198)
-------------------------------- --------- ---------- ------------ ---------- ---------- ---------
At 31 December 2020 (reported) 2,053 33,244 14,319 34,560 (77,290) 6,886
-------------------------------- --------- ---------- ------------ ---------- ---------- ---------
Effect of correction
of material misstatement - - - - (247) (247)
-------------------------------- --------- ---------- ------------ ---------- ---------- ---------
At 31 December 2020 (restated) 2,053 33,244 14,319 34,560 (77,537) 6,639
-------------------------------- --------- ---------- ------------ ---------- ---------- ---------
Shares issues in the
period 9 26 - - - 35
Share options - value
of employee services - - - - (64) (64)
-------------------------------- --------- ---------- ------------ ---------- ---------- ---------
Transactions with owners 9 26 - - (64) (29)
-------------------------------- --------- ---------- ------------ ---------- ---------- ---------
Loss for the year - - - - (636) (636)
Remeasurement of defined
benefit pension scheme - - - - 1,620 1,620
Deferred taxation on
remeasurement of defined
pension scheme taken
directly to equity - - - - (567) (567)
-------------------------------- --------- ---------- ------------ ---------- ---------- ---------
At 31 December 2021 2,062 33,270 14,319 34,560 (77,184) 7,027
-------------------------------- --------- ---------- ------------ ---------- ---------- ---------
Statements of Financial Position as at 31 December 2021
Company number 3539413 Consolidated
------------------------ -------------
31 December 1 January
2021 2020 2020
as restated as restated
Notes GBP'000 GBP'000 GBP'000
------------------------------- -------- --------- ------------- -------------
Assets
Non-current assets
Goodwill 11 4,594 4,594 4,594
Other intangible assets 12 84 6 32
Property, plant and equipment 13 15 23 43
Right-of-use assets 14 149 247 395
Trade and other receivables 16 29 87 -
Deferred tax assets 15 528 627 970
Retirement benefit asset 22 1,939 208 -
-------------
Total non-current assets 7,338 5,792 6,034
------------------------------- -------- --------- ------------- -------------
Current assets
Trade and other receivables 16 4,768 6,062 6,739
Cash and cash equivalents 1,121 3,172 4,116
Total current assets 5,889 9,234 10,855
------------------------------- -------- --------- ------------- -------------
Total assets 13,227 15,026 16,889
------------------------------- -------- --------- ------------- -------------
Liabilities
Current liabilities
Loans and borrowings 17 (2,279) (2,941) (2,719)
Lease liabilities 14 (242) (321) (325)
Trade and other payables 18 (3,608) (4,857) (6,259)
Provisions 19 - (139) (324)
Total current liabilities (6,129) (8,258) (9,627)
------------------------------- -------- --------- ------------- -------------
Non-current liabilities
Lease liabilities 14 (29) (87) (173)
Provisions 19 (42) (42) (21)
Retirement benefit liability 22 - - (892)
-------------
Total non-current liabilities (71) (129) (1,086)
------------------------------- -------- ------------- -------------
Total liabilities (6,200) (8,387) (10,713)
------------------------------- -------- --------- ------------- -------------
Net assets 7,027 6,639 6,176
------------------------------- -------- --------- ------------- -------------
Shareholders' equity
Called up share capital 23 2,062 2,053 2,053
Share premium reserve 21 33,270 33,244 33,244
Capital redemption reserve 21 14,319 14,319 14,319
Other reserves 21 34,560 34,560 34,560
Retained earnings 21 (77,184) (77,537) (78,000)
------------------------------- -------- ------------- -------------
Total shareholders' equity 7,027 6,639 6,176
------------------------------- -------- --------- ------------- -------------
In accordance with Section 408 of the Companies Act 2006, the
Company has not presented its own income statement or statement of
comprehensive income. The profit for the year dealt with in the
accounts of the Company was GBP700,000 (2020: loss of
GBP2,909,000).
Statements of Cash Flows for the year ended 31 December 2021
Consolidated
--------------------------
2021 2020
Notes GBP'000 GBP'000
------------------------------------------ ------ --------------- ---------
Operating activities
Loss for the year (636) (470)
Adjustments for:
Net finance expense 7 281 348
Share-based payment expense/(credit) 8 (64) 90
Income tax (credit)/ charge 9 (467) 145
Amortisation of intangible assets 12 3 26
Shares issued in lieu of Directors
fees 21 35 -
Depreciation of property, plant
and equipment 13 12 20
Depreciation and impairment of
right-of-use assets 14 414 540
Loss on write down of lease assets 14 31 -
Lease liability credit 14 - (21)
(391) 678
Working capital movements
Decrease in trade and other receivables 16 1,352 764
Decrease in trade and other payables 18 (1,249) (1,402)
Decrease in provisions 19 (139) (165)
Payments to retirement benefit
plan 22 (322) (325)
------------------------------------------ ------ --------------- ---------
Net cash flows (used in)/from
operating activities (749) (450)
------------------------------------------ ------ --------------- ---------
Investing activities
Purchase of property, plant and
equipment 13 (4) -
Development of intangible assets 12 (81) -
Net cash flows used in investing (85) -
activities
------------------------------------------ ------ --------------- ---------
Financing activities
(Repayment)/drawdown of finance
facility 17 (662) 222
Principal repayment of lease liabilities 14 (490) (649)
Interest paid 7 (65) (67)
------------------------------------------ ------ --------------- ---------
Net cash flows used in financing
activities (1,217) (494)
------------------------------------------ ------ --------------- ---------
Net decrease in cash and cash
equivalents (2,051) (944)
------------------------------------------ ------ --------------- ---------
Cash and cash equivalents at the
beginning of the year 3,172 4,116
------------------------------------------ ------ --------------- ---------
Cash and cash equivalents at the
end of the year 1,121 3,172
------------------------------------------ ------ --------------- ---------
Notes to the Financial Statements for the year ended 31 December
2021
1 Accounting policies
Basis of preparation
Parity Group plc (the "Company") is a company incorporated and
domiciled in the UK.
Both the parent company financial statements and the Group
financial statements have been prepared and approved by the
Directors in accordance with company law and UK adopted
international accounting standards. Financial Information is
presented in GBP'000.
The financial information set out in this document does not
constitute the Group's statutory accounts for the years ended 31
December 2021 or 2020 but is derived from those accounts. Statutory
accounts for 2020 have been delivered to the registrar of
companies. The auditors have reported on those accounts; their
reports were (i) unqualified, (ii) did not contain an Emphasis of
Matter highlighting a materiality uncertainly related to going
concern and (iii) did not contain a statement under section 498 (2)
or (3) of the Companies Act 2006. Statutory accounts for 2021 will
be delivered to the registrar of companies in due course. The
auditors have reported on those accounts; their reports were (i)
unqualified, and (ii) did not contain a statement under section 498
(2) or (3) of the Companies Act 2006.
The financial statements for the year ended 31 December 2021
(including the comparatives for the year ended 31 December 2020)
were approved and authorised for issue by the Board of Directors on
27 April 2022. This results announcement for the year ended 31
December 2021 was also approved by the Board on 27 April 2022.
The principal accounting policies adopted in the preparation of
the financial statements are set out below. The policies have been
consistently applied to all the years presented unless otherwise
stated.
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the Directors' Report (Review of business and future
developments). The financial position of the Group, its cash flows,
liquidity position and borrowing facilities are described in the
Operational and Financial Review and in note 20 to the financial
statements. Note 20 also includes the Group's objectives for
managing capital.
As outlined in note 20, the Group meets its day to day working
capital requirements through an asset-based finance facility. The
facility contains certain financial covenants which have been met
throughout the period. During the period the PNC facility was
replaced in April 2021 with a new asset based lending facility
provided by Leumi ABL. This new facility runs for 3 years and
provides up to GBP9m of borrowing.
The financial statements have been prepared on a going concern
basis. The Directors have reviewed the Group's cash flow forecasts
for the period to 31 December 2023, taking account of reasonably
possible changes in trading performance. Discussion of this risk is
included within Principal Risks and Uncertainties. Downside
sensitivities have included reduced levels of new business in these
scenarios, the Directors do not anticipate issues with the Group's
financing requirements.
Basis of consolidation
The consolidated financial statements comprise the financial statements
of the Company and its subsidiaries as at 31 December 2021. Subsidiaries
are entities controlled by the Group. Control exists when the Group
has:
* existing rights that give it the ability to direct
the relevant activities that significantly affect the
subsidiary's returns; and
* exposure, or rights, to variable returns from its
involvement with the subsidiary; and
* the ability to use its power over the subsidiary to
affect the amount of the Group's returns.
The acquisition date is the date on which control is transferred
to the acquirer. The financial statements of subsidiaries are included
in the consolidated financial statements from the date that control
commences until the date that control ceases.
The financial statements of the subsidiaries are prepared for the
same reporting period as the parent company, using consistent accounting
policies. All intra-group balances, transactions, unrealised gains
and losses resulting from intra-group transactions and dividends
are eliminated in full.
In accordance with Section 408 of the Companies Act 2006, the
Company has not presented its own income statement or statement of
comprehensive income. The profit for the year dealt with in the
accounts of the Company was GBP700,000 (2020: loss of
GBP2,909,000).
Business combinations
The acquisition of subsidiaries is accounted for using the purchase
method. The related costs of acquisition other than those associated
with the issue of debt or equity securities, are recognised in
the profit and loss as incurred. The acquiree's identifiable assets
and liabilities and contingent liabilities that meet the conditions
for recognition under IFRS 3 'Business Combinations' are recognised
at their fair value at the acquisition date.
Accounting policies: new standards, amendments and
interpretations effective and adopted by the Group
There are no other standards, amendments or interpretations
effective this year which have a significant impact on these
financial statements.
Accounting policies: new standards, amendments and
interpretations that are not yet effective and have not been
adopted early by the Group
At the date of authorisation of these financial statements, several
new, but not yet effective, standards, amendments to existing standards
and interpretations have been published. None of these have been
adopted early by the Group. New standards, amendments and interpretations
not adopted in the current year have not been disclosed as they
are not expected to have a material impact on the Group.
Measurement convention
The financial statements are prepared on the historical cost basis.
Non-current assets are stated at the lower of previous carrying
amount and fair value less costs to sell.
Alternative performance measure
In the reporting of its financial performance, the Group uses certain
measures that are not defined under IFRS, the Generally Accepted
Accounting Principles ("GAAP") under which the Group reports. The
Directors believe that these non-GAAP measures assists with the
understanding of the performance of the business. These non-GAAP
measures are not a substitute, or superior to, any IFRS measures
of performance but they have been included as the Directors consider
them to be an important means of comparing performance year-on-year
and they include key measures used within the business for assessing
performance.
