I guess this is actually good news, in that IT recruitment-cum-project services-cum-digital media aspirant, Parity, is to raise £600k from a slightly discounted (7%) share issue to fund the first year earn-out associated with its acquisition last year of Shoreditch-based, self-styled “pioneering creative 3D technology company”, Inition (see Parity buys into its digital dream). The £500k pay-out (the other £100k raised is for ‘future transaction costs’) wasn’t expected for 12 months but Inition management ‘hit the numbers’ after only 7 months. A further £500k is due by March 2014 – assuming Inition management hits the next earn-out target. Indeed at current course and speed, Parity top team Philip Swinstead and Paul Davies may have to dip into their piggy banks again somewhat earlier than planned!
This is an interesting – albeit not too challenging – test of investor sentiment for Parity’s ‘new direction’ into the world of digital media. Parity had some £3m cash in the bank at half-time (see Parity’s beating heart grows stronger), though owed £7m short-term. Cash was still flowing out, to the tune of £1.5m. Management alerted the market to the early earn-out when it issued a trading update just two days ago (see Parity confirms FY12 on track), but did not signal the ‘dash for cash’. Let’s hope no-one was asleep at the switch!