Non-underlying items
The presentation of the alternative performance measure of adjusted
profit before tax excludes non-underlying items. The Directors
consider that an underlying profit measure better illustrates the
underlying performance of the Group and allows a more meaningful
comparison of performance across periods. Items are classified
as non-underlying by nature of their magnitude, incidence or unpredictable
nature and their separate identification results in a calculation
of an underlying profit measure that is consistent with that reviewed
by the Board in their monitoring of the performance of the Group.
Events which may give rise to the classification of items as non-underlying
include gains or losses on the disposal of a business, restructuring
of a business, transaction costs, litigation and similar settlements,
asset impairments and onerous contracts.
Adjusted EBITDA
Operating profit before non-underlying items and before the deduction
of depreciation, amortisation changes and shared based payments.
This is considered a useful measure, commonly accepted and widely
used when evaluation business performance and used by the Directors
to evaluate performance of the Group and its subsidiaries. Adjusted EBITDA
(GBP 000's) 2021 2020
Operating (loss)/ profit (822) 23
Add back:
Adjustment for amortisation & depreciation 460 586
Adjustment for share based payment
charge/(income) (64) 90
------ ------
EBITDA (426) 699
Non underlying costs 553 447
Adjusted EBITDA 127 1,146
------ ------
Net debt
Net debt is the amount of bank debt less available cash balances
and is regarded as a useful measure of the level of external debt
utilised by the Group to fund its operations. Net debt is also
presented on a pre-IFRS 16 basis which excludes lease liabilities.
Revenue recognition
The Group generates revenue principally through the provision of
recruitment and consultancy services.
To determine whether to recognise revenue, the Group follows a
five-step process:
1. Identifying the contract with the customer;
2. Identifying the performance obligations;
3. Determining the transaction price;
4. Allocating the transaction price to the performance obligations;
and
5. Recognising revenue when and as performance obligations are
satisfied.
Revenue is recognised either at a point in time or over time, when
the group satisfies performance obligations by transferring promised
services to its customers. Revenue is measured at the transaction
price, being the amount of consideration expected to be entitled
in exchange for services to a customer, net of refund liabilities
and value added tax.
Revenue for the provision of recruitment services
The performance obligation is the provision of temporary or permanent
workers to customers. For temporary workers, the performance obligations
are satisfied over time as the customer receives the benefit of
the temporary worker, in line with time worked by the temporary
worker at pre-determined rates. For permanent workers, the performance
obligation is measured at a point in time, which is at the point
that the permanent worker commences employment, as before this
time the Group does not create or enhance an asset for the customer
and there is no enforceable right to payment until then. Refund
liabilities related to permanent workers are calculated based on
a probabilistic estimate using historic refund levels.
The Group presents revenues gross of the costs of the temporary
workers where it acts as principal under IFRS 15 and net of the
costs of temporary workers where it acts as agent. The Group acts
as principal in the large majority of its contracts, where it has
the primary responsibility for fulfilling the promise to supply
a worker to a customer and has control over that supply. The Group
acts as agent where it does not have such control.
Revenue for the provision of consultancy services
Performance obligations on consultancy services contracts are satisfied
over time if the service creates an asset that the customer controls
and the Group has an enforceable right to payment. Revenue is measured
using an input measure, such as days worked as a proportion of
total days to be worked, towards the satisfaction of an obligation.
In obtaining some contracts, the Group may incur a number of
incremental costs, such as commissions paid to sales staff. As the
amortisation period of these costs, if capitalised, would be less
than one year, the Group makes use of the practical expedient in
IFRS 15 and expenses them as incurred.
Financing income and expenses
Financing expenses comprise interest payable and finance leases
recognised in profit or loss using the effective interest method,
unwinding of the discount on the retirement benefit scheme liabilities,
and net foreign exchange losses that are recognised in the income
statement (see Foreign currencies accounting policy). Financing
income comprises the expected return on the retirement benefit
scheme assets, interest receivable on funds invested, dividend
income, and net foreign exchange gains.
Interest income and interest payable is recognised in profit
or loss as it accrues, using the effective interest method. Dividend
income is recognised in the income statement on the date the
entity's right to receive payments is established. Foreign currency
gains and losses are reported on a net basis.
Dividends
Final dividends proposed by the Board of Directors and unpaid
at the balance sheet date are not recognised in the financial
statements until they have been approved by the shareholders
at the Annual General Meeting. Interim dividends, which do not
require shareholder approval, are recognised when paid.
Taxation
Tax on the profit or loss for the year comprises current and
deferred tax. Tax is recognised in the income statement except
to the extent that it relates to items recognised directly in
equity, in which case it is recognised in equity or in other
comprehensive income.
Current tax is the expected tax payable or receivable on the
taxable income or loss for the year, using tax rates enacted
or substantively enacted at the balance sheet date, and any
adjustment to tax payable in respect of previous years.
Deferred tax is provided on temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. The following
temporary differences are not provided for: the initial recognition
of goodwill; the initial recognition of assets or liabilities
that affect neither accounting nor taxable profit other than
in a business combination, and differences relating to investments
in subsidiaries to the extent that they will probably not reverse
in the foreseeable future. The amount of deferred tax provided
is based on the expected manner of realisation or settlement
of the carrying amount of assets and liabilities, using tax
rates enacted or substantively enacted at the balance sheet
date.
A deferred tax asset for deductible temporary differences is
not recognised unless it is probable that there will be taxable
profits in the foreseeable future against which the deferred
tax asset can be utilised. A deferred tax asset for unused tax
losses carried forward is recognised on the same basis as for
deductible temporary differences. However, the existence of
the unused tax losses is strong evidence that future taxable
profit may not be available. Therefore, when an entity has a
history of recent losses, the entity recognises a deferred tax
asset arising from unused tax losses only to the extent that
there is convincing evidence that sufficient taxable profit
will be available against which the unused tax losses can be
utilised.
Foreign currencies
Company
Transactions in foreign currencies are recorded at the rate
ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies are retranslated at the rate
of exchange ruling at the balance sheet date. All differences
are taken to the income statement.
Non-monetary assets and liabilities that are measured in terms
of historical cost in a foreign currency are translated using
the exchange rate at the date of the transaction. Non-monetary
assets and liabilities denominated in foreign currencies that
are stated at fair value are retranslated to the functional
currency at foreign exchange rates ruling at the dates the fair
value was determined.
Group
On consolidation, the results of overseas operations are translated
into sterling at rates approximating to those ruling when the
transactions took place. All assets and liabilities of overseas
operations are translated at the rate ruling at the reporting
date. Exchange differences arising on translating the opening
net assets at opening rate and the results of overseas operations
at actual rate are recognised in other comprehensive income.
On disposal of a foreign operation, the cumulative exchange
differences recognised in other comprehensive income relating
to that operation up to the date of disposal are transferred
to the consolidated income statement as part of the profit or
loss on disposal.
Segmental reporting
Operating segments are reported in a manner consistent with
the internal reporting provided to the Chief Operating Decision
Maker. The Chief Operating Decision Maker is the Group Board.
Intangible assets
Goodwill
Goodwill represents the excess of the cost of acquisition of
a business combination over the Group's share of the fair value
of identifiable net assets of the business acquired.
After initial recognition, goodwill is stated at cost less any
accumulated impairment losses. Goodwill is allocated to cash-generating
units and is not amortised but is tested annually for impairment.
In respect of equity accounted investees, the carrying amount
of goodwill is included in the carrying amount of the investment
in the investee.
Gains and losses on disposal of a business include the carrying
amount of goodwill relating to the business sold in determining
the gain or loss on disposal, except for goodwill arising on
business combinations on or before 31 December 1997 which has
been deducted from shareholders' equity and remains indefinitely
in shareholders' equity.
Software
The carrying amount of software is its cost less any accumulated
amortisation and provision for impairment. Software is amortised on
a straight-line basis over its expected useful economic life of
three to seven years.
Property, plant and equipment
Property, plant and equipment are stated at cost, net of depreciation
and provision for impairment.
Depreciation is provided on all property, plant and equipment at
rates calculated to write off the cost less estimated residual
value of each asset on a straight-line basis over its expected
useful economic life, as follows:
Leasehold improvements The lesser of the asset life and the remaining
length of the lease
Office equipment Between 3 and 5 years
The carrying value of property, plant and equipment is reviewed
for impairment if events or changes in circumstances indicate
the carrying value may not be recoverable.
Impairment of non-financial assets (excluding deferred tax
assets)
An impairment loss is recognised for the amount by which the
asset's carrying amount exceeds its recoverable amount, the latter
being the higher of the fair value less costs to sell associated
with the cash generating unit (CGU) and its value in use. Value in
use calculations are performed using cash flow projections for the
CGU to which the goodwill relates, discounted at a pre-tax rate
which reflects the asset specific risks and the time value of
money.
Impairment losses are recognised in profit or loss. Impairment
losses recognised in respect of CGUs are allocated first to reduce
the carrying amount of any goodwill allocated to the units, and
then to reduce the carrying amounts of the other assets in the unit
(group of units) on a pro rata basis.
Goodwill is tested for impairment at each reporting date. The
carrying value of other intangible assets and property, plant and
equipment is reviewed for impairment if events or changes in
circumstances indicate the carrying value may not be
recoverable.
For the purpose of impairment testing, assets that cannot be
tested individually are grouped together into the smallest group of
assets that generates cash inflows from continuing use that are
largely independent of the cash inflows of other assets or groups
of assets, being the cash generating unit. The goodwill acquired in
a business combination, for the purpose of impairment testing, is
allocated to CGUs. Subject to an operating segment ceiling test,
for the purposes of goodwill impairment testing, CGUs to which
goodwill has been allocated are aggregated so that the level at
which impairment is tested reflects the lowest level at which
goodwill is monitored for internal reporting purposes. Goodwill
acquired in a business combination is allocated to groups of CGUs
that are expected to benefit from the synergies of the
combination.
An impairment loss in respect of goodwill is not reversed. In
respect of other assets, impairment losses recognised in prior
periods are assessed at each reporting date for any indications
that the loss has decreased or no longer exists. An impairment loss
is reversed if there has been a change in the estimates used to
determine the recoverable amount. An impairment loss is reversed
only to the extent that the asset's carrying amount does not exceed
the carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment loss had been
recognised.
Cash and cash equivalents
Cash and short-term deposits in the consolidated balance sheet
compromise cash at bank and in hand and short-term deposits with
the original maturity of three months or less. For the purpose of
the consolidated cash flow statement, cash and cash equivalents
consist of cash and short-term deposits as defined above. Amounts
drawn down from the asset-based lending facility with Leumi are
shown within loans and borrowings on the consolidated balance
sheet.
Financial instruments
Financial assets and liabilities are recognised when the Group
becomes a party to the contractual provisions of the financial
instrument. Financial assets are derecognised when the contractual
rights to the cash flows expire or when substantially all the risks
and rewards are transferred. A financial liability is derecognised
when it is extinguished, discharged, cancelled or expires.
Except for trade receivables that do not contain a significant
financing component and are measured at the transaction price in
accordance with IFRS 15, all financial assets are initially
measured at fair value adjusted for transaction costs. Financial
assets, other than those designated and effective as hedging
instruments, are classified as either amortised cost, fair value
through profit or loss (FVTPL) or fair value through other
comprehensive income (FVOCI). In the periods presented, the Group
has no financial assets categorised as FVTPL or FVOCI.
The Group's financial assets include cash and cash equivalents
and trade and other receivables. After initial recognition, these
are measured at amortised cost using the effective interest method.
All income and expenses relating to financial assets that are recognised
in profit or loss are presented within finance costs, except for
impairment of trade receivables which is presented within operating
expenses. Unless otherwise indicated, the carrying amounts of the
Group's financial assets are a reasonable approximation of their
fair values.
Impairment provisions are recognised using the expected credit
loss model. Measurement of expected credit losses is determined
by a probability-weighted estimate of credit losses over the expected
life of the financial instrument. The Group makes use of a simplified
approach for trade and other receivables and contract assets and
records impairment as a lifetime expected credit loss, being the
expected shortfalls in contractual cash flows, considering the
potential for default. The Group uses its historical experience,
external indicators and forward-looking information to calculate
the expected credit losses.
Cash and cash equivalents in the statement of financial position
comprise cash at bank and in hand, short term deposits and other
short term liquid investments. In the statement of cash flows,
cash and cash equivalents comprise cash and cash equivalents, net
of bank overdrafts.
The Group's financial liabilities include bank borrowings, finance
leases and trade and other payables. Financial liabilities are
initially measured at fair value and subsequently measured at amortised
cost using the effective interest method. All interest related
charges that are reported in profit and loss are presented within
net finance expenses. In the periods presented, the Group has no
financial liabilities categorised as FVTPL. Unless otherwise indicated,
the carrying amounts of the Group's financial liabilities are a
reasonable approximation of their fair values.
Amounts recoverable on contracts and accrued income
Amounts recoverable on contracts which are expected to benefit
performance and be recoverable over the life of the contracts are
recognised in the statement of financial position within trade
and other receivables and charged to the income statement over
the life of the contract so as to match costs with revenues.
Amounts recoverable on contracts are stated at the net sales value
of work done less amounts received as progress payments on account.
Where progress payments exceed the sales value of work done, they
are included in payables as payments in advance.
Accrued income primarily arises where temporary workers have
provided their services but approved timesheets are outstanding. As
such, the amount incurred and margin earned thereon has yet to be
invoiced onto the client. In making an accrual for time worked by
contractors at the balance sheet date, management make an estimate
of the time worked based on knowledge of the contracts in place,
the number of working days outstanding and experience adjustments
from prior periods.
Leased assets
At the commencement of a lease, the Group recognises a right-of-use
asset and a lease liability. The right-of-use asset is measured
at cost, comprising the initial measurement of the lease liability,
any initial direct costs incurred, an estimate of any restoration
costs and any lease payments made in advance of the lease commencement
date, net of any incentives received. The lease liability is measured
at the present value of the minimum lease payments discounted using
the rate implicit in the lease, or if that cannot be determined,
which is generally the case for the leases in the Group, the Group's
incremental borrowing rate is used. Lease payments to be made under
lease extensions are included when the option to extend is reasonably
certain to be taken up. Subsequent to initial measurement, the
liability will be reduced for payments made and increased for interest.
It is remeasured to reflect any reassessment or modification.
Expected lives of right-of-use assets are determined by reference
to the lease term and depreciated over the lease term on a straight-line
basis.
Provisions
A provision is recognised when the Group has a present legal or
constructive obligation as a result of a past event, that can be
reliably measured and it is probable that an outflow of economic
benefits will be required to settle the obligation. Provisions
are determined by discounting the expected future cash flows at
a pre-tax rate that reflects risks specific to the liability.
From time to time the Group faces the potential of legal action
in respect of employment or other contracts. In such situations,
where it is probable that a payment will be required to settle
the action, provision is made for the Group's best estimate of
the outcome.
Where leasehold properties are surplus to requirements, provisions
are made for the best estimates of the unavoidable net future costs.
Provisions for dilapidation charges that will crystallise at the
end of the period of occupancy are provided for in full on non-serviced
properties.
Pensions
The Group operates a small number of retirement benefit schemes.
With the exception of the 'Parity Retirement Benefit Plan', all
of the schemes are defined contribution plans and the assets are
held in separate, independently administered funds. The Group's
contributions to defined contribution plans are charged to the
income statement in the period to which the services are rendered
by the employees, and the Group has no further obligation to pay
further amounts.
The 'Parity Retirement Benefit Plan' is a defined benefit pension
fund with assets held separately from the Group. This fund has
been closed to new members since 1995 and with effect from 1 January
2005 was also closed to future service accrual.
A defined benefit plan is a post-employment benefit plan other
than a defined contribution plan. The Group's net obligation in
respect of defined benefit pension plans is calculated by estimating
the amount of future benefit that employees have earned in return
for their service in the current and prior periods; that benefit
is discounted to determine its present value, and the fair value
of any plan assets at bid price, and any unrecognised past service
costs are deducted. The liability discount rate is the yield at
the balance sheet date on AA credit rated bonds denominated in
the currency of, and having maturity dates approximating to, the
terms of the Group's obligations. The calculation is performed
by a qualified actuary using the projected unit credit method.
When the calculation results in a benefit to the Group, the recognised
asset is limited to the present value of benefits available in
the form of any future refunds from the plan, reductions in future
contributions to the plan or on settlement of the plan and takes
into account the adverse effect of any minimum funding requirements.
Share capital
Financial instruments issued by the Group are treated as equity
only to the extent that they meet the following two conditions:
(a) they include no contractual obligations upon the company (or
Group as the case may be) to deliver cash or other financial assets
or to exchange financial assets or financial liabilities with
another party under conditions that are potentially unfavourable to
the company (or Group); and
(b) where the instrument will or may be settled in the company's
own equity instruments, it is either a non-derivative that includes
no obligation to deliver a variable number of the company's own
equity instruments or is a derivative that will be settled by the
company's exchanging a fixed amount of cash or other financial
assets for a fixed number of its own equity instruments.
To the extent that this definition is not met, the proceeds of issue
are classified as a financial liability. Where the instrument so
classified takes the legal form of the company's own shares, the
amounts presented in these financial statements for called up share
capital and share premium account exclude amounts in relation to
those shares.
For the purposes of the disclosures given in note 20, the Group
considers its capital to comprise its cash and cash equivalents,
its asset-based bank borrowings, and its equity attributable to
equity holders, comprising issued capital, reserves and retained
earnings, as disclosed in the statement of changes in equity.
Financial guarantee contracts
Where Group companies enter into financial guarantee contracts
and guarantee the indebtedness of other companies within the Group,
the company considers these to be insurance arrangements and
accounts for them as such. In this respect, the company does not
recognise liabilities under the contracts until it becomes probable
that any Group company will be required to make a payment under the
guarantee.
Share-based payment transactions
Share-based payment arrangements in which the Group and Company
receives goods or services as consideration for its own equity
instruments are accounted for as equity-settled share-based payment
transactions, regardless of how the equity instruments are obtained
by the Group and Company.
The grant date fair value of share-based payment awards granted
to employees is recognised as an employee expense, with a corresponding
increase in equity, over the period that the employees become
unconditionally entitled to the awards. The fair value of the
options granted is measured using an option valuation model,
taking into account the terms and conditions upon which the options
were granted. The amount recognised as an expense is adjusted
to reflect the actual number of awards for which the related
service and non-market vesting conditions are expected to be
met, such that the amount ultimately recognised as an expense
is based on the number of awards that do meet the related service
and non-market performance conditions at the vesting date. For
share-based payment awards with non-vesting conditions, the grant
date fair value of the share-based payment is measured to reflect
such conditions and there is no true-up for differences between
expected and actual outcomes.
Where the terms and conditions of options are modified before
they vest, the increase in the fair value of the options, measured
immediately before and after the modification, is also charged
to the income statement over the remaining vesting period.
Significant management judgements in applying accounting
policies and estimation uncertainty
When preparing the financial statements, management make a
number of judgements, estimates and assumptions about the
recognition and measurement of assets, liabilities, income and
expenses. The following are the judgements made by management in
applying the accounting policies of the Group and the estimates
that have the most significant effect on the financial
statements.
Significant management judgements
Recognition of deferred tax asset
A deferred tax asset has been recognised for unused tax losses
carried forward within Parity Consultancy Services Limited as management
believes that given the significant increase in the Retirement
benefit asset during the period there is sufficient certainty that
a proportion of the tax losses carried forward would be utilised
to offset any charge arising from the realisation of the surplus
on the Retirement benefit asset. Accordingly management have decided
to include within the financial statements a deferred tax asset
in Parity consultancy Services Limited equal to the tax charge
calculated on the Retirement benefit asset during the year of GBP1.9m.
Revenue recognition
The main area of judgement in revenue recognition relates to the
determination of whether the Group acts as principal or agent in
its contractual arrangements for the provision of temporary workers
to customers. The factors considered by management to result in
recognition of revenue as principal include that the Group:
* has a direct relationship with the worker and is
responsible for paying the worker;
* has the primary responsibility for organising the
service engagements and fulfilling the promise to
supply a worker to a customer; and
* the Group has control over the supply of the worker.
Estimation uncertainty
Retirement benefit liability
The costs, assets and liabilities of the defined benefit scheme
operated by the Group are determined using methods relying on actuarial
estimates and assumptions. Details of the key assumptions and sensitivities
on those assumptions are set out in note 22. The Group takes advice
from independent actuaries relating to the appropriateness of the
assumptions. Changes in the assumptions used may have a material
effect on the income statement and the statement of financial position
within the next year.
2 Segmental information
Factors that management used to identify the Group's reporting
segments
In accordance with IFRS 8 'Operating Segments' the Group's
management structure, and the reporting of financial information to
the Chief Operating Decision Maker (the Group Board), have been
used as the basis to define reporting segments.
Description of the types of services from which each reportable
segment derives its revenues
During the period the Group derived revenue from two operating
segments relating to customer sectors, being the public sector and
private sector. The reporting of financial information presented to
the Chief operating Decision maker, being the Group board of
directors, is consistent with these reporting segments. These
reporting segments are supported by a combined back office and
therefore there is no allocation of overheads between sectors.
The accounting policies of the operating segments are the same
as those described in the summary of significant accounting
policies.
Public sector Private Total
2021 sector 2021
2021
GBP'000 GBP'000 GBP'000
Revenue 32,544 14,418 46,962
Contractor costs (29,691) (13,191) (42,882)
------------------ -------------- --------- ---------
Net fee income 2,853 1,227 4,080
------------------ -------------- --------- ---------
Public sector Private Total
2020 sector 2020
2020
GBP'000 GBP'000 GBP'000
Revenue 43,283 14,544 57,827
Contractor costs (39,405) (12,861) (52,266)
------------------ -------------- --------- ---------
Net fee income 3,878 1,683 5,561
------------------ -------------- --------- ---------
All segment assets and liabilities are based in the UK.
3 Revenue
All of the Group's revenue derives from contracts with
customers. Trade receivables, amounts recoverable on contracts and
accrued income as presented in note 16 arise from contracts with
customers. Changes to the Group's contract assets are attributable
solely to the satisfaction of performance obligations.
The Group's revenue disaggregated by pattern of revenue
recognition is as follows:
2021 2020
GBP'000 GBP'000
------------------------------------------ --------- ---------
Services transferred over time 46,934 57,790
Services transferred at a point in time 28 37
------------------------------------------ --------- ---------
Revenue 46,962 57,827
------------------------------------------ --------- ---------
The Group's revenue disaggregated by primary geographical market
is as follows:
2021 2020
GBP'000 GBP'000
----------------- --------- ---------
United Kingdom 43,967 55,235
European Union 2,994 2,577
Other 1 15
----------------- --------- ---------
Revenue 46,962 57,827
----------------- --------- ---------
The largest single customer in the public sector contributed 26%
or GBP8.2m to public sector revenue (2020: 25% or GBP11.0m). The
largest single customer in the private sector contributed 79% or
GBP11.7m to private sector revenue (2020: 46% or GBP6.7m).
4 Operating expenses
Consolidated
--------------------
2021 2020
GBP'000 GBP'000
------------------------------------------- ---- ---- --------- ---------
Employee benefit costs
- wages and salaries 2,818 2,975
- social security costs 316 342
- other pension costs 86 102
------------------------------------------------------- --------- ---------
3,220 3,419
----------------------------------------------------- --------- ---------
Depreciation, amortisation and impairment
Amortisation of intangible assets -
software 3 26
Depreciation of leased property, plant
and equipment - -
Depreciation of owned property, plant
and equipment 12 20
Depreciation of right-of-use assets 414 540
Impairment of right-of-use assets 31 -
------------------------------------------------------- --------- ---------
460 586
----------------------------------------------------- --------- ---------
All other operating expenses
Occupancy costs 43 44
IT costs 236 464
Net exchange (gain)/loss 15 (2)
Equity settled share-based payment
charge (64) 90
Other operating costs 992 937
------------------------------------------------------- --------- ---------
1,222 1,533
----------------------------------------------------- --------- ---------
Total operating expenses 4,902 5,538
------------------------------------------------------- --------- ---------
During the year the Group obtained the following services from
the Group's auditors:
Grant Thornton
UK LLP
2021 2020
Consolidated GBP'000 GBP'000
--------------------------------------------------- --------- ---------
Fees payable to the auditor of the Group's annual
financial statements 15 15
Fees payable to the Group's auditor for other - -
services
The audit of the Company's subsidiaries pursuant
to legislation 67 58
--------------------------------------------------- --------- ---------
Total 82 73
Tax compliance 17 16
Other services - 16
--------------------------------------------------- --------- ---------
Total fees 105 89
--------------------------------------------------- --------- ---------
All other services have been performed in the UK.
5 Non-underlying items
2021 2020
GBP'000 GBP'000
----------------------------------- --------- ---------
Restructuring
* Costs related to employees 502 370
* Costs related to premises 31 (11)
* Other costs 20 88
553 447
----------------------------------- --------- ---------
Items are classified as non-underlying by nature of their
magnitude, incidence or unpredictable nature and their separate
identification results in a calculation of an underlying profit
measure that is consistent with that reviewed by the Board in their
monitoring of the performance of the Group.
Non-underlying items during 2021 include costs related to
changes in senior management of the Group, including employee
termination payments.
6 Average staff numbers
The average number of staff employed by the Group during the
year was as follows:
2021 2020
Number Number
------- -------- --------
Group 38 44
-------- -------- --------
The total above includes 4 (2020: 5) employees of the
Company.
At 31 December 2021, the Group had 35 employees (2020: 41).
7 Finance costs
2021 2020
GBP'000 GBP'000
------------------------------------------------- --------- ---------
Interest expense on financial liabilities 65 67
Interest expense on lease liabilities 8 19
Interest income on lease assets (3) (4)
Net finance costs in respect of post-retirement
benefits 211 266
--------------------------------------------------- --------- ---------
281 348
------------------------------------------------- --------- ---------
The interest expense on financial liabilities represents
interest paid on the Group's asset-based financing facilities. A 1%
increase in the base rate would have increased annual borrowing
costs by approximately GBP25,000 (2020: GBP17,000).
8 Share-based payments
The Group operates several share-based reward schemes for
employees:
-- HMRC approved schemes for Executive Directors and senior staff;
-- an unapproved scheme for Executive Directors and senior staff; and
-- a Save As You Earn Scheme for all employees.
Under the approved and unapproved schemes, options vest if the
share price averages a target price for 5 consecutive days over a
three-year period from the date of grant. Options lapse if the
individual leaves the Group, except under certain circumstances
such as leaving by reason of redundancy, when the options lapse 12
months after the leaving date.
In May 2021 the Save As You Earn Scheme was closed for all new
participants and current participants were granted six months to
either purchase shares at the exercise price of 10 pence per share
or to withdraw their funds from the scheme. As at the end of 2021
all funds were withdrawn and the Save As You Earn Scheme was
closed.
All employee options have a maximum term of ten years from the
date of grant. The total share-based remuneration recognised in the
income statement was a gain of GBP64,000 (2020: loss of GBP90,000).
Share-based remuneration relating to key management personnel is
disclosed in note 25.
2021 2020
Weighted Weighted
average exercise 2021 average exercise 2020
price (p) Number price (p) Number
-------------------------- ------------------ ------------ ------------------ ------------
Outstanding at beginning
of the year 9 11,919,040 11 11,157,040
Granted during the year 7 6,000,000 9 6,000,000
Exercised during the - - - -
year
Lapsed during the year (9) (9,909,040) (11) (5,238,000)
-------------------------- ------------------ ------------ ------------------ ------------
Outstanding at the end
of the year 7 8,010,000 9 11,919,040
-------------------------- ------------------ ------------ ------------------ ------------
The exercise price of options outstanding at the end of the year
and their weighted average contractual life fell within the
following ranges:
2021 2020
Weighted Weighted
average contractual 2020 average contractual
2021 life (years) 2021 Exercise life (years) 2020
Exercise Number price (p) Number
price (p)
------------ ----------------------- ------------ -------------- ----------------------- -----------
7-11 9 8,000,000 7-11 9 10,379,040
11-17 - - 11-17 7 1,500,000
17-28 1 10,000 17-28 2 40,000
8,010,000 11,919,040
------------ ----------------------- ------------ -------------- ----------------------- -----------
Of the total number of options outstanding at the end of the
year 10,000 (2020: 840,000) had vested and were exercisable at the
end of the year. The weighted average exercise price of those
options was 26 pence (2020: 9 pence).
No options were exercised during the year (2020: none).
2,500,000 options were granted during the year (2020: 6,000,000)
at a weighted average fair value of 1 pence (2020: 2 pence). In
addition, 3,500,000 share warrants were granted during the year
(2020: nil) at a weighted average fair value of 1 pence (2020:
nil).
The following information is relevant in determining the fair
value of options granted during the year under equity-settled
share-based remuneration schemes operated by the Group. There are
no cash-settled schemes.
2021 2020
Option valuation model Stochastic Stochastic
Weighted average share price at grant date
(p) 7 7
Weighted average exercise price (p) 7 8
Weighted average contractual life (years) 10 10
Weighted average expected life (years) 5 5
Expected volatility 47.7-48.0% 47.6-48.0%
Weighted average risk-free rate 0.61% 0.09%
Expected dividend growth rate 0% 0%
--------------------------------------------- ----------- -----------
The volatility assumption is calculated as the historic
volatility of the share price over a 5 year period prior to grant
date.
Share options issued to defined benefit pension scheme
In December 2010 the Group issued 1,000,000 share options in
Parity Group plc to the pension scheme at an exercise price of 9
pence per share. These options may be exercised at the discretion
of the Trustees; they vested on grant and have no expiry date. Any
gain on exercise is to be used to reduce the scheme deficit. These
options were valued using the stochastic method. The share price on
the grant date was 15.75 pence. Whilst the options do not have an
expiry date, for valuation purposes it is assumed that the expected
life of the options is 8 years. The expected volatility is 64.2%
and the average risk-free rate assumed was 3.4%.
9 Taxation
2021 2020
GBP'000 GBP'000
--------------------------------------------- ---- ---- --------- ---------
Current tax
Current tax on profit for the year - -
Total current tax expense - -
--------------------------------------------- ---- ---- --------- ---------
Deferred tax
Accelerated capital allowances (2) (4)
Recognition of deferred tax asset on past (678) -
trading losses
Origination and reversal of other temporary
differences 98 2
Adjustments in respect of prior periods 115 230
Change in corporation tax rate - (83)
--------------------------------------------------------- --------- ---------
Total deferred tax charge (467) 145
--------------------------------------------------------- --------- ---------
Tax charge (467) 145
--------------------------------------------------------- --------- ---------
The adjustment in respect of prior periods of GBP115,000 (2020:
GBP230,000) largely relates to decisions to claim or disclaim
capital allowances.
There is no current tax payable by the Group for 2021 (2020:
GBPnil).
The Group's profits for this accounting period are subject to
tax at a rate of 19% (2020: 19%).
The reasons for the difference between the actual tax credit for
the year and the standard rate of corporation tax in the UK applied
to profit for the year are as follows:
2021 2020
GBP'000 GBP'000
Loss before tax (1,103) (325)
------------------------------------------------------------ -------- ------
Expected tax credit based on the standard rate
of UK
corporation tax of 19% (2020: 19%) (210) (62)
Expenses not allowable for tax purposes - (2)
Adjustments in respect of prior periods 115 230
Tax losses not recognised 253 85
Tax losses recognised (678) -
Change in corporation tax rate 33 (83)
Other 20 (23)
------------------------------------------------------------ -------- ------
Tax charge (467) 145
------------------------------------------------------------ -------- ------
Tax on each component of other comprehensive income is as
follows:
2021 2020
Before After Before After
tax Tax tax tax Tax tax
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- --------- ---------- --------- --------- ---------- ---------
Remeasurement of defined benefit
pension scheme 1,620 (567) 1,053 1,041 (198) 843
---------------------------------- --------- ---------- --------- --------- ---------- ---------
10 Earnings per ordinary share
Basic earnings per share is calculated by dividing the basic
earnings for the year by the weighted average number of fully paid
ordinary shares in issue during the year.
Diluted earnings per share is calculated on the same basis as
the basic earnings per share with a further adjustment to the
weighted average number of fully paid ordinary shares to reflect
the effect of all dilutive potential ordinary shares.
Weighted Weighted
average average
number number
of Loss of Loss
Loss shares per share Loss shares per share
2021 2021 2021 2020 2020 2020
GBP'000 '000 Pence GBP'000 '000 Pence
---------------------------- ---------- --------- ------------ ---------- --------- ------------
Basic (636) 102,854 (0.62) (470) 102,624 (0.46)
Effect of dilutive options - - - - - -
Diluted (636) 102,854 (0.62) (470) 102,624 (0.46)
As at 31 December 2021 the number of ordinary shares in issue
was 103,075,633 (2020: 102,624,020). There were 8,010,000 options
that had a potential dilutive effect in 2021 (2020: Nil).
11 Goodwill
The carrying amount of goodwill is allocated to the Group's two
separate continuing cash generating units (CGUs), being Parity
Professionals Limited and Parity Consultancy Services Limited.
Carrying amounts are as follows:
Parity Consultancy
Parity Professionals Services
Limited Limited Total
GBP'000 GBP'000 GBP'000
------------------------------- ----------------------- ------------------- ----------
Carrying value
Balance at 1 January 2020 and
31 December 2020 2,642 1,952 4,594
------------------------------- ----------------------- ------------------- ----------
Balance at 1 January 2021 and
31 December 2021 2,642 1,952 4,594
------------------------------- ----------------------- ------------------- ----------
Goodwill was tested for impairment in accordance with IAS 36 at
the year end and no impairment charge was recognised. Impairment
calculations include the effect of changes following the
application of IFRS 16.
The recoverable amounts of the CGUs are based on value in use
calculations using the pre-tax cash flows based on forecasts
approved by management for 2022. Years from 2023 to 2027 are based
on the forecast for 2022 projected forward at expected growth
rates, with no growth assumed beyond these years. This approach is
considered prudent based on current expectations of the 2022
long-term growth rate.
Major assumptions are as follows:
Parity Professionals Parity Consultancy
Limited Services Limited
% %
2021
Discount rate 11.5 11.5
Forecast revenue growth 5.0-11.5 11.3-14.9
Operating margin 2022 3.3 14.0
Operating margin 2023 onward 4.8-5.8 14.7-15.3
2020
Discount rate 11.3 11.3
Forecast revenue growth 12.2-13.3 10.0-15.9
Operating margin 2021 3.0 4.0
Operating margin 2022 onward 3.7-3.8 4.1-12.1
Discount rates are based on the Group's weighted average cost of
capital.
Forecast revenue growth rates are based on past experience and
future expectations of economic conditions. Growth for the CGUs is
assumed to be higher than the long-term growth rate for the UK
economy due to the following factors:
-- There is focused investment in growing new clients and
service lines, including areas that are seeing significant growth
post the Covid-19 pandemic;
-- The business recruited additional heads to focus on key areas
of new business within recruitment including value added services
and permanent recruitment; and
-- Market indicators and recent engagements with clients support
the increased demand for high skilled IT and data professionals and
help underwrite the growth forecasts.
A 10% change in any of the underlying assumptions used in the
discounted cash flow forecasts would not lead to the carrying value
of goodwill being materially in excess of their recoverable
amounts.
12 Other intangible assets
Software Intellectual Total
property
2021 2020 2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- -------- -------- -------- -------- -------- --------
Consolidated
Cost
At 1 January 408 408 - - 408 408
Additions - - 81 - 81 -
Disposals - - - - - -
At 31 December 408 408 81 - 489 408
--------------------- -------- -------- -------- -------- -------- --------
Accumulated amortisation
At 1 January 402 376 - - 402 376
Charge for the year 3 26 - - 3 26
Disposals - - - - - -
At 31 December 405 402 - - 405 402
--------------------- -------- -------- -------- -------- -------- --------
Net book value 3 6 81 - 84 6
--------------------- -------- -------- -------- -------- -------- --------
In 2021 the Group invested in the development of a data
warehouse to support the ongoing business operations. The additions
to Intellectual Property represent the costs associated with
building the data warehouse and creating the data asset within the
data warehouse.
As at 31 December 2021, the Group had no capital commitments
contracted for but not provided for the purchase of intangible
assets (2020: GBPnil).
13 Property, plant and equipment
Leasehold improvements
Office equipment Total
2021 2020 2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- ---------------- --------------- ---------- --------- -------- --------
Consolidated
Cost
At 1 January - - 204 204 204 204
Additions - - 4 - 4 -
Disposals - - - - - -
At 31 December - - 208 204 208 204
--------------------- ---------------- --------------- ---------- --------- -------- --------
Accumulated depreciation
At 1 January - - 181 161 181 161
Charge for the year - - 12 20 12 20
Disposals - - - - - -
At 31 December - - 193 181 193 181
--------------------- ---------------- --------------- ---------- --------- -------- --------
Net book value - - 15 23 15 23
--------------------- ---------------- --------------- ---------- --------- -------- --------
As at 31 December 2021, the Group had no capital commitments contracted
for but not provided for the purchase of property, plant and equipment
(2020: GBPnil).
14 Leases
The Group holds leases for its main office premises. Each lease
is reflected on the balance sheet as a right-of-use asset and a
lease liability unless exempt. The statement of financial position
includes the following amounts in relation to leases where the
Group is a lessee:
2021 2020
GBP'000 GBP'000
--------------------- --------- ---------
Right-of-use assets
Buildings 149 247
IT equipment - -
--------------------- --------- ---------
149 247
--------------------- --------- ---------
Lease liabilities
Current 242 321
Non-current 29 87
----------------------- --------- ---------
271 408
--------------------- --------- ---------
Additions to right-of-use assets during the year were GBP345,000
(2020: GBP562,000). The total cash outflow for lease liabilities
during the year was GBP490,000 (2020: GBP649,000).
Amounts recognised in profit or loss in respect of the above
leases are as follows:
2021 2020
GBP'000 GBP'000
-------------------------------------------- --------- ---------
Depreciation charge on right-of-use assets
* Buildings 414 537
* IT equipment - 3
Impairment charge on right-of-use-assets
31 -
* Buildings
-------------------------------------------- --------- ---------
Total depreciation and impairment charge
on right-of-use assets 445 540
---------------------------------------------- --------- ---------
Rent concession - (21)
---------------------------------------------- --------- ---------
Interest expense included in finance costs 8 19
---------------------------------------------- --------- ---------
Future minimum lease payments at 31 December 2021 were as
follows:
Minimum Present
payments Interest value
2021 2021 2021
GBP'000 GBP'000 GBP'000
----------------------------- --------- --------- --------
Less than one year 246 (3) 243
Between one and two years 29 - 29
Between two and three years - - -
275 (3) 272
----------------------------- --------- --------- --------
At 31 December 2021, the Group was committed to GBPnil (2020:
GBPnil) of future lease payments in respect of leases not yet
commenced.
All leases held during 2021 were accounted for under IFRS
16.
15 Deferred taxation
Consolidated
------------------
2021 2020
GBP'000 GBP'000
----------------------------------------------------- -------- --------
At 1 January 627 970
Recognised in other comprehensive income
Remeasurement of defined benefit pension scheme (567) (198)
Recognised in the income statement
Adjustments in relation to prior periods (115) (230)
Recognition of deferred tax asset for prior trading 678 -
losses
Change in corporation tax rate - 83
Capital allowances in excess of depreciation 2 4
Other short-term timing differences (97) (2)
At 31 December 528 627
----------------------------------------------------- -------- --------
The deferred asset of GBP528,000 (2020: GBP627,000)
comprises:
Consolidated
--------------------
2021 2020
GBP'000 GBP'000
---------------------------------------------- --------- ---------
Depreciation in excess of capital allowances 520 632
Other short-term timing differences 8 34
Retirement benefit (asset)/liability - (39)
---------------------------------------------- --------- ---------
528 627
---------------------------------------------- --------- ---------
A deferred tax asset for unused tax losses carried forward is
normally recognised on the same basis as for deductible temporary
differences. However, the existence of the unused tax losses is
itself strong evidence that future taxable profit may not be
available. Therefore, when an entity has a history of recent
losses, the entity recognises a deferred tax asset arising from
unused tax losses only to the extent that there is convincing
evidence that sufficient taxable profit will be available against
which the unused tax losses can be utilised. At the balance sheet
date, the Directors considered recognising a deferred tax asset for
previously unrecognised unused tax losses carried forward by Parity
Consultancy Services Limited. The review concluded that as Parity
Consultancy Services Limited has a deferred tax liability of
GBP678,000 (2020: GBP39,000) related to its defined benefit pension
plan, a deferred tax asset for previously unrecognised unused tax
losses of GBP678,000 would be recognised to offset the
liability.
The Directors believe that the deferred tax asset recognised is
recoverable based on the future earning potential of the Group and
the individual subsidiaries. The forecasts for Parity Professionals
Limited comfortably support the unwinding of the deferred tax asset
held by this company of GBP256,000 (2020: GBP335,000). Parity
Consultancy Services Limited currently has a deferred tax asset of
GBP272,000 (2020: GBP292,000) which can be offset against the
deferred tax liability to be unwound on the same defined benefit
scheme .
The Group has unrecognised carried forward tax losses of
GBP32,679,000 (2020: GBP29,392,000). The Group has unrecognised
capital losses carried forward of GBP282,441,000 (2020:
GBP282,441,000). These losses may be carried forward
indefinitely.
The Company has unrecognised carried forward tax losses of
GBP26,522,000 (2020: GBP23,511,000). The Company has unrecognised
capital losses carried forward of GBP281,875,000 (2020:
GBP281,875,000). These losses may be carried forward
indefinitely.
16 Trade and other receivables
Consolidated
-----------------------
2021 2020
GBP'000 GBP'000
------------------------------- ----------- ----------
Amounts falling due within
one year:
Trade receivables 2,116 2,197
Accrued income 2,435 3,591
Amounts owed by subsidiary - -
undertakings
Other receivables 75 110
Prepayments 142 164
------------------------------- ----------
4,768 6,062
------------------------------- ----------- ----------
Amounts falling due after one
year:
Amounts owed by subsidiary - -
undertakings
Other receivables 29 87
------------------------------- ----------- ----------
29 87
Total 4,797 6,149
------------------------------- ----------- ----------
The fair values of trade and other receivables are not
considered to differ from the values set out above.
GBP2,116,000 (2020: GBP2,197,000) of the Group's trade
receivables and GBP2,435,000 (2020: GBP3,591,000) of the total of
the Group's accrued income and amounts recoverable on contracts,
are pledged as collateral for the asset-based borrowings. These
borrowings fluctuate daily and at 31 December 2021 totalled
GBP2,279,000 (2020: GBP2,941,000).
The movement in accrued revenue on contracts during the period
is shown below:
Contract Assets
--------------------
2021 2020
GBP'000 GBP'000
------------------------------------------ --------- ---------
At 1 January 3,591 3,882
Billed and cash received during the year (3,591) (3,882)
Amounts accrued at year end 2,435 3,591
------------------------------------------ --------- ---------
At 31 December 2,435 3,591
------------------------------------------ --------- ---------
The Group records impairment losses on its trade receivables
separately from gross receivables. Factors considered in making
provisions for receivables include the ability of the customer to
settle the debt, the age of the debt and any other circumstance
particular to the transaction that may impact recoverability.
The balance of impaired losses for the Group at 31 December 2021
was GBPnil (2020: GBP9,000). All debts at 31 December 2021 are
considered to be recoverable.
The Company holds interest-bearing loan agreements with some of
its subsidiary undertakings. Interest on all loans is charged at
2.0% above the prevailing Bank of England base rate. The Company's
receivables due from subsidiary undertakings were reviewed for
impairment at the balance sheet date based on the performance of
2021 and on subsequent years' forecast projections. A discounted
future cash flow method was employed for the review. As a result of
this review, no provision was deemed necessary. The assessment was
performed on a value in use basis using a discount rate of 9.3%
(2020: 11.3%) and the other parameters used in the goodwill
impairment review, as outlined in note 11.
As at 31 December 2021 trade receivables of GBP523,000 (2020:
GBP374,000) were past due but not impaired. These relate to
customers where there is no evidence of unwillingness or of an
inability to settle the debt. The ageing of Group trade receivables
is as follows:
2021 2020
Gross Impaired Total Gross Impaired Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- --------- --------- --------- --------- --------- ---------
Not past due 1,593 - 1,593 1,823 - 1,823
31-60 days and past
due 310 - 310 323 - 323
61-90 days 131 - 131 36 - 36
>90 days 82 - 82 24 (9) 15
--------------------- --------- --------- --------- --------- --------- ---------
Total 2,116 - 2,116 2,206 (9) 2,197
--------------------- --------- --------- --------- --------- --------- ---------
The Company had no provisions for trade receivables, as it has
no trade receivables. Other receivables in the Group and the
Company were not past due and not impaired.
17 Loans & borrowings
Consolidated
--------------------
2021 2020
GBP'000 GBP'000
------------------------------------------------ --------- ---------
Current
Bank and other borrowings due within one year
or on demand:
Asset-based financing facility 2,279 2,941
------------------------------------------------ --------- ---------
Changes in liabilities from financing activities
Loans and borrowings
GBP000
-------------------------------------------------- ---------------------
Balance at 1 January 2021 2,941
Repayment of borrowings (662)
Balance at 31 December 2021 2,279
-------------------------------------------------- ---------------------
Further details of the Group's banking facilities are given in
note 20.
18 Trade and other payables
Consolidated
-------------------------
2021 2020
restated
GBP'000 GBP'000
--------------------------------------------------- ----------- ------------
Amounts falling due within one year:
Payments in advance 11 27
Trade payables 2,494 3,168
Amounts due to subsidiary undertakings - -
Other tax and social security payables 367 912
Other payables and accruals 736 750
--------------------------------------------------- ------------
3,608 4,857
--------------------------------------------------- ----------- ------------
Amounts falling due after one year:
Amounts due to subsidiary undertakings - -
--------------------------------------------------- ----------- ------------
Total 3,608 4,857
--------------------------------------------------- ----------- ------------
The fair value of trade and other payables has not been separately
disclosed as, due to their short duration, the Directors consider
the carrying amounts recognised in the statement of financial position
to be a reasonable approximation of their fair value.
19 Provisions
Leasehold
dilapidations Restructuring Total
Consolidated GBP'000 GBP'000 GBP'000
--------------------- --------------- ---------------- ----------
At 1 January 2021 42 139 181
Used in year - (45) (45)
Reversed in year - (94) (94)
Created in year - - -
At 31 December 2021 42 - 42
--------------------- --------------- ---------------- ----------
Due within one year - - -
Due after one year 42 - 42
Total 42 - 42
--------------------- --------------- ---------------- ----------
The Company had no provisions at 31 December 2021 (2020:
GBPnil).
Leasehold dilapidations
Leasehold dilapidations relate to the estimated cost of returning
leasehold properties to their original state at the end of the
lease in accordance with the lease terms. Dilapidation charges
that will crystallise at the end of the period of occupancy are
provided for in full on all properties. Based on current lease
expiry dates it is estimated these provisions will be settled over
a period of one to three years. The main uncertainty relates to
the estimation of the costs that will be incurred at the end of
the lease.
20 Financial instruments - risk management
The Group is exposed to risks that arise from its use of financial
instruments. This note describes the Group's objectives, policies
and processes for managing those risks and the methods used to
measure them. Further quantitative information in respect of these
risks is presented throughout these financial statements.
There have been no substantive changes in the Group's exposure
to financial instrument risks and the methods used to measure them
from previous periods unless otherwise stated in this note.
Principal financial instruments
The principal financial instruments used by the Group, from
which financial instrument risk arises, are trade receivables, cash
and cash equivalents, trade and other payables and bank
borrowings.
A summary by category of the financial instruments held by the
Group is provided below:
Amortised
cost Total
Consolidated GBP'000 GBP'000
----------------------------------------- ---------- ----------
As 31 December 2021
Financial assets
Non-current trade and other receivables 29 29
Cash and cash equivalents 1,121 1,121
Trade and other short-term receivables 4,626 4,626
------------------------------------------ ---------- ----------
5,776 5,776
----------------------------------------- ---------- ----------
Financial liabilities
Asset-based financing facility 2,279 2,279
Lease liabilities 272 272
Trade and other short-term payables 3,597 3,597
------------------------------------------ ---------- ----------
6,148 6,148
----------------------------------------- ---------- ----------
As 31 December 2020 (Restated)
Financial assets
Non-current trade and other receivables 87 87
Cash and cash equivalents 3,172 3,172
Trade and other short-term receivables 5,898 5,898
------------------------------------------ ---------- ----------
9,157 9,157
----------------------------------------- ---------- ----------
Financial liabilities
Asset-based financing facility 2,941 2,941
Lease liabilities 408 408
Trade and other short-term payables 4,830 4,830
------------------------------------------ ---------- ----------
8,179 8,179
----------------------------------------- ---------- ----------
Fair values of financial instruments
The fair values of all of the Group's and the Company's
financial instruments are the same as their carrying values.
General objectives, policies and processes - risk management
The Group is exposed through its operations to the following
financial instrument risks: credit risk; liquidity risk; interest
rate risk; and foreign currency risk.
The policy for managing these risks is set by the Board
following recommendations from the Chief Financial Officer. Certain
risks are managed centrally, while others are managed locally
following guidelines communicated from the centre. The overall
objective of the Board is to set policies that seek to reduce risk
as far as possible without unduly affecting the Group's
competitiveness and flexibility. The policy for each of the above
risks is described in more detail below.
Credit risk
Credit risk arises from the Group's trade and other receivables.
It is the risk that the counterparty fails to discharge their obligation
in respect of the instrument.
The Group is mainly exposed to credit risk from credit sales. It
is Group policy to assess the credit risk of new customers before
entering contracts. Such credit ratings are then factored into
the credit assessment process to determine the appropriate credit
limit for each customer. The Group does not collect collateral
to mitigate credit risk.
The Group operates primarily in the UK with 94% of generated revenues
from the UK (2020: 96%). Approximately 69% (2020: 75%) of the Group's
turnover is derived from the public sector. The largest customer
balance represents 27% (2020: 20%) of the trade receivables balance.
Quantitative disclosures of the credit risk exposure in relation
to financial assets are set out below. Further disclosures
regarding trade and other receivables, which are neither past due
nor impaired, are provided in note 16.
2021 2020
Carrying Carrying Maximum
value Maximum exposure value exposure
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- --------- ----------------- --------- ----------
Financial assets
Cash and cash equivalents 1,121 1,121 3,172 3,172
Trade and other receivables 4,655 4,655 5,985 5,985
-----------------------------
5,776 5,776 9,157 9,157
----------------------------- --------- ----------------- --------- ----------
Interest rate risk
Interest rate risk is the risk that the fair value or future cash
flows of a financial instrument will fluctuate because of changes
in interest rates.
It is Group policy that all external Group borrowings are drawn
down on the asset-based financing facilities arranged with our bankers
which bear a floating rate of interest based on the Leumi base rate.
Borrowings against the asset-based financing facilities are typically
drawn or repaid on a daily basis in order to minimise borrowings
and interest costs and transaction charges. Although the Board accepts
that this policy neither protects the Group entirely from the risk
of paying rates in excess of current market rates, nor eliminates
the cash flow risk associated with interest payments, it considers
that it achieves an appropriate balance of these risks.
Throughout 2021 the Group's variable rate borrowings were denominated
in Sterling and Euro. Interest costs on borrowings from the asset-based
financing facility with PNC (January - May) and Leumi ABL (May -
December) was charged at 2.00% above base rate for all of 2021 (2020:
2.00%). The Leumi facility has a 3 year term of commitment, although
amounts are repayable upon demand under certain circumstances such
as default. If interest rates on borrowings had been 1% higher/lower
throughout the year with all other variables held constant, the
loss after tax for the year would have been approximately GBP25,000
higher/lower (2020: GBP17,000) and net assets GBP25,000 lower/higher
(2020: GBP17,000). The Directors consider a 1% change in base rates
is the maximum likely change over the next year, being the period
to the next point at which these disclosures are expected to be
made.
The Company holds interest-bearing loan agreements with some of
its subsidiary undertakings. Interest on all loans is charged at
2.0% above the prevailing Bank of England base rate, except for
one loan with Parity International B.V. which is charged at 2.0%
above the prevailing European Central Bank base rate. As at 31 December
2021, the loan balance due by the Company to Parity International
BV, translated into Sterling, was GBP28,066,000 (2020: GBP29,469,000).
Foreign exchange risk
Foreign currency risk is the risk that the fair value or future
cash flows of a financial instrument will fluctuate because of changes
in foreign exchange rates.
The Group no longer has any active overseas operations but does
retain certain overseas subsidiaries that are not trading. The Group's
net assets arising from overseas operations are exposed to currency
risk resulting in gains or losses on retranslation into sterling.
The asset exposure is mainly in respect of intercompany balances.
The Group does not hedge its net investment in overseas operations
as it does not consider that the potential financial impact of such
hedging techniques warrants the reduction in volatility in consolidated
net assets.
The business has limited transactions in foreign currency. The hedging
of individual contracts is considered on a case by case basis. Owing
to the small value and volume of such contracts no hedging transactions
were entered in 2021 or 2020.
During 2014, the underlying denomination of a large intercompany
balance between the Company and one of the Group's inactive overseas
subsidiaries was revised, whereby the denomination of the loan was
revised from Sterling to Euros and thus subject to exchange rate
fluctuations in the books of the Company. In 2021 the Company recorded
a translation gain of GBP1,965,000 (2020: loss of GBP1,681,000).
As at 31 December 2021, the loan balance due by the Company, translated
into Sterling, was GBP28,066,000 (2020: GBP29,469,000).
The currency profile of the Group's net financial assets was as
follows:
Functional currency of individual entity
Sterling Euro Total
2021 2020 2021 2020 2021 2020
Net foreign currency financial GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
assets
---------------------------------- --------- --------------- --------- --------- --------- ---------
Sterling - - (2,462) (2,411) (2,462) (2,411)
Euro (27,279) (29,021) - - (27,279) (29,021)
US Dollar 4 4 - - 4 4
---------------------------------- --------------- --------- ---------
Total net exposure (27,275) (29,017) (2,462) (2,411) (29,737) (31,428)
---------------------------------- --------- --------------- --------- --------- --------- ---------
The currency profile of the Company's net financial assets was
as follows:
Sterling
2021 2020
Net foreign currency financial assets GBP'000 GBP'000
----------------------------------------- --------- ---------
Euro (27,680) (29,292)
US Dollar 4 4
----------------------------------------- ---------
Total net exposure (27,676) (29,288)
----------------------------------------- --------- ---------
Sensitivity analysis - Group and Company
If the exchange rate between Sterling and the Euro had been 10%
higher/lower at the balance sheet date, with all other variables
held constant, the effect on equity for the year would have been
approximately GBP2,728,000 higher/lower (2020: GBP2,902,000). A 10%
fluctuation in any other currency exchange rate would not have a
significant impact on profit and loss, nor equity.
Liquidity risk
Liquidity risk arises from the Group's management of working
capital and the finance charges on its borrowings under its
asset-based financing arrangements. It is the risk that the Group
will encounter difficulty in meeting its financial obligations as
they fall due.
The liquidity of each Group entity is managed centrally, with daily
transfers to operating entities to maintain a pre-determined cash
balance. Normal supplier terms range from 2 weeks to 30 days. The
level of the Group facility is approved periodically by the Board
and negotiated with the Group's current bankers. At the reporting
date, cash flow projections were considered by the Board and the
Group is forecast to have sufficient funds and available funding
facilities to meet its obligations as they fall due.
The following table sets out the contractual maturities
(representing undiscounted contractual cash flows) of financial
liabilities:
Consolidated Between
Up to 1 month Over
At 31 December 2021 1 month and 1 1 year Total
GBP'000 year GBP'000 GBP'000
GBP'000
---------------------------------- ---------- --------- ---------- ----------
Trade and other payables 3,597 - - 3,597
Lease liabilities 243 29 - 272
Borrowings 2,279 - - 2,279
---------------------------------- ---------- --------- ---------- ----------
Total 6,119 29 - 6,148
---------------------------------- ---------- --------- ---------- ----------
Between
Up to 1 month Over
At 31 December 2020 (Restated) 1 month and 1 1 year Total
GBP'000 year GBP'000 GBP'000
GBP'000
---------------------------------- ---------- --------- ---------- ----------
Trade and other payables 4,830 - - 4,830
Lease liabilities 321 57 30 408
Borrowings 2,941 - - 2,941
---------------------------------- ---------- --------- ---------- ----------
Total 8,092 57 30 8,179
---------------------------------- ---------- --------- ---------- ----------
More detail on trade and other payables is given in note 18.
Capital disclosures
The capital structure of the Group consists of cash and cash
equivalents, equity attributable to equity holders, and asset-based
financing. There is no other long-term external debt, except for
lease liabilities which are explained more fully in note 14.
During 2021 The Group uses two asset-based financing facilities.
The first facility was with PNC Business Credit, a member of The
PNC Financial Services Group, Inc. and this agreement ran from
January until May. In May a new asset-based finance facility was
agreed with LEUMI UK which is still being utilised. Both facilities
enable the Group to borrow against both trade debt and accrued
income and the current Leumi facility provides for borrowing of up
to GBP9.0m depending on the availability of appropriate assets as
security.
The Group's and Company's objectives when maintaining capital
are:
-- to safeguard the entity's ability to continue as a going
concern, so that it can continue to provide returns for
shareholders and benefits for other stakeholders; and
-- to provide an adequate return to shareholders by pricing
products and services commensurately with the level of risk.
The Group's net debt position is as follows:
2021 2020
Consolidated GBP'000 GBP'000
----------------------------------- --------- ---------
Cash and cash equivalents 1,121 3,172
Asset-based borrowings (2,279) (2,941)
----------------------------------- --------- ---------
Net cash before lease liabilities (1,158) 231
Lease liabilities (272) (408)
Net (debt)/cash (1,430) (177)
----------------------------------- --------- ---------
The Board regularly reviews the adequacy of resources available
and considers the options available to increase them. The
asset-based borrowing facility contains certain externally imposed
financial covenants which have been met throughout the period.
The Company does not currently have distributable reserves
available for dividend payments. A capital reconstruction will be
necessary to create reserves available for distribution. The Board
will keep possible capital reconstruction options under review.
21 Reserves
The Board is not proposing a dividend for the year (2020: nil
pence per share).
The following describes the nature and purpose of each reserve
within shareholders' equity:
Share capital
Share capital consists of ordinary share capital and previously
consisted of deferred share capital.
Ordinary share capital
Share capital is the amount subscribed for ordinary shares at
nominal value. During 2021, 451,613 ordinary shares were issued. No
share options were exercised during the year (2020: none).
Share premium reserve
Share premium is the amount subscribed for share capital in
excess of nominal value. During 2021 451,613 ordinary shares were
issued at a premium of 5.75p per share (2020: none).
Capital redemption reserve
A capital redemption reserve of GBP14,319,000 was created during
2017 when the Directors resolved to cancel the deferred shares of
Parity Group plc.
Other reserves
Other reserves of the Group relate principally to a reserve
created following a change of the Group's ultimate parent and a
corresponding Scheme of Arrangement in July 1999, and a reserve
created following the reorganisation of the Group's capital
structure in 2002 that resulted in the Company increasing its
investment in subsidiary undertakings.
Retained earnings
Retained earnings represent the cumulative net gains and losses
recognised in the income statement.
22 Pension commitments
The Group operates a small number of pension schemes. With the
exception of the Parity Group Retirement Benefits Plan, all of the
schemes are defined contribution plans and the assets are held in
separately administered funds. Contributions to defined
contribution schemes from during the year were GBP86,000 (2020:
GBP102,000).
Defined benefit plan
In March 1995, the Group established the Parity Retirement
Benefits Plan, renamed as the Parity Group Retirement Benefits Plan
("the Plan"), following a Scheme of Arrangement in 1999, in order
to facilitate the continuance of pension entitlements for staff
transferring from other schemes following acquisitions in 1994. The
Plan is governed by the Trustees of the plan and is administered by
Cartwright Group Limited in accordance with the Trust Deed and
Rules, solely for the benefit of its members and other
beneficiaries. The Trustees comprise an independent Chairman, one
member representative and one employer representative. It is a
funded defined benefit scheme and has been closed to new members
since 1995. With effect from 1 January 2005 this scheme was also
closed to future service accrual and future contributions paid into
money purchase arrangements.
The weighted average liability duration is approximately 13
years (2020: 14 years) and can be attributed to the scheme members
as follows:
Weighted
Number of average liability
members duration
(years)
------------------- ------------ -------------------
Pensioner members 61 13
Deferred members 6 18
------------------- ------------ -------------------
Total 67 13
------------------- ------------ -------------------
There were no retirements during the year (2020: one). There was
a reduction by 2 total members during the year (2020: no
change).
The Plan is funded by the Group based on the triennial actuarial
valuation of the scheme's technical provisions. The actuarial
valuation is subject to more prudent assumptions than the
accounting valuation under IAS 19. The triennial actuarial
valuation due at April 2018 was finalised during 2019 and resulted
in an increase in monthly contributions from GBP17,260 per month to
GBP24,300 per month. Funding requirements are formally set out in
the Statement of Funding Principles, Schedule of Contributions and
Recovery Plan agreed between the Trustees and the Group.
The valuation for IAS 19 has been provided by Cartwright Group
Limited, a company that specialises in providing actuarial
services, as at 31 December 2021.
Principal actuarial assumptions
2021 2020
----------------------------------------- --------- ---------
Rate of increase of pensions in payment 3.8-4.0% 3.6-3.9%
Discount rate 1.9% 1.3%
Retail price inflation 3.6% 3.2%
Consumer price inflation 2.6% 2.2%
----------------------------------------- --------- ---------
In accordance with the revised IAS 19, the assumption for future
investment returns is the same discount rate of 2.0% (2020: 2.0%)
used in calculating the pension liabilities.
The underlying mortality assumption used is in accordance with
the standard table known as S1PA_H, S1PA or S1PA_L mortality,
dependent on the size of each member's pension, using the CMI_2020
projection based on year of birth with a long-term rate of
improvement of 1.25% p.a. (2020: CMI_2019 and 1.25% p.a.). This
results in the following life expectancies:
-- Male aged 65 at 31 December 2021 has a life expectancy of 86 years (2020: 86 years)
-- Female aged 65 at 31 December 2021 has a life expectancy of 89 years (2020: 89 years)
Guaranteed Minimum Payment ("GMP") equalisation
During 2018 the High Court of Justice in England made judgement
in a case relating to GMP equalisation. The court held that
pensions earned between 1990 and 1997 must be equalised between men
and women for the effect of GMPs. Most sections of the Group's
scheme were unaffected since they were opted in to the Second State
Pension, with just one section opted out. The actuary estimates
that the impact to the scheme will be to increase liabilities by
between GBP10,000 and GBP30,000. Accordingly, an adjustment is
recorded in these accounts to increase the scheme deficit by
GBP20,000 (2020: GBP20,000), first recognised as a past service
cost recognised in the income statement for the year ended 31
December 2018.
Reconciliation to consolidated statement of financial
position
2021 2020
GBP'000 GBP'000
------------------------------------- --------- ---------
Fair value of plan assets 24,478 25,143
Present value of funded obligations (22,539) (24,935)
------------------------------------- --------- ---------
At the end of the year 1,939 208
------------------------------------- --------- ---------
Reconciliation of plan assets
2021 2020
GBP'000 GBP'000
------------------------------------ --------- ---------
At the beginning of the year 25,143 22,670
Expected return 320 442
Contribution by Group 322 325
Benefits paid (964) (990)
Expenses met by scheme (213) (247)
Actuarial (loss)/ gain (130) 2,943
------------------------------------ --------- ---------
Plan assets at the end of the year 24,478 25,143
------------------------------------ --------- ---------
Contributions to the scheme included GBPnil of additional
payments (2020: GBPnil). The actuarial loss on plan assets relates
to the fall in value of the scheme's investments reflecting
uncertainty in global equity markets experienced in 2021.
Composition of plan assets
2021 2020
GBP'000 GBP'000
-------------------------------------------- --------- ---------
Diversified growth funds - Quoted 24,308 20,139
Liability driven investment funds - Quoted - 4,827
Options in Parity Group plc 96 96
Cash 74 81
-------------------------------------------- --------- ---------
Total plan assets 24,478 25,143
-------------------------------------------- --------- ---------
Reconciliation of plan liabilities
2021 2020
GBP'000 GBP'000
----------------------------------------- --------- ---------
At the beginning of the year 24,935 23,562
Interest cost 318 461
Benefits paid (964) (990)
Actuarial (gain)/loss (1,750) 1,902
----------------------------------------- --------- ---------
Plan liabilities at the end of the year 22,539 24,935
----------------------------------------- --------- ---------
Amounts recognised in the consolidated income statement
2021 2020
GBP'000 GBP'000
------------------------------------------------- --------- ---------
Included in finance costs
Expected return on plan assets, net of expenses 107 195
Unwinding of discount on plan liabilities
(interest cost) (318) (461)
------------------------------------------------- --------- ---------
Net finance costs in respect of post-retirement
benefits (211) (266)
------------------------------------------------- --------- ---------
Amounts recognised in the consolidated statement of
comprehensive income
2021 2020
GBP'000 GBP'000
------------------------------------------- --------- ---------
Actuarial (loss)/gain on plan assets (130) 2,943
Actuarial gain/(loss) on plan liabilities 1,750 (1,902)
------------------------------------------- --------- ---------
Remeasurement of defined benefit pension
scheme 1,620 1,041
------------------------------------------- --------- ---------
The asset recognised under this scheme is not limited under
IFRIC 14 as the Group has an unconditional right to realise the
economic benefit of these assets during the life of the plan or
when the plan is settled.
Defined benefit obligation trends
2021 2020 2019 2018 2017
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- --------- --------- --------- --------- ---------
Plan assets 24,478 25,143 22,670 20,099 21,880
Plan liabilities (22,539) (24,935) (23,562) (22,041) (22,939)
--------------------------- --------- --------- --------- --------- ---------
Surplus/(deficit) 1,939 208 (892) (1,942) (1,059)
--------------------------- --------- --------- --------- --------- ---------
Experience adjustments on
assets (130) 2,943 2,761 (1,586) 609
--------------------------- --------- --------- --------- --------- ---------
(0.5%) 13.3% 13.9% (7.3%) 2.9%
--------------------------- --------- --------- --------- --------- ---------
Experience adjustments on
liabilities 1,750 (1,902) (1,830) 581 (191)
--------------------------- --------- --------- --------- --------- ---------
7.2% (8.3%) (8.4%) 2.6% (0.8%)
--------------------------- --------- --------- --------- --------- ---------
Sensitivity analysis
Increase/
(decrease)
Liabilities Assets Surplus/(deficit) in surplus
Effect of change in assumptions GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- -------------- --------- -------------------- ------------
No change 22,539 24,478 1,863 -
0.25% rise in discount
rate 21,805 24,478 2,597 734
0.25% fall in discount
rate 23,273 24,478 1,129 (734)
0.25% rise in inflation 22,639 24,478 1,763 (100)
0.25% fall in inflation 22,439 24,478 1,963 100
--------------------------------- -------------- --------- -------------------- ------------
23 Share capital
Authorised share capital
Ordinary shares 2p
each
2021 2021
Number GBP'000
----------------------------------------- ------------ --------
Authorised at 1 January and 31 December 409,044,603 8,181
----------------------------------------- ------------ --------
Issued share capital
Ordinary shares 2p
each
2021 2021
Number GBP'000
-------------------------------------- ------------ --------
Issued and fully paid at 1 January 102,624,020 2,053
Shares issued during the year 451,613 9
-------------------------------------- ------------ --------
Issued and fully paid at 31 December 103,075,633 2,062
-------------------------------------- ------------ --------
24 Contingencies
In the normal course of business, the Group is exposed to the
risk of claims in respect of contracts where the customer or
supplier is dissatisfied with the performance, pricing and/or
completion of the contracted service or product. Such claims are
normally resolved by a combination of negotiation, further work by
Parity or the supplier, and/or monetary settlement without formal
legal process being necessary. Occasionally, such claims progress
into legal action. At the present time, Group management believes
the resolution of any known claims or legal proceedings will not
have a material further impact on the financial position of the
Group.
25 Key management remuneration
Key management comprises the Group's Board of Directors, along
with Group's executive committee of senior management. The total
remuneration received by key management for 2021 was GBP1,118,000
(2020: GBP1,209,000). Remuneration comprises emoluments received,
pension contributions, share-based payment charges and compensation
for loss of office. Remuneration of the Board of Directors,
including that of the highest paid Director Matthew Bayfield, is
disclosed in detail within the remuneration report.
2021 2020
GBP'000 GBP'000
--------------------------------- --------- ---------
Short-term employee benefits 843 955
Post-employment benefits 32 29
Compensation for loss of office 308 145
Share-based payments (note 8) (65) 80
--------------------------------- --------- ---------
1,118 1,209
--------------------------------- --------- ---------
26 Related party transactions
Consolidated
During the year the Group engaged the marketing services of CRM
Squad. The Executive Chairman Mark Braund is an owner and Director
of CRM Squad. The total value of services received from CRM squad
in 2021 is GBP12,180. (2020: none).
Company
Details of the Company's holdings in Group undertakings are
given in note 27. The Company entered into transactions with Group
undertakings as shown in the table below:
Operating Finance Finance Operating Finance Finance
expenses income expense expenses income expense
2021 2021 2021 2020 2020 2020
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ ------------ ---------- ---------- ------------ ---------- ----------
Expenses incurred from
Group subsidiaries (208) - (1,350) (327) - (1,348)
------------------------ ------------ ---------- ---------- ------------ ---------- ----------
Income generated from
Group subsidiaries - 1,181 - - 1,195 -
------------------------ ------------ ---------- ---------- ------------ ---------- ----------
The Company had the following amounts payable to and recoverable
from Group undertakings:
2021 2020
GBP'000 GBP'000
----------------------------------------------- ---------- ----------
Amounts owed by subsidiary undertakings (note
16):
Falling due within one year 925 925
Falling due after one year 129,973 134,662
Amounts due to subsidiary undertakings (note
18):
Falling due within one year (14,844) (13,764)
Falling due after one year (132,335) (134,476)
----------------------------------------------- ---------- ----------
27 Subsidiaries
The principal subsidiaries of Parity Group plc, which have been
included in these consolidated financial statements, are Parity
Professionals Limited and Parity Consultancy Services Limited.
Parity Professionals Limited and Parity Consultancy Services
Limited are wholly owned by Parity Holdings Limited and
incorporated in the United Kingdom. Parity Holdings Limited is a
direct subsidiary of Parity Group plc and is incorporated in the
United Kingdom.
Parity Professionals Limited is a specialist IT and data
recruitment services company. Parity Consultancy Services Limited
provides IT and data services including consultancy and value added
recruitment services.
During 2021, management continued to simplify the group
structure. All UK dormant companies have been wound up and will be
struck off in due time.
The remaining Group subsidiaries are listed below. These are
either discontinued or dormant, are wholly owned by the Group
ultimate parent Parity Group plc.
Parity Eurosoft Limited
Parity International BV (registered at Keizersgracht 62-64, 1015
CS Amsterdam, Netherlands)
Parity Limited
Parity Resources Limited
Parity Solutions (Dublin 1999) Limited (registered at 13-18 City
Quay, Dublin 2 D02 ED70, Ireland)
Parity Solutions (Ireland) Limited (registered at Northern
Ireland Science Park, Queens Road, Belfast BT3 9DT)
Personnel Solutions Inc. (registered at 39 Broadway, New York,
NY10006, USA)
Teltech International Corp. (registered at 39 Broadway, New
York, NY10006, USA)
28 Prior period adjustment
During the year, the Group discovered that contractor expenses
has been erroneously understated in 2017 and 2018 by a cumulative
amount of GBP247,000. As a consequence, operating costs for the
Group were understated in those years and closing accruals have
been understated since 2017. The understatement represents a prior
period error under IAS 8 and is accounted for by correcting
retrospectively in these financial statements. As the error
occurred before the earliest period presented in these financial
statements, the Group has restated the opening balances of assets,
liabilities and equity for the earliest period presented. The
adjustment was posted to contractor accruals within current
liabilities on the statement of financial position.
Reconciliation of changes is Equity
1 January 1 January
2019 2020
GBP'000 GBP'000
-------------------------------------------- ----------- ----------
Equity as previously reported (77,612) (77,753)
Adjustment to prior year
Restatement of contractor expense accruals (247) (247)
Equity as adjusted (77,859) (78,000)
-------------------------------------------- ----------- ----------
Analysis of the effect upon equity
Retained earnings (247) (247)
----------- ----------
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END
FR EAFLKAAPAEAA
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April 27, 2022 02:01 ET (06:01 GMT)
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